DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------
MUNICIPAL INVESTMENT ESTIMATED CURRENT RETURN shows the estimated
TRUST FUND annual cash to be received from interest-bearing
MULTISTATE SERIES 210 bonds in the Portfolio (net of estimated annual
(UNIT INVESTMENT expenses) divided by the Public Offering Price
TRUSTS) (including the maximum sales charge).
- ------------------------------ESTIMATED LONG TERM RETURN is a measure of the
/ / EXEMPT FROM REGULAR estimated return over the estimated life of the
FEDERAL INCOME TAX Fund. This represents an average of the yields to
AND SOME STATE TAXES maturity (or in certain cases, to an earlier call
/ / DEFINED PORTFOLIOS OF date) of the individual bonds in the Portfolio,
MUNICIPAL BONDS adjusted to reflect the maximum sales charge and
/ / MONTHLY INCOME estimated expenses. The average yield for the
ARIZONA TRUST Portfolio is derived by weighting each bond's
5.19% yield by its market value and the time remaining
ESTIMATED CURRENT RETURN to the call or maturity date, depending on how the
5.31% bond is priced. Unlike Estimated Current Return,
ESTIMATED LONG TERM RETURN Estimated Long Term Return takes into account
CALIFORNIA INTERMEDIATE maturities, discounts and premiums of the
INSURED TRUST underlying bonds.
4.94% No return estimate can be predictive of your
ESTIMATED CURRENT RETURN actual return because returns will vary with
4.75% purchase price (including sales charges), how long
ESTIMATED LONG TERM RETURN units are held, changes in Portfolio composition,
NEW YORK TRUST changes in interest income and changes in fees and
5.54% expenses. Therefore, Estimated Current Return and
ESTIMATED CURRENT RETURN Estimated Long Term Return are designed to be
5.69% comparative rather than predictive. A yield
ESTIMATED LONG TERM RETURN calculation which is more comparable to an
OHIO INSURED TRUST individual bond may be higher or lower than
5.28% Estimated Current Return or Estimated Long Term
ESTIMATED CURRENT RETURN Return which are more comparable to return
5.39% calculations used by other investment products.
ESTIMATED LONG TERM RETURN
TEXAS INSURED TRUST
5.43%
ESTIMATED CURRENT RETURN
5.46%
ESTIMATED LONG TERM RETURN
VIRGINIA TRUST
5.41%
ESTIMATED CURRENT RETURN
5.48%
ESTIMATED LONG TERM RETURN
AS OF JULY 10, 1996
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
SPONSORS: HAS THE COMMISSION OR ANY STATE SECURITIES
Merrill Lynch, COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Pierce, Fenner & Smith OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Incorporated CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-323-1508.
Prudential Securities Prospectus dated July 11, 1996.
Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Dean Witter Reynolds Inc. AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
- --------------------------------------------------------------------------------
Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $100 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. Each portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal portfolios
o Corporate portfolios
o Government portfolios
o Equity portfolios
o International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined funds are available including: insured funds, double and triple
tax-free funds and funds with 'laddered maturities' to help protect against
changing interest rates. Defined Asset Funds are offered by prospectus only.
- ---------------------------------------------------
Defined Multistate Series
- ---------------------------------------------------
Our defined portfolios of municipal bonds offers you a simple and convenient way
to earn tax-free monthly income. And by purchasing Defined Asset Funds, you not
only receive professional selection but also gain the advantage of reduced risk
by investing in bonds of several different issuers.
INVESTMENT OBJECTIVE
To provide interest income exempt from regular federal income taxes through
investment in a fixed portfolio consisting primarily of municipal bonds issued
by or on behalf of a single State and its local governments and authorities.
Units may also be exempt from certain state and local taxes for residents of the
State.
DIVERSIFICATION
Each Portfolio contains a number of different bond issues. Spreading your
investment among different issuers reduces your risk, but does not eliminate it,
especially since each Portfolio contains bonds of only one State. Because of
maturities, sales or other dispositions of bonds, the size, composition and
return of the Portfolio will change over time.
- ---------------------------------------------------
Defining Your Portfolio
- ---------------------------------------------------
PROFESSIONAL SELECTION AND SUPERVISION
Each Portfolio contains a variety of bonds selected by experienced buyers and
research analysts. The Fund is not actively managed; however, it is regularly
reviewed and a bond can be sold if retaining it is considered detrimental to
investors' interests.
MONTHLY FEDERALLY TAX-FREE INTEREST INCOME
Each Portfolio pays monthly income, even though the bonds generally pay interest
semi-annually.
INSURANCE
Certain bonds are insured. This insurance guarantees the timely payment of
principal and interest of the bonds, but does not guarantee the value of the
bonds or the units. Insurance does not cover accelerated payments of principal
or any increase in interest payments or premiums payable on mandatory
redemptions, including if interest on a bond is determined to be taxable. (See
Bonds Backed by Letters of Credit or Insurance in Part B).
BOND CALL FEATURES
It is possible that during periods of falling interest rates, a bond with a
coupon higher than current market rates will be prepaid or 'called', at the
option of the bond issuer, before its expected maturity. When bonds are
initially callable, the price is usually at a premium to par which then declines
to par over time. Bonds may also be subject to a mandatory sinking fund or have
extraordinary redemption provisions. For example, if the bond's proceeds are not
able to be used as intended the bond may be redeemed. This redemption and the
sinking fund are often at par.
CALL PROTECTION
Although many bonds are subject to optional refunding or call provisions, we
have selected bonds with call protection. This call protection means that any
bond in a Portfolio generally cannot be called for a number of years and
thereafter at a declining premium over par.
TAX INFORMATION
Based on the opinion of bond counsel, income from the bonds held by this Fund is
generally 100% exempt under existing laws from regular federal income tax and
certain state and local personal income taxes for residents of a particular
State. Any gain on a disposition of the underlying bonds or units will be
subject to tax.
A-2
<PAGE>
- ---------------------------------------------------
Defining Your Investment
- ---------------------------------------------------
PUBLIC OFFERING PRICE
The Public Offering Price as of July 10, 1996, the business day prior to the
Initial Date of Deposit, is based on the aggregate offer side value of the
underlying bonds in the Portfolio, plus a sales charge on the value of the
underlying bonds, plus cash, divided by the number of units outstanding. The
Public Offering Price on any subsequent date will vary. An amount equal to
principal cash, if any, as well as net accrued but undistributed interest on the
unit is added to the Public Offering Price. The underlying bonds are evaluated
by an independent evaluator at 3:30 p.m. Eastern time on every business day.
UNIT PAR VALUE
The par value of your unit--the amount of money you will receive by termination
of the Trust, assuming all the bonds are paid at maturity or are redeemed by the
issuer at par or sold by the Fund at par to meet redemptions--is $1,000.
LOW MINIMUM INVESTMENT
You can get started with a minimum purchase of about $1,000.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into a separate
portfolio of federally tax-exempt bonds. Most or all of the bonds in that
portfolio, however, will not be insured or exempt from state and local taxes.
Reinvesting helps to compound your income free of federal income taxes.
PRINCIPAL DISTRIBUTIONS
Principal from sales, redemptions and maturities of bonds in the Portfolios will
be distributed to investors periodically when the amount to be distributed is
more than $5.00 per unit.
TERMINATION DATE
The Portfolios will generally terminate no later than the maturity date of the
last maturing bond listed in the Portfolio. The Portfolios may be terminated if
the value is less than 40% of the face amount of bonds deposited.
SPONSORS' PROFIT OR LOSS
The Sponsors' profit or loss associated with each Portfolio will include the
receipt of applicable sales charges, any fees for underwriting or placing bonds,
fluctuations in the Public Offering Price or secondary market price of units and
a gain or loss on the deposit of the bonds (see Underwriters' and Sponsors'
Profit in Part B).
SELLING YOUR INVESTMENT
You may sell your units at any time. Your price is based on the then current net
asset value of the Portfolio (generally based on the lower, bid side evaluation
of the bonds, as determined by an independent evaluator, plus principal cash, if
any, as well as accrued interest). There is no fee for selling your units.
- ---------------------------------------------------
Defining Your Risks
- ---------------------------------------------------
RISK FACTORS
Unit price fluctuates and could be adversely affected by increasing interest
rates as well as the financial condition of the issuers of the bonds and any
insurance companies backing certain of the bonds. Because of the possible
maturity, sale or other disposition of securities, the size, composition and
return of the portfolio may change at any time. Because of the sales charges,
returns of principal and fluctuations in unit price, among other reasons, the
sale price will generally be less than the cost of your units. Unit prices could
also be adversely affected if a limited trading market exists in any security to
be sold. There is no guarantee that the Fund will achieve its investment
objective.
In addition, each Portfolio has fewer bond issues than a national fund, and is
concentrated in bonds of issuers located in only one State. There may be
additional risk from decreased diversification as well as from factors
particular to that State.
UNDERWRITING ACCOUNT
One or more of the Sponsors has participated as underwriter, managing
underwriter or member of an underwriting syndicate from which approximately 3%
of the bonds in the Fund were acquired.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
P.O. Box 9051
Princeton, NJ 08543-9051 69.92%
SMITH BARNEY INC.
388 Greenwich Street--23rd Floor
New York, NY 10013 7.58%
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, NY 10019 9.78%
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza
New York, NY 10292 5.38%
DEAN WITTER REYNOLDS INC.
Two World Trade Center--59th Floor
New York, NY 10048 7.34%
-------
100.00%
-------
A-3
<PAGE>
- --------------------------------------------------------------------------------
Defined Arizona Trust
- --------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 6 Arizona bond issues and 1 Puerto Rico bond issue.
TYPES OF BONDS
The Portfolio consists of $3,250,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / General Obligation 26%
/ / Hospitals/Nursing Homes/Mental Health 31%
/ / Municipal Water/Sewer Utilities 31%
/ / State/Local Municipal Electric Utilities 12%
INSURANCE
Approximately 62% of the bonds are insured (see Risk Factors--Bonds Backed by
Letters of Credit or Insurance in Part B).
PORTFOLIO CONCENTRATIONS
The Portfolio is considered to be concentrated in Hospital/Nursing Home/Mental
Health bonds and Municipal Water/Sewer Utility bonds and is therefore dependent
to a significant degree on revenues generated from those particular activities.
The Portfolio is also concentrated in General Obligation bonds (see Risk Factors
in Part B). The Portfolio is also concentrated in bonds of Arizona issuers and
is subject to additional risk from decreased diversification as well as from
factors that may be particular to Arizona, which are briefly described on page
A-6.
- ---------------------------------------------------
Defining Your Income
- ---------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(August 25, 1996): $ 4.14
Regular Monthly Income per unit
(Beginning on September 25, 1996): $ 4.28
Annual Income per unit: $51.47
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a % As a %
of Initial of
Offering Secondary
Period Market
Public Public
Offering Offering
Price Price
----------- -----------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------- -----------
Trustee's Fee .073% $ 0.69
Maximum Portfolio
Supervision and
Bookkeeping Fees .047% 0.45
Evaluator's Fee .042% 0.40
Organizational Costs .022% 0.20
Other Operating
Expenses .088% 0.83
----------- -----------
TOTAL .272% $ 2.57
- ------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$48 $53 $60 $78
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of July 10, 1996, the Public Offering Price was $992.07, based on the
aggregate offer side value of the bonds ($3,078,905.50), plus a maximum sales
charge of 4.712% on the value of the underlying bonds, plus cash ($30,000.00),
divided by the number of units outstanding (3,280). An amount equal to principal
cash, if any, as well as net accrued but undistributed interest on the unit is
added to the Public Offering Price. Sponsors' profit on deposit was $35,034.50.
The bid side redemption and secondary market repurchase price as of July 10,
1996 was $943.87 ($48.20 less than the Public Offering Price).
A-4
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined Arizona Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--210
Arizona Trust July 11, 1996
OPTIONAL SINKING
RATING REFUNDING FUND
OF ISSUES REDEMPTIONS REDEMPTIONS COST
PORTFOLIO TITLE (1) (2) (2) TO FUND (3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $500,000 The Industrial Dev.
Auth. of the Cnty. of Mohave, AZ,
Baptist Hosp. Sys. Rev. Bonds, Ser.
1996 (MBIA Ins.), 5.50%, 9/1/21 AAA 9/1/06 @ 102 9/1/16 $ 473,915.00
2. $500,000 The Industrial Dev.
Auth. of the Cnty. of Pima, AZ,
Ins. Rfdg. Rev. Bonds (Tucson Med.
Ctr.), Ser. 1993 A (MBIA Ins.),
5.00%, 4/1/15 (4) AAA 4/1/04 @ 102 4/1/10 451,980.00
3. $500,000 City of Phoenix Civic
Imp. Corp., AZ, Jr. Lien Wtr. Sys.
Rev. Bonds, Ser. 1996, 6.00%,
7/1/19 Aa(m) 7/1/06 @ 100 -- 503,715.00
4. $500,000 Town of Oro Valley Mun.
Prop. Corp., AZ, Mun. Wtr. Sys.
Acquisition Bonds (Canada Hills and
Rancho Vistoso Wtr. Util.
Acquisition Proj.), Ser. 1996 (MBIA
Ins.), 5.375%, 7/1/26 7/1/08 @ 101 7/1/20 466,600.00
5. $500,000 Tucson Unified Sch.
Dist. No. 1 of Pima Cnty., AZ,
Sch. Imp. Bonds, Proj. of 1989,
Ser. E (1993) (Financial Guaranty
Ins.), 5.40%, 7/1/13 (4) 7/1/04 @ 101 -- 481,180.00
6. $400,000 Salt River Proj., AZ,
Agricultural Imp. and Pwr.
Dist. (Salt River Proj. Elec. Sys.
Rfdg. Rev. Bonds), Ser. 1993 A,
5.50%, 1/1/19 AA 1/1/03 @ 100 1/1/14 380,212.00
7. $350,000 Commonwealth of Puerto
Rico, Pub. Imp. Bonds (G.O. Bonds),
5.40%, 7/1/25 A 7/1/06 @ 101.5 7/1/18 321,303.50
--------------
$ 3,078,905.50
--------------
--------------
</TABLE>
- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group unless followed by
('m'), which indicates a Moody's Investors Service rating or by ('f'), which
indicates a Fitch Investors Service rating. Moody's and Fitch ratings have been
furnished by the Evaluator but not confirmed with Moody's or Fitch. '++'
indicates that while there is no available rating, in the opinion of Defined
Asset Funds research analysts the bond has credit characteristics comparable to
bonds rated A or better. (see Appendix A to Part B).
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 15% of the bonds were deposited at a
premium and 85% at a discount from par.
(4) These bonds are when-issued bonds and are expected to settle 1 day after
the settlement date for Units. The Trustee's fees and expenses will be reduced
by $0.04 per unit to compensate for interest that would have accrued on the
bonds between the settlement date for Units and the actual date of delivery of
the bonds. (See Income, Distributions and Reinvestment--Income in Part B.)
A-5
<PAGE>
- --------------------------------------------------------------------------------
Arizona Taxes and Risks
- --------------------------------------------------------------------------------
ARIZONA RISK FACTORS
The economy of the State of Arizona has historically been subject to the
boom and bust cycles associated primarily with the real estate and construction
industries. The State's economy also has historically been somewhat dependent on
the tourism industry and is sensitive to trends in that sector. Other factors
affecting Arizona's economy include, without limitation, the effects of the
savings and loan crisis, the recent loss of jobs at major employers within the
State, continuing consolidation and change in the healthcare market, and
migration into the State at a rate which causes Arizona's population growth to
exceed the national average.
Most or all of the Debt Obligations of the Arizona Trust are not obligations
of the State of Arizona and are not supported by the State's taxing powers. The
particular source of payment and security for each of the Debt Obligations is
detailed in the instruments themselves and in related offering materials. There
can be no assurances, however, with respect to whether the market value or
marketability of any of the Debt Obligations issued by an entity other than the
State of Arizona will be affected by the financial or other condition of the
State or of any entity located within the State. In addition, the State of
Arizona, as well as counties, municipalities, political subdivisions and other
public authorities of the state, are subject to limitations imposed by Arizona's
constitution with respect to ad valorem taxation, bond indebtedness and other
matters. These limitations may affect the ability of the issuers to generate
revenues to satisfy their debt obligations.
Arizona's utilities are subject to regulation by the Arizona Corporation
Commission. This regulation extends to, among other things, the issuance of
certain debt obligations by regulated utilities and periodic rate increases
needed by utilities to cover operating costs and debt service. The inability of
any regulated public utility to secure necessary rate increases could adversely
affect the utility's ability to pay debt service. The Salt River Project
Agricultural Improvement and Power District ('SRP'), an agricultural improvement
district organized under state law, is not subject to regulation by the Arizona
Corporation Commission. Instead, SRP's board of directors has the exclusive
authority to establish rates for electricity sold by it.
In July 1994, the Supreme Court of Arizona held that formulas for funding
public shools in Arizona cause 'gross disparities' among school districts and
therefore violate the Arizona Constitution. It remains unclear what effect the
judgment will have on state finances or school district budgets.
ARIZONA TAXES
In the opinion of Meyer Hendricks Victor Ruffner & Bivens, P.L.C., Phoenix,
Arizona, special counsel on Arizona tax matters, under existing Arizona law:
Under the income tax laws of the State of Arizona, the Arizona Trust is
not an association taxable as a corporation; the income of the Arizona Trust
will be treated as the income of Holders of Units of the Arizona Trust and
be deemed to be received by them when received by the Arizona Trust.
Interest on Debt Obligations in the Arizona Trust which is exempt from
Arizona income tax when received by the Arizona Trust will retain its status
as tax exempt interest for Arizona income tax purposes to the Holders of
Units of the Arizona Trust.
For purposes of the Arizona income tax laws, each Holder of Units of the
Arizona Trust will be considered to have received his pro rata share of
interest on each Debt Obligation in the Arizona Trust when it is received by
the Arizona Trust, and each Holder will have a taxable event when the
Arizona Trust disposes of a Debt Obligation (whether by sale, exchange,
redemption or payment at maturity) or when the Holder redeems or sells his
Unit to the extent the transaction constitutes a taxable event for Federal
income tax purposes. A Holder's tax cost (or basis) for his pro rata portion
of a Debt Obligation will be established and allocated for purposes of the
Arizona income tax laws in the same manner as such cost is established and
allocated for Federal income tax purposes, except if the Debt Obligation
carries bond premium or original issue discount, in which case it is unclear
whether the Federal and Arizona tax costs are equivalent.
Because Arizona income tax is based upon Federal income tax law, the
foregoing opinions concerning Arizona income tax are based upon the opinion
of Davis Polk & Wardwell concerning Federal income tax aspects of the
Arizona Trust.
A-6
<PAGE>
- --------------------------------------------------------------------------------
Defined California Intermediate Insured Trust
- --------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 8 California bond issues with an estimated average life
of 12 years.
TYPES OF BONDS
The Portfolio consists of $4,000,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Airports/Ports/Highways 12%
/ / Hospitals/Nursing Homes/Mental Health 13%
/ / Lease Rental Appropriation 25%
/ / Municipal Water/Sewer Utilities 25%
/ / Special Tax 12%
/ / Universities/Colleges 13%
INSURED AAA-RATED BONDS
As a result of insurance, the bonds are rated AAA by Standard & Poor's Ratings
group.
The approximate percentage of the aggregate face amount insured by each
insurance company is:
AMBAC Insurance Corporation 26%
Financial Guaranty Insurance
Company 24%
MBIA Insurance Corporation 50%
PORTFOLIO CONCENTRATIONS
The Portfolio is considered to be concentrated in Municipal Water/Sewer Utility
bonds and Lease Rental Appropriation bonds and is therefore dependent to a
significant degree on revenues generated from those particular activities (see
Risk Factors in Part B). The Portfolio is also concentrated in bonds of
California issuers and is subject to additional risk from decreased
diversification as well as from factors that may be particular to California,
which are briefly described on page A-9.
- ---------------------------------------------------
Defining Your Income
- ---------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(August 25, 1996): $ 4.13
Regular Monthly Income per unit
(Beginning on September 25, 1996): $ 4.27
Annual Income per unit: $51.31
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a % As a %
of Initial of
Offering Secondary
Period Market
Public Public
Offering Offering
Price Price
----------- -----------
Maximum Sales Charges 4.00% 4.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------- -----------
Trustee's Fee .070% $ 0.69
Maximum Portfolio
Supervision and
Bookkeeping Fees .045% 0.45
Evaluator's Fee .032% 0.32
Organizational Costs .020% 0.20
Other Operating
Expenses .069% 0.69
----------- -----------
TOTAL .236% $ 2.35
- ------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$42 $47 $53 $69
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of July 10, 1996, the Public Offering Price was $1,037.86, based on the
aggregate offer side value of the bonds ($3,986,699.80), plus a maximum sales
charge of 4.167% on the value of the underlying bonds, plus cash ($37,000.00),
divided by the number of units outstanding (4,037). An amount equal to principal
cash, if any, as well as net accrued but undistributed interest on the unit is
added to the Public Offering Price. Sponsors' profit on deposit was $28,876.50.
The bid side redemption and secondary market repurchase price as of July 10,
1996 was $992.74 ($45.12 less than the Public Offering Price).
A-7
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined California Intermediate Insured Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--210
California Intermediate Insured Trust July 11, 1996
OPTIONAL SINKING
RATING REFUNDING FUND
OF ISSUES REDEMPTIONS REDEMPTIONS COST
PORTFOLIO TITLE (1) (2) (2) TO FUND (3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $500,000 California Hlth. Fac.
Fin. Auth., Hlth. Fac. Rfdg. Rev.
Bonds (Catholic Healthcare West),
Ser. 1994 A (MBIA Ins.), 5.00%,
7/1/08 AAA 7/1/04 @ 102 -- $ 480,390.00
2. $535,000 State Pub. Wks. Bd. of
the State of California, Lease Rev.
Bonds (California Cmnty. Coll.)
(Var. Cmnty. Coll. Proj.), Ser.
1996 A (AMBAC Ins.), 5.375%, 3/1/09 AAA 3/1/06 @ 102 -- 528,922.40
3. $500,000 Riverside Cnty. Trans.
Comm., CA, Sales Tax Rev. Bonds
(Ltd. Tax Bonds), Ser. 1993 A
(AMBAC Ins.), 5.70%, 6/1/06 AAA -- -- 519,110.00
4. $500,000 County of Tulare, CA,
Tulare Cnty. Pub. Fac. Corp. Certs.
of Part. (Cap. Imp. Prog.), Ser.
1996 A (MBIA Ins.), 5.50%, 2/15/07
(4) AAA 2/15/06 @ 102 -- 503,965.00
5. $500,000 The City of Los
Angeles, CA, Wastewater Sys. Rev.
Bonds, Rfdg. Ser. 1993 A (MBIA
Ins.), 5.70%, 6/1/09 AAA 6/1/03 @ 102 -- 503,430.00
6. $500,000 Los Angeles Conv. and
Exhibition Ctr. Auth., CA, Lease
Rev. Bonds, Rfdg. Ser. 1993 A (MBIA
Ins.), 5.20%, 8/15/09 AAA 8/15/03 @ 102 -- 486,095.00
7. $465,000 Department of Arpts. of
the City of Los Angeles, CA, Los
Angeles Intl. Arpt., Rfdg. Rev.
Bonds, Ser. 1995 A (Financial
Guaranty Ins.), 6.00%, 5/15/05 AAA -- -- 494,462.40
8. $500,000 East Bay Mun. Util.
Dist. (Alameda and Contra Costa
Cntys., CA), Wastewater Sys. Sub.
Rev. Rfdg. Bonds, Ser. 1996
(Financial Guaranty Ins.), 4.90%,
6/1/09 AAA 6/1/06 @ 102 -- 470,325.00
--------------
$ 3,986,699.80
--------------
--------------
</TABLE>
- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group. (See Appendix A.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, approximately 49% of the bonds were
deposited at a premium and 51% at a discount from par.
(4) These bonds are when-issued bonds and are expected to settle 7 days after
the settlement date for Units. The Trustee's fees and expenses will be reduced
by $0.13 per unit to compensate for interest that would have accrued on the
bonds between the settlement date for Units and the actual date of delivery of
the bonds. (See Income, Distributions and Reinvestment--Income in Part B.)
A-8
<PAGE>
- --------------------------------------------------------------------------------
California Taxes and Risks
- --------------------------------------------------------------------------------
CALIFORNIA RISK FACTORS
From the latter years of the 1980s through fiscal year 1992-1993, California
weathered a turbulent period of repeated budgetary imbalance. Even as rapid
population growth escalated the demand for government services, an economic
recession ravaged the State's revenue base and drove expenditures above budget
appropriations.
Bolstered by strengthening revenues, reduced caseload growth and an
improving economy, the State has begun to experience some relief from the
serious budgetary pressures that characterized a significant portion of the
decade. As of May, 1996, the California State Department of Finance projected a
budget reserve of over $800 million for the 1996-97 fiscal year. In addition, an
unanticipated increase in revenue receipts is expected to allow the State to
devote nearly $1.7 billion to California's educational system for the purpose of
reducing class sizes, providing new textbooks and supplies, and increasing
spending on school maintenance projects.
Nonetheless, the State's budgetary fortunes continue to be subject to
unforeseeable events. In December, 1994, for example, Orange County, California
and its Investment Pool filed for bankruptcy. A plan of adjustment has been
approved by the court and became effective under which all non-municipal
creditors are to be paid in full. However, the ultimate financial impact on the
County and the State cannot be predicted with any certainty. In addition,
constant fluctuations in other factors affecting the State -- including health
and welfare caseloads, property tax receipts, federal funding and extraordinary
expenditures related to natural disasters -- will undoubtedly create new budget
challenges.
Furthermore, certain California constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives
could produce the adverse effects on the California economy. Among these are
measures that have established tax, spending or appropriations limits and
prohibited the imposition of certain new taxes, authorized the transfers of tax
liabilities and reallocations of tax receipts among governmental entities and
provided for minimum levels of funding.
Finally, certain bonds in the Trust may be subject to provisions of
California law that could adversely affect payments on those bonds or limit the
remedies available to bondholders. Among these are bonds of health care
institutions which are subject to the strict rules and limits regarding
reimbursement payments of California's Medi-Cal Program for health care services
to welfare beneficiaries, and bonds secured by liens on real property.
General obligation bonds of the State of California are currently rated A1
by Moody's and A by Standard & Poor's.
CALIFORNIA TAXES
In the opinion of O'Melveny & Myers LLP, Los Angeles, California, special
counsel on California tax matters, under existing California law:
The Trust is neither a business trust nor an association taxable as a
corporation for California tax purposes. Each holder will be considered the
owner of a pro rata portion of the Trust Fund and will be deemed to receive his
pro rata portion of the income therefrom. To the extent interest on the Debt
Obligations is exempt from California personal income taxes, said interest is
similarly exempt from California personal income taxes in the hands of the
holders, except to the extent such holders are banks or corporations subject to
the California franchise tax. Holders will be subject to California income tax
on any gain on the disposition of all or part of his pro rata portion of a Debt
Obligation in the Trust Fund. A holder will be considered to have disposed of
all or part of his pro rata portion of each Debt Obligation when he sells or
redeems all or some of his Units. A holder will also be considered to have
disposed of all or part of his pro rata portion of a Debt Obligation when all or
part of the Debt Obligation is sold by the Trust Fund or is redeemed or paid at
maturity. The Debt Obligations and the Units are not taxable under the
California personal property tax law.
A-9
<PAGE>
- --------------------------------------------------------------------------------
Defined New York Trust
- --------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 7 New York bond issues.
TYPES OF BONDS
The Portfolio consists of $3,250,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Lease Rental Appropriation 15%
/ / Hospitals/Nursing Homes/Mental Health 31%
/ / Special Tax Issues 15%
/ / Industrial Development Revenue 15%
/ / Universities/Colleges 24%
PORTFOLIO CONCENTRATIONS
The Portfolio is considered to be concentrated in Hospitals/Nursing Homes/Mental
Health bonds and is therefore dependent to a significant degree on revenues
generated from those particular activities. (See Risk Factors in Part B.) The
Portfolio is also concentrated in bonds of New York issuers and is subject to
additional risk from decreased diversification as well as from factors that may
be particular to New York, which are briefly described on page A-12.
- ---------------------------------------------------
Defining Your Income
- ---------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(August 25, 1996): $ 4.32
Regular Monthly Income per unit
(Beginning on September 25, 1996): $ 4.47
Annual Income per unit: $53.71
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a % As a %
of Initial of
Offering Secondary
Period Market
Public Public
Offering Offering
Price Price
----------- -----------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------- -----------
Trustee's Fee .075% $ 0.69
Maximum Portfolio
Supervision and
Bookkeeping Fees .048% 0.45
Evaluator's Fee .043% 0.40
Organizational Costs .022% 0.20
Other Operating
Expenses .090% 0.83
----------- -----------
TOTAL .278% $ 2.57
- ------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$48 $54 $60 $79
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of July 10, 1996, the Public Offering Price was $969.60, based on the
aggregate offer side value of the bonds ($3,008,465.00), plus a maximum sales
charge of 4.712% on the value of the underlying bonds, plus cash ($32,000.00),
divided by the number of units outstanding (3,282). An amount equal to principal
cash, if any, as well as net accrued but undistributed interest on the unit is
added to the Public Offering Price. Sponsors' profit on deposit was $63,755.00.
The bid side redemption and secondary market repurchase price as of July 10,
1996 was $922.45 ($47.15 less than the Public Offering Price).
A-10
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined New York Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--210
New York Trust July 11, 1996
OPTIONAL SINKING
RATING REFUNDING FUND
OF ISSUES REDEMPTIONS REDEMPTIONS COST
PORTFOLIO TITLE (1) (2) (2) TO FUND (3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $500,000 New York State Energy
Research and Dev. Auth., Fac. Rfdg.
Rev. Bonds (Consolidated Edison Co.
of New York, Inc. Proj.), Ser. 1995
A, 6.10%, 8/15/20 A+ 7/1/05 @ 102 -- $ 496,840.00
2. $500,000 New York State Urban
Dev. Corp., Corr. Cap. Fac. Rev.
Bonds, Rfdg. Ser. 1993 A, 5.25%,
1/1/21 A(f) 1/1/04 @ 102 1/1/17 437,725.00
3. $500,000 Dormitory Auth. of the
State of New York, Dept. of Hlth.
of the State of New York, Rev.
Bonds, Ser. 1996, 5.50%, 7/1/25 A(f) 7/1/06 @ 102 7/1/18 447,020.00
4. $500,000 Dormitory Auth. of the
State of New York, Mental Hlth.
Svcs. Fac. Imp. Rev. Bonds, Ser.
1996 B, 5.375%, 2/15/26 A(f) 2/15/06 @ 102 2/15/22 438,260.00
5. $500,000 Dormitory Auth. of the
State of New York, State Univ.
Educl. Fac. Rev. Bonds, Ser. 1992
A, 6.375%, 5/15/14 A(f) 5/15/03 @ 102 5/15/10 504,145.00
6. $250,000 Dormitory Auth. of the
State of New York, Rev. Bonds,
Upstate Cmnty. Coll., Ser. 1994 A,
5.70%, 7/1/21 A(f) 7/1/04 @ 102 7/1/15 232,725.00
7. $500,000 34th Street
Partnership, Inc., NY, 34th Street
Bus. Imp. Dist., Cap. Imp. Bonds,
Ser. 1993, 5.50%, 1/1/23 A1(m) 1/1/03 @ 102 1/1/15 451,750.00
--------------
$ 3,008,465.00
--------------
--------------
</TABLE>
- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group unless followed by
('m'), which indicates a Moody's Investors Service rating or by ('f'), which
indicates a Fitch Investors Service rating. Moody's and Fitch ratings have been
furnished by the Evaluator but not confirmed with Moody's or Fitch. '++'
indicates that while there is no available rating, in the opinion of Defined
Asset Funds research analysts the bond has credit characteristics comparable to
bonds rated A or better (see Appendix A to Part B).
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, approximately 15% of the bonds were
deposited at a premium and 85% at a discount from par.
A-11
<PAGE>
- --------------------------------------------------------------------------------
New York Taxes and Risks
- --------------------------------------------------------------------------------
NEW YORK RISK FACTORS
The State of New York and several of its public authorities and
municipalities including, in particular, New York City, continue to face
financial difficulties. For many years, the State accumulated deficits by
extraordinary borrowing, which have been paid off by the issuance of long-term
bonds under legislation limiting future borrowing for deficits. In June 1995
(two months after the beginning of the 1996 fiscal year) it adopted a budget to
close a projected gap of approximately $5 billion, of which nearly $1 billion
represents non-recurring measures. A $445 million surplus was realized. On July
10, 1996, it was announced that agreement was finally reached on a $64 billion
budget to close a $3.9 billion budget gap for the 1997 fiscal year (that began
April 1), but implementing legislation has not been adopted. State general
obligation debt is rated A-by Standard & Poor's and A by Moody's; at March 31,
1995, approximately $5.2 billion face amount was outstanding. 18 State
authorities had an aggregate of $70.3 billion of debt outstanding at September
30, 1994, of which approximately $28 billion was State supported.
New York City implemented nearly $3.5 billion of gap-closing measures for
the 1995 fiscal year. The City finished its 1996 fiscal year with a small
surplus, after adopting measures to eliminate a projected $3.1 billion budget
gap. In June, the City adopted a budget to close a projected $2.7 billion budget
gap for the 1997 fiscal year (that began July 1, 1996) and proposes to borrow
$1.4 billion over the next four years for school repairs. The Mayor has since
asked his agencies to prepare for further budget cuts. One fiscal monitor
commented that, in spite of massive gap-closing efforts in the last few years,
City finances continue to deteriorate. Budget revisions rely heavily on
questionable assumptions and non-recurring measures, ($2 billion, $1.3 billion
and $1.2 billion, respectively, in the 1995-97 fiscal years), and spending is
projected to increase faster than revenue for the three years after fiscal 1997.
Budget gaps of $1.4 billion, $2.3 billion and $3.0 billion are projected for
fiscal years 1998-2000, respectively. The City's constitutional borrowing limit
will be approached in fiscal 1998 and debt service would reach nearly 20% of tax
revenues in fiscal 1999. The 1997 budget proposed to borrow $1.4 billion over
the next four years for school repairs. Also, the Mayor proposed to create an
Infrastructure Financing Authority to sell revenue bonds secured by City
personal income tax revenues to avoid being foreclosed from issuance of
additional debt. The proposal will need approval by the City Council and the
State Legislature. In late June 1996 an appeals panel upheld a lower court
ruling barring sale of the City's Water System without the City Comptroller's
approval. The sale would have reduced City debt by $1.3 billion and made $800
million available for other purposes. New York City bonds are rated BBB+ by
Standard & Poor's and Baa1 by Moody's. At December 31, 1995, approximately $24.4
billion of New York City bonds (excluding City debt held by The Municipal
Assistance Corporation for the City of New York (MAC)) and approximately $4.0
billion of MAC bonds and $1.1 billion of public benefit corporation debt were
outstanding. Other localities in the State had an aggregate of approximately
$17.7 billion of indebtedness outstanding in 1993. A report by Moody's concluded
25 cities in the State are facing significant fiscal problems.
For decades, the State's economy has grown more slowly than that of the rest
of the nation as a whole. This low growth rate has been attributed, in part, to
the combined State and New York City tax burden which is among the highest in
the U.S. Because their tax structures are particularly sensitive to economic
cycles, both the State and New York City are prone to substantial budget gaps
during periods of economic weakness. Each has suffered a decline in population
and in manufacturing jobs over many years, and has become particularly dependent
on the financial services industry. Unemployment rates, especially in New York
City, have been above the national average for several years.
Both the State and New York City suffer from long-term structural imbalances
between revenues and expenditures, which historically have been narrowed through
extensive use of non-recurring measures such as bond refinancings, depletion of
reserves, sales of assets, cost-cuts and layoffs. Except for property taxes,
changes in New York City revenue measures require State approval. The City is
also particularly subject to unanticipated increases in labor costs, resulting
primarily from expiring union contracts and overtime expense. Both the State and
New York City also face substantial replacement costs for infrastructure (such
as roads, bridges and other public facilities) which has suffered from reduced
maintenance expenditures during various economic declines.
Various municipalities and State and local authorities in New York
(particularly, the Metropolitan Transportation Authority) are dependent to
varying degrees on State and federal aid, and could be adversely affected by the
State's and federal government's actions to balance their budgets. The State's
dependence on federal aid and sensitivity to economic cycles, as well as high
levels of taxes and unemployment, may continue to make it difficult to balance
State and local budgets in the future.
A-12
<PAGE>
NEW YORK TAXES
In the opinion of Davis Polk & Wardwell, special counsel for the
Sponsors, under existing New York law:
Under the income tax laws of the State and City of New York, the Trust is
not an association taxable as a corporation and income received by the Trust
will be treated as the income of the investors in the same manner as for
federal income tax purposes. Accordingly, each investor will be considered
to have received the interest on his pro rata portion of each Bond when
interest on the Bond is received by the Trust. In the opinion of bond
counsel delivered on the date of issuance of the Bonds, such interest will
be exempt from New York State and City personal income taxes except where
such interest is subject to federal income taxes (see Taxes). A noncorporate
investor in Units of the Trust who is a New York State (and City) resident
will be subject to New York State (and City) personal income taxes on any
gain recognized when he disposes of all or part of his pro rata portion of a
Bond. A noncorporate investor who is not a New York State resident will not
be subject to New York State or City personal income taxes on any such gain
unless such Units are attributable to a business, trade, profession or
occupation carried on in New York. A New York State (and City) resident
should determine his tax basis for his pro rata portion of each Bond for New
York State (and City) income tax purposes in the same manner as for federal
income tax purposes. Interest income on, as well as any gain recognized on
the disposition of, an investor's pro rata portion of the Bonds is generally
not excludable from income in computing New York State and City corporate
franchise taxes.
A-13
<PAGE>
- --------------------------------------------------------------------------------
Defined Ohio Insured Trust
- --------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 7 Ohio bond issues.
TYPES OF BONDS
The Portfolio consists of $3,250,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Airports/Ports/Highways 15%
/ / General Obligation Bonds 15%
/ / Hospitals/Nursing Homes/Mental Health 39%
/ / Industrial Development Revenues 31%
INSURED AAA-RATED BONDS
As a result of insurance, the bonds are rated AAA by Standard & Poor's Ratings
group.
The approximate percentage of the aggregate face amount insured by each
insurance company is:
MBIA Insurance Corporation 70%
AMBAC Insurance Corporation 15%
Financial Guaranty Insurance
Company 15%
PORTFOLIO CONCENTRATIONS
The Portfolio is considered to be concentrated in Hospitals/Nursing Homes/Mental
Health bonds and Industrial Development Revenue bonds and is therefore dependent
to a significant degree on revenues generated from those particular activities.
(See Risk Factors in Part B.) The Portfolio is also concentrated in bonds of
Ohio issuers and is subject to additional risk from decreased diversification as
well as from factors that may be particular to Ohio, which are briefly described
on page A-16.
- ---------------------------------------------------
Defining Your Income
- ---------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(August 25, 1996): $ 4.25
Regular Monthly Income per unit
(Beginning on September 25, 1996): $ 4.40
Annual Income per unit: $52.82
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a % As a %
of Initial of
Offering Secondary
Period Market
Public Public
Offering Offering
Price Price
----------- -----------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------- -----------
Trustee's Fee .073% $ 0.69
Maximum Portfolio
Supervision and
Bookkeeping Fees .047% 0.45
Evaluator's Fee .042% 0.40
Organizational Costs .021% 0.20
Other Operating
Expenses .087% 0.83
----------- -----------
TOTAL .270% $ 2.57
- ------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$48 $53 $60 $78
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of July 10, 1996, the Public Offering Price was $999.58, based on the
aggregate offer side value of the bonds ($3,102,435.00), plus a maximum sales
charge of 4.712% on the value of the underlying bonds, plus cash ($31,000.00),
divided by the number of units outstanding (3,281). An amount equal to principal
cash, if any, as well as net accrued but undistributed interest on the unit is
added to the Public Offering Price. Sponsors' profit on deposit was $41,837.50.
The bid side redemption and secondary market repurchase price as of July 10,
1996 was $951.06 ($48.52 less than the Public Offering Price).
A-14
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined Ohio Insured Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--210
Ohio Insured Trust July 11, 1996
OPTIONAL SINKING
RATING REFUNDING FUND
OF ISSUES REDEMPTIONS REDEMPTIONS COST
PORTFOLIO TITLE (1) (2) (2) TO FUND (3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $500,000 State of Ohio, Tpke.
Rev. Bonds, Ohio Tpke. Comm., Ser.
1996 A (MBIA Ins.), 5.50%, 2/15/26 AAA 2/15/06 @102 2/15/18 $ 472,130.00
2. $500,000 Ohio Air Quality Dev.
Auth., Poll. Ctl. Rev. Rfdg. Bonds
(Ohio Edison Co. Proj.), Ser. 1993
A (AMBAC Ins.), 5.625%, 11/15/29 AAA 11/15/03 @ 102 -- 480,000.00
3. $500,000 Ohio Air Quality Dev.
Auth., Poll. Ctl. Rev. Rfdg. Bonds
(The Cincinnati Gas & Elec. Co.
Proj.), Ser. 1994 B (MBIA Ins.),
5.45%, 1/1/24 AAA 1/1/04 @ 102 -- 469,570.00
4. $250,000 County of Mahoning, OH,
Hosp. Imp. Rev. Bonds (Western
Reserve Care Sys. Proj.), Ser. 1995
(MBIA Ins.), 5.50%, 10/15/25 (4) AAA 10/15/05 @ 102 10/15/16 234,465.00
5. $500,000 County of Cuyahoga, OH,
Hosp. Rfdg. Rev. Bonds (Univ. Hosp.
Hlth. Sys., Inc. Proj.), Ser. 1996
B (MBIA Ins.), 5.625%, 1/15/26 AAA 1/15/06 @ 102 1/15/22 477,520.00
6. $500,000 County of Montgomery,
OH, Hosp. Fac. Rev. Rfdg. and Imp.
Bonds (Kettering Med. Ctr.), Ser.
1996 (MBIA Ins.), 5.50%, 4/1/26 AAA 4/1/06 @ 102 4/1/17 468,750.00
7. $500,000 Twinsburg City Sch.
Dist., OH, Sch. Imp. Bonds (General
Oblig. Unltd. Tax) (Financial
Guaranty Ins.), 5.90%, 12/1/21 AAA 12/1/06 @ 102 12/1/17 500,000.00
--------------
$ 3,102,435.00
--------------
--------------
</TABLE>
- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group (see Appendix A to Part
B).
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, approximately 15% of the bonds were
deposited at par and 85% at a discount from par.
(4) This bond is a when-issued bond and is expected to settle 1 day after the
settlement date for Units. The Trustee's fees and expenses will be reduced by
$0.01 per unit to compensate for interest that would have accrued on the bonds
between the settlement date for Units and the actual date of delivery of the
bonds. (See Income, Distributions and Reinvestment--Income in Part B.)
A-15
<PAGE>
- --------------------------------------------------------------------------------
Ohio Taxes and Risks
- --------------------------------------------------------------------------------
OHIO RISK FACTORS
Economic activity in Ohio, as in many other industrially developed states,
tends to be more cyclical than in some other states and in the nation as a
whole. Although manufacturing (including auto-related manufacturing) remains an
important part of Ohio's economy, the greatest growth in employment in Ohio in
recent years, consistent with national trends, has been in the non-manufacturing
area. Agriculture and the related agriculture sectors, however, remain a very
important segment of the economy in Ohio.
The general revenue fund ('GRF') appropriations act for the 1994-1995
biennium provided for total GRF biennial expenditures of approximately $30.7
billion. The GRF balance was approximately $928 million at the end of the
1994-95 biennium. The GRF appropriations for the current biennium provide for
total GRF biennial expenditures of approximately $33.5 billion.
Because the schedule of general revenue fund cash receipts and disbursements
do not precisely coincide, temporary general revenue fund cash flow deficiencies
often occur in some months of a fiscal year. Statutory provisions provide for
effective management of these temporary cash flow deficiencies by permitting
adjustment of payment schedules and the use of total operating funds.
At various times, Ohio voters have authorized the incurrence of State debt
to which taxes or excises are pledged for payment.
The Ohio public and joint vocational school districts receive a major
portion of their operating funds from State subsidy appropriations and receipts
from locally-voted taxes. Litigation alleging that the Ohio system of school
funding violates various provisions of the Ohio Constitution is currently
pending on appeal. It is not possible at this time to state whether the suit
will be successful or, if plaintiffs should prevail, the effect on the State's
present school funding system, including the amount of and criteria for State
basic aid allocations to school districts.
Various Ohio municipalities have experienced fiscal difficulties and the
State established an act in 1979 to identify and assist cities and villages
experiencing defined 'fiscal emergencies'.
General obligation bonds of the State of Ohio are currently rated Aa by
Moody's and AA by Standard & Poor's, except that highway bonds of the State of
Ohio are currently rated AAA by Standard & Poor's. These ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of,
information.
OHIO TAXES
In the opinion of Vorys, Sater, Seymour and Pease, Columbus, Ohio, special
counsel on Ohio tax matters and subject to the assumptions and qualifications
contained in such opinion, under existing Ohio law:
The Ohio Trust is not an association subject to the Ohio corporation
franchise tax or the Ohio tax on dealers in intangibles and the Trustees will
not be subject to the Ohio personal income tax.
In calculating an investor's Ohio personal income tax or Ohio corporation
franchise tax, an investor will not be required to include in the investor's
'adjusted gross income' or 'net income', as the case may be, the investor's
share of interest received by or distributed from the Ohio Trust on any Bond in
the Ohio Trust, the interest on which is exempt from Ohio personal income or
corporation franchise taxes, as the case may be.
In calculating an investor's Ohio personal income tax or Ohio corporation
franchise tax, an investor will be required to include in the investor's
'adjusted gross income' or 'net income', as the case may be, capital gains and
losses which the investor must recognize for Federal income tax purposes (upon
the sale or other disposition of Units by the investor or upon the sale or other
disposition of Bonds by the Ohio Trust), except gains and losses attributable to
Bonds specifically exempted from such taxation by the Ohio law authorizing their
issuance. An investor subject to the Ohio corporation franchise tax may, in the
alternative if it results in a larger amount of tax payable, be taxed upon its
net worth and, for this purpose, is required to include in its net worth the
full value, as shown on the books of the corporation, of all Units which it
owns.
For purposes of Ohio municipal income taxation, the investor's share of
interest received by or distributed from the Ohio Trust on Bonds or gains
realized by the investor from the sale, exchange or other disposition of Units
by the investor or from the sale, exchange or other disposition of Bonds by the
Ohio Trust, as a result of the repeal of the
A-16
<PAGE>
Ohio tax on intangible personal property, might be required to be included in an
investor's taxable income for municipal income tax purposes in Ohio if (1) such
interest or gain is not exempt from Ohio municipal income taxes by virtue of a
specific statutory or constitutional exemption from such taxes (regarding which
no blanket opinion is being given), and (2) the Ohio municipality in which the
investor resides was taxing such income on or before April 1, 1986, and such tax
was submitted to and approved by the voters of such municipality in an election
held on November 8, 1988.
Assuming that the Ohio Trust will not hold any tangible personal property
nor any real property, neither Bonds held by the Ohio Trust nor Units of the
Ohio Trust held by individuals are subject to any property tax levied by the
State of Ohio or any political subdivision thereof. Units of the Ohio Trust held
by individuals may be subject to Ohio estate taxes.
A-17
<PAGE>
- --------------------------------------------------------------------------------
Defined Texas Insured Trust
- --------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 7 Texas bond issues.
TYPES OF BONDS
The Portfolio consists of $3,250,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Convention Centers 15%
/ / General Obligations 15%
/ / Hospitals/Nursing Homes/Mental Health 15%
/ / Industrial Development Revenues 24%
/ / Municipal Water/Sewer Utilities 31%
INSURED AAA-RATED BONDS
As a result of insurance, the bonds are rated AAA by Standard & Poor's Ratings
group.
The approximate percentage of the aggregate face amount insured by each
insurance company is:
MBIA Insurance Corporation 62%
AMBAC Insurance Corporation 23%
Financial Guaranty Insurance
Company 15%
PORTFOLIO CONCENTRATIONS
The Portfolio is concentrated in Municipal Water/Sewer Utility bonds and is
therefore dependent to a significant degree on revenues generated from those
particular activities. (See Risk Factors in Part B.) The Portfolio is also
concentrated in bonds of Texas issuers and is subject to additional risk from
decreased diversification as well as from factors that may be particular to
Texas, which are briefly described on page A-20.
- ---------------------------------------------------
Defining Your Income
- ---------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(August 25, 1996): $ 4.47
Regular Monthly Income per unit
(Beginning on September 25, 1996): $ 4.63
Annual Income per unit: $55.56
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a % As a %
of Initial of
Offering Secondary
Period Market
Public Public
Offering Offering
Price Price
----------- -----------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------- -----------
Trustee's Fee .071% $ 0.69
Maximum Portfolio
Supervision and
Bookkeeping Fees .045% 0.45
Evaluator's Fee .041% 0.40
Organizational Costs .021% 0.20
Other Operating
Expenses .085% 0.83
----------- -----------
TOTAL .263% $ 2.57
- ------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$48 $53 $59 $77
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of July 10, 1996, the Public Offering Price was $1,023.83, based on the
aggregate offer side value of the bonds ($3,178,455.00), plus a maximum sales
charge of 4.712% on the value of the underlying bonds, plus cash ($33,000.00),
divided by the number of units outstanding (3,283). An amount equal to principal
cash, if any, as well as net accrued but undistributed interest on the unit is
added to the Public Offering Price. Sponsors' profit on deposit was $37,490.00.
The bid side redemption and secondary market repurchase price as of July 10,
1996 was $974.25 ($49.58 less than the Public Offering Price).
A-18
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined Texas Insured Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--210
Texas Insured Trust July 11, 1996
OPTIONAL SINKING
RATING REFUNDING FUND
OF ISSUES REDEMPTIONS REDEMPTIONS COST
PORTFOLIO TITLE (1) (2) (2) TO FUND (3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $500,000 Colorado River Mun.
Wtr. Dist., TX, Wtr. Sys. Rev.
Rfdg. Bonds, Ser. 1993 (AMBAC
Ins.), 5.15%, 1/1/21 AAA 1/1/03 @ 100 1/1/14 $ 445,820.00
2. $500,000 City of Euless, TX, Tax
and Golf Course Surplus Rev. Certs.
of Oblig., Ser. 1995 (MBIA Ins.),
5.90%, 9/15/27 AAA 9/15/06 @ 100 9/15/21 492,935.00
3. $500,000 City of Houston, TX,
Wtr. and Swr. Sys. Jr. Lien Rev.
Rfdg. Bonds, Ser. 1995 A (MBIA
Ins.), 6.20%, 12/1/23 AAA 12/1/05 @ 100 12/1/21 507,060.00
4. $500,000 Sabine River Auth. of
TX, Poll. Ctl. Rev. Rfdg. Bonds
(Southwestern Elec. Pwr. Co.
Proj.), Ser. 1996 (MBIA Ins.),
6.10%, 4/1/18 AAA 4/1/06 @ 102 -- 504,110.00
5. $500,000 City of San Antonio,
TX, Hotel Occup. Tax Rev. Bonds,
(Henry B. Gonzalez Conv. Ctr.
Expansion Proj.), Ser. 1996
(Financial Guaranty Ins.), 5.70%,
8/15/26 AAA 8/15/06 @ 102 8/15/20 479,185.00
6. $250,000 Brazos River Auth., TX,
Collateralized Poll. Ctl. Rev.
Rfdg. Bonds (Texas Util. Elec. Co.
Proj.), Ser. 1993 A (AMBAC Ins.),
5.50%, 5/1/22 AAA 11/1/03 @ 102 -- 235,230.00
7. $500,000 Harris Cnty., TX, Hlth.
Fac. Dev. Corp. Hosp. Rev. Bonds
(Hermann Hospital), Ser. 1994 (MBIA
Ins.), 6.375%, 10/1/24 AAA 10/1/04 @ 101 10/1/18 514,115.00
--------------
$ 3,178,455.00
--------------
--------------
</TABLE>
- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group (see Appendix A to Part
B).
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, approximately 46% of the bonds were
deposited at a premium and 54% at a discount from par.
A-19
<PAGE>
- --------------------------------------------------------------------------------
Texas Taxes and Risks
- --------------------------------------------------------------------------------
TEXAS RISK FACTORS
Although the Texas economy performed well in 1995, the state economy faces a
number of challenges. In 1994, trade with Mexico and Latin America and exports
were an important component of the economy of Texas, accounting during the past
few years for approximately $60 billion of the state's gross state product. The
financial crisis in Mexico during the last few years has placed that segment of
the Texas economy at risk, and has also adversely affected retail trade in the
Texas-Mexico border region. One governmental estimate suggests that the Mexican
crisis could lead to a one-half of one percent reduction in the forecasted
growth in the Texas economy for the 1996-1997 fiscal biennium in Texas. In
addition, the recent decisions relating to military base closures made in the
recent past included a decision to close Kelly Air Force Base in San Antonio,
Texas, which is a major employer of civilians in the metropolitan San Antonio
area. State and local officials have been concerned that this closure could
result in the loss of 13,000 jobs in the area and would affect the Hispanic
population of the area disproportionately. Military bases in three other
communities in Texas will be adversely affected by the decisions of the base
closure commission.
Texas' population growth has recently exceeded job growth, and Texas has the
highest poverty rate among the ten most populace states. Consequently, the Texas
state government faces challenges as demands for state services increase and the
spending of state funds is required by court orders, federal mandates and
growing social services caseloads. Developments in national health and human
services policy could effect the Texas economy significantly. Approximately
one-third of the Texas state government's expenditures in recent years have been
made in the area of health and human services, and Texas has received
substantial amounts of federal funds to pay for such services in part.
Legislation has been considered by the United States Congress recently that
proposed to modify the manner in which federal funding is allocated to the
states, including through the use of block grants. If that legislation were
adopted, it could have a negative effect on the federal funding of Texas' social
assistance programs. It is estimated by state officials that one formula
contained in legislation under consideration by the United States Congress would
result in the loss of over $800 million in federal funding over the next fiscal
biennium. In fiscal 1995, the Texas state government's expenditures exceeded its
net revenues for the first time in many years. Although Texas continued to
maintain cash surplus in the state treasury that state treasury official believe
to be adequate to meet the state's spending requirements despite this budgetary
shortfall, there is no assurance that it can continue to operate on such a basis
if increased responsibility for funding health and human services is placed on
the states by the federal government.
Property tax revenues are a major source of funding for public education in
Texas. The method for funding public education in Texas has undergone material
changes over the last six years and has been the subject of rancorous litigation
during that period. In response to challenges to prior laws relating to the
funding of public education in Texas, the Texas legislature adopted new
legislation in 1993 that attempts to reduce the disparity of revenues per
student between low-wealth school districts and high-wealth school districts by
causing high-wealth school districts to share their ad valorem tax revenues with
low-wealth school districts. In January 1995, the Texas Supreme Court affirmed
the constitutionality of this legisltion. There is no assurance that further
challenges to this method of funding public education will not be mounted in
Texas.
Texas' general obligation bonds are rated AA by Standard & Poor's and Aa by
Moody's.
During the first half of 1996, Texas experienced a severe drought in many
parts of the State. Such drought has led to substantial crop losses and other
economic hardships for the state's farmers and ranchers. The full effect of the
drought on the Texas economy was not known at the date hereof.
TEXAS TAXES
In the opinion of Hughes & Luce, L.L.P., Dallas, Texas, special counsel
on Texas tax matters, under Texas law existing on December 31, 1995,
applicable to individuals who are residents of Texas for state tax purposes:
1. The Texas franchise tax functions as an income tax in certain
respects, and is imposed on corportions, limited liability companies and
certain banks, limited banking associations and savings and loan
associtions. Assuming that the Texas Trust is not a corporation, limited
liability company, bank, limited banking association or savings and loan
association (in each case for Texas franchise tax purposes), the income of
the Texas Trust will not be subject to an income tax levied by the State of
Texas or any political subdivision thereof.
2. The income derived from the Texas Trust by the Holders who are
individuals will not be subject to any income tax levied by the State of
Texas or any political subdivision thereof.
3. Assuming that the Texas Trust will not hold any tangible property,
neither Debt Obligations held by the Texas Trust nor Units of the Texas
Trust held by individuals are subject to any property tax levied by the
State of Texas or any political subdivision thereof,
4. Units of the Texas Trust held by individuals may be subject to Texas
inheritance taxes.
Neither the Sponsors, Davis Polk & Wardwell nor Hughes & Luce, L.L.P.
(except in such cases as Hughes & Luce, L.L.P., has acted or will act as counsel
to such issuing authorities), has made or will make any review of the
proceedings relating to the issuance of the Debt Obligations nor has Hughes &
Luce, L.L.P., made any review of the proceedings relating to the issuance of the
Units.
A-20
<PAGE>
- --------------------------------------------------------------------------------
Defined Virginia Trust
- --------------------------------------------------------------------------------
PORTFOLIO DIVERSIFICATION
The Portfolio contains 6 Virginia bond issues and 1 Puerto Rico bond issue.
TYPES OF BONDS
The Portfolio consists of $3,250,000 face amount of municipal bonds of the
following types:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / General Obligation 8%
/ / Housing 15%
/ / Municipal Water/Sewer Utilities 31%
/ / Lease Rental Appropriation 15%
/ / Hospitals/Nursing Homes/Mental Health 31%
INSURANCE
Approximately 15% of the bonds are insured (see Risk Factors--Bonds Backed by
Letters of Credit or Insurance in Part B).
PORTFOLIO CONCENTRATIONS
The Portfolio is concentrated in Municipal Water/Sewer Utility bonds and
Hospitals/Nursing Homes/Mental Health bonds and is therefore dependent to a
significant degree on revenues generated from those particular activities. (See
Risk Factors in Part B.) The Portfolio is also concentrated in bonds of Virginia
issuers and is subject to additional risk from decreased diversification as well
as from factors that may be particular to Virginia, which are briefly described
on page A-23.
- ---------------------------------------------------
Defining Your Income
- ---------------------------------------------------
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
First Distribution per unit
(August 25, 1996): $ 4.42
Regular Monthly Income per unit
(Beginning on September 25, 1996): $ 4.57
Annual Income per unit: $54.92
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
SALES CHARGE
Although the Trust is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a % As a %
of Initial of
Offering Secondary
Period Market
Public Public
Offering Offering
Price Price
----------- -----------
Maximum Sales Charges 4.50% 5.50%
The Trust (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------- -----------
Trustee's Fee .072% $ 0.69
Maximum Portfolio
Supervision and
Bookkeeping Fees .046% 0.45
Evaluator's Fee .041% 0.40
Organizational Costs .021% 0.20
Other Operating
Expenses .086% 0.83
----------- -----------
TOTAL .266% $ 2.57
- ------------
* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods:
1 Year 3 Years 5 Years 10 Years
$48 $53 $59 $77
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
As of July 10, 1996, the Public Offering Price was $1,016.00, based on the
aggregate offer side value of the bonds ($3,153,847.50), plus a maximum sales
charge of 4.712% on the value of the underlying bonds, plus cash ($28,000.00),
divided by the number of units outstanding (3,278). An amount equal to principal
cash, if any, as well as net accrued but undistributed interest on the unit is
added to the Public Offering Price. Sponsors' profit on deposit was $45,251.50.
The bid side redemption and secondary market repurchase price as of July 10,
1996 was $966.70 ($49.30 less than the Public Offering Price).
A-21
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined Virginia Portfolio
- --------------------------------------------------------------------------------
Municipal Investment Trust Fund
Multistate Series--210
Virginia Trust July 11, 1996
OPTIONAL SINKING
RATING REFUNDING FUND
OF ISSUES REDEMPTIONS REDEMPTIONS COST
PORTFOLIO TITLE (1) (2) (2) TO FUND (3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $500,000 Virginia Hsg. Dev.
Auth., Commonwealth Mtge. Bonds,
Ser. 1996 C, Subseries C-2, 6.125%,
7/1/13 (4) AA+ 7/1/06 @ 102 -- $ 502,500.00
2. $500,000 Industrial Dev. Auth.
of Albemarle Cnty., VA, Hosp. Rfdg.
Rev. Bonds (Martha Jefferson
Hosp.), Ser. 1993, 5.50%, 10/1/20 A(m) 10/1/03 @ 102 10/1/16 459,285.00
3. $500,000 Fairfax Cnty., VA,
Sewer Rev. Bonds, Ser. 1996 (MBIA
Ins.), 5.875%, 7/15/28 (4) 7/15/06 @ 102 7/15/22 494,655.00
4. $500,000 Fairfax Cnty. Econ.
Dev. Auth., VA, Lease Rev.
Bonds (Govt. Ctr. Prop.), Ser.
1994, 5.50%, 5/15/18 AA 5/15/04 @ 102 5/15/15 472,645.00
5. $500,000 Industrial Dev. Auth.
of Fairfax Cnty., VA, Hlth. Care
Rev. Bonds (Inova Hlth. Sys.
Proj.), Ser. 1996 A, 6.00%, 8/15/26 AA 8/15/06 @ 102 8/15/17 493,110.00
6. $500,000 Fairfax Cnty. Water
Auth., VA, Water Rfdg. Rev. Bonds,
Ser. 1992, 6.00%, 4/1/22 Aa(m) 4/1/07 @ 102 4/1/15 502,150.00
7. $250,000 Commonwealth of Puerto
Rico, Pub. Imp. Bonds (G.O. Bonds),
5.40%, 7/1/25 A 7/1/06 @ 101.5 7/1/18 229,502.50
--------------
$ 3,153,847.50
--------------
--------------
</TABLE>
- ----------------------------
(1) All ratings are by Standard & Poor's Ratings Group unless followed by
('m'), which indicates a Moody's Investors Service rating or by ('f'), which
indicates a Fitch Investors Service rating. Moody's and Fitch ratings have been
furnished by the Evaluator but not confirmed with Moody's or Fitch. '++'
indicates that while there is no available rating, in the opinion of Defined
Asset Funds research analysts the bond has credit characteristics comparable to
bonds rated A or better. (see Appendix A to Part B).
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, approximately 31% of the bonds were
deposited at a premium and 69% at a discount from par.
(4) These bonds are when-issued bonds that are expected to settle 8 to 44 days
after the settlement date for units. The Trustee's fees and expenses will be
reduced by $0.69 per unit for the first year and $0.62 per unit for the second
year to compensate for interest that would have accrued on the bonds between the
settlement date for units and the actual date of delivery of the bonds. (See
Income, Distributions and Reinvestment--Income in Part B.)
A-22
<PAGE>
- --------------------------------------------------------------------------------
Virginia Taxes and Risks
- --------------------------------------------------------------------------------
VIRGINIA RISK FACTORS
The economy of the Commonwealth of Virginia is significantly dependent on
defense spending, with major concentrations of defense installations in both
Northern Virginia and the Hampton Roads area. Any substantial reductions in
military spending generally or in particular areas, including base closings,
could adversely affect the state and local economies.
Until 1989, Virginia taxed retirement benefits paid by the federal
government while exempting retirement benefits paid by the state or local
governments. In 1989, a substantially identical Michigan income tax scheme was
held unconstitutional by the United States Supreme Court. Several suits against
the Commonwealth for refunds were filed by federal pensioners after the decision
in the Michigan case. These suits have been settled through legislation and
through compliance by the Commonwealth with a judgment of the Virginia Supreme
Court ordering refunds with interest to pensioners who opted out of the
legislative settlement.
General obligation bonds of the Commonwealth of Virginia are currently rated
AAA by Standard & Poor's and Aaa by Moody's.
VIRGINIA TAXES
In the opinion of Hunton & Williams, Richmond, Virginia, special counsel on
Virginia tax matters, under existing Virginia law and assuming that the Virginia
Trust is a grantor trust under the grantor trust rules of Sections 671-679 of
the Code:
1. The Virginia Trust will be taxable as a grantor trust for Virginia
income tax purposes with the result that income of the Virginia Trust will
be treated as income of the Holders of Units of the Virginia Trust.
Consequently, the Virginia Trust will not be subject to any income or
corporate franchise tax imposed by the Commonwealth of Virginia, or its
subdivisions, agencies or instrumentalities.
2. Interest on the Debt Obligations in the Virginia Trust that is exempt
from Virginia income tax when received by the Virginia Trust will retain its
tax-exempt status in the hands of the Holders of Units of the Virginia
Trust.
3. A Holder of Units of the Virginia Trust will realize a taxable event
when the Virginia Trust disposes of a Debt Obligation (whether by sale,
exchange, redemption or payment at maturity) or when the Holder of Units
redeems or sells his Units, and taxable gain for Federal income tax purposes
may result in taxable gain for Virginia income tax purposes. Certain Debt
Obligations, however, have been issued under Acts of the Virginia General
Assembly that provide that all income from such Debt Obligations, including
any profit from the sale thereof, shall be free from all taxation by the
Commonwealth of Virginia. To the extent any such profit is exempt from
Virginia income tax, any such profit received by the Virginia Trust will
retain its tax exempt status in the hands of the Holders of Units of the
Virginia Trust.
4. The Virginia Trust will not be subject to any intangible personal
property tax in Virginia on any Debt Obligations in the Virginia Trust. In
addition, Units of the Virginia Trust held for investment purposes will not
be subject to any intangible personal property tax in Virginia.
5. The Units may be subject to Virginia estate tax if held by a Virginia
resident or, in certain cases, by an individual who at the time of his death
was not a resident of the United States.
A-23
<PAGE>
<TABLE><CAPTION>
STATEMENTS OF CONDITION AS OF JULY 11, 1996
TRUST PROPERTY
ARIZONA CALIFORNIA NEW YORK
TRUST TRUST TRUST
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Investments--Bonds and Contracts to purchase Bonds(1) $ 3,078,905.50 $ 3,986,699.80 $ 3,008,465.00
Cash 30,000.00 37,000.00 32,000.00
Accrued interest to initial date of deposit on underlying
Bonds 19,382.64 33,386.18 29,685.41
Organizational Costs(2) 3,280.00 4,037.00 3,282.00
-------------------- -------------------- --------------------
Total $ 3,131,568.14 $ 4,061,122.98 $ 3,073,432.41
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by the Trustee for accrued
interest(3) $ 19,382.64 $ 33,386.18 $ 29,685.41
Accrued Liability(2) 3,280.00 4,037.00 3,282.00
-------------------- -------------------- --------------------
Subtotal 22,662.64 37,423.18 32,967.41
-------------------- -------------------- --------------------
Interest of Holders of units of fractional undivided
interest outstanding
(Arizona Trust--3,280; California Trust--4,037; New
York Trust--
3,282)
Cost to investors(4) 3,253,979.90 4,189,822.35 3,182,214.58
Gross underwriting commissions(5) (145,074.40) (166,122.55) (141,749.58)
-------------------- -------------------- --------------------
Subtotal 3,108,905.50 4,023,699.80 3,040,465.00
-------------------- -------------------- --------------------
Total $ 3,131,568.14 $ 4,061,122.98 $ 3,073,432.41
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
</TABLE>
- ------------
(1) Aggregate cost to the Fund of the bonds listed under each Defined
Portfolio is based upon the offer side evaluation determined by the Evaluator at
the evaluation time on the business day prior to the initial date of deposit.
The contracts to purchase the bonds are collateralized by an irrevocable letter
of credit which has been issued by San Paolo Bank, New York Branch, in the
amount of $15,681,135.94 deposited with the Trustee. The amount of the letter of
credit includes $15,529,665.80 for the purchase of $16,350,000 face amount of
the bonds, plus $151,470.14 for accrued interest.
(2) This represents a portion of the Trust's organizational costs, which
will be deferred and amortized over five years.
(3) Representing a special distribution to the Sponsors by the Trustee
of an amount equal to the accrued interest on the bonds as of the initial date
of deposit.
A-24
<PAGE>
<TABLE><CAPTION>
STATEMENTS OF CONDITION AS OF JULY 11, 1996
TRUST PROPERTY
OHIO TEXAS VIRGINIA
TRUST TRUST TRUST
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Investments--Bonds and Contracts to purchase Bonds(1) $ 3,102,435.00 $ 3,178,455.00 $ 3,153,847.50
Cash 31,000.00 33,000.00 28,000.00
Accrued interest to initial date of deposit on underlying
Bonds 33,909.71 37,687.51 32,894.11
Organizational Costs(2) 3,281.00 3,283.00 3,278.00
-------------------- -------------------- --------------------
Total $ 3,170,625.71 $ 3,252,425.51 $ 3,218,019.61
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by the Trustee for accrued
interest(3) $ 33,909.71 $ 37,687.51 $ 32,894.11
Accrued Liability(2) 3,281.00 3,283.00 3,278.00
-------------------- -------------------- --------------------
Subtotal 37,190.71 40,970.51 36,172.11
-------------------- -------------------- --------------------
Interest of Holders of units of fractional undivided
interest outstanding
(Ohio Trust--3,281; Texas Trust--3,283; Virginia
Trust--3,278)
Cost to investors(4) 3,279,636.36 3,361,225.46 3,330,439.24
Gross underwriting commissions(5) (146,201.36) (149,770.46) (148,591.74)
-------------------- -------------------- --------------------
Subtotal 3,133,435.00 3,211,455.00 3,181,847.50
-------------------- -------------------- --------------------
Total $ 3,170,625.71 $ 3,252,425.51 $ 3,218,019.61
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
</TABLE>
- ------------
(4) Aggregate public offering price (exclusive of interest) computed on
the basis of the offer side evaluation of the underlying bonds as of the
evaluation time on the business day prior to the Initial Date of Deposit (3:30
p.m., Eastern time).
(5) Assumes the maximum sales charge of 4.00% of the Public Offering
Price (4.167% of the value of the bonds) for the California Trust and 4.50% of
the Public Offering Price (4.712% of the value of the bonds) for the remaining
Trusts.
A-25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Municipal Investment Trust Fund, Multistate
Series--210, Defined Asset Funds (Arizona, California, New York, Ohio, Texas and
Virginia Trusts) (the 'Trusts'):
We have audited the accompanying statements of condition and the related defined
portfolios included in the prospectus of the Trusts as of July 11, 1996. These
financial statements are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash, securities and an irrevocable letter of credit deposited
for the purchase of securities, as described in the statements of condition,
with the Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by the Trustee, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the Trusts as of July
11, 1996 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
July 11, 1996
A-26
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR ARIZONA RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1996* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 24,000 $ 0- 40,100 17.98 4.88 5.49 6.10 6.71 7.31 7.92 8.53 9.14 9.75
$ 40,100- 96,900 31.02 5.80 6.52 7.25 7.97 8.70 9.42 10.15 10.87 11.60
$ 24,000- 58,150 31.74 5.86 6.59 7.33 8.06 8.79 9.52 10.26 10.99 11.72
$ 58,150-121,300 $ 96,900-147,700 34.59 6.12 6.88 7.64 8.41 9.17 9.94 10.70 11.47 12.23
$ 147,700-263,750 39.33 6.59 7.42 8.24 9.07 9.89 10.71 11.54 12.36 13.19
$ 121,300-263,750 39.58 6.62 7.45 8.28 9.10 9.93 10.76 11.59 12.41 13.24
OVER $263,750 OVER $263,750 42.98 7.02 7.89 8.77 9.65 10.52 11.40 12.28 13.15 14.03
<CAPTION>
FOR CALIFORNIA RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1996* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 24,000 $ 0- 40,100 20.10 5.01 5.63 6.26 6.88 7.51 8.14 8.76 9.39 10.01
$ 24,000- 58,150 $ 40,100- 96,900 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72 11.48 12.25
$ 58,150-121,300 $ 96,900-147,700 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19 11.98 12.78
$ 121,300-263,750 $ 147,700-263,750 41.95 6.89 7.75 8.61 9.47 10.34 11.20 12.06 12.92 13.78
OVER $263,750 OVER $263,750 45.22 7.30 8.21 9.13 10.04 10.95 11.87 12.78 13.69 14.60
<CAPTION>
FOR NEW YORK RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1996* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 24,000 $ 0- 40,100 24.22 5.28 5.94 6.60 7.26 7.92 8.58 9.24 9.90 10.56
$ 24,000- 58,150 $ 40,100- 96,900 35.82 6.23 7.01 7.79 8.57 9.35 10.13 10.91 11.69 12.46
$ 58,150-121,300 $ 96,900-147,700 38.53 6.51 7.32 8.13 8.95 9.76 10.57 11.39 12.20 13.01
$ 121,300-263,750 $ 147,700-263,750 42.98 7.02 7.89 8.77 9.65 10.52 11.40 12.28 13.15 14.03
OVER $263,750 OVER $263,750 46.19 7.43 8.36 9.29 10.22 11.15 12.08 13.01 13.94 14.87
<CAPTION>
FOR NEW YORK STATE RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1996* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 24,000 $ 0- 40,100 20.95 5.06 5.69 6.33 6.96 7.59 8.22 8.86 9.49 10.12
$ 24,000- 58,150 $ 40,100- 96,900 33.04 5.97 6.72 7.47 8.21 8.96 9.71 10.45 11.20 11.95
$ 58,150-121,300 $ 96,900-147,700 35.83 6.23 7.01 7.79 8.57 9.35 10.13 10.91 11.69 12.47
$ 121,300-263,750 $ 147,700-263,750 40.48 6.72 7.56 8.40 9.24 10.08 10.92 11.76 12.60 13.44
OVER $263,750 OVER $263,750 43.83 7.12 8.01 8.90 9.79 10.68 11.57 12.46 13.35 14.24
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. Yield figures are for
example only. The table incorporates 1996 federal and applicable State (and
City) income tax rates and assumes that all income would otherwise be taxed at
the investor's highest tax rate. Yield figures are for example only.
*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, investors are urged to consult their own tax advisers
in this regard.
A-27
<PAGE>
<TABLE><CAPTION>
- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR OHIO RESIDENTS
- --------------------------------------------------------------------------------
COM-
BINED
EFFECTIVE
TAXABLE INCOME 1996* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 40,100 19.42 4.96 5.58 6.21 6.83 7.45 8.07 8.69 9.31 9.93
$ 0- 24,000 18.79 4.93 5.54 6.16 6.77 7.39 8.00 8.62 9.24 9.85
$ 40,100- 96,900 32.28 5.91 6.64 7.38 8.12 8.86 9.60 10.34 11.07 11.81
$ 24,000- 58,150 31.74 5.86 6.59 7.33 8.06 8.79 9.52 10.26 10.99 11.72
$ 58,150-121,300 $ 96,900-147,700 35.76 6.23 7.01 7.78 8.56 9.34 10.12 10.90 11.68 12.45
$ 121,300-263,750 $ 147,700-263,750 40.80 6.76 7.60 8.45 9.29 10.14 10.98 11.82 12.67 13.51
OVER $263,750 OVER $263,750 44.13 7.16 8.05 8.95 9.84 10.74 11.63 12.53 13.42 14.32
<CAPTION>
FOR TEXAS RESIDENTS
- --------------------------------------------------------------------------------
EFFECTIVE
TAXABLE INCOME 1996* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 24,000 $ 0- 40,100 15.00 4.71 5.29 5.88 6.47 7.06 7.65 8.24 8.82 9.41
$ 24,000- 58,150 $ 40,100- 96,900 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72 10.42 11.11
$ 58,150-121,300 $ 96,900-147,700 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14 10.87 11.59
$ 121,300-263,750 $ 147,700-263,750 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94 11.72 12.50
OVER $263,750 OVER $263,750 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59 12.42 13.25
<CAPTION>
FOR VIRGINIA RESIDENTS
- --------------------------------------------------------------------------------
COMBINED
EFFECTIVE
TAXABLE INCOME 1996* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 24,000 $ 0- 40,100 19.89 4.99 5.62 6.24 6.87 7.49 8.11 8.74 9.36 9.99
$ 24,000- 58,150 $ 40,100- 96,900 32.14 5.89 6.63 7.37 8.10 8.84 9.58 10.32 11.05 11.79
$ 58,150-121,300 $ 96,900-147,700 34.97 6.15 6.92 7.69 8.46 9.23 10.00 10.76 11.53 12.30
$ 121,300-263,750 $ 147,700-263,750 39.68 6.63 7.46 8.29 9.12 9.95 10.78 11.60 12.43 13.26
OVER $263,750 OVER $263,750 43.07 7.03 7.90 8.78 9.66 10.54 11.42 12.30 13.17 14.05
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. Yield figures are for
example only. The table incorporates 1996 federal and applicable State income
tax rates and assumes that all income would otherwise be taxed at the investor's
highest tax rate. Yield figures are for example only.
*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, investors are urged to consult their own tax advisers
in this regard.
A-28
<PAGE>
MUNICIPAL INVESTMENT TRUST FUND
MULTISTATE SERIES
DEFINED ASSET FUNDS
I want to learn more about automatic reinvestment in the Investment Accumulation
Program. Please send me information about participation in the Municipal Fund
Accumulation Program, Inc. and a current Prospectus.
My name (please
print) ________________________________________________________________________
My address (please print):
Street and Apt.
No. ___________________________________________________________________________
City, State, Zip
Code __________________________________________________________________________
This page is a self-mailer. Please complete the information above, cut along the
dotted line, fold along the lines on the reverse side, tape, and mail with the
Trustee's address displayed on the outside.
<PAGE>
BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 644 NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE CHASE MANHATTAN BANK, N.A. UNITED STATES
RETAIL PROCESSING DEPARTMENT
770 BROADWAY--7th FLOOR
NEW YORK, NY 10003-9598
- --------------------------------------------------------------------------------
(Fold along this line.)
- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
DEFINED ASSET FUNDS MUNICIPAL SERIES
MUNICIPAL INVESTMENT TRUST FUND
FURTHER DETAIL REGARDING ANY OF THE INFORMATION PROVIDED IN THE PROSPECTUS MAY
BE OBTAINED
WITHIN FIVE DAYS BY WRITING OR CALLING THE TRUSTEE, THE ADDRESS AND
TELEPHONE NUMBER OF WHICH ARE SET FORTH ON THE BACK COVER OF PART A OF THIS
PROSPECTUS.
Index
PAGE
----
Fund Description........................... 1
Risk Factors............................... 2
How to Buy Units........................... 8
How to Sell Units.......................... 10
Income, Distributions and Reinvestment..... 11
Fund Expenses.............................. 12
Taxes...................................... 12
Records and Reports........................ 13
PAGE
----
Trust Indenture............................ 14
Miscellaneous.............................. 14
Exchange Option............................ 16
Supplemental Information................... 17
Appendix A--Description of Ratings......... a-1
Appendix B--Sales Charge Schedules for
Defined Asset Funds Municipal Series..... b-1
Appendix C--Sales Charge Schedules for
Municipal Investment Trust Fund.......... c-1
FUND DESCRIPTION
BOND PORTFOLIO SELECTION
Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Bonds for the Portfolio after
considering the Fund's investment objective as well as the quality of the Bonds
(all Bonds in the Portfolio are initially rated in the category A or better by
at least one nationally recognized rating organization or have comparable credit
characteristics), the yield and price of the Bonds compared to similar
securities, the maturities of the Bonds and the diversification of the
Portfolio. Only issues meeting these stringent criteria of the Defined Asset
Funds team of dedicated research analysts are included in the Portfolio. No
leverage or borrowing is used nor does the Portfolio contain other kinds of
securities to enhance yield. A summary of the Bonds in the Portfolio appears in
Part A of the Prospectus. In a Fund that includes multiple Trusts or Portfolios,
the word Fund should be understood to mean each individual Trust or Portfolio.
The deposit of the Bonds in the Fund on the initial date of deposit
established a proportionate relationship among the face amounts of the Bonds.
During the 90-day period following the initial date of deposit the Sponsors may
deposit additional Bonds in order to create new Units, maintaining to the extent
possible that original proportionate relationship. Deposits of additional Bonds
subsequent to the 90-day period must generally replicate exactly the
proportionate relationship among the face amounts of the Bonds at the end of the
initial 90-day period.
Yields on bonds depend on many factors including general conditions of the
bond markets, the size of a particular offering and the maturity and quality
rating of the particular issues. Yields can vary among bonds with similar
maturities, coupons and ratings. Ratings represent opinions of the rating
organizations as to the quality of the bonds rated, based on the credit of the
issuer or any guarantor, insurer or other credit provider, but these ratings are
only general standards of quality (see Appendix A).
After the initial date of deposit, the ratings of some Bonds may be reduced
or withdrawn, or the credit characteristics of the Bonds may no longer be
comparable to bonds rated A or better. Bonds rated BBB or Baa (the lowest
investment grade rating) or lower may have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest
1
<PAGE>
payments than is the case with higher grade bonds. Bonds rated below
investment grade or unrated bonds with similar credit characteristics are
often subject to greater market fluctuations and risk of loss of principal and
income than higher grade bonds and their value may decline precipitously in
response to rising interest rates.
Because each Defined Asset Fund is a preselected portfolio of bonds, you
know the securities, maturities, call dates and ratings before you invest. Of
course, the Portfolio will change somewhat over time, as Bonds mature, are
redeemed or are sold to meet Unit redemptions or in other limited circumstances.
Because the Portfolio is not actively managed and principal is returned as the
Bonds are disposed of, this principal should be relatively unaffected by changes
in interest rates.
BOND PORTFOLIO SUPERVISION
The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. The Fund may retain an issuer's bonds despite adverse financial
developments. Experienced financial analysts regularly review the Portfolio and
a Bond may be sold in certain circumstances including the occurrence of a
default in payment or other default on the Bond, a decline in the projected
income pledged for debt service on a revenue bond, institution of certain legal
proceedings, if the Bond becomes taxable or is otherwise inconsistent with the
Fund's investment objectives, a decline in the price of the Bond or the
occurrence of other market or credit factors (including advance refunding) that,
in the opinion of Defined Asset Funds research analysts, makes retention of the
Bond detrimental to the interests of investors. The Trustee must generally
reject any offer by an issuer of a Bond to exchange another security pursuant to
a refunding or refinancing plan.
The Sponsors and the Trustee are not liable for any default or defect in a
Bond. If a contract to purchase any Bond fails, the Sponsors may generally
deposit a replacement bond so long as it is a tax-exempt bond, has a fixed
maturity or disposition date substantially similar to the failed Bond and is
rated A or better by at least one nationally recognized rating organization or
has comparable credit characteristics. A replacement bond must be deposited
within 110 days after deposit of the failed contract, at a cost that does not
exceed the funds reserved for purchasing the failed Bond and at a yield to
maturity and current return substantially equivalent (considering then current
market conditions and relative creditworthiness) to those of the failed Bond, as
of the date the failed contract was deposited.
RISK FACTORS
An investment in the Fund entails certain risks, including the risk that the
value of your investment will decline with increases in interest rates.
Generally speaking, bonds with longer maturities will fluctuate in value more
than bonds with shorter maturities. In recent years there have been wide
fluctuations in interest rates and in the value of fixed-rate bonds generally.
The Sponsors cannot predict the direction or scope of any future fluctuations.
Certain of the Bonds may have been deposited at a market discount or premium
principally because their interest rates are lower or higher than prevailing
rates on comparable debt securities. The current returns of market discount
bonds are lower than comparably rated bonds selling at par because discount
bonds tend to increase in market value as they approach maturity. The current
returns of market premium bonds are higher than comparably rated bonds selling
at par because premium bonds tend to decrease in market value as they approach
maturity. Because part of the purchase price is returned through current income
payments and not at maturity, an early redemption at par of a premium bond will
result in a reduction in yield to the Fund. Market premium or discount
attributable to interest rate changes does not indicate market confidence or
lack of confidence in the issue.
Certain Bonds deposited into the Fund may have been acquired on a
when-issued or delayed delivery basis. The purchase price for these Bonds is
determined prior to their delivery to the Fund and a gain or loss may result
from fluctuations in the value of the Bonds. Additionally, in any Defined Asset
Funds Municipal Series, if the value of the Bonds reserved for payment of the
periodic deferred sales charge, together with the interest thereon, were to
become insufficient to pay these charges, additional bonds would be required to
be sold.
The Fund may be concentrated in one or more of types of bonds. Concentration
in a State may involve additional risk because of the decreased diversification
of economic, political, financial and market risks. Set forth below is a brief
description of certain risks associated with bonds which may be held by the
Fund. Additional
2
<PAGE>
information is contained in the Information Supplement which is available from
the Trustee at no charge to the investor.
GENERAL OBLIGATION BONDS
Certain of the Bonds may be general obligations of a governmental entity.
General obligation bonds are backed by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. However, the
taxing power of any governmental entity may be limited by provisions of
state constitutions or laws and its credit will depend on many factors,
including an erosion of the tax base resulting from population
declines, natural disasters, declines in the state's industrial base
or an inability to attract new industries, economic limits on the ability to tax
without eroding the tax base and the extent to which the entity relies on
federal or state aid, access to capital markets or other factors beyond the
entity's control. In addition, political restrictions on the ability to tax and
budgetary constraints affecting state governmental aid may have an adverse
impact on the creditworthiness of cities, counties, school districts and other
local governmental units.
As a result of the recent recession's adverse impact upon both revenues and
expenditures, as well as other factors, many state and local governments have
confronted deficits which were the most severe in recent years. Many issuers are
facing highly difficult choices about significant tax increases and spending
reductions in order to restore budgetary balance. The failure to implement these
actions on a timely basis could force these issuers to issue additional debt to
finance deficits or cash flow needs and could lead to a reduction of their bond
ratings and the value of their outstanding bonds.
MORAL OBLIGATION BONDS
The Portfolio may include 'moral obligation' bonds. If an issuer of moral
obligation bonds is unable to meet its obligations, the repayment of the bonds
becomes a moral commitment but not a legal obligation of the state or local
government in question. Even though the state or local government may be called
on to restore any deficits in capital reserve funds of the agencies or
authorities which issued the bonds, any restoration generally requires
appropriation by the state or local legislature and does not constitute a
legally enforceable obligation or debt of the state or local government. The
agencies or authorities generally have no taxing power.
REFUNDED BONDS
Refunded bonds are typically secured by direct obligations of the U.S.
Government or in some cases obligations guaranteed by the U.S. Government placed
in an escrow account maintained by an independent trustee until maturity or a
predetermined redemption date. These obligations are generally noncallable prior
to maturity or the predetermined redemption date. In a few isolated instances,
however, bonds which were thought to be escrowed to maturity have been called
for redemption prior to maturity.
MUNICIPAL REVENUE BONDS
Municipal revenue bonds are tax-exempt securities issued by states,
municipalities, public authorities or similar entities to finance the cost of
acquiring, constructing or improving various projects. Municipal revenue bonds
are not general obligations of governmental entities backed by their taxing
power and payment is generally solely dependent upon the creditworthiness of the
public issuer or the financed project or state appropriations. Examples of
municipal revenue bonds are:
Municipal utility bonds, including electrical, water and sewer revenue
bonds, whose payments are dependent on various factors, including the rates
the utilities may charge, the demand for their services and their operating
costs, including expenses to comply with environmental legislation and other
energy and licensing laws and regulations. Utilities are particularly
sensitive to, among other things, the effects of inflation on operating and
construction costs, the unpredictability of future usage requirements, the
costs and availability of fuel and, with certain electric utilities, the
risks associated with the nuclear industry. The movement to introduce
competition in the investor-owned electric utility industry is likely to
indirectly affect municipal utility systems by inducing them to maintain
rates as low as possible. In this effort to keep rates low, municipal
utilities may have more trouble raising rates to completely recover
investment in generating plant;
Lease rental bonds which are generally issued by governmental financing
authorities with no direct taxing power for the purchase of equipment or
construction of buildings that will be used by a state or local
3
<PAGE>
government. Lease rental bonds are generally subject to an annual
risk that the lessee government might not appropriate funds for the
leasing rental payments to service the bonds and may also be subject
to the risk that rental obligations may terminate in the event of
damage to or destruction or condemnation of the equipment or building;
Multi-family housing revenue bonds and single family mortgage revenue
bonds which are issued to provide financing for various housing projects and
which are payable primarily from the revenues derived from mortgage loans to
housing projects for low to moderate income families or notes secured by
mortgages on residences; repayment of this type of bond is therefore
dependent upon, among other things, occupancy levels, rental income, the
rate of default on underlying mortgage loans, the ability of mortgage
insurers to pay claims, the continued
availability of federal, state or local housing subsidy programs, economic
conditions in local markets, construction costs, taxes, utility costs and
other operating expenses and the managerial ability of project managers.
Housing bonds are generally prepayable at any time and therefore their
average life will ordinarily be less than their stated maturities;
Hospital and health care facility bonds whose payments are dependent upon
revenues of hospitals and other health care facilities. These revenues come
from private third-party payors and government programs, including the
Medicare and Medicaid programs, which have generally undertaken cost
containment measures to limit payments to health care facilities. Hospitals
and health care facilities are subject to various legal claims by patients
and others and are adversely affected by increasing costs of insurance. The
Internal Revenue Service has been engaged in a program of intensive audits
of certain large tax-exempt hospital and health care facility organizations.
Although these audits have not yet been completed, it has been reported that
the tax-exempt status of some of these organizations may be revoked;
Airport, port, highway and transit authority revenue bonds which are
dependent for payment on revenues from the financed projects, including user
fees from ports and airports, tolls on turnpikes and bridges, rents from
buildings, transit fare revenues and additional financial resources
including federal and state subsidies, lease rentals paid by state or local
governments or a pledge of a special tax such as a sales tax or a property
tax. In the case of the air travel industry, airport income is largely
affected by the airlines' ability to meet their obligations under use
agreements which in turn is affected by increased competition among
airlines, excess capacity and increased fuel costs, among other factors;
Solid waste disposal bonds which are generally payable from dumping and
user fees and from revenues that may be earned by the facility on the sale
of electrical energy generated in the combustion of waste products and which
are therefore dependent upon the ability of municipalities to fully utilize
the facilities, sufficient supply of waste for disposal, economic or
population growth, the level of construction and maintenance costs, the
existence of lower-cost alternative modes of waste processing and increasing
environmental regulation. A recent decision of the U.S. Supreme Court
limiting a municipality's ability to require use of its facilities may have
an adverse affect on the credit quality of various issues of these bonds;
Special tax bonds which are not secured by general tax revenues but are
only payable from and secured by the revenues derived by a municipality from
a particular tax--for example, a tax on the rental of a hotel room, on the
purchase of food and beverages, on the rental of automobiles or on the
consumption of liquor and may therefore be adversely affected by a reduction
in revenues resulting from a decline in the local economy or population or a
decline in the consumption, use or cost of the goods and services that are
subject to taxation;
Student loan revenue bonds which are typically secured by pledges of new
or existing student loans. The loans, in turn, are generally either
guaranteed by eligible guarantors and reinsured by the Secretary of the U.S.
Department of Education, directly insured by the federal government, or
financed as part of supplemental or alternative loan programs within a state
(e.g., loan repayments are not guaranteed). These bonds often permit the
issuer to enter into interest rate swap agreements with eligible
counterparties in which event the bonds are subject to the additional risk
of the counterparty's ability to fulfill its swap obligation;
University and college bonds, the payments on which are dependent upon
various factors, including the size and diversity of their sources of
revenues, enrollment, reputation, the availability of endowments and other
funds and, in the case of public institutions, the financial condition of
the relevant state or other governmental entity and its policies with
respect to education; and
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<PAGE>
Tax increment and tax allocation bonds, which are secured by ad valorem
taxes imposed on the incremental increase of taxable assessed valuation of
property within a jurisdiction above an established base of assessed value.
The issuers of these bonds do not have general taxing authority and the tax
assessments on which the taxes used to service the bonds are based may be
subject to devaluation due to market price declines or governmental action.
Puerto Rico. Certain Bonds may be affected by general economic conditions in
the Commonwealth of Puerto Rico. Puerto Rico's economy is largely dependent for
its development on federal programs, and current federal budgetary policies
suggest that an expansion of its programs is unlikely. Reductions in federal tax
benefits or incentives or curtailment of spending programs could adversely
affect the Puerto Rican economy.
Industrial Development Revenue Bonds. Industrial development revenue bonds
are municipal obligations issued to finance various privately operated projects
including pollution control and manufacturing facilities. Payment is generally
solely dependent upon the creditworthiness of the corporate
operator of the project and, in certain cases, an affiliated or
third party guarantor and may be affected by economic factors
relating to the particular industry as well as varying degrees of governmental
regulation. In many cases industrial revenue bonds do not have the benefit of
covenants which would prevent the corporations from engaging in capital
restructurings or borrowing transactions which could reduce their ability to
meet their obligations and result in a reduction in the value of the Portfolio.
BONDS BACKED BY REPURCHASE COMMITMENTS
Certain Funds contain Bonds that were purchased from commercial banks,
savings banks, savings and loan associations or other institutions (thrifts)
that had held the Bonds in their investment portfolios prior to selling the
Bonds to the Fund. These banks or thrifts (the Sellers) have committed to
repurchase the Bonds from the Fund in certain circumstances. In some cases a
Seller's Repurchase Commitments may be backed by a security interest in
collateral or by a letter of credit (see Bonds Backed by Letters of Credit or
Insurance below).
A Seller may have committed to repurchase any Bond sold by it if necessary
to satisfy investors' unit redemption requests (a Liquidity Repurchase). A
Seller may also have committed to repurchase any Bond sold by it if the issuer
of the Bond fails to make payments of interest or principal on the Bond (a
Default Repurchase) or if the issuer becomes or is deemed to be bankrupt or
insolvent (an Insolvency Repurchase). A Seller may have committed to repurchase
any Bond if the interest on that Bond becomes taxable (a Tax Repurchase).
Investors should realize that they are subject to having all or a portion of the
principal amount of their investment returned prior to termination of the Fund
if any of these situations occurs. A Seller may also have committed to
repurchase the Bonds sold by it on their scheduled disposition dates (as shown
under Portfolio in Part A) (a Disposition Repurchase). The price at which any of
these repurchases will occur (the Put Price) is shown in Part A of the
Prospectus. Any collateral securing any of the Repurchase Commitments may
consist of mortgage-backed securities issued by GNMA (Ginnie Maes), FNMA (Fannie
Maes) or FHLMC (Freddie Macs); mortgages; municipal obligations; corporate
obligations; U.S. government securities; and cash.
Investors in a Fund containing any of these credit-supported Bonds should be
aware that many thrifts have failed in recent years and that the thrift industry
generally has experienced severe strains. New federal legislation has resulted
that imposes many new limitations on the ways banks and thrifts may do business
and mandates aggressive, early intervention into unhealthy institutions. One
result of this legislation is an increased possibility of early payment of the
principal amount of an investment in Bonds backed by collateralized letters of
credit or repurchase commitments if a Seller becomes or is deemed to be
insolvent.
BONDS BACKED BY LETTERS OF CREDIT OR INSURANCE
Certain Bonds may be secured by letters of credit issued by commercial banks
or savings banks, savings and loan associations and similar thrift institutions
or are direct obligations of banks or thrifts. The letter of credit may be drawn
upon, and the Bonds redeemed, if an issuer fails to pay amounts due on the Bonds
or, in certain cases, if the interest on the Bond becomes taxable. Letters of
credit are irrevocable obligations of the issuing institutions. The
profitability of a financial institution is largely dependent upon the credit
quality of its loan portfolio which, in turn, is affected by the institution's
underwriting criteria, concentrations within the portfolio and specific industry
and general economic conditions. The operating performance of financial
institutions is also
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impacted by changes in interest rates, the availability and cost of funds,
the intensity of competition and the degree of governmental regulation.
Certain Bonds may be insured or guaranteed by insurance companies listed
below. The claims-paying ability of each of these companies, unless otherwise
indicated, was rated AAA by Standard & Poor's or another nationally recognized
rating organization at the time the insured Bonds were purchased by the Fund.
The ratings are subject to change at any time at the discretion of the rating
agencies. In the event that the rating of an Insured Fund is reduced, the
Sponsors are authorized to direct the Trustee to obtain other insurance on
behalf of the Fund. The insurance policies guarantee the timely payment of
principal and interest on the Bonds but do not guarantee their market value or
the value of the Units. The insurance policies generally do not provide for
accelerated payments of principal or cover redemptions resulting from events of
taxability.
The following summary information relating to the listed insurance
companies has been obtained from publicly available information:
<TABLE><CAPTION>
FINANCIAL INFORMATION
AS OF SEPTEMBER 30, 1995
(IN MILLIONS OF DOLLARS)
--------------------------------
DATE ADMITTED POLICYHOLDERS'
NAME ESTABLISHED ASSETS SURPLUS
------------------------------------------- ------------- ------------ ----------------
<S> <C> <C> <C>
AMBAC Indemnity Corporation................ 1970 $ 2,292 $ 815
Asset Guaranty Insurance Co. (AA by S&P)... 1988 175 80
Financial Security Assurance of Maryland
Inc. (FSAM) (formerly Capital Guaranty
Insurance Company)....................... 1986 327 173
Capital Markets Assurance Corp. (CAPMAC) 1987 234 145
Connie Lee Insurance Company............... 1987 204 110
Continental Casualty Company (A+ by S&P)... 1948 20,409 3,850
Financial Guaranty Insurance Company....... 1984 2,264 994
Financial Security Assurance Inc. (FSA).... 1984 818 352
Firemen's Insurance Company of Newark, NJ
(A-by S&P) 1855 2,057 400
Industrial Indemnity Co. (HIBI)
(A+ by S&P).............................. 1920 1,679 286
MBIA Insurance Corporation................. 1986 3,678 1,194
</TABLE>
Insurance companies are subject to extensive regulation and supervision
where they do business by state insurance commissioners who regulate the
standards of solvency which must be maintained, the nature of and limitations on
investments, reports of financial condition, and requirements regarding reserves
for unearned premiums, losses and other matters. A significant portion of the
assets of insurance companies are required by law to be held in reserve against
potential claims on policies and is not available to general creditors. Although
the federal government does not regulate the business of insurance, federal
initiatives including pension regulation, controls on medical care costs,
minimum standards for no-fault automobile insurance, national health insurance,
tax law changes affecting life insurance companies and repeal of the antitrust
exemption for the insurance business can significantly impact the insurance
business.
STATE RISK FACTORS
Investment in a single State Trust, as opposed to a Fund which invests in
the obligations of several states, may involve some additional risk due to the
decreased diversification of economic, political, financial and market risks. A
brief description of the factors which may affect the financial condition of the
applicable State for any State Trust, together with a summary of tax
considerations relating to that State, appear in Part A (or for certain State
Trusts, Part C), of the Prospectus; further information is contained in the
Information Supplement.
LITIGATION AND LEGISLATION
The Sponsors do not know of any pending litigation as of the initial date of
deposit which might reasonably be expected to have a material adverse effect
upon the Fund. At any time after the initial date of deposit, litigation
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may be initiated on a variety of grounds, or legislation may be enacted,
affecting the Bonds in the Fund. Litigation, for example, challenging the
issuance of pollution control revenue bonds under environmental protection
statutes may affect the validity of certain Bonds or the tax-free nature of
their interest. While the outcome of litigation of this nature can never be
entirely predicted, opinions of bond counsel are delivered on the date of
issuance of each Bond to the effect that it has been validly issued and that
the interest thereon is exempt from federal income tax. From time to time,
proposals are introduced in Congress to, among other things, reduce federal
income tax rates, impose a flat tax, exempt investment income from tax or
abolish the federal income tax and replace it with another form of tax.
Enactment of any such legislation could adversely affect the value of the
Units. The Fund, however, cannot predict what legislation, if any, in respect
of tax rates may be proposed, nor can it predict which proposals, if any,
might be enacted.
Also, certain proposals, in the form of state legislative proposals or voter
initiatives, seeking to limit real property taxes have been introduced in
various states, and an amendment to the constitution of the State of California,
providing for strict limitations on real property taxes, has had a significant
impact on the taxing powers of local governments and on the financial condition
of school districts and local governments in California. In addition, other
factors may arise from time to time which potentially may impair the ability of
issuers to make payments due on the Bonds.
Under the Federal Bankruptcy Code, for example, municipal bond issuers, as well
as any underlying corporate obligors or guarantors, may proceed to restructure
or otherwise alter the terms of their obligations.
From time to time Congress considers proposals to prospectively and
retroactively tax the interest on state and local obligations, such as the
Bonds. The Supreme Court clarified in South Carolina v. Baker (decided on April
20, 1988) that the U.S. Constitution does not prohibit Congress from passing a
nondiscriminatory tax on interest on state and local obligations. This type of
legislation, if enacted into law, could require investors to pay income tax on
interest from the Bonds and could adversely affect an investment in Units. See
Taxes.
PAYMENT OF THE BONDS AND LIFE OF THE FUND
The size and composition of the Portfolio will change over time. Most of the
Bonds are subject to redemption prior to their stated maturity dates pursuant to
optional refunding or sinking fund redemption provisions or otherwise. In
general, optional refunding redemption provisions are more likely to be
exercised when the value of a Bond is at a premium over par than when it is at a
discount from par. Some Bonds may be subject to sinking fund and extraordinary
redemption provisions which may commence early in the life of the Fund.
Additionally, the size and composition of the Fund will be affected by the level
of redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units and
whether or not the Sponsors are able to sell the Units acquired by them in the
secondary market. As a result, Units offered in the secondary market may not
represent the same face amount of Bonds as on the initial date of deposit.
Factors that the Sponsors will consider in determining whether or not to sell
Units acquired in the secondary market include the diversity of the Portfolio,
the size of the Fund relative to its original size, the ratio of Fund expenses
to income, the Fund's current and long-term returns, the degree to which Units
may be selling at a premium over par and the cost of maintaining a current
prospectus for the Fund. These factors may also lead the Sponsors to seek to
terminate the Fund earlier than its mandatory termination date.
FUND TERMINATION
The Fund will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Bond or upon the consent of investors holding 51% of the
Units. The Fund may also be terminated earlier by the Sponsors once the total
assets of the Fund have fallen below the minimum value specified in Part A of
the Prospectus. A decision by the Sponsors to terminate the Fund early will be
based on factors similar to those considered by the Sponsors in determining
whether to continue the sale of Units in the secondary market.
Notice of impending termination will be provided to investors and thereafter
units will no longer be redeemable. On or shortly before termination, the Fund
will seek to dispose of any Bonds remaining in the Portfolio although any Bond
unable to be sold at a reasonable price may continue to be held by the Trustee
in a liquidating trust pending its final disposition. A proportional share of
the expenses associated with termination, including brokerage costs in disposing
of Bonds, will be borne by investors remaining at that time. This may have the
effect of reducing the amount of proceeds those investors are to receive in any
final distribution.
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<PAGE>
LIQUIDITY
Up to 40% of the value of the Portfolio may be attributable to guarantees or
similar security provided by corporate entities. These guarantees or other
security may constitute restricted securities that cannot be sold publicly by
the Trustee without registration under the Securities Act of 1933, as amended.
The Sponsors nevertheless believe that, should a sale of the Bonds guaranteed or
secured be necessary in order to meet redemption of Units, the Trustee should be
able to consummate a sale with institutional investors.
The principal trading market for the Bonds will generally be in the
over-the-counter market and the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in them. There can be no
assurance that a liquid trading market will exist for any of the Bonds,
especially since the Fund may be restricted under the Investment Company Act of
1940 from selling Bonds to any Sponsor. The value of the Portfolio will be
adversely affected if trading markets for the Bonds are limited or absent.
HOW TO BUY UNITS
Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund.
Net accrued interest and principal cash, if any, are added to the Public
Offering Price, the Sponsors' Repurchase Price and the Redemption Price per
Unit. This represents the interest accrued on the Bonds, net of Fund expenses,
from the initial date of deposit to, but not including, the settlement date for
Units (less any prior distributions of interest income to investors). Bonds
deposited also carry accrued but unpaid interest up to the initial date of
deposit. To avoid having investors pay this additional accrued interest (which
earns no return) when they purchase Units, the Trustee advances and distributes
this amount to the Sponsors; it recovers this advance from interest received on
the Bonds. Because of varying interest payment dates on the Bonds, accrued
interest at any time will exceed the interest actually received by the Fund.
Because accrued interest on the Bonds is not received by the Fund at a
constant rate throughout the year, any Monthly Income Distribution may be more
or less than the interest actually received by the Fund. To eliminate
fluctuations in the Monthly Income Distribution, a portion of the Public
Offering Price may consist of cash in an amount necessary for the Trustee to
provide approximately equal distributions. Upon the sale or redemption of Units,
investors will receive their proportionate share of this cash. In addition, if a
Bond is sold, redeemed or otherwise disposed of, the Fund will periodically
distribute to investors the portion of this cash that is attributable to the
Bond.
The regular Monthly Income Distribution is stated in Part A of the
Prospectus and will change as the composition of the Portfolio changes over
time.
PUBLIC OFFERING PRICE--THE FOLLOWING SECTIONS APPLY TO TWO DIFFERENT TYPES OF
DEFINED MUNICIPAL FUNDS. INVESTORS SHOULD NOTE THE EXACT NAME OF THE FUND ON THE
COVER OF PART A OF THE PROSPECTUS TO MAKE SURE THEY REFER TO THE CORRECT SECTION
BELOW.
SECTION A--MUNICIPAL INVESTMENT TRUST FUND
In the initial offering period, the Public Offering Price is based on the
next offer side evaluation of the Bonds, and includes a sales charge based on
the number of Units of a single Fund or Trust purchased on the same or any
preceding day by a single purchaser. See Initial Offering sales charge schedule
in Appendix C. The purchaser or his dealer must notify the Sponsors at the time
of purchase of any previous purchase to be aggregated and supply sufficient
information to permit confirmation of eligibility; acceptance of the purchase
order is subject to confirmation. Purchases of Fund Units may not be aggregated
with purchases of any other unit trust. This procedure may be amended or
terminated at any time without notice.
In the secondary market (after the initial offering period), the Public
Offering Price is based on the bid side evaluation of the Bonds, and includes a
sales charge based (a) on the number of Units of the Fund and any other Series
of Municipal Investment Trust Fund purchased in the secondary market on the same
day by a single purchaser (see Secondary Market sales charge schedule in
Appendix C) and (b) the maturities of the underlying Bonds (see Effective Sales
Charge Schedule in Appendix C). To qualify for a reduced sales charge, the
dealer must confirm that the sale is to a single purchaser or is purchased for
its own account and not for distribution. For these
8
<PAGE>
purposes, Units held in the name of the purchaser's spouse or child under
21 years of age are deemed to be purchased by a single purchaser. A trustee
or other fiduciary purchasing securities for a single trust estate or single
fiduciary account is also considered a single purchaser.
In the secondary market, the Public Offering Price is further reduced
depending on the maturities of the various Bonds in the Portfolio, by
determining a sales charge percentage for each Bond, as stated in Effective
Sales Charge in Appendix C. The sales charges so determined, multiplied by the
bid side evaluation of the Bonds, are aggregated and the total divided by the
number of Units outstanding to determine the Effective Sales Charge. On any
purchase, the Effective Sales Charge is multiplied by the applicable secondary
market sales charge percentage (depending on the number of Units purchased) in
order to determine the sales charge component of the Public Offering Price.
SECTION B--DEFINED ASSET FUNDS MUNICIPAL SERIES
During the initial offering period for at least the first three months of
the Fund, the Public Offering Price (and the Initial Repurchase Price) is based
on the higher, offer side evaluation of the Bonds at the next Evaluation Time
after the order is received. In the secondary market (after the initial offering
period), the Public Offering Price (and the Sponsors' Repurchase Price and the
Redemption Price) is based on the lower, bid side evaluation of the Bonds.
Investors will be subject to differing types and amounts of sales charge
depending upon the timing of their purchases and redemptions of Units. A
periodic deferred sales charge will be payable quarterly through about the fifth
anniversary of the Fund from a portion of the interest on and principal of Bonds
reserved for that purpose. Commencing on the first anniversary of the Fund, the
Public Offering Price will also include an up-front sales charge applied to the
value of the Bonds in the Portfolio. Lastly, investors redeeming
their Units prior to the fourth anniversary of the Fund will be
charged a contingent deferred sales charge payable out of the
redemption proceeds of their Units. These charges may be less than you would pay
to buy and hold a comparable managed fund. A complete schedule of sales charges
appears in Appendix B. The Sponsors have received an opinion of their counsel
that the deferred sales charge described in this Prospectus is consistent with
an exemptive order received from the SEC.
* * *
Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per Unit.
EVALUATIONS
Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. Bond
evaluations are based on closing sales prices (unless the Evaluator deems these
prices inappropriate). If closing sales prices are not available, the evaluation
is generally determined on the basis of current bid or offer prices for the
Bonds or comparable securities or by appraisal or by any combination of these
methods. In the past, the bid prices of publicly offered tax-exempt issues have
been lower than the offer prices by as much as 3 1/2% or more of face amount in
the case of inactively traded issues and as little as 1/2 of 1% in the case of
actively traded issues, but the difference between the offer and bid prices has
averaged between 1 and 2% of face amount. Neither the Sponsors, the Trustee or
the Evaluator will be liable for errors in the Evaluator's judgment. The fees of
the Evaluator will be borne by the Fund.
CERTIFICATES
Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Sell Units--Trustee's Redemption of
Units). Certain Sponsors collect additional charges for registering and shipping
Certificates to purchasers. Lost or mutilated Certificates can be replaced upon
delivery of satisfactory indemnity and payment of costs.
9
<PAGE>
HOW TO SELL UNITS
SPONSORS' MARKET FOR UNITS
You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for over 20 years. Primarily
because of the sales charge and fluctuations in the market value of the Bonds,
the sale price may be less than the cost of your Units. You should consult your
financial professional for current market prices to determine if other
broker-dealers or banks are offering higher prices for Units.
The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons; in that event, the
Sponsors may still purchase Units at the redemption price as a service to
investors. The Sponsors may reoffer or redeem Units repurchased.
TRUSTEE'S REDEMPTION OF UNITS
You may redeem your Units by sending the Trustee a redemption request
together with any certificates you hold. Certificates must be properly endorsed
or accompanied by a written transfer instrument with signatures guaranteed by an
eligible institution. In certain instances, additional documents may be required
such as a certificate of death, trust instrument, certificate of corporate
authority or appointment as executor, administrator or guardian. If the Sponsors
are maintaining a market for Units, they will purchase any Units tendered at the
repurchase price described above. While Defined Asset Funds Municipal Series
have a declining deferred sales charge payable on redemption (see Appendix B), a
Municipal Investment Trust Fund has no back-end load or 12b-1 fees, so there is
never a fee for cashing in your investment (see Appendix C). If they do not
purchase Units tendered, the Trustee is authorized in its discretion to sell
Units in the over-the-counter market if it believes it will obtain a higher net
price for the redeeming investor.
By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Bonds, net accrued interest, cash and the value of any other Fund assets;
deducting unpaid taxes or other governmental charges, accrued but
unpaid Fund expenses, unreimbursed Trustee advances, cash held to redeem Units
or for distribution to investors and the value of any other Fund liabilities;
and dividing the result by the number of outstanding Units.
The Trustee is authorized, on a redemption request for Units with a value
exceeding $250,000 by any investor who acquired 25% or more of the outstanding
Units of a Trust, to pay part or all of the redemption 'in kind' (by the
distribution of Bonds and cash with an aggregate value equal to the applicable
Redemption Price of the Units tendered for redemption). The Trustee will attempt
to make a pro rata distribution of Bonds in the Portfolio, but reserves the
right to distribute solely one or more Bonds. The distribution will be made to
the distribution agent and either held for the account of the investor or
disposed of in accordance with the instructions of the investor. Any transaction
costs as well as transfer and ongoing custodial fees on sales of the Bonds
distributed in kind will be borne by the redeeming investor.
For Defined Asset Funds Municipal Series, Bonds are evaluated on the offer
side during the initial offering period and for at least the first three months
of the Fund (even in the secondary market) and on the bid side thereafter. For a
Municipal Investment Trust Fund, Bonds are evaluated on the offer side during
the initial offering period and on the bid side thereafter.
If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Bonds selected by the Agent for the Sponsors
based on market and credit factors determined to be in the best interest of the
Fund. These sales are often made at times when the Bonds would not otherwise be
sold and may result in lower prices than might be realized otherwise and will
also reduce the size and diversity of the Fund.
Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or
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<PAGE>
that an emergency exists making disposal or evaluation of the Bonds not
reasonably practicable, or for any other period permitted by the SEC.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME
Some of the Bonds may have been purchased on a when-issued basis or may have
a delayed delivery. Since interest on these Bonds does not begin to accrue until
the date of their delivery to the Fund, the Trustee's annual fee and expenses
may be reduced to provide tax-exempt income to investors for this non-accrual
period. If a when-issued Bond is not delivered until later than expected and the
amount of the Trustee's annual fee and expenses is insufficient to cover the
additional accrued interest, the Sponsors will treat the contracts as failed
Bonds. The Trustee is compensated for its fee reduction by drawing on the letter
of credit deposited by the Sponsors before the settlement date for these Bonds
and depositing the proceeds in a non-interest bearing account for the Fund.
Interest received is credited to an Income Account and other receipts to a
Capital Account. A Reserve Account may be created by withdrawing from the Income
and Capital Accounts amounts considered appropriate by the Trustee to reserve
for any material amount that may be payable out of the Fund.
DISTRIBUTIONS
Each Unit receives an equal share of monthly distributions of interest
income net of estimated expenses. Interest on the Bonds is generally received by
the Fund on a semi-annual or annual basis. Because interest on the Bonds is not
received at a constant rate throughout the year, any Monthly Income Distribution
may be more or less than the interest actually received. To eliminate
fluctuations in the Monthly Income Distribution, the Trustee will advance
amounts necessary to provide approximately equal interest distributions; it will
be reimbursed, without interest, from interest received on the Bonds, but the
Trustee is compensated, in part, by holding the Fund's cash balances in
non-interest bearing accounts. Along with the Monthly Income Distributions, the
Trustee will distribute the investor's pro rata share of principal received from
any disposition of a Bond to the extent available for distribution. In addition,
for Defined Asset Funds Municipal Series, distributions of amounts necessary to
pay the deferred portion of the sales charge will be made from the Capital and
Income Accounts to an account maintained by the Trustee for purposes of
satisfying investors' sales charge obligations.
The initial estimated annual income per Unit, after deducting estimated
annual Fund expenses (and, for Defined Asset Funds Municipal Series, the portion
of the deferred sales charge payable from interest income) as stated in Part A
of the Prospectus, will change as Bonds mature, are called or sold or otherwise
disposed of, as replacement bonds are deposited and as Fund expenses change.
Because the Portfolio is not actively managed, income distributions will
generally not be affected by changes in interest rates. Depending on the
financial conditions of the issuers of the Bonds, the amount of income should be
substantially maintained as long as the Portfolio remains unchanged; however,
optional bond redemptions or other Portfolio changes may occur more frequently
when interest rates decline, which would result in early returns of principal
and possibly earlier termination of the Fund.
RETURN CALCULATIONS
Estimated Current Return shows the estimated annual cash to be received from
interest-bearing bonds in a Portfolio (net of estimated annual expenses) divided
by the Public Offering Price (including the maximum sales charge). Estimated
Long Term Return is a measure of the estimated return over the estimated life of
the Trust. This represents 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 maximum sales charge and estimated expenses. The average
yield for the Portfolio is derived by weighting each Bond's yield by its market
value and the time remaining to the call or maturity date, depending on how the
Bond is priced. Unlike Estimated Current Return, Estimated Long Term Return
takes into account maturities, discounts and premiums of the underlying Bonds.
No return estimate can be predictive of your actual return because returns
will vary with purchase price (including sales charges), how long units are
held, changes in Portfolio composition, changes in interest income and changes
in fees and expenses. Therefore, Estimated Current Return and Estimated Long
Term Return are designed to be comparative rather than predictive. A yield
calculation which is more comparable to an individual
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<PAGE>
Bond may be higher or lower than Estimated Current Return or Estimated Long
Term Return which are more comparable to return calculations used by other
investment products.
REINVESTMENT
Distributions will be paid in cash unless the investor elects to have
distributions reinvested without sales charge in the Municipal Fund Accumulation
Program, Inc. The Program is an open-end management investment company whose
investment objective is to obtain income exempt from regular federal income
taxes by investing in a diversified portfolio of state, municipal and public
authority bonds rated A or better or with comparable credit characteristics.
Reinvesting compounds earnings free from federal tax. Investors participating in
the Program will be subject to state and local income taxes to the same extent
as if the distributions had been received in cash, and most of the income on the
Program is subject to state and local income taxes. For more complete
information about the Program, including charges and expenses, request the
Program's prospectus from the Trustee. Read it carefully before you decide to
participate. Written notice of election to participate must be received by the
Trustee at least ten days before the Record Day for the first distribution to
which the election is to apply.
FUND EXPENSES
Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for maintaining
the Fund's registration statement current with Federal and State authorities,
extraordinary services, costs of indemnifying the Trustee and the Sponsors,
costs of action taken to protect the Fund and other legal fees and expenses,
Fund termination expenses and any governmental charges. The Trustee has a lien
on Fund assets to secure reimbursement of these amounts and may sell Bonds for
this purpose if cash is not available. The Sponsors receive an annual fee of a
maximum of $0.35 per $1,000 face amount to reimburse them for the cost of
providing Portfolio supervisory services to the Fund. While the fee may exceed
their costs of providing these services to the Fund, the total supervision fees
from all Defined Asset Funds Municipal Series will not exceed their costs for
these services to all of those Series during any calendar year; and the total
supervision fees from all Series of Municipal Investment Trust Fund will not
exceed their costs for these services to all of those Series during any calendar
year. The Sponsors may also be reimbursed for their costs of providing
bookkeeping and administrative services to the Fund, currently estimated at a
maximum of $0.10 per Unit. The Trustee's, Sponsors' and Evaluator's fees may be
adjusted for inflation without investors' approval.
All or a portion of expenses incurred in establishing the Fund, including
the cost of the initial preparation of documents relating to the Fund, Federal
and State registration fees, the initial fees and expenses of the Trustee, legal
expenses and any other out-of-pocket expenses will be paid by the Fund and
amortized over five years. Advertising and selling expenses will be paid from
the Underwriting Account at no charge to the Fund. Sales charges on Defined
Asset Funds range from under 1.0% to 5.5%. This may be less than you might pay
to buy and hold a comparable managed fund. Defined Asset Funds can be a
cost-effective way to purchase and hold investments. Annual operating expenses
are generally lower than for managed funds. Because Defined Asset Funds have no
management fees, limited transaction costs and no ongoing marketing expenses,
operating expenses are generally less than 0.25% a year. When compounded
annually, small differences in expense ratios can make a big difference in your
investment results. Because our portfolios rarely hold any significant amount of
cash, your money is more fully invested.
TAXES
The following discussion addresses only the U.S. federal and certain New
York State and City income tax consequences under current law of Units held as
capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies or other investors with
special circumstances.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Fund is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered the owner of a pro
rata portion of each Bond in the Fund under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Code'). Each investor will be considered to have received the interest and
accrued the original issue discount, if any, on his pro rata
12
<PAGE>
portion of each Bond when interest on the Bond is received or original
issue discount is accrued by the Fund. The investor's basis in his
Units will be equal to the cost of his Units, including any up-front
sales charge and the organizational expenses borne by the investor.
When an investor pays for accrued interest, the investor's confirmation
of purchase will report to him the amount of accrued interest for which he
paid. These investors will receive the accrued interest amount as part of
their first monthly distribution. Accordingly, these investors should reduce
their tax basis by the accrued interest amount after the first monthly
distribution.
An investor will recognize taxable gain or loss when all or part of his
pro rata portion of a Bond is disposed of by the Fund. An investor will also
be considered to have disposed of all or a portion of his pro rata portion
of each Bond when he sells or redeems all or some of his Units. An investor
who is treated as having acquired his pro rata portion of a Bond at a
premium will be required to amortize the premium over the term of the Bond.
The amortization is only a reduction of basis for the investor's pro rata
portion of the Bond and does not result in any deduction against the
investor's income. Therefore, under some circumstances, an investor may
recognize taxable gain when his pro rata portion of a Bond is disposed of
for an amount equal to or less than his original tax basis therefor.
Under Section 265 of the Code, a non-corporate investor is not entitled
to a deduction for his pro rata share of fees and expenses of the Fund,
because the fees and expenses are incurred in connection with the production
of tax-exempt income. Further, if borrowed funds are used by an investor to
purchase or carry Units of the Fund, interest on this indebtedness will not
be deductible for federal income tax purposes. In addition, under rules used
by the Internal Revenue Service, the purchase of Units may be considered to
have been made with borrowed funds even though the borrowed funds are not
directly traceable to the purchase of Units.
Under the income tax laws of the State and City of New York, the Fund is
not an association taxable as a corporation and income received by the Fund
will be treated as the income of the investors in the same manner as for
federal income tax purposes, but will not be tax-exempt except to the extent
such income is earned by bonds in the Fund that are otherwise tax-exempt for
New York purposes.
The foregoing discussion relates only to U.S. federal and certain aspects
of New York State and City income taxes. Depending on their state of
residence, investors may be subject to state and local taxation and should
consult their own tax advisers in this regard.
* * *
In the opinion of bond counsel rendered on the date of issuance of each
Bond, the interest on each Bond is excludable from gross income under existing
law for regular federal income tax purposes (except in certain circumstances
depending on the investor) but may be subject to state and local taxes, and
interest on some or all of the Bonds may become subject to regular federal
income tax, perhaps retroactively to their date of issuance, as a result of
changes in federal law or as a result of the failure of issuers (or other users
of the proceeds of the Bonds) to comply with certain ongoing requirements. If
the interest on a Bond should be determined to be taxable, the Bond would
generally have to be sold at a substantial discount. In addition, investors
could be required to pay income tax on interest received prior to the date on
which the interest is determined to be taxable.
Neither the Sponsors nor Davis Polk & Wardwell have made or will make any
review of the proceedings relating to the issuance of the Bonds or the basis for
these opinions and there can be no assurance that the issuer (and other users)
will comply with any ongoing requirements necessary for a Bond to maintain its
tax-exempt character.
The Internal Revenue Service is currently engaged in a program of intensive
audits of certain tax-exempt hospital and health care facility organizations.
Although these audits have not yet been completed, it has been reported that the
tax-exempt status of some of these organizations may be revoked. At this time,
it is uncertain whether any of the hospital and health care facility obligations
held by the Fund will be affected by such audit proceedings.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Bonds and a copy of the Indenture, and
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<PAGE>
supplemental information on the operations of the Fund and the risks associated
with the Bonds held by the Fund, which may be inspected by investors at
reasonable times during business hours.
With each distribution, the Trustee includes a statement of the interest and
any other receipts being distributed. Within five days after deposit of Bonds in
exchange or substitution for Bonds (or contracts) previously deposited, the
Trustee will send a notice to each investor, identifying both the Bonds removed
and the replacement bonds deposited. The Trustee sends each investor of record
an annual report summarizing transactions in the Fund's accounts and
amounts distributed during the year and Bonds held, the number of Units
outstanding and the Redemption Price at year end, the interest received by the
Fund on the Bonds, the gross proceeds received by the Fund from the disposition
of any Bond (resulting from redemption or payment at maturity or sale of any
Bond), and the fees and expenses paid by the Fund, among other matters. The
Trustee will also furnish annual information returns to each investor and to the
Internal Revenue Service. Investors are required to report to the Internal
Revenue Service the amount of tax-exempt interest received during the year.
Investors may obtain copies of Bond evaluations from the Trustee to enable them
to comply with federal and state tax reporting requirements. Fund accounts are
audited annually by independent accountants selected by the Sponsors. Audited
financial statements are available from the Trustee on request.
TRUST INDENTURE
The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. This Prospectus
summarizes various provisions of the Indenture, but each statement is qualified
in its entirety by reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without consent
by investors to cure ambiguities or to correct or supplement any defective or
inconsistent provision, to make any amendment required by the SEC or other
governmental agency or to make any other change not materially adverse to the
interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified on the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The Evaluator may resign or be removed by the Sponsors and the
Trustee without the investors' consent. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors will use their best efforts to appoint a successor promptly;
however, if upon resignation no successor has accepted appointment within 30
days after notification, the resigning Trustee or Evaluator may apply to a court
of competent jurisdiction to appoint a successor.
Any Sponsor may resign so long as one Sponsor with a net worth of $2,000,000
remains and is agreeable to the resignation. A new Sponsor may be appointed by
the remaining Sponsors and the Trustee to assume the duties of the resigning
Sponsor. If there is only one Sponsor and it fails to perform its duties or
becomes incapable of acting or bankrupt or its affairs are taken over by public
authorities, the Trustee may appoint a successor Sponsor at reasonable rates of
compensation, terminate the Indenture and liquidate the Fund or continue to act
as Trustee without a Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated
has been appointed as Agent for the Sponsors by the other Sponsors.
The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the Sponsors.
14
<PAGE>
AUDITORS
The Statement of Condition in the Prospectus was audited by Deloitte &
Touche LLP, independent accountants, as stated in their opinion. It is included
in reliance upon that opinion given on the authority of that firm as experts in
accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.
SPONSORS
The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America;
Dean Witter Reynolds, Inc., a principal operating subsidiary of Dean Witter
Discover & Co. and PaineWebber Incorporated, a wholly-owned subsidiary of
PaineWebber Group Inc. Each Sponsor, or one of its predecessor corporations, has
acted as Sponsor of a number of series of unit investment trusts. Each Sponsor
has acted as principal underwriter and managing underwriter of other investment
companies. The Sponsors, in addition to participating as members of various
selling groups or as agents of other investment companies, execute orders on
behalf of investment companies for the purchase and sale of securities of these
companies and sell securities to these companies in their capacities as brokers
or dealers in securities.
PUBLIC DISTRIBUTION
In the initial offering period Units will be distributed to the public
through the Underwriting Account and dealers who are members of the National
Association of Securities Dealers, Inc. The initial offering period is 30 days
or less if all Units are sold. If some Units initially offered have not been
sold, the Sponsors may extend the initial offering period for up to four
additional successive 30-day periods.
The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.;
however, Units of a State trust will be offered for sale only in the State for
which the trust is named, except that Units of a New Jersey trust will also be
offered in Connecticut, Units of a Florida trust will also be offered in New
York and Units of a New York trust will also be offered in Connecticut, Florida
and Puerto Rico. The Sponsors do not intend to qualify Units for sale in any
foreign countries and this Prospectus does not constitute an offer to sell Units
in any country where Units cannot lawfully be sold. Sales to dealers and to
introducing dealers, if any, will initially be made at prices which represent a
concession from the Public Offering Price, but the Agent for the Sponsors
reserves the right to change the rate of any concession from time to time. Any
dealer or introducing dealer may reallow a concession up to the concession to
dealers.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters will be entitled to receive sales
charges. The Sponsors also realize a profit or loss on deposit of the Bonds
equal to the difference between the cost of the Bonds to the Fund (based on the
offer side evaluation on the initial date of deposit) and the Sponsors' cost of
the Bonds. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Bonds it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Underwriting Account also may realize profits or sustain losses as a result of
fluctuations after the initial date of deposit in the Public Offering Price of
the Units. In maintaining a secondary market for Units, the Sponsors will also
realize profits or sustain losses in the amount of any difference between the
prices at which they buy Units and the prices at which they resell these Units
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.
FUND PERFORMANCE
Information on the performance of the Fund for various periods, on the basis
of changes in Unit price plus the amount of income and principal distributions
reinvested, may be included from time to time in
15
<PAGE>
advertisements, sales literature, reports and other information furnished to
current or prospective investors. Total return figures are not averaged, and
may not reflect deduction of the sales charge, which would decrease the
return. Average annualized return figures reflect deduction of the maximum
sales charge. No provision is made for any income taxes payable.
Past performance may not be indicative of future results. The Fund is not
actively managed. Unit price and return fluctuate with the value of the Bonds in
the Portfolio, so there may be a gain or loss when Units are sold.
Fund performance may be compared to performance on the same basis (with
distributions reinvested) of Moody's Municipal Bond Averages or performance data
from publications such as Lipper Analytical Services, Inc., Morningstar
Publications, Inc., Money Magazine, The New York Times, U.S. News and World
Report, Barron's Business Week, CDA Investment Technology, Inc., Forbes
Magazine or Fortune Magazine. As with other performance data, performance
comparisons should not be considered representative of the Fund's relative
performance for any future period.
DEFINED ASSET FUNDS
Municipal Investment Trust Funds have provided investors with tax-free
income for more than 30 years. For decades informed investors have purchased
unit investment trusts for dependability and professional selection of
investments. Defined Asset Funds' philosophy is to allow investors to 'buy with
knowledge' (because, unlike managed funds, the portfolio of municipal bonds and
the return are relatively fixed) and 'hold with confidence' (because the
portfolio is professionally selected and regularly reviewed). Defined Asset
Funds offers an array of simple and convenient investment choices, suited to fit
a wide variety of personal financial goals--a buy and hold strategy for capital
accumulation, such as for children's education or retirement, or attractive,
regular current income consistent with the preservation of principal. Tax-exempt
income can help investors keep more today for a more secure financial future. It
can also be important in planning because tax brackets may increase with higher
earnings or changes in tax laws. Unit investment trusts are particularly suited
for the many investors who prefer to seek long-term income by purchasing sound
investments and holding them, rather than through active trading. Few
individuals have the knowledge, resources or capital to buy and hold a
diversified portfolio on their own; it would generally take a considerable sum
of money to obtain the breadth and diversity that Defined Asset Funds offer.
One's investment objectives may call for a combination of Defined Asset Funds.
Defined Asset Funds reflect a buy and hold strategy that the Sponsors
believe can be more effective and cheaper than active management. This strategy
is premised on selection criteria and procedures, diversification and regular
monitoring by investment professionals. Various advertisements and sales
literature may summarize the results of economic studies concerning how stock
market movement has tended to be concentrated and how longer-term investments
can tend to reduce risk.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.
EXCHANGE OPTION--MUNICIPAL INVESTMENT TRUST FUND ONLY.
You may exchange Fund Units for units of certain other Defined Asset Funds
subject only to a reduced sales charge. You may exchange your units of any
Municipal Investment Trust Fund Intermediate Term Series with a regular maximum
sales charge of at least 3.25%, of any other Defined Asset Fund with a regular
maximum sales charge of at least 3.50%, or of any unaffiliated unit trust with a
regular maximum sales charge of at least 3.0%, for Units of this Fund at their
relative net asset values, subject only to a reduced sales charge, or to any
remaining Deferred Sales Charge, as applicable.
To make an exchange, you should contact your financial professional to find
out what suitable Exchange Funds are available and to obtain a prospectus. You
may acquire units of only those Exchange Funds in which the Sponsors are
maintaining a secondary market and which are lawfully for sale in the state
where you reside. Except for the reduced sales charge, an exchange is a taxable
event normally requiring recognition of any gain or loss on
16
<PAGE>
the units exchanged. However, the Internal Revenue Service may seek to
disallow a loss if the portfolio of the units acquired is not materially
different from the portfolio of the units exchanged; you should consult your
own tax advisor. If the proceeds of units exchanged are insufficient to
acquire a whole number of Exchange Fund units, you may pay the difference in
cash (not exceeding the price of a single unit acquired).
As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.
SUPPLEMENTAL INFORMATION
Upon writing or calling the Trustee shown on the back cover of Part A of
this Prospectus, investors will receive at no cost to the investor supplemental
information about the Fund, which has been filed with the SEC. The supplemental
information includes more detailed risk factor disclosure about the types of
Bonds that may be part of the Fund's Portfolio, general risk disclosure
concerning any letters of credit or insurance securing certain Bonds, and
general information about the structure and operation of the Fund.
17
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS (AS DESCRIBED BY THE RATING COMPANIES THEMSELVES)
STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW-HILL, INC.
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
A provisional rating, indicated by 'p' following a rating, assumes the
successful completion of the project being financed by the issuance of the debt
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.
* Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments and
cash flows.
NR--Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
MOODY'S INVESTORS SERVICE, INC.
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as 'gilt
edge'. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
a-1
<PAGE>
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Rating symbols may include numerical modifiers 1, 2 or 3. The numerical
modifier 1 indicates that the security ranks at the high end, 2 in the
mid-range, and 3 nearer the low end, of the generic category. These modifiers of
rating symbols give investors a more precise indication of relative debt quality
in each of the historically defined categories.
Conditional ratings, indicated by 'Con.', are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.
NR--Should no rating be assigned, the reason may be one of the following:
(a) an application for rating was not received or accepted; (b) the issue or
issuer belongs to a group of securities that are not rated as a matter of
policy; (c) there is a lack of essential data pertaining to the issue or issuer
or (d) the issue was privately placed, in which case the rating is not published
in Moody's publications.
FITCH INVESTORS SERVICE, INC.
AAA--These bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--These bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, while very strong, is
somewhat less than for AAA rated securities or more subject to possible change
over the term of the issue.
A--These bonds are considered to be investment grade and of good quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--These bonds are considered to be investment grade and of satisfactory
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however are more likely to weaken this ability than bonds with higher ratings.
A '+' or a '-' sign after a rating symbol indicates relative standing in its
rating.
DUFF & PHELPS CREDIT RATING CO.
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA--High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic condtions.
A--Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.
A '+' or a '-' sign after a rating symbol indicates relative standing in its
rating.
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<PAGE>
APPENDIX B
SALES CHARGE SCHEDULES FOR DEFINED ASSET FUNDS, MUNICIPAL SERIES
DEFERRED AND UP-FRONT SALES CHARGES. Units purchased during the first year
of the Fund will be subject to periodic deferred and contingent deferred sales
charges. Units purchased in the second through fifth year will be subject to an
up-front sales charge as well as periodic deferred and contingent deferred sales
charges. Units purchased thereafter will be subject only to an up-front sales
charge. During the first five years of the Fund, a fixed periodic deferred sales
charge of $2.75 per Unit is payable on 20 quarterly payment dates occurring on
the 10th day of February, May, August and November, commencing no earlier than
45 days after the initial date of deposit. Investors purchasing Units on the
initial date of deposit and holding for at least five years, for example, would
incur total periodic deferred sales charges of $55.00 per Unit. Because of the
time value of money, however, as of the initial date of deposit this periodic
deferred sales charge obligation would, at current interest rates, equate to an
up-front sales charge of approximately 4.75%.
The Public Offering Price subsequent to the Initial Date of Deposit will
fluctuate. As the periodic deferred sales charge is a fixed dollar amount
irrespective of the Public Offering Price, it will represent a varying
percentage of the Public Offering Price. An up-front sales charge will be
imposed on all unit purchases after the first year of the Fund. The following
table illustrates the combined maximum up-front and periodic deferred sales
charges that would be incurred by an investor who purchases Units at the
beginning of each of the first five years of the Fund (based on a constant Unit
price) and holds them through the fifth year of the Fund:
<TABLE><CAPTION>
TOTAL
UP-FRONT SALES CHARGE UP-FRONT AND
------------------------------------------------ MAXIMUM PERIODIC
AS PERCENT OF AMOUNT DEFERRED SALES
YEAR OF AS PERCENT OF NET AMOUNT PER DEFERRED PER CHARGES
UNIT PUBLIC AMOUNT $1,000 $1,000 PER $1,000
PURCHASE OFFERING PRICE INVESTED INVESTED INVESTED INVESTED
- -------- --------------- ------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
1 None None None $ 55.00 $ 55.00
2 1.10% 1.11% $ 11.00 44.00 55.00
3 2.20 2.25 22.00 33.00 55.00
4 3.30 3.41 33.00 22.00 55.00
5 4.40 4.60 44.00 11.00 55.00
</TABLE>
CONTINGENT DEFERRED SALES CHARGE. Units redeemed or repurchased within 4
years after the Fund's initial date of deposit will not only incur the periodic
deferred sales charge until the quarter of redemption or repurchase but will
also be subject to a contingent deferred sales charge:
YEAR SINCE CONTINGENT
FUND'S DEFERRED
INITIAL DATE OF SALES CHARGE PER
DEPOSIT UNIT
- ---------------- ----------------
1 $ 25.00
2 15.00
3 10.00
4 5.00
5 and thereafter None
The contingent deferred sales charge is waived on any redemption or
repurchase of Units after the death (including the death of a single joint
tenant with rights of survivorship) or disability (as defined in the Internal
Revenue Code) of an investor, provided the redemption or repurchase is requested
within one year of the death or initial determination of disability. The
Sponsors may require receipt of satisfactory proof of disability before
releasing the portion of the proceeds representing the amount of the contingent
deferred sales charge waived.
To assist investors in understanding the total costs of purchasing units
during the first four years of the Fund and disposing of those units by the
fifth year, the following tables set forth the maximum combined up-front,
periodic and contingent deferred sales charges that would be incurred (assuming
a constant Unit price) by an investor:
<TABLE><CAPTION>
UNITS PURCHASED ON INITIAL OFFERING DATE
YEAR OF
UNIT CONTINGENT
UP-FRONT SALES DEFERRED DEFERRED SALES TOTAL SALES
DISPOSITION CHARGE SALES CHARGE CHARGE CHARGES
- --------- ----------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
1 None $ 11.00 $ 25.00 $ 36.00
2 None 22.00 15.00 37.00
3 None 33.00 10.00 43.00
4 None 44.00 5.00 49.00
5 None 55.00 0.00 55.00
b-1
<PAGE>
<CAPTION>
UNITS PURCHASED ON FIRST ANNIVERSARY OF FUND
YEAR OF
UNIT CONTINGENT
UP-FRONT SALES DEFERRED DEFERRED SALES TOTAL SALES
DISPOSITION CHARGE SALES CHARGE CHARGE CHARGES
- -------- ----------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
2 $ 11.00 $ 11.00 $ 15.00 $ 37.00
3 11.00 22.00 10.00 43.00
4 11.00 33.00 5.00 49.00
5 11.00 44.00 0.00 55.00
<CAPTION>
UNITS PURCHASED ON SECOND ANNIVERSARY OF FUND
YEAR OF
UNIT CONTINGENT
UP-FRONT SALES DEFERRED DEFERRED SALES TOTAL SALES
DISPOSITION CHARGE SALES CHARGE CHARGE CHARGES
- --------- ----------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
3 $ 22.00 $ 11.00 $ 10.00 $ 43.00
4 22.00 22.00 5.00 49.00
5 22.00 33.00 0.00 55.00
<CAPTION>
UNITS PURCHASED ON THIRD ANNIVERSARY OF FUND
YEAR OF
UNIT CONTINGENT
UP-FRONT SALES DEFERRED DEFERRED SALES TOTAL SALES
DISPOSITION CHARGE SALES CHARGE CHARGE CHARGES
- -------- ----------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
4 $ 33.00 $ 11.00 $ 5.00 $ 49.00
5 33.00 22.00 0.00 55.00
<CAPTION>
UNITS PURCHASED ON FOURTH ANNIVERSARY OF FUND
YEAR OF
UNIT CONTINGENT
UP-FRONT SALES DEFERRED DEFERRED SALES TOTAL SALES
DISPOSITION CHARGE SALES CHARGE CHARGE CHARGES
- -------- ----------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
5 $ 44.00 $ 11.00 $ 0.00 $ 55.00
</TABLE>
b-2
<PAGE>
APPENDIX C
SALES CHARGE SCHEDULES FOR MUNICIPAL INVESTMENT TRUST FUND
INITIAL OFFERING
<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING
PROFIT)
--------------------------
AS PERCENT OF DEALER
OFFER SIDE AS PERCENT CONCESSION AS
PUBLIC OF PERCENT OF
OFFERING NET AMOUNT PUBLIC
NUMBER OF UNITS PRICE INVESTED OFFERING PRICE
- ----------------------------------- ------------- ---------- ---------------
MONTHLY PAYMENT SERIES, MULTISTATE SERIES, INSURED SERIES
<S> <C> <C> <C>
Less than 250...................... 4.50% 4.712% 2.925%
250 - 499.......................... 3.50 3.627 2.275
500 - 749.......................... 3.00 3.093 1.950
750 - 999.......................... 2.50 2.564 1.625
1,000 or more...................... 2.00 2.041 1.300
<CAPTION>
INTERMEDIATE SERIES (TEN YEAR MATURITIES)
<S> <C> <C> <C>
Less than 250...................... 4.00% 4.167% 2.600%
250 - 499.......................... 3.00 3.093 1.950
500 - 749.......................... 2.50 2.564 1.625
750 - 999.......................... 2.00 2.041 1.300
1,000 or more...................... 1.50 1.523 0.975
<CAPTION>
INTERMEDIATE SERIES (SHORT INTERMEDIATE MATURITIES)
<S> <C> <C> <C>
Less than 250...................... 2.75% 2.828% 1.788%
250 - 499.......................... 2.25 2.302 1.463
500 - 749.......................... 1.75 1.781 1.138
750 - 999.......................... 1.25 1.266 0.813
1,000 or more...................... 1.00 1.010 0.650
<CAPTION>
SECONDARY MARKET
ACTUAL SALES
CHARGE AS DEALER CONCESSION
PERCENT OF AS PERCENT OF
NUMBER OF EFFECTIVE SALES EFFECTIVE SALES
UNITS CHARGE CHARGE
- ------------- ---------------- ------------------
<S> <C> <C>
1-249 100% 65%
250-499 80 52
500-749 60 39
750-999 45 29.25
1,000 or more 35 22.75
<CAPTION>
EFFECTIVE SALES CHARGE COMMENCING JANUARY 16, 1996
AS
PERCENT AS PERCENT
OF BID OF PUBLIC
TIME TO SIDE OFFERING
MATURITY EVALUATION PRICE
- ----------------------------- --------- -----------
<S> <C> <C>
Less than six months 0% 0%
Six months to less than 1
year 0.503 0.50
1 year to less than 2 years 1.010 1.00
2 years to less than 3 years 1.523 1.50
3 years to less than 4 years 2.302 2.25
4 years to less than 5 years 2.828 2.75
5 years to less than 6 years 3.093 3.00
6 years to less than 7 years 3.359 3.25
7 years to less than 8 years 3.627 3.50
8 years to less than 9 years 4.167 4.00
9 years to less than 12 years 4.439 4.25
12 years to less than 15
years 4.712 4.50
15 years or more 5.820 5.50
</TABLE>
For this purpose, a Bond will be considered to mature on its stated maturity
date unless: it has been called for redemption; (although not called) its yield
to maturity is more than 40 basis points higher than its yield to any call date;
funds or securities have been placed in escrow to redeem it on an earlier date;
or the Bond is subject to a mandatory tender. In each of these cases the earlier
date will be considered the maturity date.
c-1
<PAGE>
Defined
Asset FundsSM
SPONSORS: MUNICIPAL INVESTMENT
Merrill Lynch, TRUST FUND
Pierce, Fenner & Smith IncorporatedMultistate Series--210
Defined Asset Funds (Unit Investment Trusts)
P.O. Box 9051,
Princeton, NJ This Prospectus does not contain all of the
08543-9051 information with respect to the investment
(609) 282-8500 company set forth in its registration
Smith Barney Inc. statement and exhibits relating thereto which
388 Greenwich Street--23rd Floor, have been filed with the Securities and
New York, NY 10013 Exchange Commission, Washington, D.C. under
(212) 816-4000 the Securities Act of 1933 and the Investment
PaineWebber Incorporated Company Act of 1940, and to which reference
1200 Harbor Blvd., is hereby made.
Weehawken, NJ 07087 ------------------------
(201) 902-3000 No person is authorized to give any
Prudential Securities Incorporated information or to make any representations
One New York Plaza, with respect to this investment company not
New York, NY 10292 contained in this Prospectus; and any
(212) 778-6164 information or representation not contained
Dean Witter Reynolds Inc. herein must not be relied upon as having been
Two World Trade Center--59th Floor,authorized.
New York, NY 10048 ------------------------
(212) 392-2222 When Units of this Fund are no longer
EVALUATOR: available this Prospectus may be used as a
Kenny S&P Evaluation Services, preliminary prospectus for a future series,
a division of J. J. Kenny Co., Inc.and investors should note the following:
65 Broadway, New York, NY 10019 Information contained herein is subject to
TRUSTEE: amendment. A registration statement relating
The Chase Manhattan Bank, N.A. to securities of a future series has been
(a National Banking Association) filed with the Securities and Exchange
Customer Service Retail Department Commission. These securities may not be sold
770 Broadway--7th Floor nor may offers to buy be accepted prior to
New York, NY 10003-9598 the time the registration statement becomes
1-800-323-1508 effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer
solicitation or sale would be unlawful prior
to registration or qualification under the
securities laws of any such State.
15340--7/96
