DEFINED ASSET FUNDS MUNICIPAL STATE SERIES, 497, 1995-05-01

DEFINED ASSET FUNDS MUNICIPAL STATE SERIES
497, 1995-05-01

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DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------

MUNICIPAL STATE ESTIMATED CURRENT RETURN shows the estimated
SERIES annual cash to be received from interest-bearing
(UNIT INVESTMENT bonds in the Portfolio (net of estimated annual
TRUSTS) expenses) divided by the Public Offering Price
- ------------------------------(including the maximum sales charge).
/ / DESIGNED FOR DOUBLE ESTIMATED LONG TERM RETURN is a measure of the
TAX-FREE INCOME estimated return over the estimated life of the
/ / DEFINED PORTFOLIOS OF Fund. This represents an average of the yields to
INSURED MUNICIPAL BONDS maturity (or in certain cases, to an earlier call
/ / MONTHLY INCOME date) of the individual bonds in the Portfolio,
/ / AAA-RATED adjusted to reflect the maximum sales charge and
CALIFORNIA INSURED SERIES estimated expenses. The average yield for the
5.37% Portfolio is derived by weighting each bond's
ESTIMATED CURRENT RETURN yield by its market value and the time remaining
5.49% to the call or maturity date, depending on how the
ESTIMATED LONG TERM RETURN bond is priced. Unlike Estimated Current Return,
PENNSYLVANIA INSURED SERIES Estimated Long Term Return takes into account
5.34% maturities, discounts and premiums of the
ESTIMATED CURRENT RETURN underlying bonds.
5.41% No return estimate can be predictive of your
ESTIMATED LONG TERM RETURN actual return because returns will vary with
AS OF APRIL 26, 1995 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 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.

-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
SPONSORS: Inquiries should be directed to the Trustee at
Merrill Lynch, 1-800-323-1508.
Pierce, Fenner & Smith Prospectus dated April 27, 1995.
Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
PaineWebber Incorporated AND RETAIN IT FOR FUTURE REFERENCE.

<PAGE>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $95 billion sponsored since 1971. 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

Termination dates 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 Municipal State 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 insured 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 insured long-term
municipal bonds issued by or on behalf of a single state and its local
governments and authorities. Units may also be exempt from certain state and
local taxes for residents of the State.

DIVERSIFICATION

Each Portfolio contains a number of different bond issues. Spreading your
investment among different issuers reduces your risk, but does not eliminate it,
especially since each Portfolio contains bonds of only one State. Because of
maturities, sales or other dispositions of bonds, the size, composition and
return of the Portfolio will change over time.

- ----------------------------------------------------------------
Defining Your Portfolio
- ----------------------------------------------------------------

PROFESSIONAL SELECTION AND SUPERVISION

Each Portfolio contains a variety of bonds selected by experienced buyers and
research analysts. The Fund is not actively managed; however, it is regularly
reviewed and a bond can be sold if retaining it is considered detrimental to
investors' interests.

MONTHLY FEDERALLY TAX-FREE INTEREST INCOME

Each Portfolio pays monthly income, even though the bonds generally pay interest
semi-annually.

AAA-RATED AND INSURED

The bonds included in the Portfolios are insured. This insurance guarantees the
timely payment of principal and interest of the bonds, but does not guarantee
the value of the bonds or the units. As a result of the insurance, the units of
each insured Portfolio are AAA-rated by Standard & Poor's Ratings Group.
Insurance does not cover accelerated payments of principal or any increase in
interest payments or premiums payable on mandatory redemptions, including if
interest on a bond is determined to be taxable. (See Risk Factors--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 each of the bonds is 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 PER UNIT $1,000.00

The Public Offering Price as of April 26, 1995, the business day prior to the
Initial Date of Deposit, is based on the aggregate offer side value of the
underlying bonds in the Portfolio, the price at which they can be directly
purchased by the public assuming they were available, plus cash, divided by the
number of units outstanding. Units offered on the Initial Date of Deposit will
also be priced at $1,000 although the offer side value of the bonds, cash amount
and number of units may vary. The Public Offering Price on any subsequent date
will vary. An amount equal to net accrued but undistributed interest on the unit
is added to the Public Offering Price for sales made after the Initial Date of
Deposit. The underlying bonds are evaluated by an independent evaluator at 1:00
p.m. Eastern time on the business day prior to the Initial Date of Deposit, and
at 3:30 p.m. Eastern time on every business day thereafter.

LOW MINIMUM INVESTMENT

You can get started with a minimum purchase of $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 not
needed to pay the deferred sales charge 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 the Portfolios 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'
Profits 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 (based on the offer side evaluation of the bonds
during the initial public offering period for at least the first three months
and the lower, bid side evaluation thereafter, as determined by an independent
evaluator, plus accrued interest). If you sell your units before the fourth
anniversary of the Portfolio, you will pay a contingent deferred sales charge of
$25 per unit if sold in the first year, $15 per unit if sold in the second year,
$10 per unit if sold in the third year and $5 per unit if sold in the fourth
year.

- ----------------------------------------------------------------
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 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 of the Sponsors has participated as sole underwriter, managing underwriter
or member of an underwriting syndicate from which 15% of the bonds in the
Portfolios were acquired.

SPONSORS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
P.O. Box 9051,
Princeton, NJ 08543-9051 88.36%

PAINEWEBBER INCORPORATED
1285 Avenue of the Americas,
New York, NY 10019 11.64%

100.00%

A-3
<PAGE>

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Defined California Insured Series
- --------------------------------------------------------------------------------

PORTFOLIO DIVERSIFICATION

The Portfolio contains 7 California bond issues.
TYPES OF BONDS

The Portfolio consists of $6,000,000 face amount of municipal revenue bonds
which are payable from the income generated by a specific project or authority:

SOURCE OF REVENUE
/ / General Obligations 15%
/ / Hospitals/Health Care Facilities 15%
/ / Lease Rental Appropriation 15%
/ / Municipal Water/Sewer Utilities 25%
/ / Universities/Colleges 14%
/ / State/Local Municipal Electric Utilities 16%

AAA-RATED AND INSURED

The percentage of the aggregate face amount insured by each insurance company
is:

PORTFOLIO
INSURANCE COMPANY PERCENTAGE

Financial Guaranty Insurance Company 25%
MBIA Insurance Corporation 31%
AMBAC Indemnity Corporation 30%
Connie Lee Insurance Company 14%

PORTFOLIO CONCENTRATIONS

The Fund is considered to be concentrated in Municipal Water/Sewer Utility bonds
and is therefore dependent to a significant degree on revenues generated from
those particular activities. In addition, the Portfolio is concentrated in bonds
of California issuers and is subject to additional risk from decreased
diversification as well as factors that may be particular to California, which
are briefly described on page A-6.

- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------

NO UP-FRONT SALES CHARGE

The Portfolio does not have an up-front sales charge during the first year of
the Portfolio. In the first five years of owning the Portfolio you will pay $11
per Unit each year ($2.75 quarterly), a total of $55. This sales charge will be
paid from interest on $55 of bonds notionally reserved for that purpose and the
periodic sale of bonds. Interest on the reserved bonds accrues to you and is not
included in the Portfolio's return figures. Although the Portfolio is a unit
investment trust rather than a mutual fund, the following information is
presented to permit a comparison of fees and an understanding of the direct or
indirect costs and expenses that you pay.

As a %
of Initial Public Amount per
Offering Price $1,000 Invested
----------------- ---------------
Maximum Sales Charges 5.5% $ 55.00

ESTIMATED ANNUAL OPERATING EXPENSES

As a %
of Average
Net Assets* Per Unit
----------------- ---------------
Trustee's Fee .072% $ 0.72
Maximum Portfolio Supervision
and Bookkeeping Fees .041% $ 0.41
Evaluator's Fee .022% $ 0.22
Other Operating Expenses .041% $ 0.41
----------------- ---------------
TOTAL .176% $ 1.76

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

* 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 and
redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$38 $49 $65 $77

No redemption at the end of the period:
$13 $39 $65 $77

The example assumes reinvestment of all distributions into additional units of
the Portfolio (a reinvestment option different from that offered by this
Portfolio) 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 April 26, 1995, the Public Offering Price was $1,000, based on the
aggregate offer side value of the bonds ($5,773,303.10), plus cash ($64,696.90),
divided by the number of units outstanding (5,838).
The bid side redemption and secondary market repurchase price as of April 26,
1995 was $995.89 ($4.11 less than the Public Offering Price).

- ----------------------------------------------------------------
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
(June 25, 1995): $ 5.40
Regular Monthly Income per unit
(Beginning on July 25, 1995): $ 4.50
Annual Income per unit: $ 54.01

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.
A-4
<PAGE>

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Defined California Portfolio
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<TABLE><CAPTION>

California Insured Series April 26, 1995

OPTIONAL SINKING
RATING REFUNDING FUND COST
PORTFOLIO TITLE OF ISSUES (1) REDEMPTIONS (2) REDEMPTIONS (2) TO FUND (3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $850,000 California Educl. Fac.
Auth., Rfdg. Rev. Bonds (College of
Osteopathic Medicine of the
Pacific), Ser. 1995 (Connie Lee
Ins.), 5.75%, 6/1/18 AAA 6/1/05 @ 102 6/1/09 $ 813,339.50

2. $900,000 California Hlth. Fac.
Fin. Auth., Ins. Hosp. Rev. Bonds
(San Diego Hosp. Assoc.), Ser. 1992
B (MBIA Ins.), 6.125%, 8/1/22 AAA 8/1/02 @ 102 8/1/12 904,626.00

3. $610,000 Department of Wtr. and
Pwr. of the City of Los Angeles,
CA, Wtr. Works Rev. Bonds, Second
Iss. of 1992 (Financial Guaranty
Ins.), 6.00%, 7/15/32 AAA 7/15/02 @ 102 7/15/13 605,437.20

4. $900,000 Lynwood Pub. Fin.
Auth., CA, Rev. Bonds, 1993 Ser. A
(AMBAC Ins.), 5.75%, 9/1/18 AAA 9/1/03 @ 102 9/1/04 877,356.00

5. $900,000 City of Oakland,
Alameda Cnty., CA, Gen. Oblig.
Bonds, Ser. 1992 (Financial
Guaranty Ins.), 6.00%, 6/15/22(4) AAA 6/15/02 @ 102 6/15/18 900,000.00

6. $940,000 Sacramento Muni. Util.
Dist., CA, Elec. Rev. Rfdg. Bonds,
1993 Ser. D (MBIA Ins.), 5.25%,
11/15/20 AAA 11/15/03 @ 102 11/15/16 854,093.40

7. $900,000 Public Fac. Fin. Auth.
of The City of San Diego, CA, Swr.
Rev. Bonds, Ser. 1993 (AMBAC Ins.),
5.25%, 5/15/20 AAA 5/15/03 @ 102 5/15/14 818,451.00
------------------
$ 5,773,303.10
------------------
------------------
</TABLE>
- ------------------------------------

(1) All ratings are by Standard & Poor's Ratings Group. (See Appendix A to Part
B.)

(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.

(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 15% of the bonds were purchased at a
premium, 15% at par, and 70% at a discount from par. Profit to the Sponsors on
deposit of the bonds was $65,541.70.

(4) It is anticipated that the interest on $321,090 face amount of this bond
will be applied to the payment of the Portfolio's deferred sales charge and,
therefore, this amount has not been included in the Portfolio's calculation of
Estimated Current Return and Estimated Long Term Return.

A-5
<PAGE>

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California Taxes and Risks
- --------------------------------------------------------------------------------

CALIFORNIA RISK FACTORS

The State of California continues to confront budgetary concerns. State
expenditures in recent years have exceeded projected amounts mainly because of
increased health and welfare caseloads, lower property taxes (requiring State
support for certain education expenses), lower than expected federal government
payments for immigration related costs, significant additional costs associated
with the construction and operation of correctional institutions and
extraordinary expenditures related to the January 1994 Los Angeles earthquake
and the recent severe flooding in various parts of the State. Also, in December
1994, Orange County, California and its Investment Pool filed for bankruptcy in
connection with substantial losses experienced by the Pool. The County has since
defaulted on certain of its obligations and substantial budget deficits may be
experienced by the County and other public agencies which participate in the
Pool. The ultimate financial impact of these events upon the County and other
Pool investors and the State of California, generally, or the liquidity or value
of their securities, cannot be predicted.

To balance the budget, the Governor of California has proposed, among other
things, a series of revenue shifts from local government, reliance on increased
federal aid and reductions in state spending. Major adjustments reflected in
recent budgets include a shift in property taxes from cities, counties, special
districts and redevelopment agencies to school and community college districts,
severe reductions in support for health and welfare programs and higher
education, and various other cuts in services, suspensions of tax credits and
payment deferrals.

Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations and voter initiatives could have
adverse effects on the California economy. Among these are measures that have
established tax, spending or appropriations limits and prohibited the imposition
of certain new taxes, authorized the transfers of tax liabilities and
reallocations of tax receipts among governmental entities and provided for
minimum levels of funding.

Certain bonds in the Portfolio may be subject to provisions of California
law that could adversely affect payments on those bonds or limit the remedies
available to bondholders. Among these are bonds of health care institutions
which are subject to the strict rules and limits regarding reimbursement
payments of California's Medi-Cal Program for health care services to welfare
beneficiaries, and bonds secured by liens on real property.

General obligation bonds of the State of California are currently rated A1
by Moody's and A by Standard & Poor's.

CALIFORNIA TAXES

In the opinion of O'Melveny & Myers, Los Angeles, California, special
counsel on California tax matters, under existing California law:

The Trust is not an association taxable as a corporation for California tax
purposes. Each Holder will be considered the owner of a pro rata portion of the
Trust 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. 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 or is redeemed or paid at maturity. The Debt
Obligations and the Units are not taxable under the California personal property
tax law.

A-6
<PAGE>

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Defined Pennsylvania Insured Series
- --------------------------------------------------------------------------------

PORTFOLIO DIVERSIFICATION

The Portfolio contains 7 Pennsylvania bond issues.

TYPES OF BONDS

The Portfolio consists of $5,000,000 face amount of municipal revenue bonds
which are payable from the income generated by a specific project or authority:

SOURCE OF REVENUE
/ / Parking Authority 15%
/ / Hospitals/Health Care Facilities 40%
/ / Special Tax 15%
/ / Municipal Water/Sewer Utilities 30%

AAA-RATED AND INSURED

The percentage of the aggregate face amount insured by each insurance company
is:

PORTFOLIO
INSURANCE COMPANY PERCENTAGE

Financial Guaranty Insurance Company 30%
MBIA Insurance Corporation 30%
AMBAC Indemnity Corporation 25%
Connie Lee Insurance Company 15%

PORTFOLIO CONCENTRATIONS

The Portfolio is considered to be concentrated in Hospital/Health Care Facility
and Municipal Water/Sewer Utility bonds and is therefore dependent to a
significant degree on revenues generated from those particular activities. In
addition, the Portfolio is concentrated in bonds of Pennsylvania issuers and is
subject to additional risk from decreased diversification as well as factors
that may be particular to Pennsylvania, which are briefly described on page A-9.

- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------

NO UP-FRONT SALES CHARGE

As a % Amount per
of Initial Public $1,000
Offering Price Invested
----------------- --------------
Maximum Sales Charges 5.5% $ 55.00

ESTIMATED ANNUAL OPERATING EXPENSES

As a %
of Average
Net Assets* Per Unit
----------------- --------------
Trustee's Fee .071% $ 0.71
Maximum Portfolio Supervision
and Bookkeeping Fees .046% $ 0.46
Evaluator's Fee .026% $ 0.26
Other Operating Expenses .048% $ 0.48
----------------- --------------
TOTAL .191% $ 1.91

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

* 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 and
redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$38 $49 $66 $79

No redemption at the end of the period:
$13 $39 $66 $79

As of April 26, 1995, the Public Offering Price was $1,000, based on the
aggregate offer side value of the bonds ($4,848,970.00), plus cash ($54,030.00),
divided by the number of units outstanding (4,903).
The bid side redemption and secondary market repurchase price as of April 26,
1995 was $995.92 ($4.08 less than the Public Offering Price).

- ----------------------------------------------------------------
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
(June 25, 1995): $ 5.37
Regular Monthly Income per unit
(Beginning on July 25, 1995): $ 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.

A-7

<PAGE>

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Defined Pennsylvania Portfolio
- --------------------------------------------------------------------------------

Pennsylvania Insured Series April 26, 1995

OPTIONAL SINKING
RATING REFUNDING FUND COST
PORTFOLIO TITLE OF ISSUES (1) REDEMPTIONS (2) REDEMPTIONS (2) TO FUND (3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. $750,000 Pennsylvania
Intergovernmental Coop. Auth.,
Spec. Tax Rev. Bonds (City of
Philadelphia Funding Prog.), Ser.
of 1993 (MBIA Ins.), 5.75%, 6/15/15 AAA 6/15/03 @ 100 6/15/10 $ 736,777.50

2. $500,000 Bucks Cnty. Ind. Dev.
Auth., PA, Hosp. Rev. Rfdg. Bonds
(Grand View Hosp.), Ser. A of 1993
(AMBAC Ins.), 5.25%, 7/1/21 AAA 7/1/03 @ 102 7/1/13 453,805.00

3. $750,000 Cambria Cnty. Hosp.
Dev. Auth., PA, Hosp. Rev. Rfdg.
and Imp. Bonds (Conemaugh Valley
Mem. Hosp. Proj.), Ser. B of 1992
(Connie Lee Ins.), 6.375%, 7/1/18 AAA 7/1/02 @ 102 7/1/09 766,890.00

4. $750,000 Montgomery Cnty. Higher
Educ. and Hlth. Auth., PA, Hosp.
Rev. Bonds (Abington Mem. Hosp.),
Ser. A of 1994 (AMBAC Ins.),
5.125%, 6/1/24 AAA 6/1/04 @ 102 6/1/15 664,845.00

5. $750,000 The Erie Parking Auth.,
PA, Guaranteed Parking Rev. Bonds,
Ser. of 1995 (Financial Guaranty
Ins.), 5.80%, 9/1/20(5) AAA 9/1/05 @ 100 9/1/16 740,130.00

6. $750,000 City of Philadelphia,
PA, Wtr. and Wastewater Rev. Bonds,
Ser. 1995 (MBIA Ins.), 5.60%,
8/1/18(5) AAA 8/1/05 @ 102 8/1/15 721,642.50

7. $750,000 North Penn Wtr. Auth.
(Montgomery Cnty., PA), Wtr. Rev.
Bonds, Ser. of 1992 (Financial
Guaranty Ins.), 6.20%, 11/1/22(4) AAA 11/1/02 @ 101 11/1/13 764,880.00
------------------
$ 4,848,970.00
------------------
------------------
</TABLE>
- ------------------------------------
(1) All ratings are by Standard & Poor's Ratings Group. (See Appendix A to Part
B.)

(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 30% of the bonds were purchased at a
premium and 70% at a discount from par. Profit to the Sponsors on deposit of the
bonds was $40,970.00.

(4) It is anticipated that the interest on $264,419 face amount of this bond
will be applied to the payment of the Portfolio's deferred sales charge and,
therefore, this amount has not been included in the Portfolio's calculation of
Estimated Current Return and Estimated Long Term Return.

(5) These bonds are when issued bonds that are expected to settle 14 days after
the settlement date for Units. The Trustee's fee will be reduced during the
first year by $0.79 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>

- --------------------------------------------------------------------------------
Pennsylvania Taxes and Risks
- --------------------------------------------------------------------------------

PENNSYLVANIA RISK FACTORS

The Commonwealth of Pennsylvania and certain of its municipal subdivisions,
including the City of Philadelphia, have undergone the financial difficulties
and pressures that accompany a decline in economic conditions. As the heavy
industries historically associated with Pennsylvania -- e.g., coal, steel and
railroad -- have declined with increasing competition from foreign producers,
the services sector, including trade, medical and health services, education and
financial institutions, has provided major new sources of growth. Agriculture
and related industries continue to be an important part of Pennsylvania's
economy.

Both the Commonwealth of Pennsylvania and the City of Philadelphia have
historically experienced significant revenue shortfalls. On the other hand,
rising demands on state programs, particularly for medical assistance and cash
assistance programs, and the increased cost of special education programs and
correction facilities and programs, have contributed to increased expenditures.
In response, the Commonwealth and the City of Philadelphia have, in recent
years, sought to balance budgets with a combination of tax increases and
expenditure restraints.

To deal with its budget deficits, Philadelphia has considered significant
service cuts and a plan to privatize certain city-provided services. In
addition, in 1991 the Commonwealth created the Pennsylvania Inter-Governmental
Cooperation Authority (PICA), with authority to issue notes and bonds on behalf
of Philadelphia to cover budget shortfalls, to eliminate projected deficits and
fund Philadelphia capital spending. The enabling legislation contemplates such
notes and bonds to be repaid, in part, by revenues generated from Philadelphia's
new one percent sales tax. PICA is also authorized to review Philadelphia's
required five-year financial plans, which include balanced annual budgets. If
Philadelphia does not comply with the legislation's requirements, PICA may
withhold bond revenues and certain Commonwealth funding.

Although there can be no assurance that such conditions will continue, the
Commonwealth's general obligation bonds are currently rated AA-by Standard &
Poor's and A1 by Moody's, while Philadelphia's general obligation bonds are
rated BB and Baa by Standard & Poor's and Moody's, respectively.

PENNSYLVANIA TAXES

The following summarizes the opinion of Dechert Price & Rhoads,
Philadelphia, Pennsylvania, special counsel on Pennsylvania tax matters, under
existing law:

1. The Fund will be recognized as a trust and will not be taxable as a
corporation for Pennsylvania state and local tax purposes.

2. Units of the Fund are not subject to any of the personal property taxes
presently in effect in Pennsylvania to the extent of that proportion of the Fund
represented by bonds issued by the Commonwealth of Pennsylvania, its agencies
and instrumentalities, or by any county, city, borough, town, township, school
district, municipality or local housing or parking authority in the Commonwealth
of Pennsylvania ('Pennsylvania Obligations'). The taxes referred to above
include the County Personal Property Tax, the additional personal property taxes
imposed on Pittsburgh residents by the School District of Pittsburgh and by the
City of Pittsburgh. The City of Pittsburgh, the School District of Pittsburgh
and Allegheny County cannot impose personal property taxes as of January 1,
1995. Fund Units may be taxable under the Pennsylvania inheritance and estate
taxes.

3. The proportion of interest income representing interest income from
Pennsylvania Obligations distributable to investors in the Fund is not taxable
under the Pennsylvania Personal Income Tax or under the corporate Net Income Tax
imposed on corporations by Article IV of the Pennsylvania Tax Reform Code, nor
will such interest be taxable under the Philadelphia School District Investment
Income Tax imposed on Philadelphia resident individuals.

4. Although there is no published authority on the subject, counsel is of
the opinion that any insurance proceeds paid in lieu of interest on defaulted
tax-exempt bonds will be exempt from the Pennsylvania Personal Income Tax either
as payment in lieu of tax-exempt interest or as payments of insurance proceeds
which are not included in any of the classes of income specified as taxable
under the Pennsylvania Personal Income Tax Law. Further, because such insurance
proceeds are excluded from the Federal income tax base, such proceeds will not
be subject to the Pennsylvania Corporate Net Income Tax. Proceeds from insurance
policies are expressly excluded from the Philadelphia School District Investment
Income Tax and, accordingly, insurance proceeds paid to replace defaulted
payments under any bonds will not be subject to this tax.

5. The disposition by the Pennsylvania Trust of a Pennsylvania Obligations
(whether by sale, exchange, redemption or payment at maturity) will not
constitute a taxable event to an investor under the Pennsylvania Personal Income
Tax if the Pennsylvania Obligation was issued prior to February 1, 1994.
Further, although there is no published authority on the subject, counsel is of
the opinion that (i) an investor in the Fund will not have a taxable event under
the Pennsylvania state and
A-9
<PAGE>
local income taxes referred to in the preceding paragraph upon the redemption or
sale of his Unit to the extent that the Fund is then comprised of Pennsylvania
Obligations issued prior to February 1, 1994 and (ii) the disposition by the
Trust of a Pennsylvania Obligation (whether by sale, exchange, redemption or
payment at maturity) will not constitute a taxable event to an investor under
the Corporate Net Income Tax or the Philadelphia School District Investment
Income Tax if the Pennsylvania Obligation was issued prior to February 1, 1994.
(The School District tax has no application to gain on the disposition of
property held by the taxpayer for more than six months.) Gains on the sale,
exchange, redemption, or payment at maturity of a Pennsylvania Obligation issued
on or after February 1, 1994, will be taxable under all of these taxes, as will
gains on the redemption or sale of a unit to the extent that the Fund is
comprised of Pennsylvania Obligations issued on or after February 1, 1994.

6. To the extent the value of units is represented by obligations of the
Commonwealth of Puerto Rico or obligations of the territory of Guam, such value
will not be subject to Pennsylvania personal property taxes to the extent
required by federal statutes. The proportion of income received by investors
derived from interest on such obligations is not taxable under any of the
Pennsylvania State and local income taxes referred to above. Although federal
law does not expressly exclude from taxation gain realized on the disposition of
obligations of Puerto Rico or of Guam, Pennsylvania taxes gain from the
disposition of such obligations under the Personal Income Tax only if such
obligations were issued on or after February 1, 1994.

A-10
<PAGE>

- --------------------------------------------------------------------------------
TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR CALIFORNIA RESIDENTS
- --------------------------------------------------------------------------------

EFFEC-
TIVE TAX-FREE YIELD
TAXABLE INCOME 1995* TAX RATE OF
SINGLE RETURN JOINT RETURN 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF
SINGLE RETURN 7% 7.5% 8%
- --------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
0- 23,350 $ 0- 39,000 20.10 5.01 5.63 6.26 6.88 7.51 8.14
$ 23,350- 56,550 $ 39,000- 94,250 34.70 6.13 6.89 7.66 8.42 9.19 9.95
$ 94,250-143,600 37.42 6.39 7.19 7.99 8.79 9.59 10.39
$ 56,550-117,950 37.90 6.44 7.25 8.05 8.86 9.66 10.47
$ 143,600-256,500 42.40 6.94 7.81 8.68 9.55 10.42 11.28
$ 117,950-256,500 43.04 7.02 7.90 8.78 9.66 10.53 11.41
OVER $256,500 OVER $256,500 46.24 7.44 8.37 9.30 10.23 11.16 12.09

</TABLE>

0- 23,350 8.76 9.39 10.01
$ 23,350- 56,550 10.72 11.48 12.25
11.19 11.98 12.78
$ 56,550-117,950 11.27 12.08 12.88
12.15 13.02 13.89
$ 117,950-256,500 12.29 13.17 14.04
OVER $256,500 13.02 13.95 14.88

FOR PENNSYLVANIA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE><CAPTION>

EFFECTIVE TAX-FREE YIELD
TAXABLE INCOME 1995* TAX RATE OF
SINGLE RETURN JOINT RETURN 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF

SINGLE RETURN 7% 7.5% 8%
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0- 23,350 $ 0- 39,000 17.38 4.84 5.45 6.05 6.66 7.26 7.87
$ 23,350- 56,550 $ 39,000- 94,250 30.02 5.72 6.43 7.14 7.86 8.57 9.29
$ 56,550-117,950 $ 94,250-143,600 32.93 5.96 6.71 7.46 8.20 8.95 9.69
$ 117,950-256,500 $ 143,600-256,500 37.79 6.43 7.23 8.04 8.84 9.65 10.45
OVER $256,500 OVER $256,500 41.29 6.81 7.66 8.52 9.37 10.22 11.07

</TABLE>

0- 23,350 8.47 9.08 9.68
$ 23,350- 56,550 10.00 10.72 11.43
$ 56,550-117,950 10.44 11.18 11.93
$ 117,950-256,500 11.25 12.06 12.86
OVER $256,500 11.92 12.77 13.63

To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. The table incorporates
projected 1995 federal and applicable State income tax rates and assumes that
all income would otherwise be taxed at the investor's highest tax rate. Yield
figures are for example only.

*Based upon net amount subject to federal income tax after deductions and
exemptions. This table does not reflect the possible effect of other tax
factors, such as alternative minimum tax, personal exemptions, the phase out of
exemptions, itemized deductions or the possible partial disallowance of
deductions. Consequently, investors are urged to consult their own tax advisers
in this regard.
A-11
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders of Defined Asset Funds, Municipal State
Series (the 'Fund'):

We have audited the accompanying statements of condition and the related
defined portfolios included in the prospectus of the Fund as of April 26,
1995. These financial statements are the responsibility of the Trustee. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities, cash and the irrevocable
letters 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 audit 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 the Fund as of April 26, 1995
in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, N.Y.
April 26, 1995

STATEMENTS OF CONDITION AS OF APRIL 26, 1995

TRUST PROPERTY
<TABLE><CAPTION>
CALIFORNIA SERIES PENNSYLVANIA SERIES
-------------------- --------------------
<S> <C> <C>
Investments--Bonds and Contracts to purchase Bonds(1) $ 5,773,303.10 $ 4,848,970.00
Cash 64,696.90 54,030.00
Accrued interest on underlying Bonds 104,857.15 63,525.91
-------------------- --------------------
Total $ 5,942,857.15 $ 4,966,525.91
==================== ====================
LIABILITY AND INTEREST OF HOLDERS
Liability--Advance by Trustee for accrued interest(2) $ 104,857.15 $ 63,525.91
Interest of Holders of fractional undivided interest
outstanding
(California Series--5,838 units; Pennsylvania
Series--4,903 units)(3);
Cost to investors(4)(5) 5,838,000.00 4,903,000.00
-------------------- --------------------
Total $ 5,942,857.15 $ 4,966,525.91
==================== ====================
COST TO INVESTORS PER UNIT $ 1,000.00 $ 1,000.00
==================== ====================
</TABLE>

(1) Aggregate cost to the Fund of the bonds listed under Defined
Portfolios 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 (1:00 p.m., Eastern time). The contracts to purchase the bonds are
collateralized by irrevocable letters of credit which have been issued by The
Development Bank of Singapore, Ltd., New York Agency, in the amount of
$10,681,629.39 and deposited with the Trustee. The amount of letters of credit
includes $10,515,761.40 for the purchase of $11,000,000 face amount of the
bonds, plus $165,867.99 for accrued interest.

(2) Representing a special distribution to the Sponsors by the
Trustee of an amount equal to the accrued interest on the bonds.

(3) Because the value of bonds based on the evaluation time on the
Initial Date of Deposit may differ from the amounts shown in this statement of
condition, the units offered on the Initial Date of Deposit will be adjusted
from the initial number of Units to maintain the initial $1,000.00 per Unit
offering price.

(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 (1:00
p.m., Eastern time).

(5) A deferred sales charge of $2.75 per Unit will be paid quarterly
by the Trustee on behalf of the investors up to an aggregate of $55.00 per
Unit over a five year period. Should an investor redeem Units prior to the end
of the fourth anniversary of a Portfolio, a contingent deferred sales charge
(initially $25.00 per Unit) will be deducted from redemption proceeds and paid
to the Sponsors.

A-12

<PAGE>
DEFINED ASSET FUNDS
MUNICIPAL STATE SERIES
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.
12345678
A-13
<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
UNIT TRUST DEPARTMENT
BOX 2051
NEW YORK, NY 10081

- --------------------------------------------------------------------------------
(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 INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS OF WRITTEN OR TELEPHONIC REQUEST TO THE TRUSTEE AT THE ADDRESS
AND TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.

Index

PAGE
---------
Fund Description...................................... 1
Risk Factors.......................................... 2
How to Buy Units...................................... 7
How to Sell Units..................................... 9
Income, Distributions and Reinvestment................ 9
Fund Expenses......................................... 10
Taxes................................................. 11
Records and Reports................................... 12

PAGE
---------
Trust Indenture....................................... 12
Miscellaneous......................................... 13
Exchange Option....................................... 14
Supplemental Information.............................. 15
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 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
1
<PAGE>
managed and principal is returned as the Bonds are disposed of, this principal
should be relatively unaffected by changes in interest rates.

BOND PORTFOLIO SUPERVISION

The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. The Fund may retain an issuer's bonds despite adverse financial
developments. Experienced financial analysts regularly review the Portfolio and
a Bond may be sold in certain circumstances including the occurrence of a
default in payment or other default on the Bond, a decline in the projected
income pledged for debt service on a revenue bond, institution of certain legal
proceedings, if the Bond becomes taxable or is otherwise inconsistent with the
Fund's investment objectives, a decline in the price of the Bond or the
occurrence of other market or credit factors (including advance refunding) that,
in the opinion of Defined Asset Funds research analysts, makes retention of the
Bond detrimental to the interests of investors. The Trustee must generally
reject any offer by an issuer of a Bond to exchange another security pursuant to
a refunding or refinancing plan.

The Sponsors and the Trustee are not liable for any default or defect in a
Bond. If a contract to purchase any Bond fails, the Sponsors may generally
deposit a replacement bond so long as it is a tax-exempt bond, has a fixed
maturity or disposition date substantially similar to the failed Bond and is
rated A or better by at least one nationally recognized rating organization or
has comparable credit characteristics. A replacement bond must be deposited
within 110 days after deposit of the failed contract, at a cost that does not
exceed the funds reserved for purchasing the failed Bond and at a yield to
maturity and current return substantially equivalent (considering then current
market conditions and relative creditworthiness) to those of the failed Bond, as
of the date the failed contract was deposited.

RISK FACTORS

An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline with increases in interest rates.
Generally speaking, bonds with longer maturities will fluctuate in value more
than bonds with shorter maturities. In recent years there have been wide
fluctuations in interest rates and in the value of fixed-rate bonds generally.
The Sponsors cannot predict the direction or scope of any future fluctuations.

Certain of the Bonds may have been deposited at a market discount or
premium principally because their interest rates are lower or higher than
prevailing rates on comparable debt securities. The current returns of market
discount bonds are lower than comparably rated bonds selling at par because
discount bonds tend to increase in market value as they approach maturity. The
current returns of market premium bonds are higher than comparably rated bonds
selling at par because premium bonds tend to decrease in market value as they
approach maturity. Because part of the purchase price is returned through
current income payments and not at maturity, an early redemption at par of a
premium bond will result in a reduction in yield to the Fund. Market premium or
discount attributable to interest rate changes does not indicate market
confidence or lack of confidence in the issue.

Certain Bonds deposited into the Fund may have been acquired on a
when-issued or delayed delivery basis. The purchase price for these Bonds is
determined prior to their delivery to the Fund and a gain or loss may result
from fluctuations in the value of the Bonds. Additionally, in any Defined Asset
Funds Municipal Series, if the value of the Bonds reserved for payment of the
periodic deferred sales charge, together with the interest thereon, were to
become insufficient to pay these charges, additional bonds would be required to
be sold.

The Fund may be concentrated in one or more of types of bonds.
Concentration in a State may involve additional risk because of the decreased
diversification of economic, political, financial and market risks. Set forth
below is a brief description of certain risks associated with bonds which may be
held by the Fund. Additional information is contained in the Information
Supplement which is available from the Trustee at no charge to the investor.

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.
2
<PAGE>

MORAL OBLIGATION BONDS

The Portfolio may include 'moral obligation' bonds. If an issuer of moral
obligation bonds is unable to meet its obligations, the repayment of the bonds
becomes a moral commitment but not a legal obligation of the state or local
government in question. Even though the state or local government may be called
on to restore any deficits in capital reserve funds of the agencies or
authorities which issued the bonds, any restoration generally requires
appropriation by the state or local legislature and does not constitute a
legally enforceable obligation or debt of the state or local government. The
agencies or authorities generally have no taxing power.

REFUNDED BONDS

Refunded bonds are typically secured by direct obligations of the U.S.
Government or in some cases obligations guaranteed by the U.S. Government placed
in an escrow account maintained by an independent trustee until maturity or a
predetermined redemption date. These obligations are generally noncallable prior
to maturity or the predetermined redemption date. In a few isolated instances,
however, bonds which were thought to be escrowed to maturity have been called
for redemption prior to maturity.

MUNICIPAL REVENUE BONDS

Municipal revenue bonds are tax-exempt securities issued by states,
municipalities, public authorities or similar entities to finance the cost of
acquiring, constructing or improving various projects. Municipal revenue bonds
are not general obligations of governmental entities backed by their taxing
power and payment is generally solely dependent upon the creditworthiness of the
public issuer or the financed project or state appropriations. Examples of
municipal revenue bonds are:

Municipal utility bonds, including electrical, water and sewer revenue
bonds, whose payments are dependent on various factors, including the rates
the utilities may charge, the demand for their services and their operating
costs, including expenses to comply with environmental legislation and
other energy and licensing laws and regulations. Utilities are particularly
sensitive to, among other things, the effects of inflation on operating and
construction costs, the unpredictability of future usage requirements, the
costs and availability of fuel and, with certain electric utilities, the
risks associated with the nuclear industry;

Lease rental bonds which are generally issued by governmental financing
authorities with no direct taxing power for the purchase of equipment or
construction of buildings that will be used by a state or local government.
Lease rental bonds are generally subject to an annual risk that the lessee
government might not appropriate funds for the leasing rental payments to
service the bonds and may also be subject to the risk that rental
obligations may terminate in the event of damage to or destruction or
condemnation of the equipment or building;

Multi-family housing revenue bonds and single family mortgage revenue
bonds which are issued to provide financing for various housing projects
and which are payable primarily from the revenues derived from mortgage
loans to housing projects for low to moderate income families or notes
secured by mortgages on residences; repayment of this type of bonds is
therefore dependent upon, among other things, occupancy levels, rental
income, the rate of default on underlying mortgage loans, the ability of
mortgage insurers to pay claims, the continued availability of federal,
state or local housing subsidy programs, economic conditions in local
markets, construction costs, taxes, utility costs and other operating
expenses and the managerial ability of project managers. Housing bonds are
generally prepayable at any time and therefore their average life will
ordinarily be less than their stated maturities;

Hospital and health care facility bonds whose payments are dependent
upon revenues of hospitals and other health care facilities. These revenues
come from private third-party payors and government programs, including the
Medicare and Medicaid programs, which have generally undertaken cost
containment measures to limit payments to health care facilities. Hospitals
and health care facilities are subject to various legal claims by patients
and others and are adversely affected by increasing costs of insurance;

Airport, port, highway and transit authority revenue bonds which are
dependent for payment on revenues from the financed projects, including
user fees from ports and airports, tolls on turnpikes and bridges, rents
from buildings, transit fare revenues and additional financial resources
including federal and state subsidies, lease rentals paid by state or local
governments or a pledge of a special tax such as a sales tax or a property
tax. In the case of the air travel industry, airport income is largely
affected by the airlines' ability to meet their obligations under use
agreements which in turn is affected by increased competition among
airlines, excess capacity and increased fuel costs, among other factors.

Solid waste disposal bonds which are generally payable from dumping and
user fees and from revenues that may be earned by the facility on the sale
of electrical energy generated in the combustion of waste products and
which are therefore dependent upon the ability of municipalities to fully
utilize the facilities, sufficient supply of
3
<PAGE>
waste for disposal, economic or population growth, the level of
construction and maintenance costs, the existence of lower-cost alternative
modes of waste processing and increasing environmental regulation. A recent
decision of the U.S. Supreme Court limiting a municipality's ability to
require use of its facilities may have an adverse affect on the credit
quality of various issues of these bonds;

Special tax bonds which are not secured by general tax revenues but are
only payable from and secured by the revenues derived by a municipality
from a particular tax--for example, a tax on the rental of a hotel room, on
the purchase of food and beverages, on the rental of automobiles or on the
consumption of liquor and may therefore be adversely affected by a
reduction in revenues resulting from a decline in the local economy or
population or a decline in the consumption, use or cost of the goods and
services that are subject to taxation;

Student loan revenue bonds which are typically secured by pledges of new
or existing student loans. The loans, in turn, are generally either
guaranteed by eligible guarantors and reinsured by the Secretary of the
U.S. Department of Education, directly insured by the federal government,
or financed as part of supplemental or alternative loan programs within a
state (e.g., loan repayments are not guaranteed). These bonds often permit
the issuer to enter into interest rate swap agreements with eligible
counterparties in which event the bonds are subject to the additional risk
of the counterparty's ability to fulfill its swap obligation;

University and college bonds, the payments on which are dependent upon
various factors, including the size and diversity of their sources of
revenues, enrollment, reputation, the availability of endowments and other
funds and, in the case of public institutions, the financial condition of
the relevant state or other governmental entity and its policies with
respect to education; and

Tax increment and tax allocation bonds, which are secured by ad valorem
taxes imposed on the incremental increase of taxable assessed valuation of
property within a jurisdiction above an established base of assessed value.
The issuers of these bonds do not have general taxing authority and the tax
assessments on which the taxes used to service the bonds are based may be
subject to devaluation due to market price declines or governmental action.
Puerto Rico. Certain Bonds may be affected by general economic conditions
in the Commonwealth of Puerto Rico. Puerto Rico's economy is largely dependent
for its development on federal programs and current federal budgetary policies
suggest that an expansion of its programs is unlikely. Reductions in federal tax
benefits or incentives or curtailment of spending programs could adversely
affect the Puerto Rican economy.

Industrial Development Revenue Bonds. Industrial development revenue bonds
are municipal obligations issued to finance various privately operated projects
including pollution control and manufacturing facilities. Payment is generally
solely dependent upon the creditworthiness of the corporate operator of the
project and, in certain cases, an affiliated or third party guarantor and may be
affected by economic factors relating to the particular industry as well as
varying degrees of governmental regulation. In many cases industrial revenue
bonds do not have the benefit of covenants which would prevent the corporations
from engaging in capital restructurings or borrowing transactions which could
reduce their ability to meet their obligations and result in a reduction in the
value of the Portfolio.

BONDS BACKED BY LETTERS OF CREDIT OR INSURANCE

Certain Bonds may be secured by letters of credit issued by commercial
banks or savings banks, savings and loan associations and similar thrift
institutions or are direct obligations of banks or thrifts. The letter of credit
may be drawn upon, and the Bonds redeemed, if an issuer fails to pay amounts due
on the Bonds or, in certain cases, if the interest on the Bond becomes taxable.
Letters of credit are irrevocable obligations of the issuing institutions. The
profitability of a financial institution is largely dependent upon the credit
quality of its loan portfolio which, in turn, is affected by the institution's
underwriting criteria, concentrations within the portfolio and specific industry
and general economic conditions. The operating performance of financial
institutions is also impacted by changes in interest rates, the availability and
cost of funds, the intensity of competition and the degree of governmental
regulation.

Certain Bonds may be insured or guaranteed by insurance companies listed
below. The claims-paying ability of each of these companies, unless otherwise
indicated, was rated AAA by Standard & Poor's or another nationally recognized
rating organization at the time the insured Bonds were purchased by the Fund.
The ratings are subject to change at any time at the discretion of the rating
agencies. In the event that the rating of an Insured Fund is reduced, the
Sponsors are authorized to direct the Trustee to obtain other insurance on
behalf of the Fund. The insurance policies guarantee the timely payment of
principal and interest on the Bonds but do not guarantee their market value or
the value of the Units. The insurance policies generally do not provide for
accelerated payments of principal or cover redemptions resulting from events of
taxability.
4
<PAGE>

The following summary information relating to the listed insurance
companies has been obtained from publicly available information:

FINANCIAL INFORMATION
AS OF SEPTEMBER 30, 1994
(IN MILLIONS OF DOLLARS)
-------------------------------------
POLICYHOLDERS'
NAME DATE ESTABLISHED ADMITTED ASSETS SURPLUS
- ----------------------------------------------------- ----------------- --------------- --------------------
<S> <C> <C> <C>
AMBAC Indemnity Corporation.......................... 1970 $ 2,150 $ 779
Asset Guaranty Insurance Co. (AA by S&P)............. 1988 152 73
Capital Guaranty Insurance Company................... 1986 293 166
Capital Markets Assurance Corp....................... 1987 198 139
Connie Lee Insurance Company......................... 1987 193 106
Continental Casualty Company......................... 1948 19,220 3,309
Financial Guaranty Insurance Company................. 1984 2,092 872
Financial Security Assurance Inc..................... 1984 776 369
Firemen's Insurance Company of Newark, NJ 1855 2,236 383
Industrial Indemnity Co. (HIBI)...................... 1920 1,853 299
MBIA Insurance Corporation........................... 1986 3,314 1,083
</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 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. 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
5
<PAGE>
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.

LIQUIDITY

Up to 40% of the value of the Portfolio may be attributable to guarantees
or similar security provided by corporate entities. These guarantees or other
security may constitute restricted securities that cannot be sold publicly by
the Trustee without registration under the Securities Act of 1933, as amended.
The Sponsors nevertheless believe that, should a sale of the Bonds guaranteed or
secured be necessary in order to meet redemption of Units, the Trustee should be
able to consummate a sale with institutional investors.

The principal trading market for the Bonds will generally be in the
over-the-counter market and the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in them. There can be no
assurance that a liquid trading market will exist for any of the Bonds,
especially since the Fund may be restricted under the Investment Company Act of
1940 from selling Bonds to any Sponsor. The value of the Portfolio will be
adversely affected if trading markets for the Bonds are limited or absent.
HOW TO BUY UNITS

Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund.

PUBLIC OFFERING PRICE--DEFINED ASSET FUNDS MUNICIPAL SERIES

To allow Units to be priced at $1,000, the Units outstanding as of the
Evaluation Time on the Initial Date of Deposit (all of which are held by the
Sponsors) will be split (or split in reverse).

During the initial offering period for at least the first three months of
the Fund, the Public Offering Price (and the Initial Repurchase Price) is based
on the higher, offer side evaluation of the Bonds at the next Evaluation Time
after the order is received. In the secondary market (after the initial offering
period), the Public Offering Price (and the Sponsors' Repurchase Price and the
Redemption Price) is based on the lower, bid side evaluation of the Bonds.

Investors will be subject to differing types and amounts of sales charge
depending upon the timing of their purchases and redemptions of Units. A
periodic deferred sales charge will be payable quarterly through about the fifth
anniversary of the Fund from a portion of the interest on and principal of Bonds
reserved for that purpose. Commencing on the first anniversary of the Fund, the
Public Offering Price will also include an up-front sales charge applied to the
value of the Bonds in the Portfolio. Lastly, investors redeeming their Units
prior to the fourth anniversary of the Fund will be charged a contingent
deferred sales charge payable out of the redemption proceeds of their Units.
These charges may be less than you would pay to buy and hold a comparable
managed fund. A complete schedule of sales charges appears in Appendix B. The
Sponsors have received an opinion of their counsel that the deferred sales
charge described in this Prospectus is consistent with an exemptive order
received from the SEC.

Because accrued interest on the Bonds is not received by the Fund at a
constant rate throughout the year, any Monthly Income Distribution may be more
or less than the interest actually received by the Fund. To eliminate
fluctuations in the Monthly Income Distribution, a portion of the Public
Offering Price consists of cash to enable the
6
<PAGE>
Trustee to advance an amount necessary to provide approximately equal
distributions. Upon the sale or redemption of Units, investors will receive
their proportionate share of the Trustee advance. In addition, if a Bond is
sold, redeemed or otherwise disposed of, the Fund will periodically distribute
the portion of the Trustee advance that is attributable to the Bond to
investors.

The regular Monthly Income Distribution is stated in Part A of the
Prospectus and will change as the composition of the Portfolio changes over
time.

PUBLIC OFFERING PRICE--MUNICIPAL INVESTMENT TRUST FUND

In the initial offering period, the Public Offering Price is based on the
next offer side evaluation of the Bonds, and includes a sales charge based on
the number of Units of a single Fund or Trust purchased on the same or any
preceding day by a single purchaser. See Initial Offering sales charge schedule
in Appendix C. The purchaser or his dealer must notify the Sponsors at the time
of purchase of any previous purchase to be aggregated and supply sufficient
information to permit confirmation of eligibility; acceptance of the purchase
order is subject to confirmation. Purchases of Fund Units may not be aggregated
with purchases of any other unit trust. This procedure may be amended or
terminated at any time without notice.

In the secondary market (after the initial offering period), the Public
Offering Price is based on the bid side evaluation of the Bonds, and includes a
sales charge based (a) on the number of Units of the Fund and any other Series
of Municipal Investment Trust Fund purchased in the secondary market on the same
day by a single purchaser (see Secondary Market sales charge schedule in
Appendix C) and (b) the maturities of the underlying Bonds (see Effective Sales
Charge Schedule in Appendix C). To qualify for a reduced sales charge, the
dealer must confirm that the sale is to a single purchaser or is purchased for
its own account and not for distribution. For these purposes, Units held in the
name of the purchaser's spouse or child under 21 years of age are deemed to be
purchased by a single purchaser. A trustee or other fiduciary purchasing
securities for a single trust estate or single fiduciary account is also
considered a single purchaser.

In the secondary market, the Public Offering Price is further reduced
depending on the maturities of the various Bonds in the Portfolio, by
determining a sales charge percentage for each Bond, as stated in Effective
Sales Charge in Appendix C. The sales charges so determined, multiplied by the
bid side evaluation of the Bonds, are aggregated and the total divided by the
number of Units outstanding to determine the Effective Sales Charge. On any
purchase, the Effective Sales Charge is multiplied by the applicable secondary
market sales charge percentage (depending on the number of Units purchased) in
order to determine the sales charge component of the Public Offering Price.
* * *
Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per Unit.

Net accrued interest is added to the Public Offering Price, the Sponsors'
Repurchase Price and the Redemption Price per Unit. This represents the interest
accrued on the Bonds, net of Fund expenses, from the initial date of deposit to,
but not including, the settlement date for Units (less any prior distributions
of interest income to investors). Bonds deposited also carry accrued but unpaid
interest up to the initial date of deposit. To avoid having investors pay this
additional accrued interest (which earns no return) when they purchase Units,
the Trustee advances and distributes this amount to the Sponsors; it recovers
this advance from interest received on the Bonds. Because of varying interest
payment dates on the Bonds, accrued interest at any time will exceed the
interest actually received by the Fund.

EVALUATIONS

Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. Bond
evaluations are based on closing sales prices (unless the Evaluator deems these
prices inappropriate). If closing sales prices are not available, the evaluation
is generally determined on the basis of current bid or offer prices for the
Bonds or comparable securities or by appraisal or by any combination of these
methods. In the past, the bid prices of publicly offered tax-exempt issues have
been lower than the offer prices by as much as 3 1/2% or more of face amount in
the case of inactively traded issues and as little as 1/2 of 1% in the case of
actively traded issues, but the difference between the offer and bid prices has
averaged between 1 and 2% of face amount. Neither the Sponsors, the Trustee or
the Evaluator will be liable for errors in the Evaluator's judgment. The fees of
the Evaluator will be borne by the Fund.

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.
7
<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 contingent deferred sales charge payable on redemption (see
Appendix B), Municipal Investment Trust Fund has no back-end load or 12b-1 fees,
so there is never a fee for cashing in your investment (see Appendix C). If the
Sponsors do not purchase Units tendered, the Trustee is authorized in its
discretion to sell Units in the over-the-counter market if it believes it will
obtain a higher net price for the redeeming investor.

By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Bonds, net accrued interest, cash and the value of any other Fund assets;
deducting unpaid taxes or other governmental charges, accrued but unpaid Fund
expenses, unreimbursed Trustee advances, cash held to redeem Units or for
distribution to investors and the value of any other Fund liabilities; and
dividing the result by the number of outstanding Units.

For Defined Asset Funds Municipal Series, Bonds are evaluated on the offer
side during the initial offering period and for at least the first three months
of the Fund (even in the secondary market) and on the bid side thereafter. For
Municipal Investment Trust Fund, Bonds are evaluated on the offer side during
the initial offering period and on the bid side thereafter.

If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Bonds selected by the Agent for the Sponsors
based on market and credit factors determined to be in the best interest of the
Fund. These sales are often made at times when the Bonds would not otherwise be
sold and may result in lower prices than might be realized otherwise and will
also reduce the size and diversity of the Fund.

Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Bonds not reasonably practicable, or
for any other period permitted by the SEC.

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.
8
<PAGE>

DISTRIBUTIONS

Each Unit receives an equal share of monthly distributions of interest
income net of estimated expenses. Interest on the Bonds is generally received by
the Fund on a semi-annual or annual basis. Because interest on the Bonds is not
received at a constant rate throughout the year, any Monthly Income Distribution
may be more or less than the interest actually received. To eliminate
fluctuations in the Monthly Income Distribution, the Trustee will advance
amounts necessary to provide approximately equal interest distributions; it will
be reimbursed, without interest, from interest received on the Bonds, but the
Trustee is compensated, in part, by holding the Fund's cash balances in
non-interest bearing accounts. Along with the Monthly Income Distributions, the
Trustee will distribute the investor's pro rata share of principal received from
any disposition of a Bond to the extent available for distribution. In addition,
for Defined Asset Funds Municipal Series, distributions of amounts necessary to
pay the deferred portion of the sales charge will be made from the Capital and
Income Accounts to an account maintained by the Trustee for purposes of
satisfying investors' sales charge obligations.

The initial estimated annual income per Unit, after deducting estimated
annual Fund expenses (and, for Defined Asset Funds Municipal Series, the portion
of the deferred sales charge payable from interest income) as stated in Part A
of the Prospectus, will change as Bonds mature, are called or sold or otherwise
disposed of, as replacement bonds are deposited and as Fund expenses change.
Because the Portfolio is not actively managed, income distributions will
generally not be affected by changes in interest rates. Depending on the
financial conditions of the issuers of the Bonds, the amount of income should be
substantially maintained as long as the Portfolio remains unchanged; however,
optional bond redemptions or other Portfolio changes may occur more frequently
when interest rates decline, which would result in early returns of principal
and possibly earlier termination of the Fund.

REINVESTMENT

Distributions will be paid in cash unless the investor elects to have
distributions reinvested without sales charge in the Municipal Fund Accumulation
Program, Inc. The Program is an open-end management investment company whose
investment objective is to obtain income exempt from regular federal income
taxes by investing in a diversified portfolio of state, municipal and public
authority bonds rated A or better or with comparable credit characteristics.
Reinvesting compounds earnings free from federal tax. Investors participating in
the Program will be subject to state and local income taxes to the same extent
as if the distributions had been received in cash, and most of the income on the
Program is subject to state and local income taxes. For more complete
information about the Program, including charges and expenses, request the
Program's prospectus from the Trustee. Read it carefully before you decide to
participate. Written notice of election to participate must be received by the
Trustee at least ten days before the Record Day for the first distribution to
which the election is to apply.

FUND EXPENSES

Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for 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
$0.10 per Unit. The Trustee's, Sponsors' and Evaluator's fees may be adjusted
for inflation without investors' approval.

All expenses in establishing the Fund 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.

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.
9
<PAGE>
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
'Internal Revenue Code'). Each investor will be considered to have received
the interest and accrued the original issue discount, if any, on his pro
rata portion of each Bond when interest on the Bond is received or original
issue discount is accrued by the Fund. The investor's basis in his Units
will be equal to the cost of his Units, including any up-front sales
charge.

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 Internal Revenue 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 necessarily be tax-exempt.

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.

RECORDS AND REPORTS

The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Bonds and a copy of the Indenture, and
supplemental information on the operations of the Fund and the risks associated
with the Bonds held by the Fund, which may be inspected by investors at
reasonable times during business hours.

With each distribution, the Trustee includes a statement of the interest
and any other receipts being distributed. Within five days after deposit of
Bonds in exchange or substitution for Bonds (or contracts) previously deposited,
the Trustee will send a notice to each investor, identifying both the Bonds
removed and the replacement bonds deposited. The Trustee sends each investor of
record an annual report summarizing transactions in the Fund's accounts and
amounts distributed during the year and Bonds held, the number of Units
outstanding and the Redemption Price at year end, the interest received by the
Fund on the Bonds, the gross proceeds received by the Fund from the disposition
of any Bond (resulting from redemption or payment at maturity or sale of any
Bond), and the fees and expenses paid by the Fund, among other matters. The
Trustee will also furnish annual information returns to each investor and to
10
<PAGE>
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.

AUDITORS

The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.

TRUSTEE

The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.

SPONSORS

The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America;
Dean Witter Reynolds, Inc., a principal operating subsidiary of Dean Witter
Discover & Co. and PaineWebber Incorporated, a wholly-owned subsidiary of
PaineWebber Group Inc. Each Sponsor, or one of its predecessor corporations, has
acted as Sponsor of a number of series of unit investment trusts. Each Sponsor
has acted as principal underwriter and managing underwriter of other investment
companies. The Sponsors, in addition to participating as members of various
selling groups or as agents of other investment companies, execute orders on
behalf of investment companies for the purchase and sale of securities of these
companies and sell securities to these companies in their capacities as brokers
or dealers in securities.
11
<PAGE>

PUBLIC DISTRIBUTION

In the initial offering period Units will be distributed to the public
through the Underwriting Account and dealers who are members of the National
Association of Securities Dealers, Inc. The initial offering period is 30 days
or less if all Units are sold. If some Units initially offered have not been
sold, the Sponsors may extend the initial offering period for up to four
additional successive 30-day periods.

The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.;
however, Units of a State trust will be offered for sale only in the State for
which the trust is named, except that Units of a New Jersey trust will also be
offered in Connecticut, Units of a Florida trust will also be offered in New
York and Units of a New York trust will also be offered in Connecticut, Florida
and Puerto Rico. The Sponsors do not intend to qualify Units for sale in any
foreign countries and this Prospectus does not constitute an offer to sell Units
in any country where Units cannot lawfully be sold. Sales to dealers and to
introducing dealers, if any, will initially be made at prices which represent a
concession from the Public Offering Price, but the Agent for the Sponsors
reserves the right to change the rate of any concession from time to time. Any
dealer or introducing dealer may reallow a concession up to the concession to
dealers.

UNDERWRITERS' AND SPONSORS' PROFITS

Upon sale of the Units, the Underwriters will be entitled to receive sales
charges. The Sponsors also realize a profit or loss on deposit of the Bonds
equal to the difference between the cost of the Bonds to the Fund (based on the
offer side evaluation on the initial date of deposit) and the Sponsors' cost of
the Bonds. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Bonds it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Underwriting Account also may realize profits or sustain losses as a result of
fluctuations after the initial date of deposit in the Public Offering Price of
the Units. In maintaining a secondary market for Units, the Sponsors will also
realize profits or sustain losses in the amount of any difference between the
prices at which they buy Units and the prices at which they resell these Units
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.

FUND PERFORMANCE

Information on the performance of the Fund for various periods, on the
basis of changes in Unit price plus the amount of income and principal
distributions reinvested, may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective investors. Total return figures are not averaged, and may not
reflect deduction of the sales charge, which would decrease the return. Average
annualized return figures reflect deduction of the maximum sales charge. No
provision is made for any income taxes payable.

Past performance may not be indicative of future results. The Fund is not
actively managed. Unit price and return fluctuate with the value of the Bonds in
the Portfolio, so there may be a gain or loss when Units are sold.

Fund performance may be compared to performance on the same basis (with
distributions reinvested) of Moody's Municipal Bond Averages or performance data
from publications such as Lipper Analytical Services, Inc., Morningstar
Publications, Inc., Money Magazine, The New York Times, U.S. News and World
Report, Barron's Business Week, CDA Investment Technology, Inc., Forbes Magazine
or Fortune Magazine. As with other performance data, performance comparisons
should not be considered representative of the Fund's relative performance for
any future period.

DEFINED ASSET FUNDS

Municipal Investment Trust Funds have provided investors with tax-free
income for more than 30 years. For decades informed investors have purchased
unit investment trusts for dependability and professional selection of
investments. Defined Asset Funds' philosophy is to allow investors to 'buy with
knowledge' (because, unlike managed funds, the portfolio of municipal bonds and
the return are relatively fixed) and 'hold with confidence' (because the
portfolio is professionally selected and regularly reviewed). Defined Asset
Funds offers an array of simple and convenient investment choices, suited to fit
a wide variety of personal financial goals--a buy and hold strategy for capital
accumulation, such as for children's education or retirement, or attractive,
regular current income consistent with the preservation of principal. Tax-exempt
income can help investors keep more today for a more secure financial future. It
can also be important in planning because tax brackets may increase with higher
earnings or changes in tax laws. 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.

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
12
<PAGE>
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
Select Ten Portfolio, of any other Defined Asset Fund with a regular maximum
sales charge of at least 3.50%, or of any unaffiliated unit trust with a regular
maximum sales charge of at least 3.0%, for Units of this Fund at their relative
net asset values, subject only to a reduced sales charge, or to any remaining
Deferred Sales Charge, as applicable.

To make an exchange, you should contact your financial professional to find
out what suitable Exchange Funds are available and to obtain a prospectus. You
may acquire units of only those Exchange Funds in which the Sponsors are
maintaining a secondary market and which are lawfully for sale in the state
where you reside. Except for the reduced sales charge, an exchange is a taxable
event normally requiring recognition of any gain or loss on the units exchanged.
However, the Internal Revenue Service may seek to disallow a loss if the
portfolio of the units acquired is not materially different from the portfolio
of the units exchanged; you should consult your own tax advisor. If the proceeds
of units exchanged are insufficient to acquire a whole number of Exchange Fund
units, you may pay the difference in cash (not exceeding the price of a single
unit acquired).

As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.

SUPPLEMENTAL INFORMATION

Upon written or telephonic request to the Trustee shown on the back cover
of this Prospectus, investors will receive at no cost to the investor
supplemental information about the Fund, which has been filed with the SEC and
is hereby incorporated by reference. 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.
13
<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 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.

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.

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.
a-1
<PAGE>
Conditional ratings, indicated by 'Con.', are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.

NR--Should no rating be assigned, the reason may be one of the following:
(a) an application for rating was not received or accepted; (b) the issue or
issuer belongs to a group of securities that are not rated as a matter of
policy; (c) there is a lack of essential data pertaining to the issue or issuer
or (d) the issue was privately placed, in which case the rating is not published
in Moody's publications.

FITCH INVESTORS SERVICE, INC.

AAA--These bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--These bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, while very strong, is
somewhat less than for AAA rated securities or more subject to possible change
over the term of the issue.

A--These bonds are considered to be investment grade and of good quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB--These bonds are considered to be investment grade and of satisfactory
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however are more likely to weaken this ability than bonds with higher ratings.

A '+' or a '-' sign after a rating symbol indicates relative standing in
its rating.
DUFF & PHELPS CREDIT RATING CO.

AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA--High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic condtions.

A--Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.

A '+' or a '-' sign after a rating symbol indicates relative standing in
its rating.
a-2
<PAGE>
APPENDIX B
SALES CHARGE SCHEDULES FOR DEFINED ASSET FUNDS, MUNICIPAL SERIES
DEFERRED AND UP-FRONT SALES CHARGES. Units purchased during the first year
of the Fund will be subject to periodic deferred and contingent deferred sales
charges. Units purchased in the second through fifth year will be subject to an
up-front sales charge as well as periodic deferred and contingent deferred sales
charges. Units purchased thereafter will be subject only to an up-front sales
charge. During the first five years of the Fund, a fixed periodic deferred sales
charge of $2.75 per Unit is payable on 20 quarterly payment dates occurring on
the 10th day of February, May, August and November, commencing no earlier than
45 days after the initial date of deposit. Investors purchasing Units on the
initial date of deposit and holding for at least five years, for example, would
incur total periodic deferred sales charges of $55.00 per Unit. Because of the
time value of money, however, as of the initial date of deposit this periodic
deferred sales charge obligation would, at current interest rates, equate to an
up-front sales charge of approximately 4.75%.

On the Fund's initial offering date, the Public Offering Price per Unit
will be $1,000. Subsequently, the Public Offering Price per Unit will fluctuate.
As the periodic deferred sales charge is a fixed dollar amount irrespective of
the Public Offering Price, it will represent a varying percentage of the Public
Offering Price. An up-front sales charge will be imposed on all unit purchases
after the first year of the Fund. The following table illustrates the combined
maximum up-front and periodic deferred sales charges that would be incurred by
an investor who purchases Units at the beginning of each of the first five years
of the Fund (based on a constant Unit price) and holds them through the fifth
year of the Fund:

<TABLE><CAPTION>
TOTAL
UP-FRONT AND
UP-FRONT SALES CHARGE MAXIMUM PERIODIC
AMOUNT DEFERRED SALES
DEFERRED PER CHARGES
$1,000 INVESTED PER $1,000 INVESTED
----------------------------------------------------------- --------------- --------------------
YEAR OF UNIT AS PERCENT OF PUBLIC AS PERCENT OF NET AMOUNT PER
PURCHASE OFFERING PRICE AMOUNT INVESTED $1,000 INVESTED
- ----------------- --------------------- ------------------- ---------------
<C> <C> <C> <C> <C> <C>
1 None None None $ 55.00 $ 55.00
2 1.10% 1.11% $ 11.00 44.00 55.00
3 2.20 2.25 22.00 33.00 55.00
4 3.30 3.41 33.00 22.00 55.00
5 4.40 4.60 44.00 11.00 55.00

</TABLE>

CONTINGENT DEFERRED SALES CHARGE. Units redeemed or repurchased within 4
years after the Fund's initial date of deposit will not only incur the periodic
deferred sales charge until the quarter of redemption or repurchase but will
also be subject to a contingent deferred sales charge:

YEAR SINCE FUND'S CONTINGENT DEFERRED
INITIAL DATE OF SALES CHARGE PER
DEPOSIT UNIT
- -------------------- --------------------
1 $ 25.00
2 15.00
3 10.00
4 5.00
5 and thereafter None

The contingent deferred sales charge is waived on any redemption or
repurchase of Units after the death (including the death of a single joint
tenant with rights of survivorship) or disability (as defined in the Internal
Revenue Code) of an investor, provided the redemption or repurchase is requested
within one year of the death or initial determination of disability. The
Sponsors may require receipt of satisfactory proof of disability before
releasing the portion of the proceeds representing the amount of the contingent
deferred sales charge waived.

To assist investors in understanding the total costs of purchasing units
during the first four years of the Fund and disposing of those units by the
fifth year, the following tables set forth the maximum combined up-front,
periodic and contingent deferred sales charges that would be incurred (assuming
a constant Unit price) by an investor:

UNITS PURCHASED ON INITIAL OFFERING DATE

YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ------------------- --------------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
1 None $ 11.00 $ 25.00 $ 36.00
2 None 22.00 15.00 37.00
3 None 33.00 10.00 43.00
4 None 44.00 5.00 49.00
5 None 55.00 0.00 55.00

<CAPTION>
UNITS PURCHASED ON FIRST ANNIVERSARY OF FUND

YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ----------------- --------------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
2 $ 11.00 $ 11.00 $ 15.00 $ 37.00
3 11.00 22.00 10.00 43.00
4 11.00 33.00 5.00 49.00
5 11.00 44.00 0.00 55.00

</TABLE>

b-1
<PAGE>
UNITS PURCHASED ON SECOND ANNIVERSARY OF FUND

YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ------------------- --------------------- ---------------- ------------------- -------------------
<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

UNITS PURCHASED ON THIRD ANNIVERSARY OF FUND

YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ----------------- --------------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
4 $ 33.00 $ 11.00 $ 5.00 $ 49.00
5 33.00 22.00 0.00 55.00

UNITS PURCHASED ON FOURTH ANNIVERSARY OF FUND

YEAR OF UNIT DEFERRED SALES CONTINGENT DEFERRED
DISPOSITION UP-FRONT SALES CHARGE CHARGE SALES CHARGE TOTAL SALES CHARGES
- ----------------- --------------------- ---------------- ------------------- -------------------
<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)
---------------------------------- PRIMARY MARKET
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS CONCESSION TO
OFFER SIDE PUBLIC NET AMOUNT PERCENT OF PUBLIC INTRODUCING
NUMBER OF UNITS OFFERING PRICE INVESTED OFFERING PRICE DEALERS
- ----------------------------------- ------------------- ------------- --------------------- ------------------

MONTHLY PAYMENT SERIES, MULTISTATE SERIES, INSURED SERIES

<S> <C> <C> <C> <C>
Less than 250...................... 4.50% 4.712% 2.925% $ 32.40
250 - 499.......................... 3.50 3.627 2.275 25.20
500 - 749.......................... 3.00 3.093 1.950 21.60
750 - 999.......................... 2.50 2.564 1.625 18.00
1,000 or more...................... 2.00 2.041 1.300 14.40

INTERMEDIATE SERIES (TEN YEAR MATURITIES)
<S> <C> <C> <C> <C>
Less than 250...................... 4.00% 4.167% 2.600% $ 28.80
250 - 499.......................... 3.00 3.093 1.950 21.60
500 - 749.......................... 2.50 2.564 1.625 18.00
750 - 999.......................... 2.00 2.041 1.300 14.40
1,000 or more...................... 1.50 1.523 0.975 10.00

INTERMEDIATE SERIES (SHORT INTERMEDIATE MATURITIES)
<S> <C> <C> <C> <C>
Less than 250...................... 2.75% 2.828% 1.788% $ 19.80
250 - 499.......................... 2.25 2.302 1.463 16.20
500 - 749.......................... 1.75 1.781 1.138 12.60
750 - 999.......................... 1.25 1.266 0.813 9.00
1,000 or more...................... 1.00 1.010 0.650 7.20

</TABLE>

SECONDARY MARKET

ACTUAL SALES CHARGE AS DEALER CONCESSION AS
PERCENT OF EFFECTIVE PERCENT OF EFFECTIVE
NUMBER OF UNITS SALES CHARGE SALES CHARGE
- ---------------- ----------------------- -----------------------
1-249 100% 65%
250-499 80 52
500-749 60 39
750-999 45 29.25
1,000 or more 35 22.75

EFFECTIVE SALES CHARGE

AS PERCENT AS PERCENT
TIME TO OF BID SIDE OF PUBLIC
MATURITY EVALUATION OFFERING PRICE
- --------------------------- ----------- -----------------
Less than six months 0% 0%
Six months to 1 year 0.756 0.75
Over 1 year to 2 years 1.523 1.50
Over 2 years to 4 years 2.564 2.50
Over 4 years to 8 years 3.627 3.50
Over 8 years to 15 years 4.712 4.50
Over 15 years 5.820 5.50

For this purpose, a Bond will be considered to mature on its stated
maturity date unless it has been called for redemption or funds or securities
have been placed in escrow to redeem it on an earlier date, or is subject to a
mandatory tender, in which case the earlier date will be considered the maturity
date.
c-1
<PAGE>

Defined
Asset FundsSM

SPONSORS: MUNICIPAL STATE SERIES
Merrill Lynch, (Unit Investment Trusts)
Pierce, Fenner & Smith Incorporated
Defined Asset Funds
P.O. Box 9051,
Princeton, NJ 08543-9051 Units of this Fund may no longer be available
(609) 282-8500 and therefore information contained herein
PaineWebber Incorporated may be subject to amendment. A registration
1285 Avenue of the Americas, statement relating to securities of a future
New York, NY series has been filed with the Securities and
10019 Exchange Commission. These securities may not
(201) 902-3000 be sold nor may offers to buy be accepted
EVALUATOR: prior to the time the registration statement
Kenny S&P Evaluation Services, becomes effective. For more complete
a division of J. J. Kenny Co., Inc.information about a future series, including
65 Broadway, New York, NY 10019 additional information on charges and
TRUSTEE: expenses, please call or write one of the
The Chase Manhattan Bank, N.A. Sponsors listed here for a prospectus. Read
(a National Banking Association) the prospectus before you invest or send
Defined Asset Funds money.
Box 2051, New York, NY 10081 ------------------------------
1-800-323-1508 This Prospectus does not contain all of the
information with respect to the investment
company set forth in its registration
statement and exhibits relating thereto which
have been filed with the Securities and
Exchange Commission, Washington, D.C. under
the Securities Act of 1933 and the Investment
Company Act of 1940, and to which reference
is hereby made.
------------------------------
No person is authorized to give any
information or to make any representations
with respect to this investment company not
contained in this Prospectus; and any
information or representation not contained
herein must not be relied upon as having been
authorized. 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.

15095--4/95