<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 28, 1999
REGISTRATION NO. 33-62969
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-6
------------------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------------------------
A. EXACT NAME OF TRUST:
DEFINED ASSET FUNDS--
MUNICIPAL STATE SERIES 4
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
PAINEWEBBER INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
DEFINED ASSET FUNDS
POST OFFICE BOX 9051
PRINCETON, NJ 08543-9051 PAINEWEBBER INCORPORATED
1285 AVENUE OF THE
AMERICAS
NEW YORK, NY 10019
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. COPIES TO: ROBERT E. HOLLEY
P.O. BOX 9051 PIERRE DE SAINT PHALLE, 1200 HARBOR BLVD.
PRINCETON, NJ 08543-9051 ESQ. WEEHAWKEN, NJ 07087
450 LEXINGTON AVENUE
NEW YORK, NY 10017
The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice for the most
recent fiscal year on March 16, 1999.
Check box if it is proposed that this filing will become effective on September
30, 1999 pursuant to paragraph (b) of Rule 485. / x /
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<PAGE>
<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------
- ----------------------------------
MUNICIPAL STATE SERIES 4
(A UNIT INVESTMENT TRUST)
O CALIFORNIA AND FLORIDA PORTFOLIOS
O PORTFOLIOS OF INSURED LONG TERM MUNICIPAL
BONDS
O DESIGNED FOR FEDERALLY TAX-FREE INCOME
O EXEMPT FROM SOME STATE TAXES
O MONTHLY DISTRIBUTIONS
-------------------------------------------------
The Securities and Exchange Commission has not
SPONSORS: approved or disapproved these Securities or
Merrill Lynch, passed upon the adequacy of this prospectus. Any
Pierce, Fenner & Smith representation to the contrary is a criminal
Incorporated offense.
PaineWebber Incorporated Prospectus dated September 30, 1999.
<PAGE>
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Defined Asset FundsSM
Defined Asset FundsSM is America's oldest and largest family of unit investment
trusts, with over $160 billion sponsored over the last 28 years. Defined Asset
Funds has been a leader in unit investment trust research and product
innovation. Our family of Funds helps investors work toward their financial
goals with a full range of quality investments, including municipal, corporate
and government bond portfolios, as well as domestic and international equity
portfolios.
Defined Asset Funds offer a number of advantages:
o A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
o Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
o Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
o Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
o Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF MAY 31, 1999, THE
EVALUATION DATE.
CONTENTS
PAGE
-----------
California Insured Portfolio--
Risk/Return Summary.................................. 3
Florida Insured Portfolio-- Risk/Return Summary......... 6
What You Can Expect From Your Investment................ 10
Monthly Income....................................... 10
Return Figures....................................... 10
Records and Reports.................................. 10
The Risks You Face...................................... 11
Interest Rate Risk................................... 11
Call Risk............................................ 11
Reduced Diversification Risk......................... 11
Liquidity Risk....................................... 11
Concentration Risk................................... 11
State Concentration Risk............................. 12
Bond Quality Risk.................................... 13
Insurance Related Risk............................... 13
Litigation and Legislation Risks..................... 13
Selling or Exchanging Units............................. 13
Sponsors' Secondary Market........................... 13
Selling Units to the Trustee......................... 14
Exchange Option...................................... 14
How The Fund Works...................................... 14
Pricing.............................................. 14
Evaluations.......................................... 15
Income............................................... 15
Expenses............................................. 15
Portfolio Changes.................................... 16
Fund Termination..................................... 16
Certificates......................................... 16
Trust Indenture...................................... 17
Legal Opinion........................................ 17
Auditors............................................. 17
Sponsors............................................. 18
Trustee.............................................. 18
Underwriters' and Sponsors' Profits 18
Public Distribution.................................. 18
Code of Ethics....................................... 18
Year 2000 Issues..................................... 18
Taxes................................................... 19
Supplemental Information................................ 21
Financial Statements.................................... D-1
2
<PAGE>
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CALIFORNIA INSURED PORTFOLIO--RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is exempt from regular
federal income taxes and some state and local taxes by
investing in a fixed portfolio consisting primarily of
insured, long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 8 long-term tax-exempt
municipal bonds with an aggregate face amount of
$4,150,000. The Fund is a unit investment trust which means
that, unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).
The Portfolio consists of municipal bonds of the following
types:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / General Obligation 1%
/ / Hospitals/Health Care 16%
/ / Municipal/Electric Utilities 12%
/ / Municipal Water/Sewer Utilities 18%
/ / Refunded Bonds 19%
/ / Special Tax 34%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Because the Fund is concentrated in special tax bonds,
adverse developments in this sector may affect the value of
your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF CALIFORNIA
SO IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS
SUBJECT TO RISKS PARTICULAR TO CALIFORNIA WHICH ARE BRIEFLY
DESCRIBED UNDER STATE CONCENTRATION RISKS LATER IN THIS
PROSPECTUS.
3
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will
benefit from a professionally selected and supervised
portfolio whose risk is reduced by investing in insured
bonds of several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you do not want a tax-advantaged
investment or if you cannot tolerate any risk.
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):
Regular Monthly Income per unit $ 4.44
Annual Income per unit: $ 53.34
These figures are estimates determined on the evaluation
day; actual payments may vary.
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
Maximum Sales Fee (Load) on
new purchases $30
You will pay a deferred sales fee of $2.75 per unit
quarterly November, February, May and August through
August, 2001. Employees of some of the Sponsors and their
affiliates may pay a reduced sales fee of no less than
$5.00 per unit.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:
PERCENTAGE OF
MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
----------------------------------- -------------------
Less than $100,000 100%
$100,000 to $249,999 90%
$250,000 to $499,999 85%
$500,000 to $999,999 75%
$1,000,000 and over 65%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
AMOUNT
PER UNIT
-----------
$ 0.72
Trustee's Fee
$ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.33
Evaluator's Fee
$ 0.20
Organization Costs
$ 0.57
Other Operating Expenses
-----------
$ 2.28
TOTAL
The Sponsors historically paid organization costs and
updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
California Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to this
Fund. These prior Series differed in that they charged a
higher sales fee. These prior California Series were offered
between June 22, 1988 and September 27, 1996 and were
outstanding on June 30, 1999. OF COURSE, PAST PERFORMANCE OF
PRIOR SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 6/30/99.
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 10 YEARS 1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
High 3.61% 7.12% 6.00% 4.88% 8.32% 6.53%
Average -0.28 5.22 5.89 2.71 6.26 6.47
Low -3.02 3.57 5.74 -0.03 4.40 6.37
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Average
Sales fee 3.05% 5.12% 5.67%
- -------------------------------------------------------------------
Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program.
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and bonds are
not sold because of market changes. Rather, experienced
Defined Asset Funds financial analysts regularly review the
bonds in the Fund. The Fund may sell a bond if certain
adverse credit or other conditions exist.
4
<PAGE>
9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,076.32
(as of May 31, 1999)
Unit price is based on the net asset value of the Fund
plus the sales fee. An amount equal to any principal cash,
as well as net accrued but undistributed interest on the
unit, is added to the unit price. An independent evaluator
prices the bonds at 3:30 p.m. Eastern time every business
day. Unit price changes every day with changes in the
prices of the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale, less a contingent deferred
sales fee of $5.00 per unit if you sell your units before
June 26, 2000. You will not pay any other fee when you
sell your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100%
exempt from regular federal income tax. Your income may
also be exempt from some California state and local
personal income taxes if you live in California.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per unit. You will be subject to tax on any gain
realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective, but the bonds will generally not be
insured. Income from this program will generally be
subject to state and local income taxes and the bonds are
generally not insured. For more complete information about
the program, including charges and fees, ask the Trustee
for the program's prospectus. Read it carefully before you
invest. The Trustee must receive your written election to
reinvest at least 10 days before the record day of an
income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales
fee on exchanges.
5
<PAGE>
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FLORIDA INSURED PORTFOLIO--RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is exempt from regular
federal income taxes and some state and local taxes by
investing in a fixed portfolio consisting primarily of
insured, long term municipal revenue bonds.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 8 long-term tax-exempt
municipal bonds with an aggregate face amount of
$3,630,000. The Fund is a unit investment trust which means
that, unlike a mutual fund, the Portfolio is not managed.
o The bonds are rated AAA or Aaa by Standard & Poor's,
Moody's or Fitch.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 100% of the bonds are insured by insurance companies that
guarantee timely payments of principal and interest on the
bonds (but not Fund units or the market value of the bonds
before they mature).
The Portfolio consists of municipal bonds of the following
types:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / Airports/Ports/Highways 11%
/ / General Obligation 22%
/ / Refunded Bonds 7%
/ / Industrial Development Revenue 18%
/ / Lease Rental Appropriation 21%
/ / Municipal Water/Sewer Utilities 21%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.
ALSO, THE PORTFOLIO IS CONCENTRATED IN BONDS OF FLORIDA SO
IT IS LESS DIVERSIFIED THAN A NATIONAL FUND AND IS SUBJECT
TO RISKS PARTICULAR TO FLORIDA WHICH ARE BRIEFLY DESCRIBED
UNDER STATE CONCENTRATION RISKS LATER IN THIS PROSPECTUS.
6
<PAGE>
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want federally tax-free income. You will
benefit from a professionally selected and supervised
portfolio whose risk is reduced by investing in insured
bonds of several different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements, if you do not want a tax-advantaged
investment or if you cannot tolerate any risk.
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):
Regular Monthly Income per unit $ 4.30
Annual Income per unit: $ 51.61
These figures are estimates determined on the evaluation
day; actual payments may vary.
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
Maximum Sales Fee (Load) on
new purchases $30
You will pay a deferred sales fee of $2.75 per unit
quarterly November, February, May and August through
August, 2001. Employees of some of the Sponsors and their
affiliates may pay a reduced sales fee of no less than
$5.00 per unit.
The maximum sales fee is reduced if you invest at least
$100,000, as follows:
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
----------------------------------- -----------------
Less than $100,000 100%
$100,000 to $249,999 90%
$250,000 to $499,999 85%
$500,000 to $999,999 75%
$1,000,000 and over 65%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
AMOUNT
PER UNIT
-----------
$ 0.72
Trustee's Fee
$ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$ 0.37
Evaluator's Fee
$ 0.20
Organization Costs
$ 0.75
Other Operating Expenses
-----------
$ 2.50
TOTAL
The Sponsors historically paid organization costs and
updating expenses.
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
Florida Portfolios, which had investment objectives,
strategies and types of bonds substantially similar to this
Fund. These prior Series differed in that they charged a
higher sales fee. These prior Florida Series were offered
between August 25, 1988 and December 6, 1996 and were
outstanding on June 30, 1999. OF COURSE, PAST PERFORMANCE OF
PRIOR SERIES IS NO GUARANTEE OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 6/30/99.
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 10 YEARS 1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
High 3.79% 6.70% 6.01% 4.33% 7.89% 6.49%
Average -0.04 5.17 5.84 3.00 6.22 6.41
Low -3.94 3.80 5.72 1.12 4.65 6.31
- -------------------------------------------------------------------
Average
Sales fee 3.11% 5.13% 5.66%
- -------------------------------------------------------------------
Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program.
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and bonds are
not sold because of market changes. Rather, experienced
Defined Asset Funds financial analysts regularly review the
bonds in the Fund. The Fund may sell a bond if certain adverse
credit or other conditions exist.
7
<PAGE>
9. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
UNIT PRICE PER UNIT $1,064.67
(as of May 31, 1999)
Unit price is based on the net asset value of the Fund plus
the sales fee. An amount equal to any principal cash, as well
as net accrued but undistributed interest on the unit, is
added to the unit price. An independent evaluator prices the
bonds at 3:30 p.m. Eastern time every business day. Unit
price changes every day with changes in the prices of the
bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale, less a contingent deferred
sales fee of $5.00 per unit if you sell your units before
June 26, 2000. You will not pay any other fee when you sell
your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly.
In the opinion of bond counsel when each bond was issued,
interest on the bonds in this Fund is generally 100% exempt
from regular federal income tax. Your income may also be
exempt from some Florida state and local taxes if you live in
Florida.
You will also receive principal payments if bonds are sold or
called or mature, when the cash available is more than $5.00
per unit. You will be subject to tax on any gain realized by
the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your income in cash unless you choose to
compound your income by reinvesting at no sales fee in the
Municipal Fund Investment Accumulation Program, Inc. This
program is an open-end mutual fund with a comparable
investment objective. Income from this program will generally
be subject to state and local income taxes and the bonds are
generally not insured. For more complete information about
the program, including charges and fees, ask the Trustee for
the program's prospectus. Read it carefully before you
invest. The Trustee must receive your written election to
reinvest at least 10 days before the record day of an income
payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales fee
on exchanges.
8
<PAGE>
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TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
FOR CALIFORNIA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ $0- 43,050 20.10 5.01 5.63 6.26 6.88 7.51 8.14 8.76 9.39 10.01
$ 25,751- 62,450 $ 43,051-104,050 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72 11.48 12.25
$ 62,451-130,250 $104,051-158,550 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19 11.98 12.78
$130,251-283,150 $158,551-283,150 41.95 6.89 7.75 8.61 9.47 10.34 11.20 12.06 12.92 13.78
OVER $283,151 OVER $283,151 45.22 7.30 8.21 9.13 10.04 10.95 11.87 12.78 13.69 14.60
</TABLE>
FOR FLORIDA RESIDENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EFFECTIVE
TAXABLE INCOME 1999* TAX RATE TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN % 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5% 7%
IS EQUIVALENT TO A TAXABLE YIELD OF
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 25,750 $ 0- 43,050 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06 7.65 8.24
$ 27,751- 62,450 $ 43,051-104,050 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 62,451-130,250 $104,051-158,550 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$130,251-283,150 $158,551-283,150 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38 10.16 10.94
OVER $283,151 OVER $283,151 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93 10.76 11.59
</TABLE>
To compare the yield of a taxable security with the yield of a tax-free
security, find your taxable income and read across. The table incorporates 1999
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, you should consult your own tax advisers in this
regard.
9
<PAGE>
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
MONTHLY INCOME
The Fund will pay you regular monthly income. Your monthly income may vary
because of:
o elimination of one or more bonds from the Fund's portfolio because of
calls, redemptions or sales;
o a change in the Fund's expenses; or
o the failure by a bond's issuer to pay interest.
Changes in interest rates generally will not affect your income because the
portfolio is fixed.
Along with your income, you will receive your share of any available bond
principal.
RETURN FIGURES
We cannot predict your actual return, which will vary with unit price, how long
you hold your investment and changes in the portfolio, interest income and
expenses.
Estimated Current Return equals the estimated annual cash to be received from
the bonds in the Fund less estimated annual Fund expenses, divided by the Unit
Price (including the maximum sales fee):
Estimated Annual Estimated
Interest Income - Annual Expenses
- -------------------------------------------------
Unit Price
Estimated Long Term Return is a measure of the estimated return over the
estimated life of the Fund. Unlike Estimated Current Return, Estimated Long Term
Return reflects maturities, discounts and premiums of the bonds in the Fund. It
is an average of the yields to maturity (or in certain cases, to an earlier call
date) of the individual bonds in the portfolio, adjusted to reflect the Fund's
maximum sales fee and estimated expenses. We calculate the average yield for the
portfolio by weighting each bond's yield by its market value and the time
remaining to the call or maturity date.
Yields on individual bonds depend on many factors including general conditions
of the bond markets, the size of a particular offering and the maturity and
quality rating of the particular issues. Yields can vary among bonds with
similar maturities, coupons and ratings.
These return quotations are designed to be comparative rather than predictive.
RECORDS AND REPORTS
You will receive:
o a monthly statement of income payments and any principal payments;
o a notice from the Trustee when new bonds are deposited in exchange or
substitution for bonds originally deposited;
o an annual report on Fund activity; and
o annual tax information. This will also be sent to the IRS. You must report the
amount of tax-exempt interest received during the year.
You may request:
o copies of bond evaluations to enable you to comply with federal and state tax
reporting requirements; and
o audited financial statements of the Fund.
You may inspect records of Fund transactions at the Trustee's office during
regular business hours.
10
<PAGE>
THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, bonds with longer maturities will
change in value more than bonds with shorter maturities. Bonds in the Fund are
more likely to be called when interest rates decline. This would result in early
returns of principal to you and may result in early termination of the Fund. Of
course, we cannot predict how interest rates may change.
CALL RISK
Many bonds can be prepaid or 'called' by the issuer before their stated
maturity.
For example, some bonds may be required to be called pursuant to mandatory
sinking fund provisions.
Also, an issuer might call its bonds during periods of falling interest rates,
if the issuer's bonds have a coupon higher than current market rates.
An issuer might call its bonds in extraordinary cases, including if:
o it no longer needs the money for the original purpose;
o the project is condemned or sold;
o the project is destroyed and insurance proceeds are used to redeem the
bonds;
o any related credit support expires and is not replaced; or
o interest on the bonds become taxable.
If the bonds are called, your income will decline and you may not be able to
reinvest the money you receive at as high a yield or as long a maturity. An
early call at par of a premium bond will reduce your return.
REDUCED DIVERSIFICATION RISK
If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.
LIQUIDITY RISK
You can always sell back your units, but we cannot assure you that a liquid
trading market will always exist for the bonds in the portfolio, especially
since current law may restrict the Fund from selling bonds to any Sponsor. The
bonds will generally trade in the over-the-counter market. The value of the
bonds, and of your investment, may be reduced if trading in bonds is limited or
absent.
CONCENTRATION RISK
When a certain type of bond makes up 25% or more of the portfolio, it is said to
be 'concentrated' in that bond type, which makes the Portfolio less diversified.
Here is what you should know about the California Portfolio's concentration in
special tax bonds. Special tax bonds are payable from and secured by the
revenues a municipality derives from a particular tax; for example, a tax on
hotel rentals, on the purchase of food and beverages, car rentals, or liquor
consumption. These bonds are not secured by general tax revenues. Payment on
these bonds may be adversely affected by:
o a reduction in revenues resulting from a decline in the local economy or
population; or
o a decline in the consumption, use or cost of the goods and services that
are subject to taxation.
Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentrations over time.
11
<PAGE>
STATE CONCENTRATION RISK
CALIFORNIA RISKS
Generally
From the late 1980s through the early 1990s, an economic recession eroded
California's revenue base. At the same time rapid population growth caused State
expenditures to exceed budget appropriations.
o As a result California experienced a period of sustained budget imbalance.
o Since that time the California economy has improved markedly and the
extreme budgetary pressures have begun to lessen. However, the Asian
economic crisis is expected to continue to have some negative effect on the
State's economy.
State Government
The 1997-98 Budget Act allocated a State budget of approximately $66.9 Billion
and contains no tax increases or reductions. Despite this somewhat improved
state, California's budget is still subject to certain unforeseeable events. For
example:
o In December, 1994, Orange County and its investment pool filed for
bankruptcy. While a settlement has been reached, the full impact on the
State and Orange County is still unknown.
o California faces constant fluctuations in other expenses (including health
and welfare caseloads, property tax receipts, federal funding and natural
disaster relief) that will undoubtedly create new budgetary pressure and
reduce ability to pay their debts.
o California's general obligation bonds are currently rated AA3 by Moody's
and A+ by Standard & Poor's.
Other Risks
Issuers' ability to make payments on bonds (and the remedies available to
bondholders) could also be adversely affected by the following constraints:
o Certain provisions of California's Constitution, laws and regulatory system
contain tax, spending and appropriations limits and prohibit certain new
taxes.
o Certain other California laws subject the users of bond proceeds to strict
rules and limits regarding revenue repayment.
o Bonds of healthcare institutions which are subject to the strict rules and
limits regarding reimbursement payments of California's Medi-Cal program
for health care services to welfare recipients and bonds secured by liens
on real property are two of the types of bonds that could be affected by
these provisions.
FLORIDA RISKS
Generally
Florida's financial condition is affected by numerous national, economic, social
and environmental policies and conditions. For example:
o south Florida is heavily involved with foreign tourism, trade and
investment capital. As a result, the region is susceptible to international
trade and currency imbalances and economic problems in Central and South
America;
o central and northern Florida are more vulnerable to agricultural problems,
such as crop failures or severe weather conditions, especially in the
citrus and sugar industries; and
o the state as a whole is also very dependent on tourism and construction.
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<PAGE>
State and Local Government
The state of Florida and its local governments are restricted in their ability
to raise taxes and incur debts. These restrictions limit their ability to
generate revenue, and so could hurt their ability to pay debts.
General obligations of the state are rated Aa2 by Moody's, AA+ by Standard &
Poor's and AA by Fitch.
BOND QUALITY RISK
A reduction in a bond's rating may decrease its value and, indirectly, the value
of your investment in the Fund.
INSURANCE RELATED RISK
The bonds are backed by insurance companies (as shown under Portfolios).
Insurance policies generally make payments only according to a bond's original
payment schedule and do not make early payments when a bond defaults or becomes
taxable. Although the federal government does not regulate the insurance
business, various state laws and federal initiatives and tax law changes could
significantly affect the insurance business. The claims-paying ability of the
insurance companies is generally rated AAA by Standard & Poor's or another
nationally recognized rating organization. The insurance company ratings are
subject to change at any time at the discretion of the rating agencies.
LITIGATION AND LEGISLATION RISKS
We do not know of any pending litigation that might have a material adverse
effect upon the Fund.
Future tax legislation could affect the value of the portfolio by:
o limiting real property taxes,
o reducing tax rates,
o imposing a flat or other form of tax, or
o exempting investment income from tax.
SELLING OR EXCHANGING UNITS
You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
o adding the value of the bonds, net accrued interest, cash and any other
Fund assets;
o subtracting accrued but unpaid Fund expenses, unreimbursed Trustee
advances, cash held to buy back units or for distribution to investors and
any other Fund liabilities; and
o dividing the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the portfolio.
If you sell your units before the fourth anniversary of the Fund, you will pay a
contingent deferred sales fee of $5.00 per unit, which will be deducted from
your proceeds.
SPONSORS' SECONDARY MARKET
While we are not obligated to do so, we will buy back units at net asset value
without any other fee or charge other than any applicable deferred sales charge.
We may resell the units to other buyers or to the Trustee. You should consult
your financial professional for current market prices to determine if other
broker-dealers or banks are offering higher prices.
We have maintained the secondary market continuously for over 25 years, but we
could discontinue it without prior notice for any business reason.
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<PAGE>
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.
If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.
There could be a delay in paying you for your units:
o if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
bonds not reasonably practicable; and
o for any other period permitted by SEC order.
EXCHANGE OPTION
You may exchange units of certain Defined Asset Funds for units of this Fund.
You may exchange units of this Fund for units of certain other Defined Asset
Funds at a reduced sales fee if your investment goals change. To exchange units,
you should talk to your financial professional about what funds are
exchangeable, suitable and currently available.
Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.
We may amend or terminate this exchange option at any time without notice.
HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the bonds, less expenses, from
the initial most recent Record Day up to, but not including, the settlement
date, which is usually three business days after the purchase date of the unit.
14
<PAGE>
A portion of the price of a unit consists of cash so that the Trustee can
provide you with regular monthly income. When you sell your units you will
receive your share of this cash.
In addition, as with mutual funds, the Fund (and therefore the investors) pay
all or some of the costs of organizing the Fund including:
o cost of initial preparation of legal documents;
o federal and state registration fees;
o initial fees and expenses of the Trustee;
o initial audit; and
o legal expenses and other out-of-pocket expenses.
EVALUATIONS
An independent Evaluator values the bonds on each business day (excluding
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas).
Bond values are based on current bid or offer prices for the bonds or comparable
bonds. In the past, the difference between bid and offer prices of publicly
offered tax-exempt bonds has ranged from 0.5% of face amount on actively traded
issues to 3.5% on inactively traded issues; the difference has averaged between
1 and 2%.
INCOME
The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.
EXPENSES
The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
o to reimburse the Trustee for the Fund's operating expenses;
o for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
o costs of actions taken to protect the Fund and other legal fees and
expenses;
o expenses for keeping the Fund's registration statement current; and
o Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 55 cents per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are also
now chargeable to the Portfolio. While this fee may exceed the amount of these
costs and expenses attributable to this Fund, the total of these fees for all
Series of Defined Asset Funds will not exceed the aggregate amount attributable
to all of these Series for any calendar year. The Fund also pays the Evaluator's
fees.
The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
15
<PAGE>
Any quarterly deferred sales fees you owe are paid with interest and principal
from certain bonds. If these amounts are not enough, the rest will be paid out
of distributitons to you from the Fund's Capital and Income Accounts.
The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell bonds if cash is not available.
PORTFOLIO CHANGES
The Sponsors and Trustee are not liable for any default or defect in a bond; if
a contract to buy any bond.
Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
bonds in the portfolio even if their credit quality declines or other adverse
financial circumstances occur. However, we may sell a bond in certain cases if
we believe that certain adverse credit conditions exist or if a bond becomes
taxable.
If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which will affect the size
and composition of the portfolio. Units offered in the secondary market may not
represent the same face amount of bonds that they did originally.
We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
o diversity of the portfolio;
o size of the Fund relative to its original size;
o ratio of Fund expenses to income;
o current and long-term returns;
o degree to which units may be selling at a premium over par; and
o cost of maintaining a current prospectus.
FUND TERMINATION
The Fund will terminate following the stated maturity or sale of the last bond
in the portfolio. The Fund may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Fund have fallen
below 40% of the face amount of bonds deposited. We will decide whether to
terminate the Fund early based on the same factors used in deciding whether or
not to offer units in the secondary market.
When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining bonds, and you will receive your final distribution. Any
bond that cannot be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final sale.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling bonds. This may reduce the amount you receive as your
final distribution.
CERTIFICATES
Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.
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<PAGE>
TRUST INDENTURE
The Fund is a 'unit investment trust' governed by a Trust Indenture, a contract
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
o to cure ambiguities;
o to correct or supplement any defective or inconsistent provision;
o to make any amendment required by any governmental agency; or
o to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.
The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
o it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
o it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
o remove it and appoint a replacement Sponsor;
o liquidate the Fund; or
o continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
counsel for the Sponsors, has given an opinion that the units are validly
issued. Special counsel located in the relevant states have given state and
local tax opinions.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statements of Condition included in this
prospectus.
17
<PAGE>
SPONSORS
The Sponsors are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
TRUSTEE
The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee. It is supervised by
the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial date of deposit of the bonds. Any cash
made available by you to the Sponsors before the settlement date for those units
may be used in the Sponsors' businesses to the extent permitted by federal law
and may benefit the Sponsors.
A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of which it was a member.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its employees
with access to information on portfolio transactions. The goal of the code is to
prevent fraud, deception or misconduct against the Fund and to provide
reasonable standards of conduct.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the 'Year
2000 Problem'). We do not expect that the computer system changes necessary to
prepare for the Year 2000 will cause any major operational difficulties for the
Fund. The Year 2000 Problem may adversely affect the issuers of the bonds
contained in a Portfolio, but we
18
<PAGE>
cannot predict whether any impact will be material to the Fund as a whole.
TAXES
The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances. You should
consult your own tax adviser about your particular circumstances.
At the date of issue of each bond, counsel for the issuer delivered an opinion
to the effect that interest on the bond is exempt from regular federal income
tax. However, interest may be subject to state and local taxes and federal
alternative minimum tax. Neither we nor our counsel have reviewed the issuance
of the bonds, related proceedings or the basis for the opinions of counsel for
the issuers. We cannot assure you that the issuer (or other users) have complied
or will comply with any requirements necessary for a bond to be tax-exempt. If
any of the bonds were determined not to be tax-exempt, you could be required to
pay income tax for current and prior years, and if the Fund were to sell the
bond, it might have to sell it at a substantial discount.
In the opinion of our counsel, under existing law:
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Fund will not be taxed as a corporation for federal income tax purposes, and
you will be considered to own directly your share of each bond in the Fund.
INCOME OR LOSS UPON DISPOSITION
When all or part of your share of a bond is disposed of (for example, when the
Fund sells, exchanges or redeems a bond or when you sell or exchange your
units), you will generally recognize capital gain or loss. Your gain, however,
will generally be ordinary income to the extent of any accrued 'market
discount'. Generally you will have market discount to the extent that your basis
in a bond when you purchase a unit is less than its stated redemption price at
maturity (or, if it is an original issue discount bond, the issue price
increased by original issue discount that has accrued on the bond before your
purchase). You should consult your tax adviser in this regard.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain from the Fund will be long-term if you are considered to have held
your investment on each bond for more than one year and short-term if you held
it for one year or less. If you are an individual and sell your units after
holding them for more than one year, you may be entitled to a 20% maximum
federal tax rate on any resulting gains. Consult your tax adviser in this
regard. Because the deductibility of capital losses is subject to limitations,
you may not be able to deduct all of your capital losses.
YOUR BASIS IN THE BONDS
Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges and the organizational expenses you pay, adjusted to
reflect any accruals of 'original issue discount,' 'acquisition
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<PAGE>
premium' and 'bond premium'. You should consult your tax adviser in this regard.
EXPENSES
If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.
STATE AND LOCAL TAXES
Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the extent that the income is
earned on bonds that are tax-exempt for New York purposes. Depending on where
you live, your income from the Fund may be subject to state and local taxation.
You should consult your tax adviser in this regard.
CALIFORNIA TAXES
In the opinion of O'Melveny & Myers LLP, Los Angeles, California, special
counsel on California tax matters:
Under the income tax laws of the State of California, the Trust will not be
taxed as a corporation and you will be considered to own directly your share of
each bond of the Trust. If you are a California taxpayer, your share of the
income from the bonds of the Trust will not be tax-exempt in California except
for California personal income tax purposes and only to the extent that the
income is earned on bonds that are exempt for such purposes. If you are a
California taxpayer and all or part of your share of a bond is disposed of (for
example, when a bond is sold, exchanged or redeemed at maturity or you sell or
exchange your units), you will recognize gain or loss for California tax
purposes. Depending on where you live, your income from the Trust may be subject
to state and local taxation. You should consult your tax advisor in this regard.
FLORIDA TAXES
In the opinion of Greenberg, Traurig, P.A., Miami, Florida, special counsel on
Florida tax matters:
Under the income tax laws of the State of Florida, the Fund will not be taxed as
a corporation. Florida imposes an income tax on corporations but does not impose
a personal income tax. Accordingly, if you are an individual taxpayer your
income from the Fund will not be subject to tax in Florida. However, if you are
an entity that is normally taxed as a corporation, your income from the fund
will not be exempt from tax in Florida and special rules for taxation apply
depending on the type of entity. You should consult your tax adviser in this
regard.
Florida also imposes a tax on intangible personal property, such as stocks,
bonds, notes and units in trusts. The tax is imposed on Florida taxpayers as of
January 1st of each year. Florida exempts certain types of bonds and debt
obligations from this tax. Your units will be exempt from the intangible
personal property tax as long as the Fund invests exclusively in bonds and other
debt
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<PAGE>
obligations that are tax-exempt for Florida purposes.
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Fund by calling
the Trustee. The supplemental information includes more detailed risk disclosure
about the types of bonds that may be in the Fund's portfolios, general risk
disclosure concerning any insurance securing certain bonds, and general
information about the structure and operation of the Fund. The supplemental
information is also available from the SEC.
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DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4
(CALIFORNIA INSURED SERIES AND
FLORIDA INSURED SERIES)
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Defined Asset Funds - Municipal State Series - 4 (California
Insured and Florida Insured Series):
We have audited the accompanying statements of condition of
Defined Asset Funds - Municipal State Series - 4 (California
Insured Series and Florida Insured Series), including the
portfolios, as of May 31, 1999 and the related statements of
operations and of changes in net assets for the years ending
May 31, 1999 and 1998 and the period June 28, 1996 to May 31,
1997. These financial statements are the responsibility of the
Trustee. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. Securities owned at May 31,
1998, as shown in such portfolios, were confirmed to us by
The Chase Manhattan Bank, the Trustee. An audit also includes
assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Defined Asset Funds - Municipal State
Series - 4 (California Insured Series and Florida Insured Series)
at May 31, 1999 and the results of their operations and changes
in their net assets for the above-stated periods in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
September 23, 1999
D - 1.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
CALIFORNIA INSURED SERIES
STATEMENT OF CONDITION
As of May 31, 1999
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 3,973,816) (Note 1)......... $ 4,344,588
{ 36} Accrued interest ............................... 43,231
Acrrued interest on Segregated Bond (Note 5) ... 2,702
{ 42} Income payments receivable (Segregated Bond) ... 1,870
Principal payments receivable .................. 1,998
Principal payments receivable (Segregated Bond). 147
{ 32} Cash - income .................................. 3,004
Cash - income on Segregated Bond ............... 6,360
{ 34} Cash - principal ............................... 39,684
Deferred organization costs (Note 6) ........... 1,983
-----------
{ 40} Total trust property ......................... 4,445,567
LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 32,578
Deferred sales charge (Note 5) ................. 23,139
{143} Principal payments payable (Segregated Bond) ... 1,281
Income payments payable (Segregated Bond) ...... 2,145
{ 51} Accrued Sponsors' fees ......................... 799
Other liabilities (Note 6) ..................... 1,983 61,925
----------- -----------
NET ASSETS, REPRESENTED BY:
{ 80} 4,025 units of fractional undivided
{ 80} interest outstanding (Note 3)................ 4,370,784
{105} Undistributed net investment income ............ 12,858 $ 4,383,642
----------- ===========
{130}UNIT VALUE ($ 4,383,642 / 4,025 units )........... $ 1,089.10
===========
</TABLE>
See Notes to Financial Statements.
D - 2.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
CALIFORNIA INSURED SERIES
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
June 28, 1996
to
Years ended May 31, May 31,
1999 1998 1997
---- ----
<S> <C> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 237,335 $ 259,746 $ 249,721
Interest income on Segregated
Bond (Note 5) ........................ 11,638 13,672 14,073
{ 20} Trustee's fees and expenses ............ (7,080) (8,432) (7,913)
{ 30} Sponsors' fees ......................... (2,006) (2,163) (2,061)
------------------------------------------------
{ 40} Net investment income .................. 239,887 262,823 253,820
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on
{ 50} securities sold or redeemed .......... 40,315 26,495 (62)
Unrealized appreciation (depreciation)
{ 60} of investments ....................... (32,924) 294,323 109,373
------------------------------------------------
Net realized and unrealized
{ 70} gain on investments ................. 7,391 320,818 109,311
------------------------------------------------
NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 247,278 $ 583,641 $ 363,131
================================================
</TABLE>
See Notes to Financial Statements.
D - 3.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
CALIFORNIA INSURED SERIES
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
June 28, 1996
to
Years Ended May 31, May 31,
1999 1998 1997
---- ----
<S> <C> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 239,887 $ 262,823 $ 253,820
Realized gain (loss)
{ 20} securities sold or redeemed .......... 40,315 26,495 (62)
Unrealized appreciation (depreciation)
{ 30} of investments ....................... (32,924) 294,323 109,373
------------------------------------------------
Net increase in net assets
{ 40} resulting from operations ............ 247,278 583,641 363,131
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
{ 50} Income ................................ (228,605) (249,735) (224,321)
{ 60} Principal .............................. (2,393)
------------------------------------------------
{ 70} Total distributions .................... (228,605) (249,735) (226,714)
------------------------------------------------
SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Income ............................... (12,537) (13,672) (14,073)
Principal ............................ (34,001) (37,071) (25,403)
REDEMPTION AMOUNTS:
{ 82} Income ................................. (930) (698)
Income on Segregated Bond .............. (586)
{ 83} Principal .............................. (401,966) (426,670)
------------------------------------------------
{ 84} Net share transactions ................. (450,020) (478,111) (39,476)
------------------------------------------------
{ 90}NET INCREASE (DECREASE) IN NET ASSETS .... (431,347) (144,205) 96,941
{100}NET ASSETS AT BEGINNING OF PERIOD ........ 4,814,989 4,959,194 4,862,253
------------------------------------------------
{110}NET ASSETS AT END OF PERIOD .............. $ 4,383,642 $ 4,814,989 $ 4,959,194
================================================
PER UNIT:
Income distributions during
{120} period ............................... $ 53.73 $ 53.86 $ 46.88
================================================
Principal distributions during
{130} period ............................... $ 0.50
============
Net asset value at end of
{140} period ............................... $ 1,089.10 $ 1,097.06 $ 1,036.40
================================================
TRUST UNITS:
{ 83} Redeemed during period ................. 364 396
{150} Outstanding at end of period ........... 4,025 4,389 4,785
================================================
</TABLE>
See Notes to Financial Statements.
D - 4.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
CALIFORNIA INSURED SERIES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities
except that value on June 28, 1996 was based upon offering
side evaluations at June 26, 1996, the day prior to the Date
of Deposit. Cost of securities at June 28, 1996 was also
based on such offering side evaluations.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
{ 10} Cost of 4,025 units at Date of Deposit ..................... $ 4,089,983
Transfer to capital of interest on Segregated Bonds (Note 5) 39,383
{ 31} Redemptions of units - net cost of 760 units redeemed
{143} less redemption amounts (principal)....................... (56,367)
Income on Segregated Bond paid upon redemption ............. (586)
Principal distributions .................................... (2,393)
Deferred sales charge (Note 5) ............................. (136,756)
{ 40} Realized gain on securities sold or redeemed ............... 66,748
{ 70} Unrealized appreciation of investments...................... 370,772
-----------
{ 80} Net capital applicable to Holders .......................... $ 4,370,784
===========
</TABLE>
4. INCOME TAXES
As of May 31, 1999, unrealized appreciation of investments, based on cost for
Federal income tax purposes, aggregated $370,772, all of which related to
appreciated securities. The cost of investment securities for Federal income
tax purposes was $3,973,816 at May 31, 1999.
D - 5.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
CALIFORNIA INSURED SERIES
NOTES TO FINANCIAL STATEMENTS
5. DEFERRED SALES CHARGE
$ 183,175 face amount of the State of California, Var. Purp. G.O. Bonds, have
been segregated to fund the deferred sales charges. The sales charges are being
paid for with the interest received and by periodic sales or maturity of these
bonds. A deferred sales charge of $2.75 per Unit is charged on a quarterly
basis, and paid to the Sponsors annually by the Trustee on behalf of the
Holders, up to an aggregate of $55 per Unit over the first five years of the
life of the Fund. Should a Holder redeem Units prior to the end of the fourth
anniversary of the Fund, a deferred sales charge of $25, $15, $10 or $5 per
Unit will be charged in the first, second, third or fourth fiscal year of the
Fund, respectively, and is included with principal redemption amounts in the
accompanying financial statements.
6. DEFERRED ORGANIZATION COSTS
Deferred organization costs are being amortized over five years. Included in
"Other liabilities", is $1,983 payable to the Trustee for reimbursement of costs
related to the organization of the Trust.
D - 6.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
CALIFORNIA INSURED SERIES
PORTFOLIO
As of May 31, 1999
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost(2) Value(2)
---------- --------- ----------- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 California Hlth. Facs. Fin. Auth., AAA $ 680,000 5.600 % 2033 05/01/03 $ 639,737 $ 697,517
Kaiser Permanente Rev. Bonds, Ser. 1993 @ 102.000
C (MBIA Ins.)
2 County of Madera, CA, Certs. of Part. AAA 475,000 6.125 2023(6) 03/15/05 481,465 533,496
(Valley Children's Hosp. Proj.), Ser. @ 102.000
1995 (MBIA Ins.)
3 Brea Redev. Agy. (Orange Cnty., CA), AAA 750,000 5.750 2023 08/01/03 729,883 789,345
1993 Tax Alloc. Rfdg. Bonds (Redev. @ 102.000
Proj. AB) (MBIA Ins.)
4 Moulton Niguel Wtr. Dist. (Orange AAA 500,000 5.300 2023 09/01/03 453,315 502,600
Cnty., CA), Moulton Niguel Wtr. Dist. @ 102.000
Pub. Fac. Corp., 1993 Cert. of Part.
(AMBAC Ins.)
5 Sacramento, CA, Mun. Util. Dist., Elec. AAA 750,000 5.750 2022 05/15/03 735,105 787,035
Rev. Bonds, Ser.1993 E (MBIA Ins.) @ 102.000
6 Santa Cruz Cnty. Pub. Fin. Auth., CA, AAA 650,000 5.300 2023 09/01/03 589,310 654,700
Rev. (Tax Allocation) Bonds (Parity @ 102.000
Rfdg. Loan), Ser. 1993 A (MBIA Ins.)
7 State of California, Var. Purp. G.O. AAA 325,000 5.900 2025(6) 03/01/05 325,002 358,514
Bonds (AMBAC Ins.) (5) @ 101.000
20,000 5.900 2025 03/01/05 19,999 21,381
@ 101.000
----------- --------- ---------
TOTAL $ 4,150,000 $ 3,973,816 $ 4,344,588
=========== ========= =========
</TABLE>
See Notes to Portfolios on page D - 14.
D - 7.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
FLORIDA INSURED SERIES
STATEMENT OF CONDITION
As of May 31, 1999
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities -
{ 20} at value (cost $ 3,449,317)(Note 1) ......... $ 3,750,815
{ 36} Accrued interest ............................... 58,465
Accrued interest on Segregated Bond (Note 5) ... 4,238
Principal payments receivable .................. 4,562
Cash - income on Segregated Bond ............... 2,377
Cash - principal ............................... 36,858
Deferred organization costs (Note 6) ........... 1,983
-----------
{ 40} Total trust property ......................... 3,859,298
LESS LIABILITIES:
{ 50} Income advance from Trustee..................... $ 47,062
Other advance from Trustee ..................... 5,486
Deferred sales charge (Note 5) ................. 18,615
Income payments payable (Segregated Bond) ...... 387
Principal payments payable (Segregated Bond) ... 6,790
{ 51} Accrued Sponsors' fees ......................... 795
Other liabilities (Note 6) ..................... 1,983 81,118
----------- -----------
NET ASSETS, REPRESENTED BY:
{ 80} 3,513 units of fractional undivided
{ 80} interest outstanding (Note 3) ............... 3,767,572
{105} Undistributed net investment income ............ 10,608 $ 3,778,180
----------- ===========
{130}UNIT VALUE ($ 3,778,180 / 3,513 units ) .......... $ 1,075.49
===========
</TABLE>
See Notes to Financial Statements.
D - 8.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
FLORIDA INSURED SERIES
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
June 28, 1996
to
Years Ended May 31, May 31,
1999 1998 1997
---- ---- ----
<S> <C> <C>
INVESTMENT INCOME:
{ 10} Interest income ........................ $ 228,477 $ 257,408 $ 244,218
Interest income on Segregated
Bond (Note 5) ........................ 10,860 13,139 14,011
{ 20} Trustee's fees and expenses ............ (7,057) (8,497) (7,944)
{ 30} Sponsors' fees ......................... (2,018) (2,193) (2,061)
------------------------------------------------
{ 40} Net investment income .................. 230,262 259,857 248,224
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on
{ 50} securities sold or redeemed .......... 96,072 8,985 258
Unrealized appreciation (depreciation)
{ 60} of investments ....................... (77,621) 244,376 134,742
------------------------------------------------
Net realized and unrealized
{ 70} gain on investments .................. 18,451 253,361 135,000
------------------------------------------------
NET INCREASE IN NET ASSETS
{ 80} RESULTING FROM OPERATIONS .............. $ 248,713 $ 513,218 $ 383,224
================================================
</TABLE>
See Notes to Financial Statements.
D - 9.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
FLORIDA INSURED SERIES
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
June 28, 1996
to
Years Ended May 31, May 31,
1999 1998 1997
---- ---- ----
<S> <C> <C>
OPERATIONS:
{ 10} Net investment income .................. $ 230,262 $ 259,857 $ 248,224
Realized gain on
{ 20} securities sold or redeemed .......... 96,072 8,985 258
Unrealized appreciation
{ 30} of investments ....................... (77,621) 244,376 134,742
------------------------------------------------
Net increase in net assets
{ 40} resulting from operations ............ 248,713 513,218 383,224
------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
{ 50} Income ................................ (220,467) (246,842) (219,382)
{ 60} Principal .............................. (6,414) (2,392)
------------------------------------------------
{ 70} Total distributions .................... (220,467) (253,256) (221,774)
------------------------------------------------
SHARE TRANSACTIONS:
Deferred sales charge (Note 5):
Income ............................... (22,691) (13,139) (13,981)
Principal ............................ (22,601) (38,050) (25,288)
REDEMPTION AMOUNTS:
{ 82} Income ................................. (2,478) (397) (159)
Income on Segregated Bond .............. (2,810)
{ 83} Principal .............................. (1,144,679) (189,568) (37,246)
------------------------------------------------
{ 84} Net share transactions ................. (1,195,259) (241,154) (76,674)
------------------------------------------------
{ 90}NET INCREASE (DECREASE) IN NET ASSETS .... (1,167,013) 18,808 84,776
{100}NET ASSETS AT BEGINNING OF PERIOD ........ 4,945,193 4,926,385 4,841,609
------------------------------------------------
{110}NET ASSETS AT END OF PERIOD .............. $ 3,778,180 $ 4,945,193 $ 4,926,385
================================================
PER UNIT:
Income distributions during
{120} period ............................... $ 52.52 $ 52.76 $ 45.99
================================================
Principal distributions during
{130} period ............................... $ 1.38 $ 0.50
==============================
Net asset value at end of
{140} period ............................... $ 1,075.49 $ 1,082.10 $ 1,037.57
================================================
TRUST UNITS:
{ 83} Redeemed during period ................. 1,057 178 36
{150} Outstanding at end of period ........... 3,513 4,570 4,748
================================================
</TABLE>
See Notes to Financial Statements.
D - 10.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
FLORIDA INSURED SERIES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
(A) Securities are stated at value as determined by the
Evaluator based on bid side evaluations for the securities,
except that value on June 28, 1996 was based upon offering side
evaluations at June 26, 1996, the day prior to the Date of Deposit.
Cost of securities at June 28, 1996 was also based on such offering
side evaluations.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are also distributed periodically.
3. NET CAPITAL
<TABLE>
<S> <C>
{ 10} Cost of 3,513 units at Date of Deposit
(net of initial sales charge) ........................... $ 3,555,304
Transfer to capital of interest on Segregated Bond (Note 5) 38,010
{ 31} Redemptions of units - net cost of 1,271 units redeemed
{143} less redemption amounts (principal)....................... (85,188)
Income paid on Segregated Bond upon redemption ............. (2,811)
Principal distributions .................................... (8,806)
Deferred sales charge (Note 5) ............................. (135,750)
{ 40} Realized gain on securities sold or redeemed ............... 105,315
{ 70} Unrealized appreciation of investments...................... 301,498
-----------
{ 80} Net capital applicable to Holders .......................... $ 3,767,572
===========
</TABLE>
4. INCOME TAXES
As of May 31, 1999, unrealized appreciation of investments, based on cost for
Federal income tax purposes, aggregated $301,498, all of which related to
appreciated securities. The cost of investment securities for Federal income
tax purposes was $3,449,317 at May 31, 1999.
D - 11.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
CALIFORNIA INSURED SERIES
NOTES TO FINANCIAL STATEMENTS
5. DEFERRED SALES CHARGE
$ 173,120 face amount of the State of Florida, Full Faith and Credit Dept. of
Trans., Right-of-Way Acquisition and Bridge Construction Bonds, Ser. 1995
State of California, Var. Purp. G.O. Bonds, have been segregated to fund the
deferred sales charges. The sales charges are being paid for with the interest
received and by periodic sales or maturity of these bonds. A deferred sales
charge of $2.75 per Unit is charged on a quarterly basis, and paid to the
Sponsors annually by the Trustee on behalf of the Holders, up to an aggregate
of $55 per Unit over the first five years of the life of the Fund. Should a
Holder redeem Units prior to the end of the fourth anniversary of the Fund, a
deferred sales charge of $25, $15, $10 or $5 per Unit will be charged in the
first, second, third or fourth fiscal year of the Fund, respectively, and is
included with principal redemption amounts in the accompanying financial
statements.
6. DEFERRED ORGANIZATION COSTS
Deferred organization costs are being amortized over five years. Included in
"Other liabilities", is $1,983 payable to the Trustee for reimbursement of costs
related to the organization of the Trust.
D - 12.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4,
FLORIDA INSURED SERIES
PORTFOLIO
As of May 31, 1999
<TABLE>
<CAPTION>
Rating of Optional
Portfolio No. and Title of Issues Face Redemption
Securities (1) (4) Amount Coupon Maturities(3) Provisions(3) Cost(2) Value(2)
---------- --------- ----------- ----------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 State of Florida Bd. of Educ., Pub. AAA $ 265,000 5.875 % 2025 06/01/05 $ 264,070 $ 282,164
Educ. Cap. Outlay Bonds, Ser. 1995 B @ 101.000
(MBIA Ins.)
2 The School Board of Brevard Cnty.,FL, AAA 520,000 5.500 2021 07/01/06 492,970 534,576
Ser. 1996 B ( AMBAC Ins. ) @ 102.000
3 Dade Cnty., FL, Wtr. and Swr. Sys. Rev. AAA 750,000 5.500 2025 10/01/05 708,344 771,660
Bonds, Ser. 1995 (Financial Guaranty @ 102.000
Ins.)
4 Dade Cnty., FL, Aviation Rev. AAA 390,000 5.600 2026 10/01/06 373,542 404,906
Bonds,Ser. 1996 B (MBIA Ins.) @ 102.000
5 State of Florida, Full Faith and Credit AAA 290,000 5.875 2024(6) 07/01/05 289,008 318,437
Dept. of Trans., Right-of-Way @ 101.000
Acquisition and Bridge Construction
Bonds, Ser. 1995 (MBIA Ins.) (5)
6 The School Board of Escambia Cnty., FL, AAA 750,000 5.500 2022 02/01/06 710,580 770,235
Ser.1996-2 (MBIA Ins.) @ 102.000
7 Hillsborough Cnty., FL, Cap. Imp. Prog. AAA 665,000 5.250 2016 08/01/03 610,803 668,837
Rfdg. Rev. Bonds (Criminal Justice @ 101.000
Fac.), Ser. 1993 (Financial Guaranty
Ins.)
----------- --------- ---------
TOTAL $ 3,630,000 $ 3,449,317 $ 3,750,815
=========== ========= =========
</TABLE>
See Notes to Portfolios on page D - 14.
D - 13.
<PAGE>
DEFINED ASSET FUNDS - MUNICIPAL STATE SERIES - 4
(CALIFORNIA INSURED SERIES AND
FLORIDA INSURED SERIES)
NOTES TO PORTFOLIOS
As of May 31, 1999
(1) The ratings of the bonds are by Standard & Poor's Ratings Group, or by
Moody's Investors Service, Inc. if followed by "(m)", or by Fitch Investors
Service, Inc. if followed by "(f)"; "NR" indicates that this bond is not
currently rated by any of the above-mentioned rating services. These ratings
have been furnished by the Evaluator but not confirmed with the rating agencies.
(2) See Notes to Financial Statements.
(3) Optional redemption provisions, which may be exercised in whole or in part,
are initially at prices of par plus a premium, then subsequently at prices
declining to par. Certain securities may provide for redemption at par prior
or in addition to any optional or mandatory redemption dates or maturity, for
example, through the operation of a maintenance and replacement fund, if
proceeds are not able to be used as contemplated, the project is condemned or
sold or the project is destroyed and insurance proceeds are used to redeem
the securities. Many of the securities are also subject to mandatory sinking
fund redemption commencing on dates which may be prior to the date on which
securities may be optionally redeemed. Sinking fund redemptions are at par
and redeem only part of the issue. Some of the securities have mandatory
sinking funds which contain optional provisions permitting the issuer to
increase the principal amount of securities called on a mandatory redemption
date. The sinking fund redemptions with optional provisions may, and optional
refunding redemptions generally will, occur at times when the redeemed
securities have an offering side evaluation which represents a premium over
par. To the extent that the securities were acquired at a price higher than
the redemption price, this will represent a loss of capital when compared
with the Public Offering Price of the Units when acquired. Distributions will
generally be reduced by the amount of the income which would otherwise have
been paid with respect to redeemed securities and there will be distributed
to Holders any principal amount and premium received on such redemption after
satisfying any redemption requests for Units received by the Fund. The
estimated current return may be affected by redemptions.
(4) All securities are insured, either on an individual basis or by portfolio
insurance, by a municipal bond insurance company which has been assigned
"AAA" claims paying ability by Standard & Poor's. Accordingly, Standard &
Poor's has assigned a "AAA" rating to the securities. Securities covered by
portfolio insurance are rated "AAA" only as long as they remain in the Trust.
(5) A portion of this bond is segregated to fund the Deferred sales charge.
(6) Bonds with an aggregate face amount of $800,000 of the California Trust
and $290,000 of the Florida Trust have been pre-refunded and are
expected to be called for redemption on the optional redemption provision
dates shown.
D - 14.
<PAGE>
Defined
Asset FundsSM
HAVE QUESTIONS ? MUNICIPAL STATE SERIES 4
Request the most (A Unit Investment Trust)
recent free Information ---------------------------------------
Supplement that gives more This Prospectus does not contain
details about the Fund, complete information about the
by calling: investment company filed with the
The Chase Manhattan Bank Securities and Exchange Commission in
1-800-323-1508 Washington, D.C. under the:
o Securities Act of 1933 (file no.
33-62969) and
o Investment Company Act of 1940 (file
no. 811-2537).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
Units of any future series may not be
sold nor may offers to buy be accepted
until that series has become effective
with the Securities and Exchange
Commission. No units can be sold in any
State where a sale would be illegal.
15337--9/99
<PAGE>
DEFINED ASSET FUNDS--
MUNICIPAL STATE SERIES
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet of Form S-6.
The cross-reference sheet (incorporated by reference to the Cross-Reference
Sheet to the Registration Statement of Defined Asset Funds Municipal Insured
Series, 1933 Act File No. 33-54565).
The Prospectus.
The Signatures.
The following exhibits:
1.1.1--Form of Standard Terms and Conditions of Trust Effective as of
October 21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund,
Multistate Series--48, 1933 Act File No. 33-50247).
4.1 --Consent of the Evaluator.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Post-Effective
Amendment No. 4 to Exhibit 9.1 to the Registration Statement of
Municipal Investment Trust Fund, Insured Series--207, 1933 Act File
No. 33-54037).
R-1
<PAGE>
DEFINED ASSET FUNDS--
MUNICIPAL STATE SERIES 4
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
DEFINED ASSET FUNDS--MUNICIPAL STATE SERIES 4, CERTIFIES THAT IT MEETS ALL OF
THE REQUIREMENTS FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO
RULE 485(B) UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED IN THE CITY OF NEW
YORK AND STATE OF NEW YORK ON THE 28TH DAY OF SEPTEMBER, 1999.
SIGNATURES APPEAR ON PAGES R-3 AND R-4.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 333-70593
GEORGE A. SCHIEREN
JOHN L. STEFFENS
By J. DAVID MEGLEN
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
the Board of Directors of PaineWebber under
Incorporated: the following 1933 Act File
Number: 33-55073
MARGO N. ALEXANDER
TERRY L. ATKINSON
BRIAN M. BAREFOOT
STEVEN P. BAUM
MICHAEL CULP
REGINA A. DOLAN
JOSEPH J. GRANO, JR.
EDWARD M. KERSCHNER
JAMES P. MacGILVRAY
DONALD B. MARRON
ROBERT H. SILVER
MARK B. SUTTON
By
ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-4
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EXHIBIT 4.1
STANDARD & POOR'S
A DIVISION OF THE McGRAW-HILL COMPANIES
J. J. KENNY
65 BROADWAY
NEW YORK, N.Y. 10006-2551
TELEPHONE (212) 770-4422
FAX 212/797-8681
September 28, 1999
Frank A. Ciccotto, Jr.
Vice President
Tax-Exempt Evaluations
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, New Jersey 08543-9051
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004
RE: DEFINED ASSET FUNDS, MUNICIPAL STATE SERIES 4
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-62969 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J. J. Kenny Co., Inc. is currently
acting as the evaluator for the trust. We hereby consent to the use in the
Amendment of the reference to Kenny S&P Evaluation Services, a division of J. J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in our
KENNYBASE database.
You are hereby authorized to file copies of this letter with the Securities
and Exchange Commission.
Sincerely,
FRANK A. CICCOTTO
Vice President
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Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of
Municipal State Series 4 (California and Florida Insured Series), Defined Asset
Funds
We consent to the use in this Post-Effective Amendment No. 3 to Registration
Statement No. 33-62969 of our opinion dated September 23, 1999 appearing in the
Prospectus, which is part of such Registration Statement, and to the reference
to us under the heading 'Miscellaneous--Auditors' in such Prospectus.
DELOITTE & TOUCHE LLP
New York, N.Y.
September 28, 1999