<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 17, 1998
REGISTRATION NO. 333-58521
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
AMENDMENT NO. 1
TO
FORM S-6
------------------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------------------------
A. EXACT NAME OF TRUST:
MUNICIPAL INVESTMENT TRUST FUND
INTERMEDIATE TERM SERIES 401
(FORMERLY INTERMEDIATE TERM SERIES 317)
DEFINED ASSET FUNDS
B. NAME OF DEPOSITOR:
MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
SALOMON SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE,
FENNER &
SMITH INCORPORATED
UNIT INVESTMENT TRUST
DIVISION
P.O. BOX 9051
PRINCETON, NJ 08543-9051 PAINEWEBBER INCORPORATED
1285 AVENUE OF THE
AMERICAS
NEW YORK, NY 10019
SALOMON SMITH BARNEY INC.
388 GREENWICH
STREET--23RD FLOOR
NEW YORK, NY 10013
DEAN WITTER REYNOLDS INC.
TWO WORLD TRADE
CENTER--59TH FLOOR
NEW YORK, NY 10048
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ.
P.O. BOX 9051
PRINCETON, NJ 08543-9051 ROBERT E. HOLLEY
1200 HARBOR BLVD.
WEEHAWKEN, NJ 07087
COPIES TO: DOUGLAS LOWE, ESQ.
PIERRE DE SAINT PHALLE, DEAN WITTER REYNOLDS INC.
LAURIE A. HESSLEIN ESQ. TWO WORLD TRADE
388 GREENWICH STREET 450 LEXINGTON AVENUE CENTER--59TH FLOOR
NEW YORK, NY 10013 NEW YORK, NY 10017 NEW YORK, NY 10048
E. TITLE OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
/ x / Check box if it is proposed that this registration statement will become
effective upon filing on September 17, 1998, pursuant to Rule 487.
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<PAGE>
DEFINED ASSET FUNDSSM
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MUNICIPAL INVESTMENT TRUST FUND
INTERMEDIATE TERM SERIES 401
(A UNIT INVESTMENT TRUST)
O PORTFOLIO OF INTERMEDIATE TERM MUNICIPAL BONDS
O DESIGNED FOR INCOME FREE FROM REGULAR FEDERAL
INCOME TAX
O MONTHLY INCOME DISTRIBUTIONS
SPONSORS: -------------------------------------------------
Merrill Lynch, The Securities and Exchange Commission has not
Pierce, Fenner & Smith approved or disapproved these Securities or
Incorporated passed upon the adequacy of this prospectus. Any
Salomon Smith Barney Inc. representation to the contrary is a criminal
PaineWebber Incorporated offense.
Dean Witter Reynolds Inc. Prospectus dated September 17, 1998.
<PAGE>
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Defined Asset FundsSM
FOR MORE THAN 25 YEARS, DEFINED ASSET FUNDSSM HAS BEEN A LEADER IN UNIT
INVESTMENT TRUST RESEARCH AND PRODUCT INNOVATION. OUR FAMILY OF 'DEFINEDSM'
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 FIXED PORTFOLIO: DEFINED FUNDS FOLLOW A BUY AND HOLD INVESTMENT STRATEGY;
FUNDS ARE NOT MANAGED AND PORTFOLIO CHANGES ARE LIMITED.
O PRESELECTED 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.
CONTENTS
PAGE
-----------
RISK/RETURN SUMMARY AND PORTFOLIO....................... 3
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT................ 7
MONTHLY INCOME....................................... 7
RETURN FIGURES....................................... 7
RECORDS AND REPORTS.................................. 7
THE RISKS YOU FACE...................................... 8
INTEREST RATE RISK................................... 8
CALL RISK............................................ 8
REDUCED DIVERSIFICATION RISK......................... 8
LIQUIDITY RISK....................................... 8
BOND QUALITY RISK.................................... 8
INSURANCE RELATED RISK............................... 8
LITIGATION AND LEGISLATION RISKS..................... 8
SELLING OR EXCHANGING UNITS............................. 8
SPONSORS' SECONDARY MARKET........................... 9
SELLING UNITS TO THE TRUSTEE......................... 9
EXCHANGE OPTION...................................... 10
HOW THE FUND WORKS...................................... 11
PRICING.............................................. 11
EVALUATIONS.......................................... 11
INCOME............................................... 11
EXPENSES............................................. 11
PORTFOLIO CHANGES.................................... 12
FUND TERMINATION..................................... 12
CERTIFICATES......................................... 13
TRUST INDENTURE...................................... 13
LEGAL OPINION........................................ 14
AUDITORS............................................. 14
SPONSORS............................................. 14
TRUSTEE.............................................. 14
UNDERWRITERS' AND SPONSORS' PROFITS.................. 14
PUBLIC DISTRIBUTION.................................. 15
CODE OF ETHICS....................................... 15
YEAR 2000 ISSUES..................................... 15
TAXES................................................... 15
SUPPLEMENTAL INFORMATION................................ 17
FINANCIAL STATEMENTS.................................... 18
REPORT OF INDEPENDENT ACCOUNTANTS.................... 18
STATEMENT OF CONDITION............................... 18
2
<PAGE>
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RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks interest income that is exempt from regular
federal income taxes by investing in a fixed portfolio
consisting primarily of 8-to 12-year municipal revenue
bonds with an estimated average life of 10 years.
2. WHAT ARE MUNICIPAL REVENUE BONDS?
Municipal revenue bonds are bonds issued by states,
municipalities and public authorities to finance the cost
of buying, building or improving various projects intended
to generate revenue, such as airports, health care
facilities, housing and municipal electric, water and sewer
utilities. Generally, payments on these bonds depend solely
on the revenues generated by the projects, excise taxes or
state appropriations, and are not backed by the
government's taxing power.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
o The Fund plans to hold to maturity intermediate-term
tax-exempt municipal bonds with an aggregate face amount of
$10,665,000, and some short-term bonds reserved to pay the
deferred sales charge. The Fund is a unit investment trust
which means that, unlike a mutual fund, the Fund's
portfolio is not managed.
o The bonds are rated A or better by Standard & Poor's,
Moody's or Fitch or in the opinion of the agent for the
Sponsors have similar credit quality to other bonds in the
Portfolio.
o Most of the bonds cannot be called for several years, and
after that they can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
o 14% of the bonds are backed by bank letters of credit.
o 24% of the bonds are insured by AAA-rated insurance
companies and 19% are insured by A-rated insurance
companies.
Letters of credit and insurance 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
o Airports/Ports/Highways 1%
o Financial Institutions 9%
o General Obligation 22%
o Hospitals/Health Care 19%
o Housing 20%
o Manufacturing 1%
o Municipal Water/Sewer Utilities 1%
o Special Tax 8%
o State/Local Municipal Electric Utilities 13%
o Universities/Colleges 6%
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.
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want monthly income free from regular federal
income tax. You will benefit from a professionally selected
and supervised portfolio whose risk is reduced by investing
in 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, if you are subject to AMT or if you cannot
tolerate any risk.
3
<PAGE>
DEFINING YOUR INCOME
AND ESTIMATING YOUR RETURN
WHAT YOU MAY EXPECT
First payment per 1,000 units (10/25/98) $ 2.99
Regular Monthly Income per 1,000 units
(beginning 11/25/98): $ 3.90
Annual Income per 1,000 units: $ 46.88
RECORD DAY: 10th day of each month
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 4.52%
Estimated Long Term Return 4.34%
These returns will vary (see page 7)
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
2.75%
Maximum Sales Fee (Load) on new purchases
(as a percentage of $1,000 invested)
You will pay an up-front sales fee of 1.00%, as well as a
total deferred sales fee of $17.50 over a two-year period
($2.19 per 1,000 units quarterly in the first six quarters
and $2.18 per 1,000 units quarterly in the next two
quarters). Employees of some of the Sponsors and their
affiliates may be charged a reduced sales fee of no less
than $5.00 per 1,000 Units.
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 2.75%
$100,000 to $249,999 2.50%
$250,000 to $499,999 2.25%
$500,000 to $999,999 2.00%
$1,000,000 and over 1.75%
Maximum Exchange Fee 1.75%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
---------- -----------
.069% $ 0.71
Trustee's Fee
.045% $ 0.45
Portfolio Supervision,
Bookkeeping and
Administrative Fees
.012% $ 0.12
Evaluator's Fee
.028% $ 0.29
Other Operating Expenses
---------- -----------
.154% $ 1.57
TOTAL
AMOUNT
PER 1,000
UNITS
---------------------
$ 2.00
ORGANIZATIONAL COSTS (deducted from
Fund assets at the close of the
initial offering period)
EXAMPLE
This example may help you compare the cost of investing in
the Fund to the cost of investing in other funds.
The example assumes that you invest $10,000 in the Fund for
the periods indicated and sell all your units at the end of
those periods. The example also assumes a 5% return on your
investment each year and that the Fund's operating expenses
stay the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
$135 $169 $206 $314
You will pay the following expenses if you do not sell
your units:
1 Year 3 Years 5 Years 10 Years
$126 $169 $206 $314
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
Intermediate Series, which had the same investment
objectives, strategies and types of bonds as this Fund.
These prior Series differed in that they charged a higher
sales fee. These prior Intermediate Series were offered
between June 1, 1988 and October 31, 1996 and were
outstanding on June 30, 1998. 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 6/30/98.
%SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
- ---------------------------------------------------------------
High 7.09% 6.62% 9.84% 7.44%
Average 4.73 5.40 7.17 6.23
Low 3.44 4.80 5.18 5.54
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Note: All returns represent changes in unit price with distributions reinvested
into the Municipal Fund Investment Accumulation Program. Returns with Sales Fee
reflect the maximum applicable sales fee at that time and range from 0.50% to
5.50%.
4
<PAGE>
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.
9. HOW DO I BUY UNITS?
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.
The minimum investment is $250.
UNIT PRICE PER 1,000 UNITS $1,038.04
(as of September 16, 1998)
Unit price is based on the net asset value of the Fund plus
the up-front 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. Unit price also
includes the estimated organization costs shown on the
previous page. 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.
UNIT PAR VALUE $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are sold
by the Fund at par. If you sell your units before the Fund
terminates, you may receive more or less than the unit par
value.
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 any remaining deferred
sales fee. 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.
Interest on approximately 65% of the bonds will be a
preference item for Alternative Minimum Tax. A portion of
the income may also be exempt from state and local personal
income taxes, depending on where you live.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per 1,000 units. You will be subject to tax on any
gain realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your monthly income in cash unless you
choose to compound your income by reinvesting at no sales
fee in the Municipal Fund Investment Accumulation Program,
Inc. This Program is an open-end mutual fund with a
comparable investment objective. Income from this Program
will generally be subject to state and local income taxes.
For more complete information about the Program, including
charges and fees, ask the Trustee for the Program's
prospectus. Read it carefully before you invest. The
Trustee must receive your written election to reinvest at
least 10 days before the record day of an income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales
fee on exchanges.
5
<PAGE>
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TAX-FREE VS. TAXABLE INCOME: A COMPARISON OF TAXABLE AND TAX-FREE YIELDS
<TABLE><CAPTION>
EFFECTIVE
TAXABLE INCOME 1998* % TAX TAX-FREE YIELD OF
SINGLE RETURN JOINT RETURN BRACKET 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5%
IS EQUIVALENT TO A TAXABLE YIELD OF
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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$ 0- 25,350 $ 0- 42,350 15.00 3.53 4.12 4.71 5.29 5.88 6.47 7.06 7.65
- ----------------------------------------------------------------------------------------------------------
$ 25,351- 61,400 $ 42,351-102,300 28.00 4.17 4.86 5.56 6.25 6.94 7.64 8.33 9.03
- ----------------------------------------------------------------------------------------------------------
$ 61,401-128,100 $102,301-155,950 31.00 4.35 5.07 5.80 6.52 7.25 7.97 8.70 9.42
- ----------------------------------------------------------------------------------------------------------
$128,101-278,450 $155,951-278,450 36.00 4.69 5.47 6.25 7.03 7.81 8.59 9.38 10.16
- ----------------------------------------------------------------------------------------------------------
OVER $278,450 OVER $278,450 39.60 4.97 5.79 6.62 7.45 8.28 9.11 9.93 10.76
- ----------------------------------------------------------------------------------------------------------
</TABLE>
To compare the yield of a taxable security with the yield of a federally
tax-free security, find your taxable income and read across. The table
incorporates 1998 federal income tax rates and assumes that all income would
otherwise be taxed at a U.S. 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, the possible partial disallowance of deductions
or state and local taxation. Consequently, investors are urged to consult their
own tax advisers in this regard.
MUNICIPAL BONDS AND THE ALTERNATIVE MINIMUM TAX
INCOME+ MAXIMUM 'PREFERENCE' INCOME
WITHOUT TRIGGERING AMT
(STATE INCOME TAX RATES)
SINGLE ++ JOINT ++ 0% 7% 11%
- --------------------------------------------------
$50,000 $21,000 $16,000 $14,000
- --------------------------------------------------
$30,000 $20,000 $16,000 $15,000
- --------------------------------------------------
$100,000 $25,000 $16,000 $12,000
- --------------------------------------------------
$55,000 $22,000 $16,000 $14,000
- --------------------------------------------------
$225,000 $31,000 $14,000 $5,000
- --------------------------------------------------
$205,000 $31,000 $15,000 $7,000
- --------------------------------------------------
NOTES:
+ Regular taxable income plus state income
taxes and personal exemptions.
++Assuming no dependents.
Under federal tax law, interest income on certain municipal bonds, although
exempt from regular income tax, is treated as a 'preference' item for purposes
of AMT. The table above shows amounts of such municipal bond 'preference'
interest income, assuming no other 'preference' or similar items apply, that
individual taxpayers could receive in 1998 without becoming subject to the AMT.
The table gives information for single and joint returns of U.S. individuals
having no dependents. The table provides three income levels and three
hypothetical state income tax rates. The table further assumes that the stated
amount of municipal bond 'preference' interest income is subject to state income
taxes.
6
<PAGE>
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DEFINED PORTFOLIO
- --------------------------------------------------------------------------------
Intermediate Term Series--401 (10 yr.)
<TABLE><CAPTION>
RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIRPORT/PORTS/HIGHWAYS (1 %):
1. $85,000 Illinois State Toll Hwy. Auth., 4.50% 1/1/00 A $ 85,792.20
Toll Hwy. Rfdg. Rev. Bonds, Ser. 1993 A
(5)
2. $5,000 Delaware River Port Auth. of 3.95 1/1/01 AAA 5,027.00
Pennsylvania and New Jersey, Port Dist.
Proj. Bonds, Ser. 1998 (MBIA Ins.)(5)
FINANCIAL INSTITUTIONS (9 %):
3. $1,000,000 Massachusetts Educl. Fin. 4.70 12/1/09 AAA 1,000,000.00
Auth., Educ. Loan Rev. Bonds, Issue G,
Ser. 1998 C (MBIA Ins.)(4)
GENERAL OBLIGATION BONDS (22 %):
4. $185,000 Town of Cicero, Cook Cnty., IL, 4.60 12/1/10 AAA 185,000.00
G.O. Bonds (Alternate Rev. Source), Ser.
1998 (MBIA Ins.)
5. $1,635,000 Fort Wayne Intl. Arpt. Air 4.60-4.70 1/15/08-09 AA(f) 1,635,000.00
Trade Ctr. Bldg. Corp., (Allen Cnty., IN),
First Mtge. Bonds, Ser. 1998 (4)
6. $590,000 City of New York, NY, G.O. Bonds, 4.875 8/1/10 A- 596,602.10
Fiscal 1999 Ser. D
HOSPITALS/HEALTH CARE (19 %):
7. $765,000 Baker Cnty. Hosp. Auth., FL, 4.65-4.80 12/1/07-09 A 765,000.00
Hlth. Care Facs. Rev. Bonds, Ser. 1998
(ACA Ins.)
8. $1,330,000 City of Pottsville Hosp. Auth., 5.30 7/1/11 A 1,367,253.30
PA, Hosp. Rev. Bonds (The Pottsville Hosp.
and Warne Clinic), Ser. 1998 (ACA Ins.)
</TABLE>
- ------------------------------------
(1) Approximately 60% of the bonds are callable beginning in 2005.
(2) All ratings are by Standard & Poor's Ratings Group unless followed by
'(m)', which indiciates a Moody's Investors Service rating or by '(f)',
which indicates a Fitch Investors Service rating; '+' indicates a rating of
the company that guarantees the issue; '++' indicates that while there is
no available rating, in the opinion of Defined Asset Funds research
analysts, the bond has credit characteristics comparable to other bonds in
the Portfolio. Ratings A through AAA indicate good to highest quality bonds
with a strong to very strong capacity to pay interest and repay principal.
Bonds designated by 'NR' are not rated but in the opinion of the agent for
the Sponsors have similar credit quality to other bonds in the Portfolio.
------------------------------------
PLEASE NOTE THAT IF THIS PROSPECTUS IS USED AS A PRELIMINARY
PROSPECTUS
FOR A FUTURE FUND IN THIS SERIES, THE PORTFOLIO WILL CONTAIN
DIFFERENT
BONDS FROM THOSE DESCRIBED ABOVE.
(Continued on next page)
<PAGE>
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DEFINED PORTFOLIO
- --------------------------------------------------------------------------------
Intermediate Term Series--401 (10 yr.)(Continued)
<TABLE>
RATING COST
PORTFOLIO TITLE COUPON MATURITY (1) OF ISSUES (2) TO FUND (3)
- ------------------------------------------------------------------------------------------------------------------
HOUSING (20 %):
<S> <C> <C> <C> <C>
9. $440,000 Maine State Hsg. Auth., Mtge. 4.65-4.90% 11/15/06-09 AA $ 440,000.00
Purchase Bonds, 1998 Ser. C-2 (4)
10. $200,000 New York State Mtge. Agy., 4.80 4/1/10 Aa2(m) 200,000.00
Homeowner Mtge. Rev. Bonds, Ser. 73-A (4)
11. $1,500,000 Washington State Hsg. Fin. 4.90 7/1/08 AA 1,512,825.00
Comm., Multi-Family Rev. Bonds (Summit
Apts. Proj.), Ser. 1998 A (Bank One,
Arizona, N.A.-Letter of Credit) (4)
MANUFACTURING (1 %):
12. $145,000 City of Silvis, Rock Island 4.85-4.90 1/1/06-07 A++ 146,440.75
Cnty., IL, Spec. Svc. Area No. 1 Bonds,
Ser. 1998 A (John Deere & Co.-Guarantee)
MUNICIPAL WATER/SEWER UTILITIES (1 %):
13. $85,000 City of Monticello, GA, Wtr. and 3.60 12/1/00 AAA 85,000.00
Swr. Rev. Bonds, Ser. 1998 (FSA Ins.) (5)
SPECIAL TAX ISSUES (8 %):
14. $5,000 Brevard Cnty., FL, Sales Tax Rfdg. 4.00 12/1/99 Aaa(m) 5,035.00
Rev. Bonds, Ser. 1997 (MBIA Ins.) (5)
15. $875,000 Western Iowa Tech Cmnty. Coll., 5.00-5.10 6/1/06-08 A2(m) 891,709.90
Indl. New Jobs Training Certs. (Merged
Area XII), Ser. 1998 - 1B (4)
STATE/LOCAL MUNICIPAL ELECTRIC UTILITIES (13 %):
16. $1,350,000 Alaska Indl. Dev. and Export 4.85-4.90 1/1/09-10 AAA 1,365,056.00
Auth., Pwr. Rev. Bonds (Snettisham
Hydroelectric Proj.), First Series
(AMBAC Ins.) (4)
UNIVERSITY/COLLEGE (6 %):
17. $650,000 Skagit Valley Coll. Foundation, 5.00-5.30 11/1/06-10 ++ 658,092.90
Skagit Cnty., WA, Stud. Hsg. Rev. and
Rfdg. Bonds, Ser. 1998
--------------------
$ 10,943,834.10
--------------------
--------------------
</TABLE>
- ------------------------------------
(3) Approximately 60% of the bonds were deposited at a premium and 40% at par.
Sponsors' profit on deposit was $91,728.80.
(4) These bonds are subject to Alternative Minimum Tax.
(5) The interest and principal on these bonds will be used to pay the deferred
sales charge obligations of the investors, and these amounts are not
included in the calculation of Estimated Current and Long Term Returns.
------------------------------------
PLEASE NOTE THAT IF THIS PROSPECTUS IS USED AS A PRELIMINARY
PROSPECTUS
FOR A FUTURE FUND IN THIS SERIES, THE PORTFOLIO WILL CONTAIN
DIFFERENT
BONDS FROM THOSE DESCRIBED ABOVE.
<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 monthly income because
the portfolio is fixed.
Along with your monthly 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.
7
<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, an issuer might call its bonds if it no longer needs the money for
the original purpose or, during periods of falling interest rates, if the
issuer's bonds have a coupon higher than current market rates. 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
The bonds will generally trade in the over-the-counter market. We cannot assure
you that a liquid trading market will exist, especially since current law may
restrict the Fund from selling bonds to any Sponsor. The value of the bonds, and
of your investment, may be reduced if trading in bonds is limited or absent.
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
Some bonds are backed by insurance companies (as shown under Defined Portfolio).
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;
8
<PAGE>
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.
As of the close of the initial offering period, the price you receive will be
reduced to reflect estimated organization costs.
If you sell your units before the final deferred sales fee installment, the
amount of any remaining installments 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 remaining 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 a secondary market continuously for over 25 years, but we
could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.
If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.
If you acquire 25% or more of the outstanding units of the Fund and you sell
units with a value exceeding $250,000, the Trustee may choose to pay you 'in
kind' by distributing bonds and cash with a total value equal to the price of
those units. The Trustee will try to distribute bonds in the portfolio pro rata,
but it reserves the right to distribute only one or a few bonds. The Trustee
will act as your agent in an in kind distribution and will either hold
9
<PAGE>
the bonds for your account or sell them as you instruct. You must pay any
transaction costs as well as transfer and ongoing custodial fees on sales of
bonds distributed in kind.
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 at
a maximum exchange fee of 1.75%. You may exchange units of this Fund for units
of certain other 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.
10
<PAGE>
HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the bonds, less expenses, from
the initial date of deposit up to, but not including, the settlement date, which
is usually three business days after the purchase date of the unit.
Bonds also carry accrued but unpaid interest up to the initial date of deposit.
To avoid having you pay this additional accrued interest (which earns no return)
when you buy, the Trustee advances this amount to the Sponsors. The Trustee
recovers this advance from interest received on the bonds.
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, a portion of the price of a unit also consists of cash to 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
Interest on any bonds purchased on a when-issued basis or for a delayed delivery
does not begin to accrue until the bonds are delivered to the Fund. The Trustee
may reduce its fee to provide you with tax-exempt income for this non-accrual
period. If a bond is not delivered on time and the Trustee's annual fee and
expenses do not cover the additional accrued interest, we will treat the
contract to buy the bond as failed.
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;
11
<PAGE>
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 45 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. 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.
Quarterly deferred sales charges you owe are paid with interest and principal
from certain bonds. If these amounts are not enough, the rest will be paid out
of distributions 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 fails in the first 90 days of the Fund, we generally
will deposit a replacement tax-exempt bond with a similar yield, maturity,
rating and price.
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.
12
<PAGE>
When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining bonds, and you will receive your final distribution. Any
bond that cannot be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final sale.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling bonds. This may reduce the amount you receive as your
final distribution.
CERTIFICATES
Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering satisfactory indemnity
and paying the associated costs.
TRUST INDENTURE
The Fund is a 'unit investment trust' governed by a Trust Indenture, a contract
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
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.
13
<PAGE>
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
special counsel for the Sponsors, has given an opinion that the units are
validly issued.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statement of Condition included in this
prospectus.
SPONSORS
The Sponsors and their underwriting percentages are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051 74.89%
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of The
Travelers Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013 11.16%
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048 4.65%
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019 9.30%
100.00%
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 Investement 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. Sponsors also realize a
profit or loss on deposit of the bonds shown under Defined Portfolio. 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.
We bought approximately 9% of the bonds in the portfolio from one or more of the
Sponsors (as sole underwriter, managing underwriter or member of an underwriting
syndicate).
14
<PAGE>
During the initial offering period, the Sponsors also may realize profits or
sustain losses on units they hold. 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
During the initial offering period, units will be distributed to the public by
the Sponsors and dealers who are members of the National Association of
Securities Dealers, Inc. This period is 30 days or less if all units are sold.
The Sponsors may extend the initial period up to 120 days.
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.
In the initial offering period, the concession to dealers will be $17 per 1,000
units. We may change the concession at any time. Dealers may resell units to
other dealers with a concession not in excess of the original concession to
dealers.
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.
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:
15
<PAGE>
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 12 months, you may be entitled to a 20% maximum
federal tax rate on any resulting gains. Consult your tax adviser in this
regard. Because the deductibility of capital losses is subject to limitations,
you may not be able to deduct all of your capital losses.
YOUR BASIS IN THE BONDS
Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges and the organizational expenses you pay, adjusted to
reflect any accruals of 'original issue discount,' 'acquisition premium' and
'bond premium'. You should consult your tax adviser in this regard.
EXPENSES
If you are not a corporate investor, you will not be entitled to a deduction for
your share of fees and expenses of the Fund. Also, if you borrowed money in
order to purchase or carry your units, you will not be able to deduct the
interest on this borrowing for federal income tax purposes. The IRS may treat
your purchase of units as made with borrowed money even if the money is not
directly traceable to the purchase of units.
STATE AND LOCAL TAXES
Under the income tax laws of the State and City of New York, the Fund will not
be taxed as a corporation. If you are a New York taxpayer, your income from the
Fund will not be tax-exempt in New York except to the extent that the income is
earned on bonds that are tax-exempt for New York purposes. Depending on where
you live, your income from the Fund may be subject to state and local taxation.
You should consult your tax adviser in this regard.
16
<PAGE>
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 portfolio, 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.
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Municipal Investment Trust Fund,
Intermediate Term Series 401, Defined Asset Funds (the 'Fund'):
We have audited the accompanying statement of condition and the related defined
portfolio included in the prospectus of the Fund as of September 17, 1998. This
financial statement is the responsibility of the Trustee. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash, securities and an irrevocable letter of credit deposited
for the purchase of securities, as described in the statement 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 provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Fund as of September 17,
1998 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
NEW YORK, N.Y.
SEPTEMBER 17, 1998
STATEMENT OF CONDITION AS OF SEPTEMBER 17, 1998
TRUST PROPERTY
Investments--Bonds and Contracts to purchase Bonds(1) $ 10,943,834.10
Cash 109,506.00
Accrued interest to Initial Date of Deposit on underlying
Bonds 54,222.72
--------------------
Total $ 11,107,562.82
--------------------
--------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by Trustee for accrued interest (2) $ 54,222.72
Reimbursement of Sponsors for organization expenses (3) $ 21,506.00
--------------------
Subtotal 75,728.72
--------------------
Interest of Holders of 10,753,000 Units of fractional
undivided interest outstanding:
Cost to investors (3)(4)(5) 11,162,052.93
Organization expenses (3) and gross underwriting
commissions(4) (130,218.83)
--------------------
Subtotal 11,031,834.10
--------------------
Total $ 11,107,562.82
--------------------
--------------------
- ---------------
(1) Aggregate cost to the Fund of the bonds listed under Defined
Portfolio is based upon the offer side evaluation determined by the Evaluator at
the evaluation time on the business day prior to the Initial Date of Deposit.
The contracts to purchase the bonds are collateralized by an irrevocable letter
of credit which has been issued by San Paolo Bank, New York Branch, in the
amount of $3,846,113.18 and deposited with the Trustee. The amount of the letter
of credit includes $3,825,773.15 for the purchase of $3,795,000 face amount of
the bonds, plus $20,340.03 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) A portion of the Unit Price consists of cash in an amount
sufficient to pay for costs incurred in establishing the Fund. These costs have
been estimated at $2.00 per 1,000 Units. A distribution will be made at the
close of the initial offering period to an account maintained by the Trustee
from which the organization expense obligation of the investors will be
satisfied.
(4) Assumes the maximum up-front sales fee per 1,000 units of 1.00% of
the Unit Price. A deferred sales fee of $17.50 per 1,000 Units is payable over a
two-year period ($2.19 per 1,000 Units quarterly in the first six quarters and
$2.18 per 1,000 units quarterly in the next two quarters). Distributions will be
made to an account maintained by the Trustee from which the deferred sales fee
obligation of the investors will be satisfied. If units are redeemed prior to
the final deferred sales
charge deduction, the remaining portion of the deferred sales fee applicable to
such units will be transferred to the account on the redemption date.
(5) Aggregate Unit 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.
18
<PAGE>
Defined
Asset FundsSM
HAVE QUESTIONS ? MUNICIPAL INVESTMENT TRUST FUND
Request the most recent free INTERMEDIATE TERM SERIES 401
Information Supplement (A Unit Investment Trust)
that gives more details about ---------------------------------------
the Fund, by calling: This Prospectus does not contain
The Chase Manhattan Bank complete information about the
1-800-323-1508 investment company filed with the
Securities and Exchange Commission in
Washington, D.C. under the:
o Securities Act of 1933 (file no.
333-58521) and
o Investment Company Act of 1940 (file
no. 811-1777).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
Units of any future series may not be
sold nor may offers to buy be accepted
until that series has become effective
with the Securities and Exchange
Commission. No units can be sold in any
State where a sale would be illegal.
70124--9/98
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositors is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
I. Bonding arrangements of each of the Depositors are incorporated by reference
to Item A of Part II to the Registration Statement on Form S-6 under the
Securities Act of 1933 for Municipal Investment Trust Fund, Monthly Payment
Series--573 Defined Asset Funds (Reg. No. 333-08241).
II. The date of organization of each of the Depositors is set forth in Item B
of Part II to the Registration Statement on Form S-6 under the Securities Act of
1933 for Municipal Investment Trust Fund, Monthly Payment Series--573 Defined
Asset Funds (Reg. No. 333-08241) and is herein incorporated by reference
thereto.
III. The Charter and By-Laws of each of the Depositors are incorporated herein
by reference to Exhibits 1.3 through 1.12 to the Registration Statement on Form
S-6 under the Securities Act of 1933 for Municipal Investment Trust Fund,
Monthly Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).
IV. Information as to Officers and Directors of the Depositors has been filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934 and is incorporated by reference to the SEC
filings indicated and made a part of this Registration Statement:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 8-7221
Salomon Smith Barney Inc. ................................ 8-8177
PaineWebber Incorporated.................................. 8-16267
Dean Witter Reynolds Inc. ................................ 8-14172
------------------------------------
B. The Internal Revenue Service Employer Identification Numbers of the
Sponsors and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 13-5674085
Salomon Smith Barney Inc. ................................ 13-1912900
PaineWebber Incorporated.................................. 13-2638166
Dean Witter Reynolds Inc. ................................ 94-0899825
The Chase Manhattan Bank, Trustee......................... 13-4994650
UNDERTAKING
The Sponsors undertake that they will not instruct the Trustee to accept from
(i) Asset Guaranty Reinsurance Company, Municipal Bond Investors Assurance
Corporation or any other insurance company affiliated with any of the Sponsors,
in settlement of any claim, less than an amount sufficient to pay any principal
or interest (and, in the case of a taxability redemption, premium) then due on
any Security in accordance with the municipal bond guaranty insurance policy
attached to such Security or (ii) any affiliate of the Sponsors who has any
obligation with respect to any Security, less than the full amount due pursuant
to the obligation, unless such instructions have been approved by the Securities
and Exchange Commission pursuant to Rule 17d-1 under the Investment Company Act
of 1940.
II-1
<PAGE>
SERIES OF DEFINED ASSET FUNDS
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933
SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
DEFINED ASSET FUNDS MUNICIPAL DEFINED FUND.................. 333-58397
CONTENTS OF REGISTRATION STATEMENT
The Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-Reference
Sheet to the Registration Statement of Defined Asset Funds Municipal Series,
1933 Act File No. 33-54565).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The following exhibits:
1.1 --Form of Trust Indenture (incorporated by reference to Exhibit 1.1 to
the Registration Statement of Municipal Defined Fund Series 2, 1933
Act File No. 333-61285).
1.1.1 --Form of Standard Terms and Conditions of Trust Effective October 21,
1993 (incorporated by reference to Exhibit 1.1.1 to the Registration
Statement of Municipal Investment Trust Fund, Multistate Series-48,
1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement of The Corporate Income
Fund, One Hundred Ninety-Fourth Monthly Payment Series, 1933 Act File
No. 2-90925).
2.1 --Form of Certificate of Beneficial Interest (included in Exhibit
1.1.1).
3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the headings
'How The Fund Works--'Legal Opinion' in the Prospectus.
4.1 --Consent of the Evaluator.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Municipal Investment Trust Fund,
Multistate Series--30, 1933 Act File No. 333-49353).
R-1
<PAGE>
DEFINED ASSET FUNDS
MUNICIPAL INVESTMENT TRUST FUND
SIGNATURES
The registrant hereby identifies the series number of Defined Asset Funds
listed on page R-1 for the purposes of the representations required by Rule 487
and represents the following:
1) That the portfolio securities deposited in the series as to which this
registration statement is being filed do not differ materially in type
or quality from those deposited in such previous series;
2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential information for, the
series with respect to which this registration statement is being filed,
this registration statement does not contain disclosures that differ in
any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined
by the Commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 17TH DAY OF
SEPTEMBER, 1998.
SIGNATURES APPEAR ON PAGES R-3, R-4, R-5 AND R-6.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Salomon Smith Barney
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Dean Witter Reynolds
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 33-43466 and 33-51607
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
ROGER M. VASEY
ARTHUR H. ZEIKEL
DANIEL C. TYLER
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
SALOMON SMITH BARNEY INC.
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Salomon Smith Barney Inc.: have been filed
under the 1933 Act
File Numbers:
33-49753,
33-55073,
333-41765 and
333-10441
JAMES DIMON
DERYCK C. MAUGHAN
By GINA LEMON
(As authorized signatory for
Salomon Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
R-4
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
the Board of Directors of PaineWebber under
Incorporated: the following 1933 Act File
Number: 2-61279
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-5
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Numbers: 33-17085 and
Reynolds Inc.: 333-13039
RICHARD M. DeMARTINI
ROBERT J. DWYER
CHRISTINE A. EDWARDS
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
MITCHELL M. MERIN
STEPHEN R. MILLER
RICHARD F. POWERS III
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-6
<PAGE>
EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
SEPTEMBER 17, 1998
Municipal Investment Trust Fund,
Intermediate Term Series 401
Defined Asset Funds
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
PaineWebber Incorporated
Dean Witter Reynolds Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, NJ 08543-9051
Dear Sirs:
We have acted as special counsel for you, as sponsors (the Sponsors) of
Municipal Investment Trust Fund, Intermediate Term Series 401, Defined Asset
Funds (the 'Fund'), in connection with the issuance of units of fractional
undivided interest in the Fund (the 'Units') in accordance with the Trust
Indenture relating to the Fund (the 'Indenture').
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indenture and the issuance of the Units have been duly
authorized by the Sponsors and (ii) the Units, when duly issued and delivered by
the Sponsors and the Trustee in accordance with the Indenture, will be legally
issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 3.1 to the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the heading 'How the Fund Works--Legal Opinion'.
Very truly yours,
DAVIS POLK & WARDWELL
<PAGE>
EXHIBIT 4.1
KENNY INFORMATION SYSTEMS,
A Division of J. J. Kenny Co., Inc.
65 Broadway
New York, New York 10006
Telephone: 212/770-4422
Fax: 212/797-8681
Frank A. Ciccotto, Jr.
Vice President
September 17, 1998
Merrill Lynch Pierce Fenner & Smith
Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, NJ 08543-9051
The Chase Manhattan Bank
Customer Service Retail Department
Bowling Green Station
New York, NY 10274-5187
Re: Municipal Investment Trust Fund,
Intermediate Term Series 401
Defined Asset Funds
Gentlemen:
We have examined the Registration Statement File No. 333-58521 for the
above-captioned fund. We hereby acknowledge that Kenny Information Systems, a
Division of J. J. Kenny Co., Inc. is currently acting as the evaluator for the
fund. We hereby consent to the use in the Registration Statement of the
reference to Kenny Information Systems, a Division of J. J. Kenny Co., Inc. as
evaluator.
In addition, we hereby confirm that the ratings indicated in the
Registration Statement for the respective bonds comprising the trust portfolio
are the ratings indicated in our KENNYBASE database as of the date of the
Evaluation Report.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
FRANK A. CICCOTTO, JR.
VICE PRESIDENT
<PAGE>
EXHIBIT 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of Municipal Investment Trust Fund, Intermediate Term
Series 401, Defined Asset Funds:
We consent to the use in this Registration Statement No. 333-58521 of our report
dated September 17, 1998 relating to the Statement of Condition of Municipal
Investment Trust Fund, Intermediate Term Series 401, Defined Asset Funds, and to
the reference to us under the heading 'How the Fund Works--Auditors' in the
Prospectus which is a part of this Registration Statement.
DELOITTE & TOUCHE LLP
New York, N.Y.
September 17, 1998
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<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> SEP-17-1998
<INVESTMENTS-AT-COST> 10,943,834
<INVESTMENTS-AT-VALUE> 10,943,834
<RECEIVABLES> 54,223
<ASSETS-OTHER> 21,506
<OTHER-ITEMS-ASSETS> 0
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