<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------
CORPORATE INCOME FUND The objective of this Defined Fund is to provide a
PREFERRED STOCK high level of income from dividends income and
PUT SERIES--1 capital gains, if any, from regular mandatory
(A UNIT INVESTMENT sinking fund payments through investment in a
TRUST) portfolio of fixed-rate cumulative Preferred
- ------------------------------Stocks issued by domestic public utility
- -- MONTHLY INCOME companies.
- -- PURCHASE COMMITMENTS In the opinion of counsel, substantially all of
the dividend income on the Preferred Stocks, when
received by the Fund and distributed to investors,
will constitute dividends for Federal income tax
purposes which are eligible for the
dividends-received deduction for corporations. See
Taxes. The Preferred Stocks are supported by
purchase commitments of the Seller, which should
significantly reduce fluctuations in the value of
the Units. There is no assurance that these
objectives can be met because they are subject to
the financial condition of the issuers of the
Preferred Stocks and upon the Seller's continuing
ability to meet its obligations under its purchase
commitments. Furthermore, the market value of the
underlying Securities, and therefore the value of
the Units, will fluctuate with changes in interest
rates and other factors.
Minimum purchase in individual transactions: One
Unit
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------------------------
PART A OF THIS PROSPECTUS MAY NOT BE DISTRIBUTED
UNLESS ACCOMPANIED BY CORPORATE INCOME FUND
SPONSORS: PROSPECTUS PART B.
Merrill Lynch, INVESTORS SHOULD READ BOTH PARTS OF THIS
Pierce, Fenner & Smith PROSPECTUS CAREFULLY AND RETAIN THEM FOR FUTURE
Incorporated REFERENCE.
Smith Barney Inc. INQUIRIES SHOULD BE DIRECTED TO THE TRUSTEE AT
Dean Witter Reynolds Inc. 1-800-221-7771.
PaineWebber Incorporated PROSPECTUS DATED AUGUST 6, 1996.
<PAGE>
- --------------------------------------------------------------------------------
Def ined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $100 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal portfolios
o Corporate portfolios
o Government portfolios
o Equity portfolios
o International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.
- ----------------------------------------------------------------
Defining Your Portfolio
- ----------------------------------------------------------------
The Portfolio contains preferred stocks issued by three public utility
companies. The stocks included in the Portfolio were acquired from The
Prudential Insurance Company of America (the 'Seller') a mutual insurance
company organized under the laws of New Jersey. As of December 31, 1995, the
admitted assets of the Seller were $179,734,000,000 and policyholders' surplus
was $7,684,000,000. All of the Preferred Stocks were originally acquired by the
Seller in the ordinary course of its business and held in its investment
portfolio prior to sale to Sponsors. The Sponsors believe that the Securities
together with the purchase commitments will be readily marketable to
institutions and other investors should it be necessary for the Trustee to sell
Securities to meet redemption of Units. Investment in the Fund should be made
with an understanding of the nature of preferred stocks (see Risk
Factors--Preferred Stock Put Series in Part B). The Fund was created on December
15, 1984. The information in this prospectus is as of May 31, 1996, the
evaluation date.
PURCHASE COMMITMENTS
To provide liquidity, the Seller has committed to purchase on each Annual
Purchase Date, any Preferred Stocks if required to satisfy redemption of Units
(a 'Liquidity Purchase'). This purchase commitment is designed to minimize, in
comparison with other preferred stock, the risk of capital depreciation while
maintaining the potential for capital appreciation. The Preferred Stocks are
also supported by Default Purchase and Insolvency Purchase commitments designed
to stabilize your capital investment. (See Risk Factors--Preferred Stock Put
Series in Part B.) In certain circumstances the Seller may make payments equal
to any missed dividends or sinking fund payments in lieu of its Default Purchase
commitment.
MONTHLY INCOME DISTRIBUTIONS
Monthly distributions of dividends are payable on the 25th of the month to
holders of record on the 10th day of the month. In order to meet certain tax
requirements, a special distribution of income including capital gains, may be
paid to holders of record as of a date in December. Any capital gain net income
will generally be distributed after the end of the year.
It is expected that the proceeds of the sale or redemption of securities will
not be distributed but will be reinvested in additional securities. To the
extent these proceeds are available for distribution, they will be distributed
on the next distribution day.
TAXES
Distributions which are taxable as ordinary income to Holders will constitute
dividends for Federal income tax purposes and may, subject to certain
limitations, be eligible for the dividends-received deduction for certain
corporations. Distributions of the proceeds of mandatory sinking fund
redemptions of the Preferred Stocks will constitute a return of capital to the
extent of the Fund's cost for the Preferred Stocks redeemed. Any excess will
constitute taxable dividends to investors which will not be eligible for the
dividends received deduction for corporations. (See Taxes.)
ANNUAL PURCHASE DATES
December 27 of each year.
FINAL DISPOSITION DATE
The Portfolio will terminate by January 1, 2034. The final distribution will be
made within a reasonable time afterward. The Portfolio may be terminated earlier
if its value is less than 40% of the face amount or stated value of the
Securities. On the evaluation date, the value of the Portfolio was 15% of the
face amount or stated value of the Securities.
A-2
<PAGE>
- ----------------------------------------------------------------
Defining Your Risks
- ----------------------------------------------------------------
The Portfolio is considered to be 'concentrated' in Preferred Stocks of public
utility companies and is therefore dependent on revenues from those particular
activities as well as on the continuing ability of the Seller to meet its
purchase commitment obligations. (See Risk Factors in Part B.)
Unit price fluctuates with the value of the Portfolio, and the value of the
Portfolio will be affected by changes in the financial condition of the issuers,
changes in the public utility industry, general economic conditions, movements
in interest rates generally, the impact of the Sponsors' purchase and sale of
the securities and other factors. Further distributions of income on the
underlying securities will generally depend upon the payment of dividends by the
issuers, and there can be no assurance that the issuers of securities will pay
dividends. Therefore, there is no guarantee that the objective of the Portfolio
will be achieved. Also, the value of equity securities issued by utilities,
because of their higher yields, might be more adversely affected by a reduction
in the dividends-received deduction than equity securities generally.
The amount realized by investors upon sale or redemption of Units may be less
than the price paid for the Units. However, because of the Seller's Liquidity
Purchase commitment on each Annual Purchase Date at a predetermined price (the
'Put Price'), the Sponsors anticipate that the bid side evaluation of a Security
on each Annual Purchase Date will at least equal the Put Price of that Security
but will not necessarily equal the offering side evaluation of that Security on
the Date of Deposit. During the 12-month period prior to each Annual Purchase
Date, the bid side evaluation of each Security may fluctuate but should approach
the Put Price of that Security as each Annual Purchase Date approaches.
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsors
receive no management fee. Therefore, the adverse financial condition of an
issuer or any market movement in the price of a security will not necessarily
require the sale of securities from the Portfolio. Although the Portfolio is
regularly reviewed and evaluated and Sponsors may instruct the Trustee to sell
securities under certain limited circumstances, securities will not be sold to
take advantage of market fluctuations or changes in anticipated rates of
appreciation.
- ----------------------------------------------------------------
Defining Your Investment
- ----------------------------------------------------------------
PUBLIC OFFERING PRICE PER UNIT $187.92
The Public Offering Price as of May 31, 1996, the evaluation date, is based on
the aggregate offer side value of the underlying securities ($34,629,097) and
any cash held to purchase securities, divided by the number of units outstanding
(184,279). The Public Offering Price on any subsequent date will vary. The
underlying securities are valued by an independent evaluator at 3:30 p.m.
Eastern time on every business day.
PLACEMENT FEE
In addition to the portfolio supervision, administrative and bookkeeping fees
shown below under Defining Your Costs, the Sponsors also receive a quarterly
placement fee from the Seller in an amount equal to .125% of the Put Price (see
Underwriters' and Sponsors' Profits in Part B).
- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------
ESTIMATED ANNUAL FUND OPERATING EXPENSES
Amount per
Unit
---------------
Trustee's Fee $ 0.15
Maximum Portfolio Supervision, Bookkeeping and
Administrative Fees $ 0.12
Evaluator's Fee $ 0.01
Other $ 0.16
---------------
TOTAL $ 0.44
SELLING YOUR INVESTMENT
You may sell or redeem your units at any time prior to the termination of the
Portfolio. Your price will be based on the then current net asset value (based
on the lower, bid side value of the securities, as determined by an independent
evaluator), plus principal cash if any. The redemption and secondary market
repurchase price as of the evaluation date was $186.61 per unit ($1.31 per unit
less than the Public Offering Price).
A-3
<PAGE>
- ----------------------------------------------------------------
Taxes
- ----------------------------------------------------------------
The following replaces 'Taxes' in Part B
TAXATION OF THE FUND
The Fund intends to qualify for and elect the special tax treatment applicable
to 'regulated investment companies' under Sections 851-855 of the Internal
Revenue Code of 1986, as amended (the 'Code'). Qualification and election as a
'regulated investment company' involve no supervision of investment policy or
management by any government agency. If the Fund qualifies as a 'regulated
investment company' and distributes to investors 90% or more of its taxable
income without regard to its net capital gain (net capital gain is defined as
the excess of net long-term capital gain over short-term capital loss), it will
not be subject to Federal income tax on the portion of its taxable income
(including any net capital gain) it distributes to investors in a timely manner.
In addition, the Fund will not be subject to the 4% excise tax on certain
undistributed income of 'regulated investment companies' to the extent it
distributes to investors in a timely manner at least 98% of its taxable income
(including any net capital gain). It is anticipated that the Fund will not be
subject to Federal income tax or the excise tax because the Indenture requires
the distribution of the Fund's taxable income (including any net capital gain)
in a timely manner. Although all or a portion of the Fund's taxable income
(including any net capital gain) for a calendar year may be distributed shortly
after the end of the calendar year, such a distribution will be treated for
Federal income tax purposes as having been received by investors during the
calendar year.
DISTRIBUTIONS
Distributions to investors of the Fund's interest income and any net short-term
capital gain in any year will be taxable as ordinary income to investors to the
extent of the Fund's taxable income (without regard to any net capital gain) for
that year. Any excess will be treated as a return of capital and will reduce the
investor's basis in his Units and, to the extent that they exceed his basis,
will be treated as a gain from the sale of his Units as discussed below. It is
anticipated that substantially all of the distributions of the Fund's interest
income and any net short-term capital gain will be taxable as ordinary income to
investors.
Distributions that are taxable as ordinary income to investors will constitute
dividends for Federal income tax purposes. To the extent that distributions are
appropriately designated by the Fund and are attributable to dividends received
by the Fund from domestic issuers with respect to whose securities the Fund
satisfied the requirements for the dividends-received deduction, such
distributions will be eligible for the dividends-received deduction for
corporations (other than corporations such as 'S' corporations which are not
eligible for such deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax).
The dividends-received deduction generally is 70%. However, Congress from time
to time considers proposals to reduce the rate, and enactment of such a proposal
would adversely affect the after-tax return to investors who can take advantage
of the deduction. Further, on December 7, 1995, the Clinton Administration
proposed reducing the dividends received deduction to 50% for dividends paid or
accrued after January 31, 1996. Investors are urged to consult their own tax
advisers.
Sections 246 and 246A of the Code contain additional limitations on the
eligibility of dividends for the corporate dividends-received deduction.
Depending upon the corporate investor's circumstances (including whether it has
a 45-day holding period for his Units and whether its Units are debt financed),
these limitations may be applicable to dividends received by an investor from
the Fund which would otherwise qualify for the dividends-received deduction
under the principles discussed above. Accordingly, investors should consult
their own tax advisers in this regard. A corporate investor should be aware that
the receipt of dividend income for which the dividends-received deduction is
available may give rise to an alternative minimum tax liability (or increase an
existing liability) because the dividend income will be included in the
corporation's 'adjusted current earnings' for purposes of the adjustment to
alternative minimum taxable income required by Section 56(g) of the Code.
Distributions of the Fund's net capital gain (designated as capital gain
dividends by the Fund) will be taxable to investors as long-term capital gain,
regardless of the time the Units have been held by an investor. An investor will
recognize taxable gain or loss if the investor sells or redeems his Units. Any
gain or loss arising from (or treated as arising from) the sale or redemption of
Units will be capital gain or loss, except in the case of a dealer. Capital
gains are currently taxed at the same rate as ordinary income. However, the
excess of net long-term capital gains over net short-term capital losses may be
taxed at a lower rate than ordinary income for certain noncorporate taxpayers. A
capital gain or loss is long-term if the asset is held for more than one year
and short-term if held for one year or less. However, any capital loss on the
sale or redemption of a Unit that an investor has held for six months or less
will be a long-term capital loss to the extent of any capital gain dividends
previously distributed to the investor by the Fund. The deduction of capital
losses is subject to limitations.
The Federal tax status of each year's distributions will be reported to
investors and to the Internal Revenue
A-4
<PAGE>
Service. The foregoing discussion relates only to the Federal income tax status
of the Fund and to the tax treatment of distributions by the Fund to U.S.
investors. Investors who are not U.S. citizens or residents should be aware that
distributions from the Fund generally will be subject to a withholding tax of
30%, or a lower treaty rate, and should consult their own tax advisers to
determine whether investment in the Fund is appropriate. Distributions may also
be subject to state and local taxation and investors should consult their own
tax advisers in this regard.
* * *
There are no regulations, published rulings or judicial decisions involving the
characterization for Federal income tax purposes of arrangements involving the
purchase of preferred stocks with purchase commitments that are substantially
the same as the Seller's purchase commitments with respect to the Securities.
However, Davis Polk & Wardwell, special counsel for the Sponsors, are of the
opinion that, under applicable law, the Fund will be treated as the owner of the
Securities for Federal income tax purposes, notwithstanding the existence of the
Seller's purchase commitments. (Neither the Fund nor the Sponsors have applied
for a ruling from the Internal Revenue Service regarding the ownership of the
Securities; the Internal Revenue Service has announced in Rev. Proc. 83-55, as
restated as part of Rev. Proc. 96-3, that it will not ordinarily issue advance
rulings or determination letters on the question of who is the true owner of
securities or participation interests therein where the purchaser has the
contractual right to cause the security or participation interest therein to be
purchased by either the seller or a third party; accordingly, there can be no
assurance that the Internal Revenue Service will agree with the conclusion
expressed herein or that it will not take actions which, if sustained, would
result in the Fund not being treated as the owner of the Securities for Federal
income tax purposes.)
The Fund may recognize capital gain upon the sinking fund or optional redemption
of Securities in an amount equal to the excess of the redemption price of the
Securities redeemed over the Fund's cost therefor (including any portion of such
cost allocable to the Seller's purchase commitment). The Fund may also recognize
capital gain if it sells a Security (pursuant to the Seller's purchase
commitment or otherwise). The existence of the Seller's purchase commitments
causes any capital gain realized by the Fund to constitute short-term capital
gain regardless of whether the Security redeemed or sold was held in excess of
the long-term capital gain holding period. Therefore, distributions of the
Fund's capital gain will constitute ordinary income dividends (not capital gain
dividends) to the extent of the Fund's taxable income for that year but will not
qualify for the dividends-received deduction for corporations.
Only the amount of the Fund's dividend distributions (exclusive of capital gain
dividends) which does not exceed the aggregate amount of dividends received by
the Fund from domestic corporations will qualify for the 70% dividends-received
deduction for corporations. Dividends received by the Fund will be considered
dividends for this purpose only if such dividends would qualify for the
dividends-received deduction for corporations pursuant to the rules generally
applicable to corporations under Section 246(c) of the Code. Although there are
no regulations, published rulings or judicial decisions involving the
eligibility for the dividends-received deduction in circumstances substantially
similar to those present here, it is the opinion of Davis Polk & Wardwell,
special counsel for the Sponsors, that the Fund will be considered to have a
holding period for the Securities of at least 45 days for purposes of Section
246(c) of the Code and that accordingly all dividends received by the Fund on
the Securities will qualify for the dividends-received deduction and thus will
be considered to be dividends for purposes of determining the amount of the
Fund's dividend distributions which will qualify for the dividends-received
deduction. Opinions of counsel, however, are not binding on the Internal Revenue
Service. The Internal Revenue Service could assert that because of the existence
of the Seller's purchase commitments, none of the dividends received by the Fund
will qualify for the dividends-received deductions under the rules generally
applicable to corporations and therefore that none of the dividends distributed
by the Fund will qualify for the dividends-received deduction. Although there
can be no assurance as to the outcome, it is the opinion of Davis Polk &
Wardwell that the Internal Revenue Service would not prevail if this issue were
properly presented to a court.
On December 7, 1995, the Clinton Administration proposed an amendment to the
Internal Revenue Code that effectively would deny the dividends received
deduction to taxpayers such as the Fund that have entered into arrangements that
would protect them from the risk of loss with respect to shares of stock. The
proposal would be effective for dividends paid or accrued after January 31,
1996.
It is likely that less than 100% of the Fund's dividend distributions will
qualify for the dividends-received deduction. The exact percentage of the Fund's
dividend distributions in a given year that will qualify for the
dividends-received deduction will depend on the amount of short-term capital
gain that results from the sale or redemption of Securities, as well as on the
expenses of the Fund for such year.
A-5
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND
PREFERRED STOCK PUT SERIES - 1
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Defined Asset Funds - Corporate Income Fund,
Preferred Stock Put Series - 1:
We have audited the accompanying statement of condition of
Defined Asset Funds - Corporate Income Fund, Preferred Stock
Put Series - 1, including the portfolio, as of May 31, 1996 and
the related statements of operations and of changes in net
assets for the years ended May 31, 1996, 1995 and 1996. These
financial statements are the responsibility of the Trustee.
(See Note 6.) 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, 1996, as shown in such portfolio,
were confirmed to us by The Bank of New York, 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 - Corporate Income Fund, Preferred Stock
Put Series - 1 at May 31, 1996 and the results of its operations
and changes in its net assets for the above-stated years in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y
July 31, 1996
D - 1
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
PREFERRED STOCK PUT SERIES - 1
STATEMENT OF CONDITION
AS OF MAY 31, 1996
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
(cost $32,505,785)(Note 1)..................... $34,387,579
Securities called for redemption
(cost $2,633,970)(Note 5)...................... 2,866,000
Accrued dividend receivable...................... 315,215
Cash............................................. 190,103
______________
Total trust property................. 37,758,897
LESS LIABILITY - Accrued expenses.................. 27,885
______________
NET ASSETS, REPRESENTED BY:
184,279 units of fractional undivided
interest outstanding (Note 3).................. $37,312,644
Undistributed net investment income.............. 418,368
_____________ $37,731,012
==============
UNIT VALUE ($37,731,012/184,279 units)............. $204.75
==============
</TABLE>
See Notes to Financial Statements.
D - 2
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
PREFERRED STOCK PUT SERIES - 1
<TABLE><CAPTION>
STATEMENTS OF OPERATIONS
..........Years Ended May 31,..............
1996 1995 1994
<S> <C> <C> <C>
<C>
INVESTMENT INCOME:
__________________________________________
Dividend income.......................... $3,187,184 $4,060,962 $5,043,490
Trustee's fees and expenses.............. (14,663) (59,313) (37,779)
Sponsors' fees........................... (44,912) 61,852 (29,580)
__________________________________________
Net investment income.................... 3,127,609 4,063,501 4,976,131
__________________________________________
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on securities
sold or redeemed....................... 707,741 1,665,483 2,535,304
Unrealized depreciation
of investments......................... (1,749,193) (480,046) (3,547,640)
__________________________________________
Net realized and unrealized gain (loss)
on investments......................... (1,041,452) 1,185,437 (1,012,336)
__________________________________________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.......................... $2,086,157 $5,248,938 $3,963,795
==========================================
</TABLE>
See Notes to Financial Statements.
D - 3
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
PREFERRED STOCK PUT SERIES - 1
<TABLE><CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
..........Years Ended May 31,..............
1996 1995 1994
__________________________________________
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income............................ $ 3,127,609 $ 4,063,501 $ 4,976,131
Realized gain on securities sold
or redeemed.................................... 707,741 1,665,483 2,535,304
Unrealized depreciation
of investments................................. (1,749,193) (480,046) (3,547,640)
__________________________________________
Net increase in net assets resulting
from operations................................ 2,086,157 5,248,938 3,963,795
__________________________________________
DISTRIBUTIONS TO HOLDERS (Note 2):
Income........................................... (3,309,880) (3,994,701) (4,944,849)
Principal........................................ (4,560,728) (8,856,045) (11,771,095)
__________________________________________
Total distributions.............................. (7,870,608) (12,850,746) (16,715,944)
__________________________________________
CAPITAL SHARE TRANSACTIONS - Redemptions of 4,571,
11,505 and 14,446 units, respectively ........... (929,759) (2,589,637) (3,970,483)
__________________________________________
NET DECREASE IN NET ASSETS......................... (6,714,210) (10,191,445) (16,722,632)
NET ASSETS AT BEGINNING OF YEAR.................... 44,445,222 54,636,667 71,359,299
__________________________________________
NET ASSETS AT END OF YEAR.......................... $37,731,012 $44,445,222 $54,636,667
==========================================
PER UNIT:
Income distributions during year................. $17.66 $20.38 $23.41
==========================================
Principal distributions during year.............. $24.15 $44.38 $54.80
==========================================
Net asset value at end of year................... $204.75 $235.35 $272.70
==========================================
TRUST UNITS OUTSTANDING AT END OF YEAR............. 184,279 188,850 200,355
==========================================
</TABLE>
See Notes to Financial Statements.
D - 4
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
PREFERRED STOCK PUT SERIES - 1
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.
(See Redemption - Computation of Redemption Price Per Unit in
this Prospectus, Part B)
(b) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(c) Dividend income is recorded on the record date. All securities
in the portfolio represent private placements.
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 distributed as explained
in "Administration of the Fund - Accounts and Distributions" in
this Prospectus, Part B.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 184,279 units at Date of Deposit.................................... $166,323,418
Redemptions of units - net cost of 38,079 units redeemed
less redemption amounts................................................... 24,000,778
Realized gain on securities sold or redeemed................................ 17,705,204
Principal distributions..................................................... (172,830,580)
Unrealized appreciation of investments...................................... 2,113,824
_______________
Net capital applicable to Holders........................................... $ 37,312,644
===============
</TABLE>
4. INCOME TAXES
As of May 31, 1996, unrealized appreciation of investments, based
on cost for Federal income tax purposes, aggregated $2,113,824,
all of which related to appreciated securities. The cost of
investment securities for Federal income tax purposes was
$35,139,755 at May 31, 1996.
D - 5
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
PREFERRED STOCK PUT SERIES - 1
NOTES TO FINANCIAL STATEMENTS
5. SECURITIES CALLED FOR REDEMPTION
2,866 shares of The Cleveland Elec. Illuminating Co, Serial
Pfd. Stk. $7.35 Ser. C were called for redemption on June 1, 1996.
Such securities are valued at the amount of the proceeds subsequently
received.
6. CHANGE OF TRUSTEE
On March 1, 1995, The Bank of New York assumed all of the Trustee
responsibilities from Investors Bank & Trust Company.
D - 6
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
PREFERRED STOCK PUT SERIES - 1
PORTFOLIO
AS OF MAY 31, 1996
<TABLE><CAPTION>
Par (P)
or Stated
Number Liquidation (L) Dividend
Portfolio No. and Title of of Value per Rate Per
Securities Shares Share Total Annum Cost Value(2)
__________ _________ _______________ _________ _____________ ___________ _____
<S> <C> <C> <C> <C> <C> <C>
1 The Cleveland Elec. Illuminating Co. 130,000 100.000 (L) 13,000,000 7.350% $10,292,661 $10,617,884
Serial Pfd. Stk. $7.35 Ser. C 11,462 1000.000 (L) 11,462,000 8.800 10,534,043 11,001,852
2 Commonwealth Edison Company, 44,771 100.000 (L) 4,477,100 8.200 3,896,196 4,644,991
$8.20 Cum. Pfd. Stk.
3 Niagara Mohawk Pwr. Corp., Pfd. 97,548 100.000 (P) 9,754,800 7.450 7,782,885 8,122,852
Stk. 7.45% Ser.
______________ _____________
TOTAL $32,505,785 $34,387,579
============== =============
See Notes to Portfolio.
</TABLE>
D - 7
<PAGE>
DEFINED ASSET FUNDS - CORPORATE INCOME FUND,
PREFERRED STOCK PUT SERIES - 1
NOTES TO PORTFOLIO
AS OF MAY 31, 1996
(1)
See Notes to Financial Statements.
(2) All preferred stocks in the Fund were acquired from The Prudential
Insurance Company of America (the Seller), a mutual insurance
company organized under the laws of the State of New Jersey. The
Seller has agreed to repurchase any securities sold by it to the Fund
under specified circumstances. For additional information about such
arrangements, see "Investment Summary - Purchase Commitments" in Part
B of this Prospectus.
D - 8
<PAGE>
Def ined
Asset FundsSM
SPONSORS: CORPORATE INCOME FUND
Merrill Lynch, PREFERRED STOCK PUT SERIES--1
Pierce, Fenner & Smith IncorporatedPROSPECTUS PART A
Defined Asset Funds This Prospectus does not contain all of the
P.O. Box 9051 information with respect to the investment
Princeton, N.J. 08543-9051 company set forth in its registration
(609) 282-8500 statement and exhibits relating thereto which
Smith Barney Inc. have been filed with the Securities and
Unit Trust Department Exchange Commission, Washington, D.C. under
388 Greenwich Street--23rd Floor the Securities Act of 1933 and the Investment
New York, NY 10013 Company Act of 1940, and to which reference
(212) 816-4000 is hereby made. Copies of such material can
Dean Witter Reynolds Inc. be obtained from the Public Reference Section
Two World Trade Center--59th Floor of the Commission, 450 Fifth Street, N.W.,
New York, N.Y. 10048 Washington, D.C. 20549 at prescribed rates.
(212) 392-2222 The Commission also maintains a Web site that
PaineWebber Incorporated contains information statements and other
1200 Harbor Blvd. information regarding registrants such as
Weehawken, N.J. 07087 Defined Asset Funds that file electronically
(201) 902-3000 with the Commission at http://www.sec.gov.
EVALUATOR: ------------------------------
Kenny S&P Evaluation Services, No person is authorized to give any
65 Broadway information or to make any representations
New York, N.Y. 10006 with respect to this investment company not
TRUSTEE: contained in its registration statement and
The Bank of New York exhibits relating thereto; and any
(a New York Banking Corporation) information or representation not contained
Box 974--Wall Street Station therein must not be relied upon as having
New York, N.Y. 10268-0974 been authorized. This Prospectus shall not
1-800-221-7771 constitute an offer to sell or the
solicitation of an offer to buy nor shall
there be any sale of these securities in any
State in which such offer solicitation or
sale would be unlawful prior to registration
or qualification under the securities laws of
any such State.
11811--8/96
