AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 16, 1997
REGISTRATION NO. 33-50887
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-6
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FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
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A. EXACT NAME OF TRUST:
CORPORATE INCOME FUND
INTERMEDIATE TERM SERIES--49
DEFINED ASSET FUNDS
(A UNIT INVESTMENT TRUST)
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
PAINEWEBBER INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
DEFINED ASSET FUNDS
POST OFFICE BOX 9051
PRINCETON, NJ 08543-9051 SMITH BARNEY INC.
388 GREENWICH
STREET--23RD FLOOR
NEW YORK, NY 10013
PRUDENTIAL SECURITIES PAINEWEBBER INCORPORATED DEAN WITTER REYNOLDS INC.
INCORPORATED 1285 AVENUE OF THE TWO WORLD TRADE
ONE NEW YORK PLAZA AMERICAS CENTER--59TH FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10019 NEW YORK, NY 10048
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. ROBERT E. HOLLEY LAURIE A. HESSLEIN
P.O. BOX 9051 1200 HARBOR BLVD. 388 GREENWICH ST.
PRINCETON, NJ 08543-9051 WEEHAWKEN, NJ 07087 NEW YORK, NY 10013
LEE B. SPENCER, JR. COPIES TO: DOUGLAS LOWE, ESQ.
ONE NEW YORK PLAZA PIERRE DE SAINT PHALLE, 130 LIBERTY STREET--29TH
NEW YORK, NY 10292 ESQ. FLOOR
450 LEXINGTON AVENUE NEW YORK, NY 10006
NEW YORK, NY 10017
The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice for the most
recent fiscal year on February 20, 1997.
Check box if it is proposed that this filing will become effective on July 25,
1997 pursuant to paragraph (b) of Rule 485. / x /
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<PAGE>
DEFINED ASSET FUNDSSM
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CORPORATE This Defined Fund is a portfolio of preselected
INCOME FUND bonds formed to provide a high level of current
INTERMEDIATE TERM income through investment in a fixed Portfolio of
SERIES--49 intermediate-term corporate bonds. This income is
(A UNIT INVESTMENT taxable to U.S. investors, but in the opinion of
TRUST) counsel is exempt from U.S. Federal income taxes,
- ------------------------------including withholding taxes, for many foreign
/ / DESIGNED FOR HIGH CURRENT investors. There is no assurance that this
INCOME objective will be met because it is subject to the
/ / DEFINED PORTFOLIO OF continuing ability of issuers of the bonds to meet
CORPORATE BONDS their principal and interest requirements.
/ / MONTHLY INCOME Furthermore, the market value of the bonds, and
/ / TAX EXEMPT TO FOREIGN therefore the value of the Units, will fluctuate
INVESTORS with changes in interest rates and other factors.
Minimum Purchase: 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.
-------------------------------------------------
SPONSORS: PART A OF THIS PROSPECTUS MAY NOT BE DISTRIBUTED
Merrill Lynch, UNLESS ACCOMPANIED BY CORPORATE INCOME FUND
Pierce, Fenner & Smith PROSPECTUS PART B.
Incorporated INVESTORS SHOULD READ BOTH PARTS OF THIS
Smith Barney Inc. PROSPECTUS CAREFULLY AND RETAIN THEM FOR FUTURE
Prudential Securities REFERENCE.
Incorporated INQUIRIES SHOULD BE DIRECTED TO THE TRUSTEE AT
Dean Witter Reynolds Inc. 1-800-323-1508.
PaineWebber Incorporated PROSPECTUS PART A DATED JULY 25, 1997.
<PAGE>
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Def ined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored over 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.
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Defined Intermediate Term Series
- ----------------------------------------------------------------
Our defined portfolio of intermediate term corporate bonds offers you a simple
and convenient way to earn a high level of current monthly income. By purchasing
Defined Asset Funds, you not only receive professional selection but also gain
the advantage of reduced risk by investing in bonds of several different
issuers.
INVESTMENT OBJECTIVE
To provide a high level of current income through investment in a fixed
portfolio consisting primarily of intermediate-term corporate bonds.
DIVERSIFICATION
The Portfolio contains 10 bonds with an estimated average life of 9 years.
Spreading your investment among different issuers reduces your risk, but does
not eliminate it. Because of maturities, sales or other dispositions of bonds,
the size, composition and return of the Portfolio will change over time. The
Fund was created May 19, 1994. The information in this prospectus is as of April
30, 1997, the evaluation date.
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Defining Your Portfolio
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PROFESSIONAL SELECTION AND SUPERVISION
The Portfolio contains a variety of bonds selected by experienced buyers. The
Fund is not actively managed; however, it is regularly reviewed and a bond can
be sold if retaining it is considered detrimental to investors' interests.
TYPES OF BONDS
The Portfolio consists of bonds issued by 10 different corporate issuers.
APPROXIMATE
ISSUERS PORTFOLIO PERCENTAGE
/ / Consumer Goods 12%
/ / Financial Institutions 77%
/ / Utility 11%
PREMIUM AND DISCOUNT ISSUES
On the evaluation date, 32% of the bonds were valued at a premium over par and
68% at a discount from par (see Risk Factors in Part B).
BOND CALL FEATURES
It is possible that during periods of falling interest rates, a bond with a
coupon higher than current market rates will be prepaid or 'called', at the
option of the bond issuer, before its expected maturity. When bonds are
initially callable, the price is usually at a premium to par which then declines
to par over time. Bonds may also be subject to a mandatory sinking fund or have
extraordinary redemption provisions. For example, if the bond's proceeds are not
able to be used as intended the bond may be redeemed. This redemption and the
sinking fund are often at par.
CALL PROTECTION
None of the bonds in the Portfolio are subject to optional refunding or call
provisions.
TAX INFORMATION
In the opinion of special counsel to the Sponsors, each investor will be
considered to have received the interest on his pro rata portion of each bond
when interest on the bond is received by the Fund. This interest is taxable for
U.S. investors but exempt from U.S. Federal income taxes, including withholding
taxes, for many foreign investors. (See Taxes in Part B).
A-2
<PAGE>
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Defining Your Investment
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PUBLIC OFFERING PRICE PER UNIT $1,027.08
The Public Offering Price as of April 30, 1997, the evaluation date, is based on
the aggregate bid side value of the underlying bonds in the Fund ($47,832,635),
divided by the number of units outstanding (48,894) plus a sales charge of 4.75%
of the Public Offering Price (4.987% on the value of the underlying bonds). The
Public Offering Price on any subsequent date will vary. An amount equal to
principal cash, if any, as well as net accrued but undistributed interest on the
unit is added to the Public Offering Price. The underlying bonds are evaluated
by an independent evaluator at 3:30 p.m. Eastern time on every business day.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into a separate
portfolio of corporate bonds. Reinvesting helps to compound your income.
PRINCIPAL DISTRIBUTIONS
Principal from sales, redemptions and maturities of bonds in the Fund will be
distributed to investors periodically when the amount to be distributed is more
than $5.00 per unit.
TERMINATION DATE
The Fund will generally terminate following the maturity date of the last
maturing bond listed in the Portfolio. The Fund may be terminated earlier if the
value is less than 40% of the face amount of bonds deposited. On the evaluation
date the value of the Fund was 72% of the face amount of bonds deposited.
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Defining Your Risks
- ---------------------------------------------------------------
RISK FACTORS
Unit price fluctuates and could be adversely affected by increasing interest
rates as well as the financial condition of the issuers of the bonds. Because of
the possible maturity, sale or other disposition of securities, the size,
composition and return of the portfolio may change at any time. Because of the
sales charges, returns of principal and fluctuations in unit price, among other
reasons, the sale price will generally be less than the cost of your units. Unit
prices could also be adversely affected if a limited trading market exists in
any Security to be sold. There is no guarantee that the Fund will achieve its
investment objective.
The Fund is concentrated in bonds issued by Financial Institutions and is
therefore dependent to a significant degree on revenues generated from those
particular activities (see Risk Factors in Part B). In addition, three of the
issuers are foreign issuers.
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Defining Your Costs
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SALES CHARGES
Although the Fund is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a %
of Secondary
Market
Public
Offering Price
--------------
Maximum Sales Charge 4.75%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
Per Unit
--------------
Trustee's Fee $ 0.48
Portfolio Supervision, Bookkeeping and
Administrative Fees $ 0.31
Evaluator's Fee $ 0.08
Other Operating Expenses $ 0.11
--------------
TOTAL $ 0.98
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time. Your price is based on the Fund's
then current net asset value (based on the lower, bid side evaluation of the
bonds, as determined by an independent evaluator), plus principal cash, if any,
as well as accrued interest. The per unit bid side redemption and secondary
market repurchase price as of the evaluation date was $978.29 ($48.79 less than
the Public Offering Price). There is no fee for redeeming or selling your units.
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Defining Your Income
- ---------------------------------------------------------------
MONTHLY INTEREST INCOME
The Fund pays monthly income, even though the bonds generally pay interest
semi-annually.
WHAT YOU MAY EXPECT
(PAYABLE ON THE 25TH DAY OF THE MONTH TO HOLDERS OF RECORD ON THE 10TH DAY OF
THE MONTH):
Regular Monthly Income per unit $ 5.81
Annual Income per unit: $ 69.78
These figures are estimates determined as of the evaluation date and actual
payments may vary.
A-3
<PAGE>
CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES - 49,
DEFINED ASSET FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Corporate Income Fund, Intermediate Term Series - 49,
Defined Asset Funds:
We have audited the accompanying statement of condition
of Corporate Income Fund, Intermediate Term Series - 49,
Defined Asset Funds, including the portfolio, as of April
30, 1997 and the related statements of operations and of
changes in net assets for the years ended April 30, 1997
and 1996 and the period May 20, 1994 to April 30, 1995. These
financial statements are the responsibility of the Trustee.
Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. Securities owned at April 30,
1997, as shown in such portfolio, were confirmed to us by
The Chase Manhattan Bank, the Trustee. An audit also
includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Corporate Income Fund, Intermediate
Term Series - 49, Defined Asset Funds at April 30, 1997 and
the results of its operations and changes in its net assets
for the above-stated periods in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
June 16, 1997
D - 1.
<PAGE>
CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES - 49,
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
As of April 30, 1997
TRUST PROPERTY:
Investment in marketable securities -
at value (cost $ 45,623,344 )(Note 1)...... $47,832,635
Accrued interest ............................. 1,045,274
Proceeds receivable from sale of securities .. 116,756
Cash - income ................................ 815
Cash - principal ............................. 44,215
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Total trust property ....................... 49,039,695
LESS LIABILITIES:
Income advance from Trustee................... $ 194,704
Accrued Sponsors' fees ....................... 6,428
Redemptions payable .......................... 115,038 316,170
----------- -----------
NET ASSETS, REPRESENTED BY:
48,894 units of fractional undivided
interest outstanding (Note 3).............. 47,880,665
Undistributed net investment income .......... 842,860 $48,723,525
----------- ===========
UNIT VALUE ($ 48,723,525 / 48,894 units )....... $ 996.51
===========
See Notes to Financial Statements.
D - 2.
<PAGE>
CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES - 49,
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE><CAPTION>
May 20, 1994
to
Years Ended April 30, April 30,
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................ $ 3,732,169 $ 4,355,535 $ 4,008,746
Trustee's fees and expenses ............ (36,742) (39,861) (35,646)
Sponsors' fees ......................... (15,349) (38,758)
---------------------------------------------------
Net investment income .................. 3,680,078 4,276,916 3,973,100
---------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on
securities sold or redeemed .......... 323,145 679,073
Unrealized appreciation (depreciation)
of investments ....................... (384,446) 2,179,023 414,714
---------------------------------------------------
Net realized and unrealized
gain (loss) on investments ........... (61,301) 2,858,096 414,714
---------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 3,618,777 $ 7,135,012 $ 4,387,814
===================================================
</TABLE>
See Notes to Financial Statements.
D - 3.
<PAGE>
CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES - 49,
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
May 20, 1994
to
Years Ended April 30, April 30,
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
OPERATIONS:
Net investment income .................. $ 3,680,078 $ 4,276,916 $ 3,973,100
Realized gain on
securities sold or redeemed .......... 323,145 679,073
Unrealized appreciation (depreciation)
of investments ....................... (384,446) 2,179,023 414,714
---------------------------------------------------
Net increase in net assets
resulting from operations ............ 3,618,777 7,135,012 4,387,814
---------------------------------------------------
DISTRIBUTIONS TO HOLDERS (Note 2):
Income ................................ (3,689,550) (4,303,558) (3,285,360)
Principal .............................. (66,020) (42,168)
---------------------------------------------------
Total distributions .................... (3,755,570) (4,345,726) (3,285,360)
---------------------------------------------------
SHARE TRANSACTIONS:
Subscription amounts ................... 56,736,582
Redemption amounts - income ............ (108,952) (165,146)
Redemption amounts - principal ......... (6,636,830) (10,520,201)
---------------------------------------------------
Total share transactions ............... (6,745,782) (10,685,347) 56,736,582
---------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS .... (6,882,575) (7,896,061) 57,839,036
NET ASSETS AT BEGINNING OF PERIOD ........ 55,606,100 63,502,161 5,663,125
---------------------------------------------------
NET ASSETS AT END OF PERIOD .............. $48,723,525 $55,606,100 $63,502,161
===================================================
PER UNIT:
Income distributions during
period .............................. $ 70.18 $ 70.73 $ 50.03
===================================================
Principal distributions during
period ............................... $ 1.28 $ 0.71
========================================
Net asset value at end of
period ............................... $ 996.51 $ 999.79 $ 962.15
===================================================
TRUST UNITS:
Issued during period ................... 60,000
Redeemed during period ................. 6,724 10,382
Outstanding at end of period ........... 48,894 55,618 66,000
===================================================
</TABLE>
See Notes to Financial Statements.
D - 4.
<PAGE>
CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES - 49,
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
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 "How to Sell Units - Trustee's Redemption of Units"
in this Prospectus, Part B), except that value on May 20,
1994 was based upon offering side evaluations at May 18,
1994, the day prior to the Date of Deposit. Cost of
securities at May 20, 1994 was also based on such offering
side evaluations. Cost of securities purchased subsequent to
the intial Date of Deposit was based on the offering side
evaluations on those dates. Realized gains and losses on sales
are determined using the first-in, first-out method.
(B) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(C) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than interest, after deductions for redemptions and applicable
expenses, are distributed as explained in "Income, Distributions and
Reinvestment - Distributions" in this Prospectus, Part B.
3. NET CAPITAL
Cost of 48,894 units at Date of Deposit .................... $47,794,019
Less sales charge .......................................... 1,911,908
-----------
Net amount applicable to Holders ........................... 45,882,111
Redemptions of units - net cost of 17,106 units redeemed
less redemption amounts (principal)....................... (1,104,767)
Realized gain on securities sold or redeemed ............... 1,002,218
Principal distributions .................................... (108,188)
Unrealized appreciation of investments ..................... 2,209,291
-----------
Net capital applicable to Holders .......................... $47,880,665
===========
4. INCOME TAXES
As of April 30, 1997, unrealized appreciation of investments, based on
cost for Federal income tax purposes, aggregated $2,209,291, all of which
related to appreciated securities. The cost of investment securities for
Federal income tax purposes was $45,623,344 at April 30, 1997.
</TABLE>
D - 5.
<PAGE>
CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES - 49,
DEFINED ASSET FUNDS
PORTFOLIO
As of April 30, 1997
<TABLE><CAPTION>
Rating of Issues(1)
-------------------
Moody's Standard Optional
Portfolio No. and Title of Investors & Poor's Face Redemption
Securities Service Corporation Amount Coupon Maturities(3) Provisions(3) Cost(2) Value(2)
---------- -------------------- -------- -------- ------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 BankAmerica Corporation Subordinated A2 A $ 4,410,000 8.375 % 2002 None $ 4,575,187 $4,639,655
Notes
2 Banque Paribas, Subordinated Notes A3 BBB+ 2,935,000 6.875 2009 None 2,572,338 2,744,510
3 Citicorp, Subordinated Notes A2 A 4,805,000 7.125 2004 None 4,578,950 4,789,379
4 First Union Corporation, Subordinated A2 A- 5,200,000 6.625 2005 None 4,736,125
4,965,891
Notes
5 Ford Motor Credit, Notes A1 A+ 5,055,000 6.375 2008 None 4,373,438 4,649,847
6 New York Telephone Company, Debentures A2 A 5,125,000 6.500 2005 None 4,671,406 4,934,734
7 Progressive Corporation, Notes A3 A+ 5,215,000 6.600 2004 None 4,773,425 5,036,689
8 Republic New York Corporation, A1 AA- 5,205,000 7.750 2009 None 5,152,075 5,338,081
Subordinated Notes
9 J. Seagram & Sons Company Limited, A2 A 5,700,000 8.350 2006 None 5,836,625 6,091,282
Debentures
10 Toronto-Dominion Bank, Subordinated Aa3 AA- 5,010,000 6.450 2009 None 4,353,775 4,642,567
Notes
----------- ---------- ----------
TOTAL $48,660,000 $45,623,344 $47,832,635
=========== ========== ==========
See Notes to Portfolio.
</TABLE>
D - 6.
<PAGE>
CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES - 49,
DEFINED ASSET FUNDS
NOTES TO PORTFOLIO
As of April 30, 1997
<TABLE>
<S> <C>
(1) A description of the rating symbols and their meanings appears under
"Description of Ratings" in this Prospectus, Part B. "NR", if applicable,
indicates that this security is not currently rated by the indicated
rating service. These ratings have been furnished by the Evaluator but
not confirmed with the rating agencies.
(2) See Notes to Financial Statements.
(3) Optional redemption provisions, which may be exercised in whole or in part,
are initially at prices of par plus a premium, then subsequently at prices
declining to par. Certain securities may provide for redemption at par prior
or in addition to any optional or mandatory redemption dates or maturity, for
example, through the operation of a maintenance and replacement fund, if
proceeds are not able to be used as contemplated, the project is condemned or
sold or the project is destroyed and insurance proceeds are used to redeem
the securities. Many of the securities are also subject to mandatory sinking
fund redemption commencing on dates which may be prior to the date on which
securities may be optionally redeemed. Sinking fund redemptions are at par
and redeem only part of the issue. Some of the securities have mandatory
sinking funds which contain optional provisions permitting the issuer to
increase the principal amount of securities called on a mandatory redemption
date. The sinking fund redemptions with optional provisions may, and optional
refunding redemptions generally will, occur at times when the redeemed
securities have an offering side evaluation which represents a premium over
par. To the extent that the securities were acquired at a price higher than
the redemption price, this will represent a loss of capital when compared
with the Public Offering Price of the Units when acquired. Distributions will
generally be reduced by the amount of the income which would otherwise have
been paid with respect to redeemed securities and there will be distributed
to Holders any principal amount and premium received on such redemption after
satisfying any redemption requests for Units received by the Fund. The
estimated current return may be affected by redemptions. The tax effect on
Holders of redemptions and related distributions is described under "Taxes"
in this Prospectus, Part B.
D - 7.
<PAGE>
CORPORATE INCOME FUND
INTERMEDIATE TERM SERIES
DEFINED ASSET FUNDS
I want to learn more about automatic reinvestment in the Investment Accumulation
Program. Please send me information about participation in the Corporate Fund
Accumulation Program, Inc. and a current Prospectus.
My name (please
print) ________________________________________________________________________
My address (please print):
Street and Apt.
No. ___________________________________________________________________________
City, State, Zip
Code __________________________________________________________________________
This page is a self-mailer. Please complete the information above, cut along the
dotted line, fold along the lines on the reverse side, tape, and mail with the
Trustee's address displayed on the outside.
12345678
<PAGE>
BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 644, NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE CHASE MANHATTAN BANK (CIF) UNITED STATES
RETAIL PROCESSING DEPARTMENT
BOWLING GREEN STATION
P.O. BOX 5179
NEW YORK, NY 10274-5179
- --------------------------------------------------------------------------------
(Fold along this line.)
- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
CORPORATE INCOME FUND
CASH OR ACCRETION SERIES
INTERMEDIATE TERM SERIES
INSURED SERIES
MONTHLY PAYMENT SERIES
PREFERRED STOCK PUT SERIES
SELECT SERIES
THIS PART B OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED OR
PRECEDED BY PART A.
FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS BY WRITING OR CALLING THE TRUSTEE, AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF PART A OF THIS PROSPECTUS.
Index
PAGE
----
Fund Description........................... 1
Risk Factors............................... 2
How to Buy Units........................... 6
How to Redeem or Sell Units................ 7
Income, Distributions and Reinvestment..... 8
Fund Expenses.............................. 9
Taxes...................................... 10
PAGE
----
Records and Reports........................ 12
Trust Indenture............................ 12
Miscellaneous.............................. 13
Exchange Option............................ 15
Supplemental Information................... 15
Appendix A--Description of Ratings......... a-1
Appendix B--Sales Charge Schedules......... b-1
FUND DESCRIPTION
BOND PORTFOLIO SELECTION
Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, generally selected the Bonds for the Portfolio
after considering the Fund's investment objective as well as the quality of the
Bonds (the Bonds were initially rated in the category A or better by at least
one nationally recognized rating organization or had comparable credit
characteristics), the yield and price of the Bonds compared to similar
securities, the maturities of the Bonds and the diversification of the
Portfolio. No leverage or borrowing is used nor does the Portfolio contain other
kinds of securities to enhance yield. A summary of the Bonds in the Portfolio
appears in Part A of the Prospectus. (For Preferred Stock Put Series, see page
4.)
Yields on bonds depend on many factors including general conditions of the
bond markets, the size of a particular offering and the maturity and quality
rating of the particular issues. Yields can vary among bonds with similar
maturities, coupons and ratings. Ratings represent opinions of the rating
organizations as to the quality of the bonds rated, based on the credit of the
issuer or any guarantor, insurer or other credit provider, but these ratings are
only general standards of quality (see Appendix A).
After the initial date of deposit, the ratings of some Bonds may be reduced
or withdrawn, or the credit characteristics of the Bonds may no longer be
comparable to bonds rated A or better. Bonds rated BBB or Baa (the lowest
investment grade rating) or lower may have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher grade bonds. Bonds rated below investment grade or unrated bonds
with
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similar credit characteristics are often subject to greater market fluctuations
and risk of loss of principal and income than higher grade bonds and their value
may decline precipitously in response to rising interest rates.
Because each Defined Asset Fund is a preselected portfolio of Bonds, you
know the securities, maturities, call dates and ratings before you invest. Of
course, the Portfolio will change somewhat over time as Bonds mature, are
redeemed or are sold to meet Unit redemptions or in other limited circumstances.
Because the Portfolio is not actively managed and principal is returned as the
Bonds are disposed of, this principal should be relatively unaffected by changes
in interest rates.
BOND PORTFOLIO SUPERVISION
The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. The Fund may retain an issuer's bonds despite adverse financial
developments. Experienced financial analysts regularly review the Portfolio and
a Bond may be sold in certain circumstances including the occurrence of a
default in payment or other default on the Bond, institution of certain legal
proceedings, if the Bond becomes inconsistent with the Fund's investment
objectives, a decline in the price of the Bond or the occurrence of other market
or credit factors that, in the opinion of Defined Asset Funds research analysts,
makes retention of the Bond detrimental to the interests of investors. The
Trustee must generally reject any offer by an issuer of a Bond to exchange
another security pursuant to a refunding or refinancing plan. The Sponsors and
the Trustee are not liable for any default or defect in a Bond.
RISK FACTORS
An investment in the Fund entails certain risks, including the risk that the
value of your investment will decline with increases in interest rates.
Generally speaking, bonds with longer maturities will fluctuate in value more
than bonds with shorter maturities. In recent years there have been wide
fluctuations in interest rates and in the value of fixed-rate bonds generally.
The Sponsors cannot predict the direction or scope of any future fluctuations.
Certain of the Bonds may have been deposited at a market discount or premium
principally because their interest rates are lower or higher than prevailing
rates on comparable debt securities. The current returns of market discount
bonds are lower than comparably rated bonds selling at par because discount
bonds tend to increase in market value as they approach maturity. The current
returns of market premium bonds are higher than comparably rated bonds selling
at par because premium bonds tend to decrease in market value as they approach
maturity. Because part of the purchase price is returned through current income
payments and not at maturity, an early redemption at par of a premium bond will
result in a reduction in yield to the Fund. Market premium or discount
attributable to interest rate changes does not indicate market confidence or
lack of confidence in the issue.
The Fund may be concentrated in one or more of types of bonds. Set forth
below is a brief description of certain risks associated with bonds which may be
held by the Fund. Additional information is contained in the Information
Supplement which is available from the Trustee at no charge to the investor.
UTILITIES
Payments on utility bonds are dependent on various factors, including the
rates the utilities may charge, the demand for their services and their
operating costs, including expenses to comply with environmental legislation and
other energy and licensing laws and regulations. Utilities are particularly
sensitive to, among other things, the effects of inflation on operating and
construction costs, the unpredictability of future usage requirements, the costs
and availability of fuel and, with certain electric utilities, the risks
associated with the nuclear industry. The movement to introduce competition in
the investor-owned electric utility industry is likely to induce them to
maintain rates as low as possible. In this effort to keep rates low, utilities
may have more trouble raising rates to completely recover investment in
generating plant.
HOSPITAL, MENTAL HEALTH AND NURSING HOME FACILITIES
Payments on hospital, mental health and nursing home facility bonds are
dependent upon revenues of hospitals and other health care facilities. These
revenues come from private third-party payors and government programs, including
the Medicare and Medicaid programs, which have generally undertaken cost
containment
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measures to limit payments to health care facilities. Hospitals and health care
facilities are subject to various legal claims by patients and others and are
adversely affected by increasing cost of insurance.
BANKS AND OTHER FINANCIAL INSTITUTIONS
The profitability of a financial institution is largely dependent upon the
credit quality of its loan portfolio which, in turn, is affected by the
institution's underwriting criteria, concentrations within the portfolio and
specific industry and general economic conditions. The operating performance of
financial institutions is also impacted by changes in interest rates, the
availability and cost of funds, the intensity of competition and the degree of
governmental regulation.
TELECOMMUNICATIONS
Payments on bonds of companies in the telecommunications industry, including
local, long-distance and cellular service, the manufacture of telecommunications
equipment, and other ancillary services, are generally dependant upon the amount
and growth of customer demand, the level of rates permitted to be charged by
regulatory authorities and the ability to obtain periodic rate increases, the
effects of inflation on the cost of providing services and the rate of
technological innovation. The industry is characterized by increasing
competition in all sectors and extensive regulation by the Federal
Communications Commission and various state regulatory authorities.
FOREIGN OBLIGORS
On the basis of the best information available to the Sponsors, except as
indicated in Prospectus Part A, under existing law there are no withholding
taxes applicable to any foreign Securities in the Portfolio. Issues of foreign
obligors may involve investment risks that are different from those of domestic
issues, including currency rate fluctuations, future political and economic
developments and the possible imposition of withholding taxes, exchange controls
or other foreign governmental restrictions which might adversely affect the
Fund.
INSURED SERIES
Portfolio Insurance. The Fund has obtained portfolio insurance ('Portfolio
Insurance') from either MBIA Insurance Corporation or Financial Security
Assurance Inc. (each referred to as an 'Insurer' or the 'Insurers') (see The
Insurers below) that guarantees the scheduled payments of the principal of and
interest on the Bonds ('Portfolio-Insured Bonds') while they are owned by the
Fund, but does not guarantee the market value of the Bonds or the value of the
Units. Although all Bonds are individually insured, neither the Fund, the Units
nor the Portfolio are insured directly.
Since Portfolio Insurance applies to the Bonds only while they are owned by
the Fund, the value of Portfolio-Insured Bonds (and therefore the value of the
Units) may decline if the credit quality of any Portfolio-Insured Bond is
reduced. Premiums for Portfolio Insurance are payable monthly in advance by the
Trustee on behalf of the Fund. Upon the sale of a Portfolio-Insured Bond from
the Fund, the Trustee has the right, pursuant to an irrevocable commitment
obtained from the Insurer, to obtain insurance to maturity ('Permanent
Insurance') on the Bond upon the payment of a single, predetermined insurance
premium from the proceeds of the sale. Accordingly, any Bond in the Fund is
eligible to be sold on an insured basis. The Public Offering Price does not
reflect any element of value for Portfolio Insurance. The Evaluator will
attribute a value to the Portfolio Insurance (including the right to obtain
Permanent Insurance) for the purpose of computing the price or redemption value
of Units only if the Portfolio-Insured Bonds are in default in the payment of
principal or interest or, in the opinion of Defined Asset Funds research
analysts, in significant risk of default.
The Insurers. The claims-paying ability of each Insurer is rated AAA by
Standard & Poor's. Ratings of insurance companies are subject to change at any
time at the discretion of the rating agency. In the event that the rating of an
Insurer is reduced, the Sponsors are authorized to direct the Trustee to obtain
other insurance on behalf of the Fund.
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The following summary information relating to the listed insurance companies
has been obtained from publicly available information:
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
AS OF DECEMBER 31, 1995
(IN MILLIONS OF DOLLARS)
---------------------------------
DATE ADMITTED POLICYHOLDERS'
NAME ESTABLISHED ASSETS SURPLUS
------------------------------------------ ------------- ------------ -----------------
<S> <C> <C> <C>
Financial Security Assurance Inc. (FSA)
(including Financial Security Assurance
of Maryland Inc. (FSAM) (formerly
Capital Guaranty Insurance Company)..... 1984 $ 1,083 $ 461
MBIA Insurance Corporation................ 1986 3,814 1,274
</TABLE>
Insurance companies are subject to extensive regulation and supervision
where they do business by state insurance commissioners who regulate the
standards of solvency which must be maintained, the nature of and limitations on
investments, reports of financial condition, and requirements regarding reserves
for unearned premiums, losses and other matters. A significant portion of the
assets of insurance companies are required by law to be held in reserve against
potential claims on policies and is not available to general creditors. Although
the federal government does not regulate the business of insurance, federal
initiatives including pension regulation, controls on medical care costs,
minimum standards for no-fault automobile insurance, national health insurance,
tax law changes affecting life insurance companies and repeal of the antitrust
exemption for the insurance business can significantly impact the insurance
business.
CASH OR ACCRETION BOND SERIES AND SELECT SERIES
The Bonds in these Funds are Compound Interest Bonds that initially do not
pay interest. Instead, these Bonds accrue interest until a certain date (the
Payment Commencement Date). Prior to that date, the accrued but unpaid interest
on each Compound Interest Bond is added to principal and compounded, and
additional Units of the Fund are issued and added to the investor's account on
the quarterly or semi-annual Unit Accretion Distribution Days stated in Part A
of the Prospectus. Investors may elect automatic unit accretion distributions
which will return to them cash substantially equivalent to the accrued but
unpaid interest on the Compound Interest Bonds. Notice of your election to have
unit accretion distributions liquidated must be received by the Trustee at least
ten days prior to the first Record Day for Unit Accretion Distribution as to
which your election will apply. Compound Interest Bonds are treated for federal
income tax purposes as having original issue discount, and investors must report
as taxable income each year a portion of the original issue discount prior to
receiving the cash attributable to that income (see Taxes in Part A of the
Prospectus). In addition, the value of the Compound Interest Bonds and of the
Units may be subject to greater fluctuations in response to changing interest
rates than bonds that make current interest payments.
The Compound Interest Bonds are backed by collateral primarily composed of
mortgage-backed securities guaranteed as to payment of interest and principal by
U.S. government agencies, including the Government National Mortgage Association
(GNMA), the Federal Home Loan Mortgage Corporation (FHLMC) and the Federal
National Mortgage Association (FNMA). The issuers of the Compound Interest Bonds
are generally limited purpose corporations organized solely to issue the Bonds.
PREFERRED STOCK PUT SERIES
Preferred stocks present less risk than common stocks since dividends must
be paid before holders of common stock of that issuer may receive a dividend.
Preferred stocks do not, however, represent a liability of the issuer and
therefore do not offer as great a degree of protection of capital or assurance
of continued income as corporate bonds.
The preferred stocks in the Fund were acquired from a savings bank or
savings and loan association (the Seller) that had held the preferred stocks in
its portfolio prior to sale to the Sponsors (see Banks and Other Financial
Institutions above). In order to provide liquidity, the Seller has committed to
repurchase any of the preferred stocks on any semi-annual Purchase Date (as
stated in Part A of the Prospectus) (a Liquidity Purchase). The Seller will also
repurchase any preferred stocks if the issuer fails to make any redemption
payments or fails to declare and pay a dividend at the prescribed dividend rate
(a Default Purchase) or if the Seller becomes or is deemed to be bankrupt or
insolvent (an Insolvency Purchase). Investors should realize that they may have
all or
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<PAGE>
part of the principal amount of their investment in Units returned prior to
termination of the Fund if any of these situations occurs. The Seller will also
purchase all the preferred stocks remaining in the Fund on the Final Disposition
Date stated in Part A of the Prospectus (a Disposition Purchase). These purchase
commitments are backed by collateral which may include mortgage-backed
securities, municipal and corporate bonds, U.S. government securities and cash.
LITIGATION AND LEGISLATION
The Sponsors do not know of any pending litigation as of the date of this
Prospectus which might reasonably be expected to have a material adverse effect
upon the Fund. At any time litigation may be initiated on a variety of grounds,
or legislation may be enacted, affecting the Bonds in the Fund. In addition,
there can be no assurance that foreign withholding taxes will not be imposed on
interest on Bonds issued by non-U.S. issuers in the future.
PAYMENT OF THE BONDS AND LIFE OF THE FUND
The size and composition of the Portfolio will change over time. Certain of
the Bonds may be subject to redemption prior to their stated maturity dates
pursuant to optional refunding or sinking fund redemption provisions or
otherwise. In general, optional refunding redemption provisions are more likely
to be exercised when the value of a Bond is at a premium over par than when it
is at a discount from par. Some Bonds may be subject to sinking fund and
extraordinary redemption provisions which may commence early in the life of the
Fund. Additionally, the size and composition of the Fund will be affected by the
level of redemptions of Units that may occur from time to time. Principally,
this will depend upon the number of investors seeking to sell or redeem their
Units and whether or not the Sponsors are able to sell the Units acquired by
them in the secondary market. As a result, Units offered in the secondary market
may not represent the same face amount of Bonds as on the initial date of
deposit. Factors that the Sponsors will consider in determining whether or not
to sell Units acquired in the secondary market include the diversity of the
Portfolio, the size of the Fund relative to its original size, the ratio of Fund
expenses to income, the Fund's current and long-term returns, the degree to
which Units may be selling at a premium over par and the cost of maintaining a
current prospectus for the Fund. These factors may also lead the Sponsors to
seek to terminate the Fund earlier than its mandatory termination date.
Cash or Accretion Bond Series and Select Series. As periodic payments of
interest and principal and any prepayments of principal are made on the Ginnie
Maes, Freddie Macs and Fannie Maes (the Collateral) backing the Compound
Interest Bonds, all or a portion of the amounts received will be used first to
make principal and interest payments on other bonds issued by the issuers of the
Compound Interest Bonds, until those bonds are fully paid, and then to make
principal and interest payments on the Compound Interest Bonds. Therefore, the
prepayment rates on the mortgages underlying the Collateral will affect the
principal amount of the Compound Interest Bonds in the Fund and the ultimate
life of the Fund.
All of the mortgages in the pools relating to the Collateral are subject to
prepayment without any significant premium or penalty at the option of the
mortgagors (i.e., the homeowners). While the mortgages underlying the Collateral
may be amortized over a period from 30 to 15 years, it has been the experience
of the mortgage industry that the average life of comparable mortgages, owing to
prepayments, is much less, perhaps as little as nine and six years,
respectively. Generally speaking, a number of factors, including mortgage market
interest rates and homeowners' mobility, will affect the average life of the
Collateral. Changes in prepayment patterns which are influenced by changes in
housing cycles and mortgage refinancing could influence yield assumptions used
in pricing the securities.
While the value of these mortgage backed securities generally fluctuates
inversely with changes in interest rates, it should be noted that their
potential for appreciation, which could otherwise be expected to result from a
decline in interest rates, may tend to be limited by any increased prepayments
by mortgagors as interest rates decline. Accordingly, the termination of the
Fund might be accelerated as a result of prepayments made as described above.
Early termination of a Fund or early payments of principal may have
important consequences to the investor; e.g., to the extent that Units were
purchased with a view to an investment of longer duration, the overall
investment program of the investor may require readjustment; or the overall
return on investment may be less or greater than anticipated, depending in part
on whether the purchase price paid for Units represented the payment
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<PAGE>
of an overall premium or a discount, respectively, above or below the stated
principal amounts of the underlying mortgages.
FUND TERMINATION
The Fund will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Bond or upon the consent of investors holding 51% of the
Units. The Fund may also be terminated earlier by the Sponsors once the total
assets of the Fund have fallen below the minimum value specified in Part A of
the Prospectus. A decision by the Sponsors to terminate the Fund early will be
based on factors similar to those considered by the Sponsors in determining
whether to continue the sale of Units in the secondary market.
Notice of impending termination will be provided to investors and thereafter
Units will no longer be redeemable. On or shortly before termination, the Fund
will seek to dispose of any Bonds remaining in the Portfolio although any Bond
unable to be sold at a reasonable price may continue to be held by the Trustee
in a liquidating trust pending its final disposition. A proportional share of
the expenses associated with termination, including brokerage costs in disposing
of Bonds, will be borne by investors remaining at that time. This may have the
effect of reducing the amount of proceeds those investors are to receive in any
final distribution.
LIQUIDITY
Up to 40% of the value of the Portfolio may consist of Bonds acquired in
private placements or otherwise that may constitute restricted securities that
cannot be sold publicly by the Trustee without registration under the Securities
Act of 1933, as amended. The Sponsors nevertheless believe that, should a sale
of these Bonds be necessary in order to meet redemption of Units, the Trustee
should be able to consummate a sale with institutional investors.
The principal trading market for the Bonds will generally be in the
over-the-counter market and the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in them. There can be no
assurance that a liquid trading market will exist for any of the Bonds,
especially since the Fund may be restricted under the Investment Company Act of
1940 from selling Bonds to any Sponsor. The value of the Portfolio will be
adversely affected if trading markets for the Bonds are limited or absent.
HOW TO BUY UNITS
PUBLIC OFFERING PRICE
Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund. In the secondary
market (after the initial offering period), the Public Offering Price is
generally based on the bid side evaluation of the Bonds and includes a sales
charge based on the number of Units of the Fund purchased in the secondary
market on the same day by a single purchaser (see Secondary Market sales charge
schedule in Appendix B). Purchases in the secondary market of one or more Series
sponsored by the Sponsors that have the same rates of sales charge may be
aggregated. To qualify for a reduced sales charge, the dealer must confirm that
the sale is to a single purchaser or is purchased for its own account and not
for distribution. For these purposes, Units held in the name of the purchaser's
spouse or child under 21 years of age are deemed to be purchased by a single
purchaser. A trustee or other fiduciary purchasing securities for a single trust
estate or single fiduciary account is also considered a single purchaser. This
procedure may be amended or terminated at any time without notice. For Preferred
Stock Put Series there is no sales charge and the Public Offering Price is based
on the offer side evaluation of the preferred stocks.
Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per Unit.
Net accrued interest and principal cash, if any, is added to the Public
Offering Price, the Sponsors' Repurchase Price and the Redemption Price per
Unit. This represents the interest accrued on the Bonds, net of Fund expenses,
from the initial date of purchase of Units to, but not including, the settlement
date for Units (less any prior distributions of interest income to investors).
Because of varying interest payment dates on the Bonds, accrued interest at any
time will exceed the interest actually received by the Fund.
6
<PAGE>
EVALUATIONS
Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. For Cash
or Accretion Bond Series and Select Series, the following Federal holidays are
also not Business Days: Columbus Day, Veteran's Day and Martin Luther King's
birthday. Bond evaluations are based on closing sales prices (unless the
Evaluator deems these prices inappropriate). If closing sales prices are not
available, the evaluation is generally determined on the basis of current bid or
offer prices for the Bonds or comparable securities or by appraisal or by any
combination of these methods. In the past, the bid prices of publicly offered
issues have been lower than the offer prices by as much as 1 1/2 or more of face
amount in the case of inactively traded issues and as little as 1/4 of 1% in
the case of actively traded issues, but the difference between the offer and bid
prices has averaged between 1/2 of 1% and 1% of face amount. Neither the
Sponsors, the Trustee or the Evaluator will be liable for errors in the
Evaluator's judgment. The fees of the Evaluator will be borne by the Fund.
CERTIFICATES
Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Redeem or Sell Units-- Redeeming Units
with the Trustee). Certain Sponsors collect additional charges for registering
and shipping Certificates to purchasers. Lost or mutilated Certificates can be
replaced upon delivery of satisfactory indemnity and payment of costs.
HOW TO REDEEM OR SELL UNITS
You can redeem your Units at any time for net asset value. In addition, the
Sponsors have maintained an uninterrupted secondary market for Units for over 20
years and will ordinarily buy back Units at net asset value. The following
describes these two methods to redeem or sell Units in greater detail.
REDEEMING UNITS WITH THE TRUSTEE
You can always redeem your Units directly with the Trustee for net asset
value. This can be done by sending the Trustee a redemption request together
with any Unit certificates you hold, which must be properly endorsed or
accompanied by a written transfer instrument with signatures guaranteed by an
eligible institution. In certain instances, additional documents may be required
such as a trust instrument, certificate of corporate authority, certificate of
death or appointment as executor, administrator or guardian.
Within seven days after the Trustee's receipt of your request containing the
necessary documents, a check will be mailed to you in an amount equal to the net
asset value of your Units. Because of the sales charge, market movements or
changes in the Portfolio, net asset value at the time you redeem your Units may
be greater or less than the original cost of your Units. Net asset value is
calculated each Business Day by adding the value of the Bonds, net accrued
interest, cash and the value of any other Fund assets; deducting unpaid taxes or
other governmental charges, accrued but unpaid Fund expenses, unreimbursed
Trustee advances, cash held to redeem Units or for distribution to investors and
the value of any other Fund liabilities; and dividing the result by the number
of outstanding Units. Bonds are evaluated on the offer side during the initial
offering period and on the bid side thereafter.
As long as the Sponsors are maintaining a secondary market for Units (as
described below), the Trustee will not actually redeem your Units but will sell
them to the Sponsors for net asset value. If the Sponsors are not maintaining a
secondary market, the Trustee will redeem your Units for net asset value or will
sell your Units in the over-the-counter market if the Trustee believes it will
obtain a higher net price for your Units. If the Trustee is able to sell the
Units for a net price higher than net asset value, you will receive the net
proceeds of the sale.
If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Bonds selected by the Agent for the Sponsors
based on market and credit factors determined to be in the best interest of the
Fund. These sales are often made at times when the Bonds would not otherwise be
sold and may result in lower prices than might be realized otherwise and may
also reduce the size and diversity of the Fund. If Bonds are being sold during a
time when additional Units are being created by the purchase of additional Bonds
7
<PAGE>
(as described under Portfolio Selection), Bonds will be sold in a manner
designed to maintain, to the extent practicable, the proportionate relationship
among the face amounts of each Bond in the Portfolio.
Redemptions may be suspended or payment postponed (i) if the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (ii) if
the SEC determines that trading on the New York Stock Exchange is restricted or
that an emergency exists making disposal or evaluation of the Bonds not
reasonably practicable or (iii) for any other period permitted by SEC order.
SPONSORS' SECONDARY MARKET FOR UNITS
The Sponsors, while not obligated to do so, will buy back Units at net asset
value without any other fee or charge as long as they are maintaining a
secondary market for Units. Because of the sales charge, market movements or
changes in the portfolio, net asset value at the time you sell your Units may be
greater or less than the original cost of your Units. The Sponsors may resell
the Units to other buyers or redeem the Units by tendering them 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 for Units.
The Sponsors may discontinue the secondary market for Units without prior
notice if the supply of Units exceeds demand or for other business reasons.
Regardless of whether the Sponsors maintain a secondary market, you have the
right to redeem your Units for net asset value with the Trustee at any time, as
described above.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME
Interest or dividends received are credited to an Income Account and other
receipts to a Capital Account. A Reserve Account may be created by withdrawing
from the Income and Capital Accounts amounts considered appropriate by the
Trustee to reserve for any material amount that may be payable out of the Fund.
RETURN CALCULATIONS
Estimated Current Return shows the estimated annual cash to be received from
interest-bearing Bonds in the Portfolio (net of estimated annual expenses)
divided by the Public Offering Price (including the maximum sales charge).
Estimated Long Term Return is a measure of the estimated return over the
estimated life of the Fund. This represents an average of the yields to maturity
(or in certain cases, to an earlier call date) of the individual bonds in the
Portfolio, adjusted to reflect the maximum sales charge and estimated expenses.
The average yield for the Portfolio is derived by weighing each Bond's yield by
its market value and the time remaining to the call or maturity date, depending
on how the Bond is priced. Unlike Estimated Current Return, Estimated Long Term
Return takes into account maturities, discounts and premiums of the underlying
Bonds.
No return estimate can be predictive of your actual return because returns
will vary with purchase price (including sales charges), how long Units are
held, changes in Portfolio composition, changes in interest income and changes
in fees and expenses. Therefore, Estimated Current Return and Estimated Long
Term Return are designed to be comparative rather than predictive. A yield
calculation which is more comparable to an individual bond may be higher or
lower than Estimated Current Return or Estimated Long Term Return which are more
comparable to return calculations used by other investment products.
ESTIMATED RATE TO PROJECTED TO MATURITY (CASH OR ACCRETION BONDS SERIES AND
SELECT SERIES). Estimated Rate to Projected Maturity of the Compound Interest
Bonds is calculated assuming that the mortgages underlying the Ginnie Mae,
Fannie Mae or Freddie Mac collateral for the Compound Interest Bonds are prepaid
at a certain percentage of a standard prepayment model, that payment on any
Compound Interest Bond is not accelerated due to the default of an issuer, that
the principal amount of the interest-bearing Bonds included in the Portfolio is
distributed when it matures, that interest received on the interest-bearing
Bonds will precisely cover the expenses of the Fund, that investors do not
redeem or sell any Units (including new Units credited in respect of the
aggregate increase in Accreted Principal Amount of the Compound Interest Bonds)
prior to projected maturity of the Fund. If the mortgages underlying the Ginnie
Mae, Fannie Mae or Freddie Mac collateral prepay more slowly than the specified
assumed rates of the prepayment model, the actual return will be less.
PREFERRED STOCK PUT SERIES. Estimated Current Return shows the anticipated
net annual income rate times the face amount or par or stated value of the
preferred stock, divided by the Public Offering Price. The estimated net
8
<PAGE>
annual income rate per Unit shows the percentage return based on the face amount
or par or stated value per Unit after deducting estimated annual fees and
expenses. The Estimated After-Tax Return assumes that investors are taxed at the
highest current corporate tax rate and that all dividends distributed to
investors will be eligible for the dividends-received deduction for
corporations, and is determined without regard to any capital gains that may be
distributed to investors.
DISTRIBUTIONS
Each Unit receives an equal share of any distributions of income net of
estimated expenses. Interest on the Bonds is generally received by the Fund on a
semi-annual or annual basis; dividends on the preferred stocks are usually paid
quarterly. Because interest and dividends are not received at a constant rate
throughout the year, any Income Distribution may be more or less than the income
actually received. To eliminate fluctuations in the Income Distribution, the
Trustee will advance amounts necessary to provide approximately equal
distributions; it will be reimbursed, without interest, from income received on
the Bonds or preferred stocks, as the case may be, but the Trustee is
compensated, in part, by holding the Fund's cash balances in non-interest
bearing accounts. Along with the Income Distributions, the Trustee will
distribute the investor's pro rata share of any principal received from any
disposition of a Bond to the extent available for distribution.
The estimated annual income per Unit, after deducting estimated annual Fund
expenses as stated in Part A of the Prospectus, will change as Bonds mature, are
called or sold or otherwise disposed of, as replacement bonds are deposited and
as Fund expenses change. Because the Portfolio is not actively managed, income
distributions will generally not be affected by changes in interest rates.
Depending on the financial conditions of the issuers of the Bonds, the amount of
income should be substantially maintained as long as the Portfolio remains
unchanged; however, optional bond redemptions or other Portfolio changes may
occur more frequently when interest rates decline, which would result in early
returns of principal and possibly earlier termination of the Fund.
REINVESTMENT
Distributions will be paid in cash unless the investor elects to have
distributions reinvested without sales charge in The Corporate Fund Accumulation
Program, Inc., which is available to investors in certain Series. The Program is
an open-end management investment company whose investment objective is to
obtain a high level of current income by investing in a diversified portfolio
consisting primarily of long-term corporate bonds rated A or better or with
comparable credit characteristics. It should be noted, however, that interest
distributions to foreign investors from this Program will be subject to U.S.
Federal income taxes, including withholding taxes. Investors participating in
the Program will be taxed on their reinvested distributions in the manner
described in Taxes even though distributions are automatically reinvested. For
more complete information about the Program, including charges and expenses,
request the Program's prospectus from the Trustee. Read it carefully before you
decide to participate. Written notice of election to participate must be
received by the Trustee at least ten days before the Record Day for the first
distribution to which the election is to apply. REINVESTMENT IS NOT AVAILABLE TO
INVESTORS IN CASH OR ACCRETION BOND SERIES, PREFERRED STOCK PUT SERIES OR SELECT
SERIES.
FUND EXPENSES
Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's fee shown in Part A of this Prospectus assumes that the Fund will
reach a size estimated by the Sponsors and is based on a sliding fee scale that
reduces the Trustee's fee as the size of the Fund increases. The Trustee's
annual fee is payable in monthly installments. The Trustee also benefits when it
holds cash for the Fund in non-interest bearing accounts. Possible additional
charges include Trustee fees and expenses for maintaining the Fund's
registration statement current with Federal and State authorities, extraordinary
services, costs of indemnifying the Trustee and the Sponsors, costs of action
taken to protect the Fund and other legal fees and expenses, Fund termination
expenses and any governmental charges. The Trustee has a lien on Fund assets to
secure reimbursement of these amounts and may sell Bonds for this purpose if
cash is not available. The Sponsors receive an annual fee of a maximum of $0.35
per $1,000 face amount to reimburse them for the cost of providing Portfolio
supervisory services to the Fund. While the fee may exceed their costs of
providing these services to the Fund, the total supervision fees from all Series
of Corporate Income Fund will not exceed their costs for these services to all
of those Series during any calendar year. The Sponsors may also be
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reimbursed for their costs of providing bookkeeping and administrative services
to the Fund. The Trustee's, Sponsors' and Evaluator's fees may be adjusted for
inflation without investors' approval.
All or a portion of expenses incurred in establishing certain Funds, as
indicated in Part A of the Prospectus, including the cost of the initial
preparation of documents relating to the Fund, Federal and State registration
fees, the initial fees and expenses of the Trustee, legal expenses and any other
out-of-pocket expenses will be paid by the Fund and amortized over five years.
Advertising and selling expenses will be paid from the Underwriting Account at
no charge to the Fund. Sales charges on Defined Asset Funds range from under
1.0% to 5.5%. This may be less than you might pay to buy and hold a comparable
managed fund. Defined Asset Funds can be a cost-effective way to purchase and
hold investments. Annual operating expenses are generally lower than for managed
funds. Because Defined Asset Funds have no management fees, limited transaction
costs and no ongoing marketing expenses, operating expenses are generally less
than 0.25% a year. When compounded annually, small differences in expense ratios
can make a big difference in your investment results.
TAXES--For all Funds except Preferred Stock Put Series and Monthly Payment
Series that are structured as regulated investment companies, as specified in
Part A of the Prospectus.
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies. Certain Funds may
contain units of previously issued series of Corporate Income Fund; reference
here to the Fund should be understood to include those previously issued Series.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Fund is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered the owner of a pro
rata portion of each Bond in the Fund under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Code'). The total cost to an investor of his Units, including sales
charges, is allocated to his pro rata portion of each Bond, in proportion to
the fair market values thereof on the date the investor purchases his Units,
in order to determine his tax basis for his pro rata portion of each Bond.
Each investor will be considered to have received the interest and
accrued the original issue discount, if any, on his pro rata portion of each
Bond when interest on the Bond is received or original issue discount is
accrued by the Fund regardless of whether it is automatically reinvested in
the Fund. An individual investor who itemizes deductions may deduct his pro
rata share of fees and other expenses of the Fund only to the extent that
such amount together with the investor's other miscellaneous deductions
exceeds 2% of his adjusted gross income.
If an investor's tax basis for his pro rata portion of a Bond exceeds the
redemption price at maturity thereof (subject to certain adjustments), the
investor will be considered to have purchased his pro rata portion of the
Bond at a 'bond premium'. The investor may elect to amortize the bond
premium prior to the maturity of the Bond. The amount amortized in any year
should be applied to offset the investor's interest from the Bond and will
result in a reduction of basis for his pro rata portion of the Bond.
An investor will recognize taxable gain or loss when all or part of his
pro rata portion of a Bond is disposed of by the Fund or when he sells or
redeems all or some of his Units. Any such taxable gain or loss will be
capital gain or loss, except that any gain from the disposition of an
investor's pro rata portion of a Bond acquired by the investor at a 'market
discount' (i.e., where the investor's tax basis for his pro rata portion of
the Bond (which includes any original issue discount accrued thereon) is
less than its stated redemption price at maturity) will be treated as
ordinary income to the extent the gain does not exceed the accrued market
discount.
Under the income tax laws of the State and City of New York, the Fund is
not an association taxable as a corporation and income received by the Fund
will be treated as the income of the investors in the same manner as for
federal income tax purposes.
Notwithstanding the foregoing, an investor who is a non-resident alien
individual or a foreign corporation (a 'Foreign Investor') will generally
not be subject to U.S. federal income taxes, including withholding taxes, on
the interest income on, or any gain from the sale or other disposition of,
his pro rata
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portion of any Bond provided that (i) the interest income or gain is not
effectively connected with the conduct by the Foreign Investor of a trade or
business within the United States, (ii) if the interest is United States
source income (which is the case on most Bonds issued by United States
issuers), the Bond is issued after July 18, 1984 and the Foreign Investor
does not own, actually or constructively, 10% or more of the total combined
voting power of all classes of voting stock of the issuer of the Bond and is
not a controlled foreign corporation related (within the meaning of Section
864 (d)(4) of the Code) to the issuer of the Bond, (iii) with respect to any
gain, the Foreign Investor (if an individual) is not present in the United
States for 183 days or more during the taxable year and (iv) the Foreign
Investor provides the required certification of his status and of certain
other matters. Withholding agents will file with the Internal Revenue
Service foreign person information returns with respect to such interest
payments accompanied by such certifications. Foreign Investors should
consult their own tax advisers with respect to United States federal income
tax consequences of ownership of Units.
The foregoing discussion relates only to U.S. federal and certain aspects
of New York State and City income taxes. Investors may be subject to
taxation in New York and other jurisdictions (including a Foreign Investor's
country of residence) and should consult their own tax advisers in this
regard.
* * *
Neither the Sponsors nor Davis Polk & Wardwell have made or will make a
review of the facts and circumstances relating to the issuance of any Bonds. To
the best knowledge of the Sponsors, each Bond will be treated as debt for tax
purposes by the respective issuers. The Internal Revenue Service, however, is
not bound by an issuer's treatment and may take the position that a Bond has
more equity than debt features and, accordingly, should be treated as equity. In
the event of such a recharacterization, a withholding tax at the statutory rate
of 30% (or a lesser treaty rate) would apply on distributions to Foreign
Investors in respect of that Bond.
Unless otherwise stated in Part A of the Prospectus, the Sponsors believe
that (i) each of the Bonds, the interest on which is United States source income
(which is the case for most Bonds issued by United States issuers), was or will
have been issued after July 18, 1984 and (ii) interest on any Bond issued by a
non-United States issuer is not subject to any foreign withholding taxes under
current law. There can be no assurance, however, that foreign withholding taxes
will not be imposed on interest on Bonds issued by non-United States issuers in
the future.
After the end of each calendar year, the Trustee will furnish to each
investor an annual statement containing information relating to the interest
received by the Fund on the Bonds, the gross proceeds received by the Fund from
the disposition of any Bond (resulting from redemption or payment at maturity of
any Bond or the sale by the Fund of any Bond), and the fees and expenses paid by
the Fund. The Trustee will also furnish annual information returns to each
investor and to the Internal Revenue Service.
RETIREMENT PLANS--CASH AND ACCRETION BOND SERIES AND SELECT SERIES
These Series may be well suited for purchase by Individual Retirement
Accounts ('IRAs'), Keogh plans, pension funds and other qualified retirement
plans, certain of which are briefly described below. Generally, capital gains
and income received in each of the foregoing plans are exempt from Federal
taxation. All distributions from such plans are generally treated as ordinary
income but may, in some cases, be eligible for special 5 or 10 year averaging or
tax-deferred rollover treatment. Investors in IRAs, Keogh plans and other tax-
deferred retirement plans should consult their plan custodian as to the
appropriate disposition of distributions. Investors considering participation in
any of these plans should review specific tax laws related thereto and should
consult their attorneys or tax advisors with respect to the establishment and
maintenance of any of these plans. These plans are offered by brokerage firms,
including the Sponsor of this Fund, and other financial institutions. Fees and
charges with respect to such plans may vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units of the Fund may
be purchased by retirement plans established for self-employed individuals,
partnerships or unincorporated companies ('Keogh plans'). The assets of a Keogh
plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Keogh plan participants may also establish separate
IRAs (see below) to which they may contribute up to an additional $2,000 per
year ($2,250 in a spousal account).
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Individual Retirement Account--IRA. Any individual can make use of a
qualified IRA arrangement for the purchase of Units of the Fund. Any individual
(including one covered by an employer retirement plan) can make a contribution
in an IRA equal to the lesser of $2,000 ($2,250 in a spousal account) or 100% of
earned income; such investment must be made in cash. However, the deductible
amount an individual may contribute will be reduced if the individual's adjusted
gross income exceeds $25,000 (in the case of a single individual), $40,000 (in
the case of married individuals filing a joint return) or $200 (in the case of a
married individual filling a separate return). Certain transactions which are
prohibited under Section 408 of the Code will cause all or a portion of the
amount in an IRA to be deemed to be distributed and subject to tax at that time.
Unless nondeductible contributions were made in 1987 or a later year, all
distributions from an IRA will be treated as ordinary income but generally are
eligible for tax-deferred rollover treatment. Taxable distributions made before
attainment of age 59 1/2, except in the case of the participant's death or
disability or where the amount distributed is part of a series of substantially
equal periodic (at least annual) payments that are to be made over the life
expectancies of the participant and his or her beneficiary, are generally
subject to a surtax in an amount equal to 10% of the distribution.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing plan
for employees of a corporation may purchase Units of the Fund.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Bonds and a copy of the Indenture, and
supplemental information on the operations of the Fund and the risks associated
with the Bonds held by the Fund, which may be inspected by investors at
reasonable times during business hours.
With each distribution, the Trustee includes a statement of the interest and
any other receipts being distributed. Within five days after deposit of Bonds in
exchange or substitution for Bonds (or contracts) previously deposited, the
Trustee will send a notice to each investor, identifying both the Bonds removed
and the replacement bonds deposited. The Trustee sends each investor of record
an annual report summarizing transactions in the Fund's accounts and amounts
distributed during the year and Bonds held, the number of Units outstanding and
the Redemption Price at year end, the interest received by the Fund on the
Bonds, the gross proceeds received by the Fund from the disposition of any Bond
(resulting from redemption or payment at maturity or sale of any Bond), and the
fees and expenses paid by the Fund, among other matters. The Trustee will also
furnish annual information returns to each investor. Investors may obtain copies
of Bond evaluations from the Trustee to enable them to comply with federal and
state tax reporting requirements. Fund accounts are audited annually by
independent accountants selected by the Sponsors. Audited financial statements
are available from the Trustee on request.
TRUST INDENTURE
The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. This Prospectus
summarizes various provisions of the Indenture, but each statement is qualified
in its entirety by reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without consent
by investors to cure ambiguities or to correct or supplement any defective or
inconsistent provision, to make any amendment required by the SEC or other
governmental agency or to make any other change not materially adverse to the
interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified on the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The Evaluator may resign or be removed by the Sponsors and the
Trustee without the investors' consent. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors will use their best efforts to
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appoint a successor promptly; however, if upon resignation no successor has
accepted appointment within 30 days after notification, the resigning Trustee or
Evaluator may apply to a court of competent jurisdiction to appoint a successor.
Any Sponsor may resign so long as one Sponsor with a net worth of $2,000,000
remains and is agreeable to the resignation. A new Sponsor may be appointed by
the remaining Sponsors and the Trustee to assume the duties of the resigning
Sponsor. If there is only one Sponsor and it fails to perform its duties or
becomes incapable of acting or bankrupt or its affairs are taken over by public
authorities, the Trustee may appoint a successor Sponsor at reasonable rates of
compensation, terminate the Indenture and liquidate the Fund or continue to act
as Trustee without a Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated
has been appointed as Agent for the Sponsors by the other Sponsors.
The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the Sponsors.
AUDITORS
The Statement of Condition was audited by Deloitte & Touche LLP, independent
accountants, as stated in their opinion. It is included in reliance upon that
opinion given on the authority of that firm as experts in accounting and
auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of Part A of the
Prospectus. The Trustee is subject to supervision by the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve System and
New York State banking authorities.
SPONSORS
The Sponsors are listed on the back cover of Part A of the Prospectus. They
may include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect
wholly-owned subsidiary of The Travelers Inc.; Prudential Securities
Incorporated, an indirect wholly-owned subsidiary of the Prudential Insurance
Company of America; Dean Witter Reynolds, Inc., a principal operating subsidiary
of Dean Witter Discover & Co. and PaineWebber Incorporated, a wholly-owned
subsidiary of PaineWebber Group Inc. Each Sponsor, or one of its predecessor
corporations, has acted as Sponsor of a number of series of unit investment
trusts. Each Sponsor has acted as principal underwriter and managing underwriter
of other investment companies. The Sponsors, in addition to participating as
members of various selling groups or as agents of other investment companies,
execute orders on behalf of investment companies for the purchase and sale of
securities of these companies and sell securities to these companies in their
capacities as brokers or dealers in securities.
CODE OF ETHICS
The Agent for the Sponsors has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its personnel
who have access to information on Defined Asset Funds portfolio transactions.
The code is intended to prevent any act, practice or course of conduct which
would operate as a fraud or deceit on any Fund and to provide guidance to these
persons regarding standards of conduct consistent with the Agent's
responsibilities to the Funds.
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PUBLIC DISTRIBUTION
The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.
The Sponsors do not intend to qualify Units for sale in any foreign countries
and this Prospectus does not constitute an offer to sell Units in any country
where Units cannot lawfully be sold. Sales to dealers and to introducing
dealers, if any, will initially be made at prices which represent a concession
from the Public Offering Price, but the Agent for the Sponsors reserves the
right to change the rate of any concession from time to time. Any dealer or
introducing dealer may reallow a concession up to the concession to dealers.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters will be entitled to receive sales
charges. The Sponsors also realize a profit or loss on deposit of the Bonds
equal to the difference between the cost of the Bonds to the Fund (based on the
offer side evaluation on the initial date of deposit) and the Sponsors' cost of
the Bonds. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Bonds it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Underwriting Account also may realize profits or sustain losses as a result of
fluctuations after the initial date of deposit in the Public Offering Price of
the Units. In maintaining a secondary market for Units, the Sponsors will also
realize profits or sustain losses in the amount of any difference between the
prices at which they buy Units and the prices at which they resell these Units
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors. On Preferred Stock Put
Series, the Sponsors received an initial placement fee from the Seller and
receive an annual placement fee equal to a percentage of the price at which the
Seller has committed to purchase the preferred stocks (the Put Price).
FUND PERFORMANCE
Information on the performance of the Fund for various periods, on the basis
of changes in Unit price plus the amount of income and principal distributions
reinvested, may be included from time to time in advertisements, sales
literature, reports and other information furnished to current or prospective
investors. Total return figures are not averaged, and may not reflect deduction
of the sales charge, which would decrease the return. Average annualized return
figures reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.
Past performance may not be indicative of future results. The Fund is not
actively managed. Unit price and return fluctuate with the value of the Bonds in
the Portfolio, so there may be a gain or loss when Units are sold.
Fund performance may be compared to performance data from publications such
as Lipper Analytical Services, Inc., Morningstar Publications, Inc., Money
Magazine, The New York Times, U.S. News and World Report, Barron's Business
Week, CDA Investment Technology, Inc., Forbes Magazine or Fortune Magazine. As
with other performance data, performance comparisons should not be considered
representative of the Fund's relative performance for any future period.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio of municipal bonds and the return are relatively
fixed) and 'hold with confidence' (because the portfolio is professionally
selected and regularly reviewed). Defined Asset Funds offers an array of simple
and convenient investment choices, suited to fit a wide variety of personal
financial goals--a buy and hold strategy for capital accumulation, such as for
children's education or retirement, or attractive, regular current income
consistent with the preservation of principal. Unit investment trusts are
particularly suited for the many investors who prefer to seek long-term income
by purchasing sound investments and holding them, rather than through active
trading. Few individuals have the knowledge, resources or capital to buy and
hold a diversified portfolio on their own; it would generally take a
considerable sum of money to obtain the breadth and diversity that Defined Asset
Funds offer. One's investment objectives may call for a combination of Defined
Asset Funds.
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One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.
EXCHANGE OPTION
You may exchange Fund Units for units of certain other Defined Asset Funds
subject only to a reduced sales charge. You may exchange your units of any
Select Ten Portfolio, of any other Defined Asset Fund with a regular maximum
sales charge of at least 3.50%, or of any unaffiliated unit trust with a regular
maximum sales charge of at least 3.0%, for Units of this Fund at their relative
net asset values, subject only to a reduced sales charge.
To make an exchange, you should contact your financial professional to find
out what suitable Exchange Funds are available and to obtain a prospectus. You
may acquire units of only those Exchange Funds in which the Sponsors are
maintaining a secondary market and which are lawfully for sale in the state
where you reside. Except for the reduced sales charge, an exchange is a taxable
event normally requiring recognition of any gain or loss on the units exchanged.
However, the Internal Revenue Service may seek to disallow a loss if the
portfolio of the units acquired is not materially different from the portfolio
of the units exchanged; you should consult your own tax advisor. If the proceeds
of units exchanged are insufficient to acquire a whole number of Exchange Fund
units, you may pay the difference in cash (not exceeding the price of a single
unit acquired).
As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.
SUPPLEMENTAL INFORMATION
Upon writing or calling the Trustee shown on the back cover of this
Prospectus, investors will receive at no cost to the investor supplemental
information about the Fund, which has been filed with the SEC. The supplemental
information includes more detailed risk factor disclosure about the types of
Bonds that may be part of the Fund's Portfolio, general risk disclosure
concerning any insurance securing certain Bonds, and general information about
the structure and operation of the Fund.
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APPENDIX A
DESCRIPTION OF RATINGS (AS DESCRIBED BY THE RATING COMPANIES THEMSELVES)
STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW-HILL, INC.
A Standard & Poor's rating on the units of an investment trust (hereinafter
referred to collectively as 'units' and 'funds') is a current assessment of
creditworthiness with respect to the investments held by the fund. This
assessment takes into consideration the financial capacity of the issuers and of
any guarantors, insurers, lessees, or mortgagors with respect to such
investments. The assessment, however, does not take into account the extent to
which fund expenses will reduce payment to the Holder of the interest and
principal required to be paid on portfolio assets. In addition, the rating is
not a recommendation to purchase, sell, or hold units, as the rating does not
comment as to market price of the units or suitability for a particular
investor.
AAA--Units rated AAA represent interests in funds composed exclusively of
securities that, together with their credit support, are rated AAA by Standard &
Poor's and/or certain short-term investments. This AAA rating is the highest
rating assigned by Standard & Poor's to a security. Capacity to pay interest and
repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal, and differs from the highest rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The ratings may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
A provisional rating, indicated by 'p' following a rating, assumes the
successful completion of the project being financed by the issuance of the debt
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.
*Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement during documentation confirming investments and
cash flows.
NR--Indicates that no rating has been requested, that there is insufficient
information on which to base rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.
MOODY'S INVESTORS SERVICE, INC.
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
'gilt edge'. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
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A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Rating symbols may include numerical modifiers 1, 2 or 3. The numerical
modifier 1 indicates that the security ranks at the high end, 2 in the
mid-range, and 3 nearer the low end, of the generic category. These modifiers of
rating symbols are to give investors a more precise indication of relative debt
quality in each of the historically defined categories.
Conditional ratings, indicated by 'Con.', are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.
FITCH INVESTORS SERVICES, INC.
AAA--These bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--These bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, which very strong, is
somewhat less than for AAA rated securities or more subject to possible change
over the term of the issue.
A--These bonds are considered to be investment grade and of good quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--These bonds are considered to be investment grade and of satisfactory
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however are more likely to weaken this ability than bonds with higher ratings.
A '+' or a '-' sign after a rating symbol indicates relative standing in its
rating.
DUFF & PHELPS CREDIT RATING CO.
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA--High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic stress.
A--Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.
A '+' or a '-' sign after a rating symbol indicates relative standing in its
rating.
a-2
<PAGE>
APPENDIX B
SECONDARY MARKET SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING
PROFIT)
-------------------------
AS PERCENT
OF
BID SIDE AS PERCENT DEALER CONCESSION
PUBLIC OF AS
OFFERING NET AMOUNT PERCENT OF PUBLIC
NUMBER OF UNITS PRICE INVESTED OFFERING PRICE
- ----------------------------------- ------------ ---------- ------------------
<S> <C> <C> <C>
MONTHLY PAYMENT SERIES AND INSURED
SERIES:
Less than 250...................... 5.50% 5.820% 3.575%
250 - 499.......................... 4.50 4.712 2.925
500 - 749.......................... 3.50 3.627 2.275
750 - 999.......................... 2.50 2.564 1.625
1,000 or more...................... 2.00 2.041 1.300
INTERMEDIATE SERIES:
Less than 250...................... 4.75% 4.987% 3.088%
250 - 499.......................... 3.75 3.896 2.438
500 - 749.......................... 2.75 2.828 1.788
750 - 999.......................... 2.00 2.041 1.300
1,000 or more...................... 1.50 1.523 0.975
CASH OR ACCRETION BOND SERIES AND
SELECT SERIES::
Less than 250,000.................. 3.50% 3.627% 2.275%
250,000 - 499,999.................. 2.75 2.828 1.788
500,000 - 749,999.................. 2.00 2.040 1.300
750,000 - 999,999.................. 1.50 1.523 0.975
1,000,000 or more.................. 1.00 1.010 0.650
</TABLE>
PREFERRED STOCK PUT SERIES: Units are sold at no sales charge.
b-1
<PAGE>
PROSPECTUS FORMAT
This prospectus consists of a Part A and this Part B. The Prospectus does
not contain all of the information with respect to the investment company set
forth in its registration statement and exhibits relating thereto which have
been filed with the Securities and Exchange Commission, Washington, D.C. under
the Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The Commission also maintains a Web site that
contains information statements and other information regarding registrants such
as Defined Asset Funds that file electronically with the Commission at
http://www.sec.gov.
No person is authorized to give any information or to make any
representations with respect to this investment company not contained in the
registration statement and related exhibits; and any information or
representation not contained therein must not be relied upon as having been
authorized. The Prospectus does not constitute an offer to sell, or a
solicitation of any offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
14100--8/96
<PAGE>
DEFINED
ASSET FUNDSSM
SPONSORS: CORPORATE INCOME FUND
Merrill Lynch, Intermediate Term Series--49
Pierce, Fenner & Smith Incorporated (A Unit Investment Trust)
Defined Asset Funds PROSPECTUS PART A
P.O. Box 9051 This Prospectus consists of a Part A and
Princeton, NJ 08543-9051 a Part B. This Prospectus does not
(609) 282-8500 contain all of the information with
Smith Barney Inc. respect to the investment company set
Unit Trust Department forth in its registration statement and
388 Greenwich Street--23rd Floor exhibits relating thereto which have
New York, NY 10013 been filed with the Securities and
(212) 816-4000 Exchange Commission, Washington, D.C.
PaineWebber Incorporated under the Securities Act of 1933 and the
1200 Harbor Boulevard Investment Company Act of 1940, and to
Weehawken, NJ 07087 which reference is hereby made. Copies
(201) 902-3000 of filed material can be obtained from
Prudential Securities Incorporated the Public Reference Section of the
One New York Plaza Commission, 450 Fifth Street, N.W.,
New York, NY 10292 Washington, D.C. 20549 at prescribed
(212) 778-6164 rates. The Commission also maintains a
Dean Witter Reynolds Inc. Web site that contains information
Two World Trade Center--59th Floor statements and other information
New York, NY 10048 regarding registrants such as Defined
(212) 392-2222 Asset Funds that file electronically
EVALUATOR: with the Commission at
Interactive Data Services Inc. http://www.sec.gov.
14 Wall Street No person is authorized to give any
New York, NY 10005 information or to make any
TRUSTEE: representations with respect to this
The Chase Manhattan Bank investment company not contained in its
Customer Service Retail Department registration statement and exhibits
Bowling Green Station thereto; and any information or
P.O. Box 5187 representation not contained therein
New York, NY 10274-5187 must not be relied upon as having been
1-800-323-1508 authorized. This Prospectus does not
constitute an offer to sell, or a
solicitation of an offer to buy,
securities in any state to any person to
whom it is not lawful to make such offer
in such state.
14854--7/97
<PAGE>
CORPORATE INCOME FUND
DEFINED ASSET FUNDS
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet of Form S-6.
The cross-reference sheet (incorporated by reference to the Cross-Reference
Sheet to the Registration Statement on Form S-6 of Defined Asset Funds Municipal
Insured Series, 1933 Act File No. 33-54565).
The Prospectus.
The Signatures.
The following exhibits:
1.1.1--Form of Standard Terms and Conditions of Trust Effective as of
October 21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund,
Multi-state Series--48, 1933 Act File No. 33-50247).
4.1 --Consent of the Evaluator.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Corporate Income Fund, Intermediate
Term Series 54, 1933 Act File No. 33-57973.
R-1
<PAGE>
CORPORATE INCOME FUND
INTERMEDIATE TERM SERIES--49
DEFINED ASSET FUNDS
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES--49 DEFINED ASSET FUNDS (A UNIT
INVESTMENT TRUST), CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR
EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE
SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT OR
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW
YORK ON THE 16TH DAY OF JULY, 1997.
SIGNATURES APPEAR ON PAGES R-3, R-4, R-5, R-6 AND R-7.
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 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 Prudential
Securities 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 a majority of Powers of Attorney
the Board of Directors of Merrill Lynch, Pierce, have been filed
Fenner & Smith Incorporated: under
Form SE and the
following 1933 Act
File
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
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By 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>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Prudential Securities have been filed
Incorporated: under Form SE and
the following 1933
Act File Numbers:
33-41631 and
333-15919
ROBERT C. GOLDEN
ALAN D. HOGAN
A. LAURENCE NORTON, JR.
LELAND B. PATON
VINCENT T. PICA II
MARTIN PFINSGRAFF
HARDWICK SIMMONS
LEE B. SPENCER, JR.
BRIAN M. STORMS
By RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)
R-4
<PAGE>
SMITH BARNEY INC.
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Inc.: have been filed
under the 1933 Act
File Numbers:
33-49753, 33-55073
and 333-10441
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT H. LESSIN
WILLIAM J. MILLS, II
MICHAEL B. PANITCH
PAUL UNDERWOOD
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. 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>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board the following 1933 Act File
of Directors of PaineWebber Number: 33-55073
Incorporated:
JOSEPH J. GRANO, JR.
DONALD B. MARRON
By
ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-7
EXHIBIT 4.1
FINANCIAL TIMES INFORMATION
A PEARSON COMPANY
INTERACTIVE DATA
14 WALL STREET
NEW YORK, NEW YORK 10005
(212) 306-6596
FAX 212-306-6698
July 16, 1997
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Unit Investment Trust Division
P.O. Box 9051
Princeton, New Jersey 08543-9051
The Chase Manhattan Bank
1 Chase Manhattan Plaza--3B
New York, New York 10081
Re: Corporate Income Fund
Intermediate Term Series--49, Defined Asset Funds
(A Unit Investment Trust) Units of Fractional Undivided Interest-Registered
Under the Securities Act of 1933, File No. 33-50887)
Gentlemen:
We have examined the Registration Statement for the above captioned Fund.
We hereby consent to the reference to Interactive Data Services, Inc. in
the Prospectus contained in the Post-Effective Amendment No. 3 to the
Registration Statement for the above captioned Fund and to the use of the
evaluations of the Obligations prepared by us which are referred to in such
Prospectus and Registration Statement.
You are authorized to file copies of this letter with the Securities and
Exchange Commission.
Very truly yours,
JAMES PERRY
Vice President
Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of
Corporate Income Fund--Intermediate Term Series--49, Defined Asset Funds
We consent to the use in this Post-Effective Amendment No. 3 to Registration
Statement No. 33-50887 of our opinion dated June 16, 1997 appearing in the
Prospectus, which is part of such Registration Statement, and to the reference
to us under the heading 'Miscellaneous--Auditors' in such Prospectus.
DELOITTE & TOUCHE LLP
New York, N.Y.
July 16, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<S>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 45,623,344
<INVESTMENTS-AT-VALUE> 47,832,635
<RECEIVABLES> 1,162,030
<ASSETS-OTHER> 45,030
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49,039,695
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (316,170)
<TOTAL-LIABILITIES> (316,170)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,671,374
<SHARES-COMMON-STOCK> 48,894
<SHARES-COMMON-PRIOR> 55,618
<ACCUMULATED-NII-CURRENT> 842,860
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,209,291
<NET-ASSETS> 48,723,525
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,732,169
<OTHER-INCOME> 0
<EXPENSES-NET> (52,091)
<NET-INVESTMENT-INCOME> 3,680,078
<REALIZED-GAINS-CURRENT> 323,145
<APPREC-INCREASE-CURRENT> (384,446)
<NET-CHANGE-FROM-OPS> 3,618,777
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,689,550)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (66,020)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 6,724
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (6,882,575)
<ACCUMULATED-NII-PRIOR> 961,284
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
July 16, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We hereby represent that the Post-Effective Amendments to the registered
unit investment trusts described in Exhibit A attached hereto do not contain
disclosures which would render them ineligible to become effective pursuant to
Rule 485(b) under the Securities Act of 1933.
Very truly yours,
Davis Polk & Wardwell
Attachment
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
1933 ACT 1940 ACT
FUND NAME CIK FILE NO. FILE NO.
- --------- --- -------- --------
<S> <C> <C> <C>
DEFINED ASSET FUNDS- IGP-2 INTERMEDIATE TERM SERIES DAF 1004412 33-64769 811-1777
DEFINED ASSET FUNDS-ITS-49 DAF 883661 33-50887 811-2295
DEFINED ASSET FUNDS-ITS-54 DAF 914810 33-57973 811-2295
DEFINED ASSET FUNDS-MITF ITS-174 868088 33-39604 811-1777
DEFINED ASSET FUNDS- MPS-540 DAF 892762 33-52453 811-1777
DEFINED ASSET FUNDS-MITF MSS-1 881825 33-46608 811-1777
DEFINED ASSET FUNDS-MITF MSS-2 881826 33-47077 811-1777
DEFINED ASSET FUNDS-MITF MSS-3 881827 33-47079 811-1777
DEFINED ASSET FUNDS- MSS-206 DAF 924305 333-0198 811-1777
DEFINED ASSET FUNDS- MSS-34 DAF 895621 33-49451 811-1777
DEFINED ASSET FUNDS- MSS-35 DAF 895622 33-49471 811-1777
DEFINED ASSET FUNDS- MSS-61 DAF 910007 33-53165 811-1777
DEFINED ASSET FUNDS- MSS-87 DAF 924268 33-58157 811-1777
DEFINED ASSET FUNDS-MITF MSS 8P 868159 33-39601 811-1777
DEFINED ASSET FUNDS-MITF OHIO-3 725023 2-85646 811-1777
DEFINED ASSET FUNDS- USTST-1 DAF 890652 33-48915 811-2810
TOTAL: 16 FUNDS
</TABLE>
