AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1997
REGISTRATION NO. 333-21527
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
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
INSURED SERIES--101
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, SMITH BARNEY INC. PAINEWEBBER INCORPORATED
FENNER & 388 GREENWICH 1285 AVENUE OF THE
SMITH INCORPORATED STREET--23RD FLOOR AMERICAS
UNIT INVESTMENT TRUST NEW YORK, NY 10013 NEW YORK, NY 10019
DIVISION
P.O. BOX 9051
PRINCETON, NJ 08543-9051
PRUDENTIAL SECURITIES
INCORPORATED
ONE NEW YORK PLAZA
NEW YORK, NY 10292
DEAN WITTER REYNOLDS INC.
TWO WORLD TRADE
CENTER--59TH FLOOR
NEW YORK, NY 10048
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. LAURIE A. HESSLEIN ROBERT E. HOLLEY
P.O. BOX 9051 388 GREENWICH STREET 1200 HARBOR BLVD.
PRINCETON, NJ 08543-9051 NEW YORK, NY 10013 WEEHAWKEN, NJ 07087
COPIES TO:
PIERRE DE SAINT PHALLE, DOUGLAS LOWE, ESQ.
LEE B. SPENCER, JR. ESQ. 130 LIBERTY STREET--29TH
ONE NEW YORK PLAZA 450 LEXINGTON AVENUE FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10017 NEW YORK, NY 10006
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED: Indefinite
G. AMOUNT OF FILING FEE: Not applicable
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
/ x / Check box if it is proposed that this filing will become effective upon
filing on August 28, 1997, pursuant to Rule 487.
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<PAGE>
DEFINED ASSET FUNDSSM
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CORPORATE 6.62% ESTIMATED CURRENT RETURN shows the estimated
INCOME FUND annual cash to be received from interest-bearing
INSURED SERIES--101 bonds in the Portfolio (net of estimated annual
(A UNIT INVESTMENT expenses) divided by the Public Offering Price
TRUST) (including the maximum sales charge).
- ------------------------------6.83% ESTIMATED LONG TERM RETURN is a measure of
/ / DESIGNED FOR HIGH the estimated return over the estimated life of
CURRENT INCOME the Fund. This represents an average of the yields
/ / DEFINED INSURED PORTFOLIO to maturity (or in certain cases, to an earlier
OF call date) of the individual bonds in the
CORPORATE BONDS Portfolio, adjusted to reflect the maximum sales
/ / MONTHLY INCOME charge and estimated expenses. The average yield
/ / AAA-RATED BONDS for the Portfolio is derived by weighting each
/ / FOREIGN HOLDERS TAX EXEMPTbond's yield by its market value and the time
6.62% remaining to the call or maturity date, depending
ESTIMATED CURRENT RETURN on how the bond is priced. Unlike Estimated
6.83% Current Return, Estimated Long Term Return takes
ESTIMATED LONG TERM RETURN into account maturities, discounts and premiums of
AS OF AUGUST 27, 1997 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.
[LOGO]
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THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
SPONSORS: HAS THE COMMISSION OR ANY STATE SECURITIES
Merrill Lynch, COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Pierce, Fenner & Smith OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Incorporated CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
Prudential Securities 1-800-323-1508.
Incorporated Prospectus dated August 28, 1997.
Dean Witter Reynolds Inc. INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
PaineWebber Incorporated AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal bond portfolios
o Corporate bond portfolios
o Government bond portfolios
o Equity portfolios
o International bond and equity 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 Insured Series
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Our defined portfolio of insured corporate bonds offers you a simple and
convenient way to earn a high level of current monthly income. And by purchasing
Defined Asset Funds, you not only receive professional selection but also gain
the advantage of reduced risk by investing in insured bonds of several different
issuers.
INVESTMENT OBJECTIVE
To provide a high level of current income and safety of principal through
investment in a fixed portfolio consisting primarily of insured long-term
corporate bonds.
DIVERSIFICATION
The Portfolio is diversified among 10 corporate and government bond issues.
Spreading your investment among different issuers reduces your risk, but does
not eliminate it, especially since the Portfolio primarily contains bonds
representing only two industries. Because of deposits of additional bonds during
the initial offering period of the Fund and maturities, sales or other
dispositions of bonds, the size, composition and return of the Portfolio will
change over time.
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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 $6,276,000 face amount of bonds issued by 10 different
corporate and government issuers.
INSURANCE
The bonds included in the Portfolio are insured by MBIA Insurance Corporation
for as long as the bonds remain in the Fund. This insurance guarantees the
timely payment of principal and interest of the bonds, but does not guarantee
the value of the bonds or the units. Insurance may not cover accelerated
payments of principal or any increase in interest payments or premiums payable
on mandatory redemptions (see Bonds Backed by Insurance in Part B).
BOND CALL FEATURES
It is possible that during periods of falling interest rates, a bond with a
coupon higher than current market rates will be prepaid or 'called', at the
option of the bond issuer, before its expected maturity. When bonds are
initially callable, the price is usually at a premium to par which then declines
to par over time. Bonds may also be subject to a mandatory sinking fund or have
extraordinary redemption provisions. For example, if the bond's proceeds are not
able to be used as intended the bond may be redeemed. This redemption and the
sinking fund are often at par.
CALL PROTECTION
Although many bonds are subject to optional refunding or call provisions, we
have selected bonds with call protection. This call protection means that any
bond in the Portfolio generally cannot be called for a number of years and
thereafter at a declining premium over par.
TAX INFORMATION
Interest is subject to U.S. Federal income taxes for U.S. investors but exempt
from U.S. Federal income taxes, including withholding taxes, for many foreign
investors. In addition, interest on the U.S. Treasury Securities is exempt from
state and local personal income taxes. 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 and U.S. Treasury Security when that interest is
received by the Fund. (See Taxes in Part B.)
A-2
<PAGE>
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Defining Your Investment
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PUBLIC OFFERING PRICE PER UNIT $996.66
The Public Offering Price as of August 27, 1997, the business day prior to the
Initial Date of Deposit, is based on the aggregate offer side value of the
underlying securities in the Fund ($5,979,723.80) plus cash ($72,000.00),
divided by the number of units outstanding (6,072). 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.
LOW MINIMUM INVESTMENT
You can get started with a minimum purchase of about $1,000.
UNIT PAR VALUE
The par value of your unit--the amount of money you will receive by termination
of the Fund--assuming all the bonds are paid at maturity or are redeemed by the
issuer at par or sold by the Fund at par to meet redemptions--is $1,000.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into a separate
portfolio of corporate bonds. Most or all of the bonds in that portfolio,
however, will not be insured. Reinvesting helps to compound your income.
DISTRIBUTIONS
Principal from sales, redemptions and maturities of bonds in the Fund, other
than U.S. Treasury Securities, will be distributed to investors periodically
when the amount to be distributed is more than $5.00 per unit. Interest income
received on the short-term U.S. Treasury Securities will be distributed at the
end of each of the first three years of the Fund.
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.
SPONSORS' PROFIT OR LOSS
The Sponsors' profit or loss associated with the Fund will include the receipt
of applicable sales charges, any fees for underwriting or placing bonds,
fluctuations in the Public Offering Price or secondary market price of units, a
gain of $30,272.55 on the initial deposit of the bonds and a gain or loss on
subsequent deposits of additional bonds (see Underwriters' and Sponsors' Profits
in Part B).
UNDERWRITING ACCOUNT
None of the Sponsors have participated as sole underwriter, managing underwriter
or member of an underwriting syndicate from which any of the bonds in the
Portfolio were acquired.
SPONSORS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
P.O. Box 9051,
Princeton, NJ 08543-9051 63.29%
SMITH BARNEY INC.
388 Greenwich Street--23rd Floor,
New York, NY 10013 12.01%
PRUDENTIAL SECURITIES INCORPORATED
One New York Plaza,
New York, NY 10292 4.94%
DEAN WITTER REYNOLDS INC.
Two World Trade Center--59th Floor,
New York, NY 10048 9.88%
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas,
New York, NY 10019 9.88%
100.00%
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Defining Your Risks
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RISK FACTORS
The Fund is concentrated in gas and electric utility and telecommunications
company obligations and is therefore dependent to a significant extent on
revenues derived from those particular activities, as well as on the financial
condition of the insurer (see Risk Factors in Part B.)
Unit price fluctuates and could be adversely affected by increasing interest
rates as well as the financial condition of the issuers of the bonds and the
insurance company backing the bonds. Because of the possible maturity, sale or
other disposition of securities, the size, composition and return of the
portfolio may change at any time. Because of the sales charges, returns of
principal and fluctuations in unit price, among other reasons, the sale price
will generally be less than the cost of your units. Unit prices could also be
adversely affected if a limited trading market exists in any Security to be
sold.
There is no guarantee that the Fund will achieve its investment objective.
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Defining Your Costs
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SALES CHARGES
The Fund does not have an up-front sales charge in the initial offering period
until after the deduction of the first deferred sales charge from holders of
record on February 10, 1998. In the first three years of owning your units you
will pay a deferred sales charge of $15 per unit each year, a total of $45.00 to
be collected as follows: in the first year, $5.00 payable February, May and
August; in the
A-3
<PAGE>
second and third years, $3.75 quarterly November, February, May and August. This
deferred sales charge will be paid from principal proceeds from the periodic
sale or maturity of the short-term U.S. Treasury securities in the Portolio.
Units purchased after February 10, 1998 will be charged an up-front sales charge
equal to 0.50% per unit based on the Public Offering Price (less the value of
the short-term securities reserved to pay the deferred sales charge not yet
accrued) multiplied by the number of deferred sales charge payments already
deducted. For example, units purchased in June, 1998, would be charged an
up-front sales charge equal to 1.00% per unit and a deferred sales charge of
$35.00. (See How to Buy Units in Part B.)
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 Initial Offer-
ing Amount per
Period Public $1,000
Offering Price Invested
----------------- --------------
Maximum Sales Charges 4.50% $ 45.00
The Fund (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing registration statements, the
trust indenture and other closing documents, registering units with the SEC and
the states and the initial audit of the Portfolio--as is common for mutual
funds.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Average
Net Assets* Per Unit
----------------- --------------
Trustee's Fee .073% $ 0.72
Portfolio Supervision,
Bookkeeping and
Administrative Fees .046% $ 0.46
Organizational Costs .020% $ 0.20
Evaluator's Fee .033% $ 0.32
Insurance Premium .201% $ 2.00
Other Operating Expenses .021% $ 0.21
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TOTAL .394% $ 3.91
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* Based on the mean of the bid and offer side evaluations.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:
1 Year 3 Years 5 Years 10 Years
$49 $58 $67 $95
No redemption at the end of the period:
1 Year 3 Years 5 Years 10 Years
$19 $58 $67 $95
The example assumes reinvestment of all distributions into additional units of
the Fund (a reinvestment option different from that offered by this Fund) and
uses a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Costs Over Time above
reflect both sales charges and operating expenses on an increasing investment
(because the net annual return is reinvested). The example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than the
example.
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time. Your price is generally based on
the offer side evaluation of the bonds during the initial public offering period
and for at least the first four months of the Fund and on the lower, bid side
evaluation thereafter, as determined by an independent evaluator plus principal
cash, if any, as well as accrued interest. The redemption and Sponsors'
repurchase price as of August 27, 1997, was $45.00 less than the Public Offering
Price, reflecting the deduction of the deferred sales charge, which declines by
$5.00 in each of the last three quarters of the first year of the Fund and by
$3.75 quarterly in the second and third years of the Fund. If you redeem or sell
your Units before the third anniversary of the Fund, you will pay the remaining
balance of the deferred sales charge. (See How to Buy Units in Part B.)
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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):
First Distribution per unit
(September 25, 1997): $ 2.19
Regular Monthly Income per unit
(Beginning on October 25, 1997): $ 5.49
Annual Income per unit: $ 65.97
These figures are estimates determined as of the business day prior to the
Initial Date of Deposit and actual payments may vary.
Estimated cash flows are available upon request from the Sponsors.
A-4
<PAGE>
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Defined Portfolio
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Corporate Income Fund
Insured Series--101 August 28, 1997
<TABLE>
<CAPTION>
RATINGS OF
ISSUES (1)
------------------------------------- OPTIONAL SINKING
STANDARD & REFUNDING FUND
PORTFOLIO TITLE POOR'S MOODY'S FITCH REDEMPTIONS (2) REDEMPTIONS (2)
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<S> <C> <C> <C> <C> <C>
1. $500,000 BellSouth AAA Aaa AAA 6/15/03 @ 104.75 --
Telecommunications, Debentures,
7.50%, 6/15/33
2. $500,000 New York Telephone A+ A2 NR 2/15/04 @ 103.06 --
Company, Debentures, 7.25%, 2/15/24
3. $1,000,000 Pacific Gas and A+ A1 NR 12/1/03 @ 102.74 --
Electric, First Refunding Mortgage
Bonds, Series 93-F, 6.75%, 10/1/23
4. $500,000 Public Service Electric A- A3 A- 9/1/03 @ 102.74 --
and Gas, First Refunding Mortgage
Bonds, Series SS, 7.00%, 9/1/24
5. $500,000 SBC Communications AA- A1 NR -- --
Inc., Debentures, 7.125%, 3/15/26
6. $500,000 Southwestern Bell AA Aa3 NR 7/15/03 @ 102.86 --
Telephone, Debentures, 7.25%,
7/15/25
7. $1,000,000 Texas Utilities, BBB+ Baa1 BBB+ 10/1/03 @ 103.35 --
First Mortgage Bonds, 7.375%,
10/1/25
8. $1,000,000 US West A Aa3 NR 9/15/03 @ 101.95 --
Communications Company, Debentures,
6.875%, 9/15/33
9. $500,000 Virginia Electric A A2 A+ 10/1/03 @ 102.77 --
Power, First Refunding Mortgage
Bonds, Ser. G, 6.75%, 10/1/23
10. $276,000 United States Treasury AAA Aaa AAA -- --
Notes, 5.875% to 6.00%, 8/15/98
through 8/15/00 (4)
<CAPTION>
COST
PORTFOLIO TITLE TO FUND (3)
- ------------------------------------------------------
<S> <C>
1. $500,000 BellSouth $ 499,235.00
Telecommunications, Debentures,
7.50%, 6/15/33
2. $500,000 New York Telephone 485,625.00
Company, Debentures, 7.25%, 2/15/24
3. $1,000,000 Pacific Gas and 927,340.00
Electric, First Refunding Mortgage
Bonds, Series 93-F, 6.75%, 10/1/23
4. $500,000 Public Service Electric 469,535.00
and Gas, First Refunding Mortgage
Bonds, Series SS, 7.00%, 9/1/24
5. $500,000 SBC Communications 494,805.00
Inc., Debentures, 7.125%, 3/15/26
6. $500,000 Southwestern Bell 488,775.00
Telephone, Debentures, 7.25%,
7/15/25
7. $1,000,000 Texas Utilities, 971,580.00
First Mortgage Bonds, 7.375%,
10/1/25
8. $1,000,000 US West 907,550.00
Communications Company, Debentures,
6.875%, 9/15/33
9. $500,000 Virginia Electric 459,365.00
Power, First Refunding Mortgage
Bonds, Ser. G, 6.75%, 10/1/23
10. $276,000 United States Treasury 275,913.80
Notes, 5.875% to 6.00%, 8/15/98
through 8/15/00 (4)
-----------------
$ 5,979,723.80
-----------------
-----------------
</TABLE>
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(1) These ratings have been furnished by the Evaluator but not confirmed by
Standard & Poor's, Moody's or Fitch. NR indicates that no rating has been
assigned. These ratings do not reflect the fact that the bonds are insured by
MBIA as long as they remain in the Fund and that they are all rated AAA by
Standard & Poor's Ratings Group during that period. (See Appendix A to Part B.)
(2) Bonds are first subject to optional redemptions (which may be exercised in
whole or in part) on the dates and at the prices indicated under the Optional
Refunding Redemptions column. In subsequent years, bonds are redeemable at
declining prices, but typically not below par value. Some issues may be subject
to sinking fund redemption or extraordinary redemption without premium prior to
the dates shown.
(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 100% of the bonds were deposited at a
discount from par. On the business day prior to the Initial Date of Deposit, the
bid side evaluation was 0.50% lower than the offer side evaluation.
(4) It is anticipated that principal received upon the sale or maturity of
these securities will be applied to the payment of the Fund's deferred sales
charge; the interest income will be distributed at the end of each year. These
amounts have not been included in the calculation of the Fund's Estimated
Current or Long Term Returns.
A-5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Corporate Income Fund, Insured Series--101,
Defined Asset Funds (the 'Fund'):
We have audited the accompanying statement of condition and the related defined
portfolio included in the prospectus of the Fund as of August 28, 1997. This
financial statement is the responsibility of the Trustee. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash and an irrevocable letter of credit deposited for the
purchase of securities, as described in the statement of condition, with the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Fund as of August 28, 1997
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
NEW YORK, N.Y.
AUGUST 28, 1997
STATEMENT OF CONDITION AS OF AUGUST 28, 1997
TRUST PROPERTY
Investments--Bonds and Contracts to purchase Bonds(1) $ 5,979,723.80
Cash 72,000.00
Accrued interest to Initial Date of Deposit on underlying
Bonds 121,291.01
Organizational costs(2) 18,216.00
--------------------
Total $ 6,191,230.81
--------------------
--------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by Trustee for accrued interest(3) $ 121,291.01
Accrued Liability(2) 18,216.00
--------------------
Subtotal 139,507.01
--------------------
Interest of Holders of 6,072 Units of fractional
undivided interest outstanding:
Cost to investors(4)(5) 6,051,723.80
--------------------
Total $ 6,191,230.81
--------------------
--------------------
- ---------------
(1) Aggregate cost to the Fund of the bonds listed under Defined
Portfolio is based upon the offer side evaluation determined by the Evaluator at
the evaluation time on the business day prior to the Initial Date of Deposit.
The contracts to purchase the bonds are collateralized by an irrevocable letter
of credit which has been issued by The Fuji Bank Ltd., New York Branch, in the
amount of $6,075,165.87 and deposited with the Trustee. The amount of the letter
of credit includes $5,949,451.25 for the purchase of $6,276,000 face amount of
the bonds, plus $125,714.62 for accrued interest.
(2) This represents a portion of the Fund's organizational costs,
which will be deferred and amortized over five years. Organizational costs have
been estimated based on a projected Fund size of 18,216 units. To the extent the
Fund is larger or smaller the amount paid may vary.
(3) Representing a special distribution to the Sponsors by the Trustee
of an amount equal to the accrued interest on the bonds as of the initial date
of deposit.
(4) Mandatory distributions of $5.00 per Unit are payable February,
May and August 1998, and of $3.75 per Unit are payable quarterly thereafter, up
to an aggregate of $45.00 per unit over a three-year period. Distributions will
be made to an account maintained by the Trustee from which the deferred sales
charge obligations of the investors to the Sponsors will be satisfied. If units
are redeemed prior to the third anniversary of the Fund, the remaining portion
of the distribution applicable to those Units will be transferred to that
account on the redemption date.
(5) Aggregate public offering price (exclusive of interest) computed
on the basis of the offer side evaluation of the underlying bonds as of the
evaluation time on the business day prior to the Initial Date of Deposit.
A-6
<PAGE>
CORPORATE INCOME FUND
INSURED 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
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 UNITED STATES
CUSTOMER SERVICE RETAIL DEPARTMENT
BOWLING GREEN STATION
P.O. BOX 5179
NEW YORK, NY 10274-5179
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(Fold along this line.)
- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
CORPORATE INCOME FUND
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 THIS PROSPECTUS.
Index
PAGE
---------
Fund Description...................................... 1
Risk Factors.......................................... 2
How to Buy Units...................................... 5
How to Redeem or Sell Units........................... 6
Income, Distributions and Reinvestment................ 7
Fund Expenses......................................... 8
Taxes................................................. 9
Records and Reports................................... 10
PAGE
---------
Trust Indenture....................................... 10
Miscellaneous......................................... 11
Exchange Option....................................... 13
Supplemental Information.............................. 13
Appendix A--Description of Ratings.................... a-1
Appendix B--Secondary Market Sales Charge Schedule.... b-1
FUND DESCRIPTION BOND PORTFOLIO SELECTION
Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Bonds for the Portfolio after
considering the Fund's investment objective as well as the quality of the Bonds
(all Bonds in the Portfolio are initially rated in the category A or better by
at least one nationally recognized rating organization or have comparable credit
characteristics), the yield and price of the Bonds compared to similar
securities, the maturities of the Bonds and the diversification of the
Portfolio. Only issues meeting these stringent criteria of the Defined Asset
Funds team of dedicated research analysts are included in the Portfolio. No
leverage or borrowing is used nor does the Portfolio contain other kinds of
securities to enhance yield. A summary of the Bonds in the Portfolio appears in
Part A of the Prospectus. The word Bond should be understood generally to
include any short term U.S. Treasury Securities in the Portfolio.
The deposit of the Bonds in the Fund on the initial date of deposit
established a proportionate relationship among the face amounts of the Bonds.
During the 90-day period following the initial date of deposit the Sponsors may
deposit additional Bonds in order to create new Units, maintaining to the extent
possible that original proportionate relationship. Deposits of additional Bonds
subsequent to the 90-day period must generally replicate exactly the
proportionate relationship among the face amounts of the Bonds at the end of the
initial 90-day period.
Yields on bonds depend on many factors including general conditions of the
bond markets, the size of a particular offering and the maturity and quality
rating of the particular issues. Yields can vary among bonds with similar
maturities, coupons and ratings. Ratings represent opinions of the rating
organizations as to the quality of the bonds rated, based on the credit of the
issuer or any guarantor, insurer or other credit provider, but these ratings are
only general standards of quality (see Appendix A).
After the initial date of deposit, the ratings of some Bonds may be reduced
or withdrawn, or the credit characteristics of the Bonds may no longer be
comparable to bonds rated A or better. Bonds rated BBB or Baa (the lowest
investment grade rating) or lower may have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher grade bonds. Bonds rated below investment grade or unrated bonds
with similar credit characteristics are often subject to greater market
fluctuations and risk of loss of principal and income than higher grade bonds
and their value may decline precipitously in response to rising interest rates.
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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 additional Bonds are
deposited in order to create new Units, 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. If a contract to purchase any Bond fails, the Sponsors may generally
deposit a replacement bond so long as it is a corporate bond, has a fixed
maturity or disposition date substantially similar to the failed Bond and is
rated A or better by at least one nationally recognized rating organization or
has comparable credit characteristics. A replacement bond must be deposited
within 110 days after deposit of the failed contract, at a cost that does not
exceed the funds reserved for purchasing the failed Bond and at a yield to
maturity and current return substantially equivalent (considering then current
market conditions and relative creditworthiness) to those of the failed Bond, as
of the date the failed contract was deposited.
RISK FACTORS
An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline with increases in interest rates.
Generally speaking, bonds with longer maturities will fluctuate in value more
than bonds with shorter maturities. In recent years there have been wide
fluctuations in interest rates and in the value of fixed-rate bonds generally.
The Sponsors cannot predict the direction or scope of any future fluctuations.
Certain of the Bonds may have been deposited at a market discount or
premium principally because their interest rates are lower or higher than
prevailing rates on comparable debt securities. The current returns of market
discount bonds are lower than comparably rated bonds selling at par because
discount bonds tend to increase in market value as they approach maturity. The
current returns of market premium bonds are higher than comparably rated bonds
selling at par because premium bonds tend to decrease in market value as they
approach maturity. Because part of the purchase price is returned through
current income payments and not at maturity, an early redemption at par of a
premium bond will result in a reduction in yield to the Fund. Market premium or
discount attributable to interest rate changes does not indicate market
confidence or lack of confidence in the issue.
Certain Bonds deposited into the Fund may have been acquired on a
when-issued or delayed delivery basis. The purchase price for these Bonds is
determined prior to their delivery to the Fund and a gain or loss may result
from fluctuations in the value of the Bonds.
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.
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HOSPITAL AND HEALTH CARE FACILITIES
Payments on hospital and health care 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 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.
INSURED SERIES
Portfolio Insurance. MBIA Insurance Corporation (the 'Insurer') (see The
Insurer below) provides insurance to each Insured Series 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 Insurer. The Bonds in Insured Series are insured or guaranteed by MBIA
Insurance Corporation, which, according to publicly available information as of
December 31, 1996, had admitted assets of approximately $4,189,000,000 and
policyholders' surplus of approximately $1,467,000,000. MBIA Insurance
Corporation was established in 1986 and its claims-paying ability 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 Insured Series is reduced, the Sponsors are authorized to direct the Trustee
to obtain other insurance on behalf of the Fund.
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,
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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.
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 after the initial date of deposit, litigation may be
initiated on a variety of grounds, or legislation may be enacted, affecting the
Bonds in the Fund. In addition, there can be no assurance that foreign
withholding taxes will not be imposed on interest on any 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 are subject to redemption prior to their stated maturity dates
pursuant to optional refunding or sinking fund redemption provisions or
otherwise. In general, optional refunding redemption provisions are more likely
to be exercised when the value of a Bond is at a premium over par than when it
is at a discount from par. Some Bonds may be subject to sinking fund and
extraordinary redemption provisions which may commence early in the life of the
Fund. Additionally, the size and composition of the Fund will be affected by the
level of redemptions of Units that may occur from time to time. Principally,
this will depend upon the number of investors seeking to sell or redeem their
Units and whether or not the Sponsors are able to sell the Units acquired by
them in the secondary market. As a result, Units offered in the secondary market
may not represent the same face amount of Bonds as on the initial date of
deposit. Factors that the Sponsors will consider in determining whether or not
to sell Units acquired in the secondary market include the diversity of the
Portfolio, the size of the Fund relative to its original size, the ratio of Fund
expenses to income, the Fund's current and long-term returns, the degree to
which Units may be selling at a premium over par and the cost of maintaining a
current prospectus for the Fund. These factors may also lead the Sponsors to
seek to terminate the Fund earlier than its mandatory termination date.
FUND TERMINATION
The Fund will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Bond or upon the consent of investors holding 51% of the
Units. The Fund may also be terminated earlier by the Sponsors once the total
assets of the Fund have fallen below the minimum value specified in Part A of
the Prospectus. A decision by the Sponsors to terminate the Fund early will be
based on factors similar to those considered by the Sponsors in determining
whether to continue the sale of Units in the secondary market.
Notice of impending termination will be provided to investors and
thereafter Units will no longer be redeemable. On or shortly before termination,
the Fund will seek to dispose of any Bonds remaining in the Portfolio although
any Bond unable to be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final disposition. A proportional
share of the expenses associated with termination, including brokerage costs in
disposing of Bonds, will be borne by investors remaining at that time. This may
have the effect of reducing the amount of proceeds those investors are to
receive in any final distribution.
LIQUIDITY
Up to 40% of the value of the Portfolio may 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.
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HOW TO BUY UNITS
Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund.
PUBLIC OFFERING PRICE
Net accrued interest and principal cash, if any, are added to the Public
Offering Price, the Sponsors' Repurchase Price and the Redemption Price per
Unit. This represents the interest accrued on the Bonds, net of Fund expenses,
from the initial date of deposit to, but not including, the settlement date for
Units (less any prior distributions of interest income to investors). Bonds
deposited also carry accrued but unpaid interest up to the initial date of
deposit. To avoid having investors pay this additional accrued interest (which
earns no return) when they purchase Units, the Trustee advances and distributes
this amount to the Sponsors; it recovers this advance from interest received on
the Bonds. Because of varying interest payment dates on the Bonds, accrued
interest at any time will exceed the interest actually received by the Fund.
Because accrued interest on the Bonds is not received by the Fund at a
constant rate throughout the year, any Monthly Income Distribution may be more
or less than the interest actually received by the Fund. To eliminate
fluctuations in the Monthly Income Distribution, a portion of the Public
Offering Price may consist of cash in an amount necessary for the Trustee to
provide approximately equal distributions. Upon the sale or redemption of Units,
investors will receive their proportionate share of this cash. In addition, if a
Bond is sold, redeemed or otherwise disposed of, the Fund will periodically
distribute to investors the portion of this cash that is attributable to the
Bond.
The regular Monthly Income Distribution is stated in Part A of the
Prospectus and will change as the composition of the Portfolio changes over
time.
During the initial offering period and for at least the first four months
of the Fund, the Public Offering Price (and the Initial Repurchase Price) is
based on the higher, offer side evaluation of the Bonds at the next Evaluation
Time after the order is received. In the secondary market (after the initial
offering period), the Public Offering Price (and the Sponsors' Repurchase Price
and the Redemption Price) is based on the lower, bid side evaluation of the
Bonds.
The Fund does not have an up-front sales charge in the initial offering
period until after the deduction of the first quarterly Deferred Sales Charge
installment which will commence on the date indicated in part A of this
Prospectus. Units redeemed or repurchased prior to the accrual of the final
Deferred Sales Charge installment will have the amount of any remaining
installments deducted from the redemption or repurchase proceeds, although this
deduction will be waived in the event of the death or disability (as defined in
the Internal Revenue Code of 1986) of an investor. Units purchased after the
deduction of the first Deferred Sales Charge installment will be charged the
up-front per Unit sales charge indicated in Part A of this Prospectus based on
the Public Offering Price (less the value of the short-term securities reserved
to pay the deferred sales charge not yet accrued), multiplied by the number of
Deferred Sales Charge installments already deducted. Units purchased after the
deduction of the final Deferred Sales Charge installment will be subject only to
an up-front sales charge as set forth in Appendix B.
In the initial offering period the concession to dealers will be equal to:
the Public Offering Price less $30.00 per Unit for Monthly Payment Series and
Insured Series and the Public Offering Price less $27.50 per Unit for
Intermediate Term Series.
EVALUATIONS
Evaluations are determined by the independent Evaluator on each Business
Day. This excludes Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. Bond
evaluations are based on closing sales prices (unless the Evaluator deems these
prices inappropriate). If closing sales prices are not available, the evaluation
is generally determined on the basis of current bid or offer prices for the
Bonds or comparable securities or by appraisal or by any combination of these
methods. In the past, the bid prices of publicly offered 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.
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CERTIFICATES
Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Sell Units--Trustee's Redemption of
Units). Certain Sponsors collect additional charges for registering and shipping
Certificates to purchasers. Lost or mutilated Certificates can be replaced upon
delivery of satisfactory indemnity and payment of costs.
HOW TO REDEEM OR SELL UNITS
You can redeem your Units at any time for a price based on 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 the same price.
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 based on the
net asset value of your Units. If you redeem or sell your Units before the final
deferred sales charge installment date the remaining deferred sales charges will
be deducted from the net asset value. Because of sales charges, 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 and any remaining
deferred sales charges, 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 for at least the first
four months of the Fund (even in the secondary market) 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
(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.
The Trustee is authorized, on a redemption request for Units with a value
exceeding $250,000 by any investor who acquired 25% or more of the outstanding
Units of a Trust, to pay part or all of the redemption 'in kind' (by the
distribution of Bonds and cash with an aggregate value equal to the applicable
Redemption Price of the Units tendered for redemption). The Trustee will attempt
to make a pro rata distribution of Bonds in the Portfolio, but reserves the
right to distribute solely one or more Bonds. This distribution will be made to
the distribution agent and either held for the account of the investor or
disposed of in accordance with the instructions of the investor. Any transaction
costs as well as transfer and ongoing custodial fees on sales of the Bonds
distributed in kind will be borne by the redeeming investor.
Redemptions may be suspended or payment postponed (i) if the New York Stock
Exchange is closed (other than customary weekend and holiday closing), (ii) if
the SEC determines that trading on the New York Stock Exchange is
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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' MARKET FOR UNITS
The Sponsors, while not obligated to do so, will buy back Units at new
asset value without any sales charge as long as they are maintaining a secondary
market for Units. Because of sales charges, 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 Sponsor 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 this market 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 anytime, as described above.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME
Some of the Bonds may have been purchased on a when-issued basis or may
have a delayed delivery. Since interest on these Bonds does not begin to accrue
until the date of their delivery to the Fund, in order to provide income to
investors for this non-accrual period, the Trustee will advance Funds to the
Fund in an amount equal to the amount of interest that would have accrued on
these Bonds between the date of settlement for the Units and the dates of
delivery of the Bonds. If a when-issued Bond is not delivered until later than
expected and the amount of the Trustee's annual fee and expenses is insufficient
to cover the additional accrued interest, the Sponsors will treat the contracts
as failed Bonds.
Interest received is credited to an Income Account and other receipts to a
Capital Account. A Reserve Account may be created by withdrawing from the Income
and Capital Accounts amounts considered appropriate by the Trustee to reserve
for any material amount that may be payable out of the Fund.
DISTRIBUTIONS
Each Unit receives an equal share of monthly distributions of interest
income net of estimated expenses. Interest on the Bonds is generally received by
the Fund on a semi-annual or annual basis. Because interest on the Bonds is not
received at a constant rate throughout the year, any Monthly Income Distribution
may be more or less than the interest actually received. To eliminate
fluctuations in the Monthly Income Distribution, the Trustee will advance
amounts necessary to provide approximately equal interest distributions; it will
be reimbursed, without interest, from interest received on the Bonds, but the
Trustee is compensated, in part, by holding the Fund's cash balances in
non-interest bearing accounts. Along with the Monthly Income Distributions, the
Trustee will distribute the investor's pro rata share of principal received from
any disposition of a Bond to the extent available for distribution. In addition,
interest income received on the short-term U.S. Treasury securities in the
Portfolio will be distributed at the end of each of the first three years of the
Fund.
The initial 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. 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
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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.
FUND EXPENSES
Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee's fee shown
in Part A of this Prospectus assumes that the Portfolio 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 Portfolio increases. 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 currently estimated at
$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
reimbursed for their costs of providing bookkeeping and administrative services
to Defined Asset Funds, currently estimated at $0.10 per Unit. The Trustee's,
Sponsors' and Evaluator's fees may be adjusted for inflation without investors'
approval.
All or some portion of the expenses incurred in establishing the Fund,
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. Any balance of the expenses incurred in
establishing the Fund, as well as 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
The following summary describes some of the important income tax
consequences of holding Units, assuming that the investor is not a dealer,
financial institution or insurance company or other investor with special
circumstances. Investors should consult their tax advisers about U.S., state and
local or foreign taxes that may apply to an investment in the Fund.
Neither the Sponsors nor Davis Polk & Wardwell, special counsel for the
Sponsors, has reviewed the issuance of the Bonds or related facts and
circumstances. The Sponsors believe that each issuer treats its respective Bonds
as debt for U.S. federal income tax purposes. However, the Internal Revenue
Service and the courts are not bound by an issuer's treatment. If a Bond is
recharacterized as equity for having more equity than debt features, foreign
investors (including non-resident alien individuals and foreign corporations)
not engaged in U.S. trade or business will generally be subject to 30% U.S.
withholding tax (or lower applicable treaty rate) with respect to interest on
the Bond.
The Sponsors believe that Bonds in the Portfolio yielding U.S. source
interest income were issued after July 18, 1984 (see Foreign Investors below).
In the opinion of Davis Polk & Wardwell, under existing law:
GENERAL TREATMENT OF THE FUND
The Fund will not be taxed as a corporation for federal income tax purposes
or for New York State or City purposes, and each investor will be considered to
own directly a share of each Bond in the Fund. Each investor will be
8
<PAGE>
considered to have received the interest (and accrued the original issue
discount, if any) on his pro rata portion of each Bond when interest is received
(or original issue discount is accrued) by the Fund regardless of whether the
interest is automatically reinvested or used to pay Fund expenses.
INCOME OR LOSS UPON DISPOSITION
Upon a disposition of all or part of an investor's pro rata portion of a
Bond (by sale, exchange or redemption of the Bond or his Units), an investor
will generally recognize capital gain or loss. However, gain from the
disposition will generally be ordinary income to the extent of any accrued
market discount. An investor will generally have market discount to the extent
that his basis in a Bond when he purchases a Unit is less than its stated
redemption price at maturity (or, in the case of a Bond issued with original
issue discount, the issue price increased by original issue discount that has
accrued on the bond prior to the investor's purchase). Investors should consult
their tax advisers in this regard.
The excess of a non-corporate investor's net long-term capital gains over
his net short-term capital losses may be subject to tax at a lower rate than
ordinary income. A capital gain or loss is long-term if the investment is held
for more than one year and short-term if held for one year or less. Because the
deduction of capital losses is subject to limitations, an investor may not be
able to deduct all of his capital losses. Under the recently enacted Taxpayer
Relief Act of 1997, an investor who is an individual and has held his pro rata
portions of Bonds for more than 18 months may be entitled to a 20% maximum
federal tax rate for gains from the sale of these Bonds or corresponding Units.
(See Defining Your Investment--Termination Date in Part A.) Investors should
consult their tax advisers in this regard.
INVESTOR'S BASIS IN THE SECURITIES
An investor's aggregate basis in the Bonds will be equal to the cost of his
Units, including any sales charges and the organizational expenses borne by the
investor but excluding any amount paid for accrued interest, and adjusted to
reflect any accruals of 'original issue discount', 'acquisition premium' and
'bond premium'. Investors should consult their tax advisers in this regard.
ORIGINAL ISSUE DISCOUNT, ACQUISITION PREMIUM AND BOND PREMIUM
Original issue discount accrues in accordance with a constant yield method
based on a compounding of interest and is generally equal to the excess of a
Bond's stated redemption price at maturity over its original issue price.
Original issue discount inclusions are reduced by accruals of acquisition
premium. An investor will have acquisition premium to the extent his basis in a
Bond when he purchases a Unit is less than the stated redemption price at
maturity but more than the issue price increased by any original issue discount
that has accrued to previous holders.
Generally, bond premium accruals on a Bond will be based upon the excess of
an investor's basis in the Bond at the time of purchasing a Unit over its stated
redemption price at maturity. If an investor has elected to amortize bond
premium, which is an election that applies to all debt obligations of an
investor and that can be revoked only with consent of the Internal Revenue
Service, the amount amortized will offset the investor's interest from the Bond
and will reduce the investor's basis. Investors should consult their tax
advisers in this regard.
EXPENSES
An individual investor who itemizes deductions may deduct his pro rata
share of current ongoing Fund expenses only to the extent that this amount,
together with the investor's other miscellaneous deductions, exceeds 2% of his
adjusted gross income. The Internal Revenue Code further restricts the ability
of an individual investor with an adjusted gross income in excess of a specified
amount (for 1997, $121,200 or $60,600 for a married person filing a separate
return) to claim itemized deductions (including his pro rata share of Fund
expenses).
FOREIGN INVESTORS
Notwithstanding the foregoing, foreign investors (including non-resident
alien individuals and foreign corporations) not engaged in U.S. trade or
business will generally not be subject to U.S. federal income tax, including
withholding tax, on the interest or gain on a Bond if (i) the investor meets
certain requirements, including the certification of foreign status and other
matters, and (ii) with respect to any Bond yielding U.S. source interest income
(typical for Bonds of U.S. issuers), the Bond was issued after July 18, 1984.
Under certain circumstances, withholding agents will file foreign person
information returns with the Internal Revenue Service. Foreign investors should
consult their own
9
<PAGE>
tax advisers about the possible application of federal, state and local taxes in
the U.S. and their foreign countries of residence or organization.
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 and
'original issue discount' accrued by the Fund on the Bonds, the cash proceeds
received by the Fund from the disposition of any Bond, and the fees and expenses
paid by the Fund, among other matters. The Trustee will also furnish annual
information returns to each investor and to the Internal Revenue Service.
Investors may obtain copies of Bond evaluations from the Trustee to enable them
to comply with federal and state tax reporting requirements. Fund accounts are
audited annually by independent accountants selected by the Sponsors. Audited
financial statements are available from the Trustee on request.
TRUST INDENTURE
The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. This Prospectus
summarizes various provisions of the Indenture, but each statement is qualified
in its entirety by reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without
consent by investors to cure ambiguities or to correct or supplement any
defective or inconsistent provision, to make any amendment required by the SEC
or other governmental agency or to make any other change not materially adverse
to the interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified on the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The Evaluator may resign or be removed by the Sponsors and the
Trustee without the investors' consent. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors will use their best efforts to appoint a successor promptly;
however, if upon resignation no successor has accepted appointment within 30
days after notification, the resigning Trustee or Evaluator may apply to a court
of competent jurisdiction to appoint a successor.
Any Sponsor may resign so long as one Sponsor with a net worth of
$2,000,000 remains and is agreeable to the resignation. A new Sponsor may be
appointed by the remaining Sponsors and the Trustee to assume the duties of the
resigning Sponsor. If there is only one Sponsor and it fails to perform its
duties or becomes incapable of acting or bankrupt or its affairs are taken over
by public authorities, the Trustee may appoint a successor Sponsor at reasonable
rates of compensation, terminate the Indenture and liquidate the Fund or
continue to act as Trustee without a Sponsor. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been appointed as Agent for the Sponsors by the other
Sponsors.
The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.
10
<PAGE>
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and New York
State banking authorities.
SPONSORS
The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America;
Dean Witter Reynolds, Inc., a principal operating subsidiary of Morgan Stanley,
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.
PUBLIC DISTRIBUTION
During the initial offering period and thereafter to the extent that
additional Units continue to be offered for sale to the public by means of this
Prospectus, Units will be distributed to the public at the Public Offering Price
determined in the manner described above. 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
11
<PAGE>
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.
FUND PERFORMANCE
Information on the performance of the Fund for various periods, on the
basis of changes in Unit price plus the amount of income and principal
distributions reinvested, may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective investors. Total return figures are not averaged, and may not
reflect deduction of the sales charge, which would decrease the return. Average
annualized return figures reflect deduction of the maximum sales charge. No
provision is made for any income taxes payable.
Past performance may not be indicative of future results. The Fund is not
actively managed. Unit price and return fluctuate with the value of the Bonds in
the Portfolio, so there may be a gain or loss when Units are sold.
Fund performance may be compared to performance 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.
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. 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.
12
<PAGE>
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.
13
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS (AS DESCRIBED BY THE RATING COMPANIES THEMSELVES)
STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW HILL, INC.
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal, and differs from the highest rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
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.
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.
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.
a-1
<PAGE>
Conditional ratings, indicated by 'Con.', are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.
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
Units purchased after the deduction of the final deferred sales charge
installment will be subject only to an up-front sales charge, as set forth
below.
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
-------------------------------------------------------
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS
BID SIDE PUBLIC NET AMOUNT PERCENT OF PUBLIC
NUMBER OF UNITS OFFERING PRICE INVESTED OFFERING PRICE
- ---------------- ----------------- ------------- ---------------------
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
b-1
<PAGE>
Defined
Asset FundsSM
SPONSORS: CORPORATE INCOME FUND
Merrill Lynch, Insured Series--101
Pierce, Fenner & Smith Incorporated (A Unit Investment Trust)
Defined Asset Funds This Prospectus does not contain all of
P.O. Box 9051 the information with respect to the
Princeton, NJ 08543-9051 investment company set forth in its
(609) 282-8500 registration statement and exhibits
Smith Barney Inc. relating thereto which have been filed
Unit Trust Department with the Securities and Exchange
388 Greenwich Street--23rd Floor Commission, Washington, D.C. under the
New York, NY 10013 Securities Act of 1933 and the
(212) 816-4000 Investment Company Act of 1940, and to
PaineWebber Incorporated which reference is hereby made. Copies
1200 Harbor Blvd. of filed material can be obtained from
Weehawken, NJ 07087 the Public Reference Section of the
(201) 902-3000 Commission, 450 Fifth Street, N.W.,
Prudential Securities Incorporated Washington, D.C. 20549 at prescribed
One New York Plaza rates. The Commission also maintains a
New York, NY 10292 Web site that contains information
(212) 778-6164 statements and other information
Dean Witter Reynolds Inc. regarding registrants such as Defined
Two World Trade Center--59th Floor Asset Funds that file electronically
New York, NY 10048 with the Commission at
(212) 392-2222 http://www.sec.gov.
EVALUATOR: ------------------------------
Interactive Data Corporation, No person is authorized to give any
14 Wall Street information or to make any
New York, NY 10005 representations with respect to this
TRUSTEE: investment company not contained in
The Chase Manhattan Bank this Prospectus; and any information or
Customer Service Retail Department representation not contained herein
Bowling Green Station must not be relied upon as having been
P.O. Box 5187 authorized.
New York, NY 10274-5187 ------------------------------
1-800-323-1508 When Units of this Fund are no longer
available this Prospectus may be used
as a preliminary prospectus for a
future series, and investors should
note the following:
Information contained herein is subject
to amendment. A registration statement
relating to securities of a future
series has been filed with the
Securities and Exchange Commission.
These securities may not be sold nor
may offers to buy be accepted prior to
the time the registration statement
becomes effective.
This Prospectus shall not constitute an
offer to sell or the solicitation of an
offer to buy nor shall there be any
sale of these securities in any State
in which such offer, solicitation or
sale would be unlawful prior to
qualification under the securities laws
of any such State.
11321--8/97
b-2
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositors is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
I. Bonding arrangements of each of the Depositors are incorporated by reference
to Item A of Part II to the Registration Statement on Form S-6 under the
Securities Act of 1933 for Municipal Investment Trust Fund, Monthly Payment
Series--573 Defined Asset Funds (Reg. No. 333-08241).
II. The date of organization of each of the Depositors is set forth in Item B
of Part II to the Registration Statement on Form S-6 under the Securities Act of
1933 for Municipal Investment Trust Fund, Monthly Payment Series--573 Defined
Asset Funds (Reg. No. 333-08241) and is herein incorporated by reference
thereto.
III. The Charter and By-Laws of each of the Depositors are incorporated herein
by reference to Exhibits 1.3 through 1.12 to the Registration Statement on Form
S-6 under the Securities Act of 1933 for Municipal Investment Trust Fund,
Monthly Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).
IV. Information as to Officers and Directors of the Depositors has been filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934 and is incorporated by reference to the SEC
filings indicated and made a part of this Registration Statement:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 8-7221
Smith Barney Inc. ........................................ 8-8177
PaineWebber Incorporated.................................. 8-16267
Prudential Securities Incorporated........................ 8-27154
Dean Witter Reynolds Inc. ................................ 8-14172
------------------------------------
B. The Internal Revenue Service Employer Identification Numbers of the
Sponsors and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 13-5674085
Smith Barney Inc. ........................................ 13-1912900
PaineWebber Incorporated.................................. 13-2638166
Prudential Securities Incorporated........................ 22-2347336
Dean Witter Reynolds Inc. ................................ 94-0899825
The Chase Manhattan Bank, Trustee......................... 13-4994650
UNDERTAKING
The Sponsors undertake that they will not instruct the Trustee to accept from
(i) Asset Guaranty Reinsurance Company, Municipal Bond Investors Assurance
Corporation or any other insurance company affiliated with any of the Sponsors,
in settlement of any claim, less than an amount sufficient to pay any principal
or interest (and, in the case of a taxability redemption, premium) then due on
any Security in accordance with the municipal bond guaranty insurance policy
attached to such Security or (ii) any affiliate of the Sponsors who has any
obligation with respect to any Security, less than the full amount due pursuant
to the obligation, unless such instructions have been approved by the Securities
and Exchange Commission pursuant to Rule 17d-1 under the Investment Company Act
of 1940.
II-1
<PAGE>
SERIES OF CORPORATE INCOME FUND,
DEFINED ASSET FUNDS INSURED SERIES, EQUITY INCOME FUND
AND MUNICIPAL INVESTMENT TRUST SERIES
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933
SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
Corporate Income Fund, Two Hundred Thirteenth Monthly
Payment Series.............................................. 2-96642
Corporate Income Fund, First Insured Series................. 33-19553
Municipal Investment Trust Fund, Four Hundred Thirty-Eighth
Monthly Payment Series...................................... 33-16561
Municipal Investment Fund, Multistate Series 6E............. 33-29412
Municipal Investment Trust Fund, Multistate Series--48...... 33-50247
Municipal Investment Trust Fund, Monthly Payment Series
600......................................................... 333-13265
Equity Income Fund Select Ten Portfolio--1995 Spring
Series...................................................... 33-55807
Defined Asset Fund, Municipal Insured Series................ 33-54565
CONTENTS OF REGISTRATION STATEMENT
The Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-Reference
Sheet to the Registration Statement of Defined Asset Funds, Municipal Insured
Series, 1933 Act File No. 33-54565).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The following exhibits:
1.1 --Form of Trust Indenture (incorporated by reference to Exhibit 1.1.1 to
the Registration Statement of Corporate Income Fund, Insured
Series--26, 1933 Act File No. 33-54457).
1.1.1 --Form of Standard Terms and Conditions of Trust Effective October 21,
1993 (incorporated by reference to Exhibit 1.1.1 to the Registration
Statement of Municipal Investment Trust Fund, Multistate Series-48,
1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement of The Corporate Income
Fund, One Hundred Ninety-Fourth Monthly Payment Series, 1933 Act File
No. 2-90925).
2.1 --Form of Certificate of Beneficial Interest (included in Exhibit
1.1.1).
3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their names under the headings
'Taxes' and 'Miscellaneous--Legal Opinion' in the Prospectus.
4.1 --Consent of the Evaluator.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Corporate Income Fund, Intermediate Term
Series 54, 1933 Act File No. 33-57973).
R-1
<PAGE>
CORPORATE INCOME FUND
INSURED SERIES--101
DEFINED ASSET FUNDS
SIGNATURES
The registrant hereby identifies the series numbers of Corporate Income
Fund, Equity Income Fund, Municipal Investment Trust Fund and Defined Asset
Funds Municipal Insured Series listed on page R-1 for the purposes of the
representations required by Rule 487 and represents the following:
1) That the portfolio securities deposited in the series as to which this
registration statement is being filed do not differ materially in type
or quality from those deposited in such previous series;
2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential information for, the
series with respect to which this registration statement is being filed,
this registration statement does not contain disclosures that differ in
any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined
by the Commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 28TH DAY OF
AUGUST, 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 Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 33-43466 and 33-51607
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
DANIEL C. TYLER
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
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-4
<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 Number: 33-55073
of PaineWebber 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-5
<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-6
<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-7
EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
August 28, 1997
CORPORATE INCOME FUND,
INSURED SERIES--101
DEFINED ASSET FUNDS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
C/O MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, NJ 08543-9051
Dear Sirs:
We have acted as special counsel for you, as sponsors (the 'Sponsors') of
Insured Series--101 of Corporate Income Fund, Defined Asset Funds (the 'Fund'),
in connection with the issuance of units of fractional undivided interest in the
Fund (the 'Units') in accordance with the Trust Indenture relating to the Fund
(the 'Indenture').
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indenture and the issuance of the Units have been duly
authorized by the Sponsor and (ii) the Units, when duly issued and delivered by
the Sponsors and the Trustee in accordance with the Indenture, will be legally
issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 3.1 of the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the headings 'Taxes' and 'Miscellaneous--Legal
Opinion.'
Very truly yours,
DAVIS POLK & WARDWELL
EXHIBIT 4.1
Interactive Data
14 Wall Street
New York, N.Y. 10005
212-285-0700
AUGUST 28, 1997
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, NJ 08543-9051
THE CHASE MANHATTAN BANK
UNIT INVESTMENT TRUST DIVISION
4 NEW YORK PLAZA--6TH FLOOR
NEW YORK, NY 10004
RE: CORPORATE INCOME FUND, INSURED SERIES--101, DEFINED ASSET FUNDS (A UNIT
INVESTMENT TRUST) UNITS OF FRACTIONAL UNDIVIDED INTEREST--REGISTERED UNDER
THE SECURITIES ACT OF 1933, FILE NO. 333-21527
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 and Registration Statement for the above-captioned Fund and to
the evaluations of the Obligations prepared by us which are referred to in such
Prospectus and Registration Statement.
You are authorized to file a copy of this letter with the Securities and
Exchange Commission.
Sincerely,
James Perry
Vice President
EXHIBIT 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of Corporate Income Fund,
Insured Series--101, Defined Asset Funds:
We consent to the use in this Registration Statement No. 333-21527 of our report
dated August 28, 1997, relating to the Statement of Condition of Corporate
Income Fund, Insured Series--101, Defined Asset Funds and to the reference to us
under the heading 'Miscellaneous--Auditors' in the Prospectus which is a part of
this Registration Statement.
DELOITTE & TOUCHE LLP
New York, N.Y.
August 28, 1997
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