<PAGE>
Defined Asset FundsSM
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Corporate 6.64% ESTIMATED CURRENT RETURN shows the estimated annual
Income Fund cash to be received from interest-bearing bonds in
the Portfolio (net of estimated annual expenses) divided
by the Public Offering Price (including the maximum sales
INTERMEDIATE TERM
SERIES--54 charge).
6.93% ESTIMATED LONG TERM RETURN is a measure of the
estimated return over the estimated life of the Fund.
This represents an average of the yields to maturity (or
(A UNIT INVESTMENT in certain cases, to an earlier call date) of the
TRUST) individual
bonds in the Portfolio, adjusted to reflect the maximum
sales charge and estimated expenses. The average yield
for
- --------------------
/ /INTERMEDIATE TERM the Portfolio is derived by weighting each bond's yield
MATURITIES by its market value and the time remaining to the call or
maturity date, depending on how the bond is priced.
Unlike Estimated Current Return, Estimated Long Term
/ /DESIGNED FOR HIGH Return takes into account maturities, discounts and
CURRENT INCOME premiums of the underlying bonds.
/ /DEFINED PORTFOLIO
OF CORPORATE BONDS
/ /MONTHLY INCOME
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
/ /INVESTMENT GRADE Portfo-
lio composition, changes in interest income and changes
in fees and expenses. Therefore, Estimated Current Return
and Estimated Long Term Return are designed to be com-
parative rather than predictive. A yield calculation
/ /FOREIGN HOLDERS which is more comparable to an individual bond may be
TAX EXEMPT higher or
6.64% lower than Estimated Current Return or Estimated Long
ESTIMATED CURRENT Term Return which are more comparable to return calcu-
RETURN lations used by other investment products.
6.93%
ESTIMATED LONG TERM
RETURN
AS OF MAY 15, 1995
</TABLE>
<TABLE>
<S> <C>
SPONSORS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
Merrill Lynch, DISAPPROVED BY THE SECURITIES AND EXCHANGE
Pierce, Fenner & COMMISSION OR ANY STATE SECURITIES COMMISSION
Smith Incorporated NOR HAS THE COMMISSION OR ANY STATE SECURITIES
Smith Barney Inc. COMMISSION PASSED UPON THE ACCURACY OR ADE-
Prudential QUACY OF THIS DOCUMENT. ANY REPRESENTATION
Securities TO THE CONTRARY IS A CRIMINAL OFFENSE.
Incorporated Inquiries should be directed to the Trustee at
Dean Witter Reynolds 1-800-323-1508.
Inc. Prospectus dated May 16, 1995.
PaineWebber Investors should read this prospectus carefully and
Incorporated retain it for future reference.
</TABLE>
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $95 billion sponsored since 1971. 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:
Municipal portfolios
Corporate portfolios
Government portfolios
Equity portfolios
International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.
- ---------------------------------------------------------------
Defined Intermediate Term Series
- ---------------------------------------------------------------
Our defined portfolio of intermediate term corporate bonds offers you a simple
and convenient way to earn a high level of current monthly income. And by
purchasing Defined Asset Funds, you not only receive professional selection but
also gain the advantage of reduced risk by investing in bonds of several
different issuers.
Investment Objective
To provide a high level of current income through investment in a fixed
portfolio consisting primarily of intermediate term corporate bonds.
Diversification
The Portfolio contains 10 bond issues. Spreading your investment among different
issuers reduces your risk, but does not eliminate it. 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.
- ---------------------------------------------------------------
Defining Your Portfolio
- ---------------------------------------------------------------
Professional Selection and Supervision
The Portfolio contains a variety of bonds selected by experienced buyers and
research analysts. 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 $12,000,000 face amount of bonds issued by 10
different corporate issuers.
<TABLE>
<CAPTION>
APPROXIMATE
ISSUERS PORTFOLIO PERCENTAGE
<S> <C> <C>
/ / FINANCIAL 75%
/ / UTILITY 17%
/ / CONSUMER GOODS 8%
</TABLE>
Bond Call Features
It is possible that during periods of falling interest rates, a bond with a
coupon higher than current market rates will be prepaid or 'called', at the
option of the bond issuer, before its expected maturity. When bonds are
initially callable, the price is usually at a premium to par which then declines
to par over time. Bonds may also be subject to a mandatory sinking fund or have
extraordinary redemption provisions. For example, if the bond's proceeds are not
able to be used as intended the bond may be redeemed. This redemption and the
sinking fund are often at par.
Call Protection
None of the bonds in the Portfolio is subject to optional refunding or call
provisions.
A-2
<PAGE>
<PAGE>
Tax Information
In the opinion of special counsel to the Sponsors, each Holder will be
considered to have received the interest on his pro rata portion of each bond
when interest on the bond is received by the Fund. This interest is taxable for
U.S. investors but exempt from U.S. Federal income taxes, including withholding
taxes, for many foreign investors.
- ---------------------------------------------------------------
Defining Your Investment
- ---------------------------------------------------------------
Public Offering Price per Unit $978.52
The Public Offering Price as of May 15, 1995, the business day prior to the
Initial Date of Deposit, is based on the aggregate offer side value of the
underlying bonds in the Fund ($11,272,500.00), the price at which they can be
directly purchased by the public assuming they were available, divided by the
number of units outstanding (12,000) plus a maximum sales charge of 4.00%. The
Public Offering Price on any subsequent date will vary. An amount equal to 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.
Reinvestment Option
You can elect to automatically reinvest your distributions into a separate
portfolio of corporate bonds. Reinvesting helps to compound your income.
Principal Distributions
Principal from sales, redemptions and maturities of bonds in the Fund will be
distributed to investors periodically when the amount to be distributed is more
than $5.00 per unit.
Termination Date
The Fund will generally terminate following the maturity date of the last
maturing bond listed in the Portfolio. The Fund may be terminated earlier if the
value is less than 40% of the face amount of bonds deposited.
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 $38,500.00 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 has participated as sole underwriter, managing underwriter
or member of an underwriting syndicate from which the bonds in the Portfolio
were acquired.
<TABLE>
<S> <C>
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
P.O. Box 9051,
Princeton, NJ 08543-9051 75.41%
SMITH BARNEY INC.
388 Greenwich Street--23rd Floor,
New York, NY 10013 10.00%
PRUDENTIAL SECURITIES INCORPORATED
One Seaport Plaza--199 Water Street,
New York, NY 10292 5.00%
DEAN WITTER REYNOLDS INC.
Two World Trade Center--59th Floor,
New York, NY 10048 5.84%
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas,
New York, NY 10019 3.33%
GRUNTAL & CO. INCORPORATED
14 Wall Street,
New York, NY 10005 0.42%
--------
100.00%
--------
</TABLE>
- ---------------------------------------------------------------
Defining Your Risks
- ---------------------------------------------------------------
Risk Factors
Unit price fluctuates and could be adversely affected by increasing interest
rates as well as the financial condition of the issuers of the bonds. Because of
the possible maturity, sale or other disposition of securities, the size,
composition and return of the portfolio may change at any time. Because of the
sales charges, returns of principal and fluctuations in unit price, among other
reasons, the sale price will generally be less than the cost of your units. Unit
prices could also be adversely affected if a limited trading market exists in
any security to be sold. There is no guarantee that the Fund will achieve its
investment objective.
The Fund is concentrated in bonds issued by financial institutions and is
therefore dependent to a significant degree on revenues generated from those
particular activities (see Risk Factors in Part B).
A-3
<PAGE>
<PAGE>
- ---------------------------------------------------------------
Defining Your Costs
- ---------------------------------------------------------------
Sales Charges
Although the Fund is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
<TABLE>
<CAPTION>
As a %
As a % of Secondary
of Initial Offering Market
Period Public Public Offering
Offering Price Price
<S> <C> <C>
------------------- ---------------
Maximum Sales Charges 4.00% 4.75%
</TABLE>
The Fund (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
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. Historically, the Sponsors of unit investment trusts have paid all the
costs of establishing those trusts.
Estimated Annual Fund Operating Expenses
<TABLE>
<CAPTION>
As a %
of Average
Net Assets* Per Unit
<S> <C> <C>
------------------- ---------------
Trustee's Fee .075% $0.70
Maximum Portfolio
Supervision,
Bookkeeping and
Administrative Fees .048% $0.45
Organizational
Expenses .026% $0.24
Evaluator's Fee .016% $0.15
Other Operating
Expenses .022% $0.21
TOTAL .187% $1.75
</TABLE>
- ------------
*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:
<TABLE>
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$42 $46 $50 $63
</TABLE>
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.
Selling Your Investment
You may sell your units at any time. Your price is based on the Fund's then
current net asset value (based on the offer side evaluation of the bonds during
the initial public offering period and on the lower, bid side evaluation
thereafter, as determined by an independent evaluator), plus accrued interest.
The per unit bid side redemption and secondary market repurchase price as of May
15, 1995 was $934.38 ($44.14 less than the Public Offering Price). There is no
fee for selling your units.
- ---------------------------------------------------------------
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):
<TABLE>
<S> <C>
First Distribution per unit
(August 25, 1995): $2.87
Regular Monthly Income per unit
(Beginning on September 25, 1995): $5.41
Annual Income per unit: $64.97
</TABLE>
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>
<PAGE>
CORPORATE INCOME FUND
INTERMEDIATE TERM SERIES
DEFINED ASSET FUNDS
I want to learn more about automatic reinvestment in the
Investment Accumulation Program. Please send me information
about participation in the Corporate Fund Accumulation
Program, Inc. and a current Prospectus.
My name (please print) _____________________________________
My address (please print):
Street and Apt. No. __________________________________
City, State, Zip Code ______________________________________
This page is a self-mailer. Please complete the information
above, cut along the dotted line, fold along the lines on
the reverse side, tape, and mail with the Trustee's address
displayed on the outside.
<PAGE>
<PAGE>
<TABLE>
<S> <C>
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST CLASS PERMIT NO. 644 NEW YORK, NY
POSTAGE WILL BE PAID BY ADDRESSEE
THE CHASE MANHATTAN BANK, N.A.
A NATIONAL BANKING ASSOCIATION
DEFINED ASSET FUNDS
BOX 2051
NEW YORK, NY 10081
</TABLE>
- --------------------------------------------------------------------------------
(Fold along this line.)
- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Corporate Income Fund, Intermediate Term
Series--54, Defined Asset Funds (the 'Fund'):
We have audited the accompanying statement of condition and the related
portfolio included in the prospectus of the Fund as of May 16, 1995. 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 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 May 16, 1995 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
NEW YORK, N.Y.
MAY 16, 1995
STATEMENT OF CONDITION AS OF MAY 16, 1995
<TABLE>
<S> <C>
TRUST PROPERTY
Investments--Bonds and Contracts to purchase Bonds(1) $11,272,500.00
Accrued interest to initial date of deposit on underlying Bonds 144,842.37
Organizational Costs(2) 28,800.00
--------------
Total $11,446,142.37
--------------
--------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Accrued interest to Initial Date of Deposit on underlying
Bonds(3) $ 144,842.37
Accrued Liability (2) 28,800.00
--------------
Subtotal 173,642.37
--------------
Interest of Holders of 12,000 Units of fractional undivided interest
outstanding:
Cost to investors(4) 11,742,180.00
Gross underwriting commissions(5) (469,680.00)
--------------
Subtotal 11,272,500.00
--------------
Total $11,446,142.37
--------------
--------------
</TABLE>
- ------------
(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 Banca Popolare Di Milano, New York Branch, in
the amount of $11,392,188.18 and deposited with the Trustee. The amount of the
letter of credit includes $11,234,000.00 for the purchase of $12,000,000 face
amount of the bonds, plus $158,188.18 for accrued interest.
(2) The Fund will bear all or a portion of its organizational costs,
which will be deferred and amortized over 5 years. Organizational costs have
been estimated based on a projected Fund size of $24,000,000. To the extent the
Fund is larger or smaller, the estimate will vary.
(3) Representing a special distribution by the Trustee to the Sponsors,
of an amount equal to the accrued interest on the bonds as of the initial date
of deposit.
(4) 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.
(5) Assumes the maximum sales charge of 4.00%.
A-6
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
Defined Portfolio
- --------------------------------------------------------------------------------
Corporate Income Fund
Intermediate Term Series--54 May 16, 1995
<TABLE>
<CAPTION>
RATINGS OF ISSUES(1) OPTIONAL SINKING
STANDARD REFUNDING FUND COST
PORTFOLIO TITLE & POOR'S MOODY'S FITCH REDEMPTIONS (2) REDEMPTIONS (2) TO FUND (3)
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
1. $1,000,000 BankAmerica A- A3 A+ -- -- $ 990,000.00
Corporation, Subordinated Notes,
7.20%, 4/15/06
2. $1,000,000 Bellsouth AAA Aaa NR -- -- 893,750.00
Telecommunications, Debentures,
5.875%, 1/15/09
3. $2,000,000 Chase Manhattan A- A3 A- -- -- 1,855,000.00
Corporation, Subordinated Notes,
6.75%, 8/15/08
4. $2,000,000 Chemical Bank A A2 A -- -- 1,765,000.00
Subordinated Notes, 6.125%, 11/1/08
5. $1,000,000 Citicorp, Subordinated A- A3 NR -- -- 961,250.00
Notes, 6.75%, 8/15/05
6. $1,000,000 First Union A- A3 NR -- -- 907,500.00
Corporation, Subordinated Notes,
6.375%, 1/15/09
7. $1,000,000 Ford Motor Credit, A+ A1 NR -- -- 948,750.00
Notes, 6.75%, 8/15/08
8. $1,000,000 Nationsbank A- A3 A -- -- 1,018,750.00
Corporation, Subordinated Notes,
7.625%, 4/15/05
9. $1,000,000 Public Service A- A2 NR -- -- 967,500.00
Electric & Gas, Series UU First and
Refunding Mortgage Bonds, 6.75%,
3/1/06
10. $1,000,000 Joseph E. Seagram & A A2 NR -- -- 965,000.00
Sons, Inc., Guaranteed Debentures,
7.00%, 4/15/08
-------------
$11,272,500.00
<CAPTION>
-------------
-------------
</TABLE>
- ------------------------------------
(1) (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, 8% of the bonds were purchased at a
premium and 92% at a discount from par.
A-5
<PAGE>
<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 OF WRITTEN OR TELEPHONIC REQUEST TO THE TRUSTEE, AT THE ADDRESS
AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
Index
<TABLE>
<S> <C>
PAGE
Fund Description.......................... 1
Risk Factors.............................. 2
How to Buy Units.......................... 5
How to Sell Units......................... 6
Income, Distributions and Reinvestment.... 6
Fund Expenses............................. 7
Taxes..................................... 8
Records and Reports....................... 9
PAGE
Trust Indenture........................... 9
Miscellaneous............................. 10
Exchange Option........................... 11
Supplemental Information.................. 12
Appendix A--Description of Ratings........ a-1
Appendix B--Sales Charge Schedules........ b-1
</TABLE>
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. In a Fund that includes multiple Trusts or Portfolios,
the word Fund should be understood to mean each individual Trust or 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.
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
1
<PAGE>
<PAGE>
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.
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
2
<PAGE>
<PAGE>
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
The Investment Summary in Part A sets forth the percentage of the aggregate
face amount of the Portfolio that is insured by an insurance company and whether
the insurance covers the Bonds as long as they are outstanding ('permanent
insurance' or insurance 'to maturity') or only while the Bonds are held by the
Fund ('portfolio insurance').
Permanent Insurance
The Debt Obligations in FIRST THROUGH FOURTH INSURED SERIES (the 'Insured
Bonds') have been insured by Financial Security Assurance Inc. ('Financial
Security') (see The Insurers below). These surety bonds are non-cancellable and
will continue in force so long as the Insured Bonds are outstanding. The cost of
this insurance is borne by the Sponsors. The insurance guarantees the scheduled
payment of principal and interest on but does not guarantee the market value of
the Insured Bonds or the value of the Units. The Insurance does not guarantee
accelerated payments of principal or cover redemptions.
Portfolio Insurance
The FIFTH AND SUBSEQUENT INSURED SERIES have obtained portfolio insurance
('Portfolio Insurance') from either MBIA Insurance Corporation ('MBIA Corp') or
Financial Security (each referred to as an 'Insurer' or the 'Insurers') (see The
Insurers below) that guarantees the scheduled payments of the principal of and
interest on the Bonds ('Portfolio-Insured Bonds') while they are owned by the
Fund, but does not guarantee the market value of the Bonds or the value of the
Units. Although all Bonds are individually insured, neither the Fund, the Units
nor the Portfolio are insured directly.
Since Portfolio Insurance applies to the Bonds only while they are owned by
the Fund, the value of Portfolio-Insured Bonds (and therefore the value of the
Units) may decline if the credit quality of any Portfolio-Insured Bond is
reduced. Premiums for Portfolio Insurance are payable monthly in advance by the
Trustee on behalf of the Fund. Upon the sale of a Portfolio-Insured Bond from
the Fund, the Trustee has the right, pursuant to an irrevocable commitment
obtained from the insurer, to obtain insurance to maturity ('Permanent
Insurance') on the Bond upon the payment of a single, predetermined insurance
premium from the proceeds of the sale. Accordingly, any Bond in the Fund is
eligible to be sold on an insured basis. The Public Offering Price does not
reflect any element of value for Portfolio Insurance. The Evaluator will
attribute a value to the Portfolio Insurance (including the right to obtain
Permanent Insurance) for the purpose of computing the price or redemption value
of Units only if the Portfolio-Insured Bonds are in default in the payment of
principal or interest or, in the opinion of Defined Asset Funds research
analysts, in significant risk of default.
The Insurers. The Bonds in Insured Series are insured or guaranteed by one
of the insurance companies listed below. The claims-paying ability of each of
these companies is rated AAA by Standard & Poor's. The ratings of the 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.
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The following summary information relating to the listed insurance
companies has been obtained from publicly available information:
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
AS OF DECEMBER 31, 1994
------------------------------------------
NAME DATE ESTABLISHED ADMITTED ASSETS POLICYHOLDERS' SURPLUS
<S> <C> <C> <C>
Financial Security Assurance Inc............... 1984 804 344
MBIA Insurance Corporation..................... 1986 3,401 1,110
</TABLE>
Insurance companies are subject to extensive regulation and supervision
where they do business by state insurance commissioners who regulate the
standards of solvency which must be maintained, the nature of and limitations on
investments, reports of financial condition, and requirements regarding reserves
for unearned premiums, losses and other matters. A significant portion of the
assets of insurance companies are required by law to be held in reserve against
potential claims on policies and is not available to general creditors. Although
the federal government does not regulate the business of insurance, federal
initiatives including pension regulation, controls on medical care costs,
minimum standards for no-fault automobile insurance, national health insurance,
tax law changes affecting life insurance companies and repeal of the antitrust
exemption for the insurance business can significantly impact the insurance
business.
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 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
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the Securities Act of 1933, as amended. The Sponsors nevertheless believe that,
should a sale of these Bonds be necessary in order to meet redemption of Units,
the Trustee should be able to consummate a sale with institutional investors.
The principal trading market for the Bonds will generally be in the
over-the-counter market and the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in them. There can be no
assurance that a liquid trading market will exist for any of the Bonds,
especially since the Fund may be restricted under the Investment Company Act of
1940 from selling Bonds to any Sponsor. The value of the Portfolio will be
adversely affected if trading markets for the Bonds are limited or absent.
HOW TO BUY UNITS
PUBLIC OFFERING PRICE
Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund. In the initial
offering period, the Public Offering Price is based on the next offer side
evaluation of the Bonds, and includes a sales charge based on the number of
Units of a single Fund purchased on any one day by a single purchaser. See
Initial Offering sales charge schedule in Appendix B. Purchases of Fund Units
during the initial offering period may not be aggregated with purchases of any
other unit trust.
In the secondary market (after the initial offering period), the Public
Offering Price is based on the bid side evaluation of the Bonds, and includes a
sales charge based on the number of Units of the Fund purchased in the secondary
market on the same day by a single purchaser (see Secondary Market sales charge
schedule in Appendix B). Purchases in the secondary market of one or more Series
sponsored by the Sponsors that have the same rates of sales charge may be
aggregated. To qualify for a reduced sales charge, the dealer must confirm that
the sale is to a single purchaser or is purchased for its own account and not
for distribution. For these purposes, Units held in the name of the purchaser's
spouse or child under 21 years of age are deemed to be purchased by a single
purchaser. A trustee or other fiduciary purchasing securities for a single trust
estate or single fiduciary account is also considered a single purchaser. This
procedure may be amended or terminated at any time without notice.
Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at any time at prices
including a sales charge of not less than $5 per Unit.
Net accrued interest is added to the Public Offering Price, the Sponsors'
Repurchase Price and the Redemption Price per Unit. This represents the interest
accrued on the Bonds, net of Fund expenses, from the initial date of 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.
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.
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
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purchasers. Lost or mutilated Certificates can be replaced upon delivery of
satisfactory indemnity and payment of costs.
HOW TO SELL UNITS
SPONSORS' MARKET FOR UNITS
You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for over 20 years. Primarily
because of the sales charge and fluctuations in the market value of the Bonds,
the sale price may be less than the cost of your Units. 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; in that event, the
Sponsors may still purchase Units at the redemption price as a service to
investors. The Sponsors may reoffer or redeem Units repurchased.
TRUSTEE'S REDEMPTION OF UNITS
You may redeem your Units by sending the Trustee a redemption request
together with any certificates you hold. Certificates 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 certificate of death, trust instrument, certificate of corporate
authority or appointment as executor, administrator or guardian. If the Sponsors
are maintaining a market for Units, they will purchase any Units tendered at the
repurchase price described above. The Fund has no back-end load or 12b-1 fees,
so there is never a fee for cashing in your investment (see Appendix B). If they
do not purchase Units tendered, the Trustee is authorized in its discretion to
sell Units in the over-the-counter market if it believes it will obtain a higher
net price for the redeeming investor.
By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Bonds, net accrued interest, cash and the value of any other Fund assets;
deducting unpaid taxes or other governmental charges, accrued but unpaid Fund
expenses, unreimbursed Trustee advances, cash held to redeem Units or for
distribution to investors and the value of any other Fund liabilities; and
dividing the result by the number of outstanding Units. Bonds are evaluated on
the offer side during the initial offering period and on the bid side
thereafter.
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 will
also reduce the size and diversity of the Fund.
Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Bonds not reasonably practicable, or
for any other period permitted by the SEC.
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.
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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.
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 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 also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for maintaining
the Fund's registration statement current with Federal and State authorities,
extraordinary services, costs of indemnifying the Trustee and the Sponsors,
costs of action taken to protect the Fund and other legal fees and expenses,
Fund termination expenses and any governmental charges. The Trustee has a lien
on Fund assets to secure reimbursement of these amounts and may sell Bonds for
this purpose if cash is not available. The Sponsors receive an annual fee of a
maximum of $0.35 per $1,000 face amount to reimburse them for the cost of
providing Portfolio supervisory services to the Fund. While the fee may exceed
their costs of providing these services to the Fund, the total supervision fees
from all Series of Corporate Income Fund will not exceed their costs for these
services to all of those Series during any calendar year. The Sponsors may also
be reimbursed for their costs of providing bookkeeping and administrative
services to the Fund, 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
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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 discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Fund is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered the owner of a pro
rata portion of each Bond in the Fund under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Code'). The total cost to an investor of his Units, including sales
charges, is allocated to his pro rata portion of each Bond, in proportion
to the fair market values thereof on the date the investor purchases his
Units, in order to determine his tax basis for his pro rata portion of each
Bond.
Each investor will be considered to have received the interest on his
pro rata portion of each Bond when interest on the Bond is received by the
Fund regardless of whether it is automatically reinvested in the Fund. An
individual Holder who itemizes deductions may deduct his pro rata share of
fees and other expenses of the Fund only to the extent that such amount
together with the Holder's other miscellaneous deductions exceeds 2% of his
adjusted gross income.
If an investor's tax basis for his pro rata portion of a Bond exceeds
the redemption price at maturity thereof (subject to certain adjustments),
the investor will be considered to have purchased his pro rata portion of
the Bond at a 'bond premium'. The investor may elect to amortize the bond
premium prior to the maturity of the Bond. The amount amortized in any year
should be applied to offset the investor's interest from the Bond and will
result in a reduction of basis for his pro rata portion of the Bond.
An investor will recognize taxable gain or loss when all or part of
his pro rata portion of a Bond is disposed of by the Fund or when he sells
or redeems all or some of his Units. Any such taxable gain or loss will be
capital gain or loss, except that any gain from the disposition of an
investor's pro rata portion of a Bond acquired by the investor at a 'market
discount' (i.e., where the investor's tax basis for his pro rata portion of
the Bond is less than its stated redemption price at maturity) will be
treated as ordinary income to the extent the gain does not exceed the
accrued market discount.
Under the income tax laws of the State and City of New York, the Fund
is not an association taxable as a corporation and income received by the
Fund will be treated as the income of the investors in the same manner as
for federal income tax purposes.
Notwithstanding the foregoing, an investor who is a non-resident alien
individual or a foreign corporation (a 'Foreign Investor') will generally
not be subject to U.S. federal income taxes, including withholding taxes,
on the interest income on, or any gain from the sale or other disposition
of, his pro rata portion of any Bond provided that (i) the interest income
or gain is not effectively connected with the conduct by the Foreign
Investor of a trade or business within the United States, (ii) if the
interest is United States source income (which is the case on most Bonds
issued by United States issuers), the Foreign Investor does not own,
actually or constructively, 10% or more of the total combined voting power
of all classes of voting stock of the issuer of the Bond and is not a
controlled foreign corporation related (within the meaning of Section 864
(d)(4) of the Code) to the issuer of the Bond, (iii) with respect to any
gain, the Foreign Investor (if an individual) is not present in the United
States for 183 days or more during the taxable year and (iv) the Foreign
Investor provides the required certification of his status and of certain
other matters. Withholding agents will file with the Internal Revenue
Service foreign person information returns with respect to such interest
payments accompanied by such certifications. Foreign Investors should
consult their own tax advisers with respect to United States federal income
tax consequences of ownership of Units.
The foregoing discussion relates only to U.S. federal and certain
aspects of New York State and City income taxes. Investors may be subject
to taxation in New York and other jurisdictions (including a Foreign
Investor's country of residence) and should consult their own tax advisers
in this regard.
* * *
Neither the Sponsors nor Davis Polk & Wardwell have made or will make a
review of the facts and circumstances relating to the issuance of any Bonds. To
the best knowledge of the Sponsors, each Debt Obligation will be treated as debt
for tax purposes by the respective issuers. The Internal Revenue Service,
however, is not bound by an issuer's treatment and may take the position that a
Bond has more equity than debt features and,
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accordingly, should be treated as equity. In the event of such a
recharacterization, a withholding tax at the statutory rate of 30% (or a lesser
treaty rate) would apply on distributions to Foreign Investors in respect of
that Bond.
After the end of each calendar year, the Trustee will furnish to each
investor an annual statement containing information relating to the interest
received by the Fund on the Bonds, the gross proceeds received by the Fund from
the disposition of any Bond (resulting from redemption or payment at maturity of
any Bond or the sale by the Fund of any Bond), and the fees and expenses paid by
the Fund. The Trustee will also furnish annual information returns to each
Investor and to the Internal Revenue Service.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Bonds and a copy of the Indenture, and
supplemental information on the operations of the Fund and the risks associated
with the Bonds held by the Fund, which may be inspected by investors at
reasonable times during business hours.
With each distribution, the Trustee includes a statement of the interest
and any other receipts being distributed. Within five days after deposit of
Bonds in exchange or substitution for Bonds (or contracts) previously deposited,
the Trustee will send a notice to each investor, identifying both the Bonds
removed and the replacement bonds deposited. The Trustee sends each investor of
record an annual report summarizing transactions in the Fund's accounts and
amounts distributed during the year and Bonds held, the number of Units
outstanding and the Redemption Price at year end, the interest received by the
Fund on the Bonds, the gross proceeds received by the Fund from the disposition
of any Bond (resulting from redemption or payment at maturity or sale of any
Bond), and the fees and expenses paid by the Fund, among other matters. The
Trustee will also furnish annual information returns to each investor. Investors
may obtain copies of Bond evaluations from the Trustee to enable them to comply
with federal and state tax reporting requirements. Fund accounts are audited
annually by independent accountants selected by the Sponsors. Audited financial
statements are available from the Trustee on request.
TRUST INDENTURE
The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. This Prospectus
summarizes various provisions of the Indenture, but each statement is qualified
in its entirety by reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without
consent by investors to cure ambiguities or to correct or supplement any
defective or inconsistent provision, to make any amendment required by the SEC
or other governmental agency or to make any other change not materially adverse
to the interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified on the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The Evaluator may resign or be removed by the Sponsors and the
Trustee without the investors' consent. The resignation or removal of either
becomes effective upon acceptance of appointment by a successor; in this case,
the Sponsors will use their best efforts to 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.
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The Sponsors, the Trustee and the Evaluator are not liable to investors or
any other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.
AUDITORS
The Statement of Condition on the back cover 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 either the
Comptroller of the Currency or 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 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.
PUBLIC DISTRIBUTION
In the initial offering period Units will be distributed to the public
through the Underwriting Account and dealers who are members of the National
Association of Securities Dealers, Inc. The initial offering period is 30 days
or less if all Units are sold. If some Units initially offered have not been
sold, the Sponsors may extend the initial offering period for up to four
additional successive 30-day periods.
The Sponsors intend to qualify Units for sale in all states in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.
The Sponsors do not intend to qualify Units for sale in any foreign countries
and this Prospectus does not constitute an offer to sell Units in any country
where Units cannot lawfully be sold. Sales to dealers and to introducing
dealers, if any, will initially be made at prices which represent a concession
from the Public Offering Price, but the Agent for the Sponsors reserves the
right to change the rate of any concession from time to time. Any dealer or
introducing dealer may reallow a concession up to the concession to dealers.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters will be entitled to receive sales
charges. The Sponsors also realize a profit or loss on deposit of the Bonds
equal to the difference between the cost of the Bonds to the Fund (based on the
offer side evaluation on the initial date of deposit) and the Sponsors' cost of
the Bonds. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Bonds it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Underwriting Account also may realize profits or sustain losses as a result of
fluctuations after the initial date of deposit in the Public Offering Price of
the Units. In maintaining a secondary market for Units, the Sponsors will also
realize profits or sustain losses in the amount of any difference between the
prices at which they buy Units and the prices at which they resell these Units
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for
10
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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. Except for the reduced sales charge, an exchange is a taxable
event normally requiring recognition of any gain or loss on the units exchanged.
However, the Internal Revenue Service may seek to disallow a loss if the
portfolio of the units acquired is not materially different from the portfolio
of the units exchanged; you should consult your own tax advisor. If the proceeds
of units exchanged are insufficient to acquire a whole number of Exchange Fund
units, you may pay the difference in cash (not exceeding the price of a single
unit acquired).
As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.
11
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SUPPLEMENTAL INFORMATION
Upon written or telephonic request to the Trustee shown on the back cover
of this Prospectus, investors will receive at no cost to the investor
supplemental information about the Fund, which has been filed with the SEC. The
supplemental information includes more detailed risk factor disclosure about the
types of Bonds that may be part of the Fund's Portfolio, general risk disclosure
concerning any insurance securing certain Bonds, and general information about
the structure and operation of the Fund.
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APPENDIX A
DESCRIPTION OF RATINGS (AS DESCRIBED BY THE RATING COMPANIES THEMSELVES)
STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW HILL, INC.
A Standard & Poor's rating on the units of an investment trust (hereinafter
referred to collectively as 'units' and 'funds') is a current assessment of
creditworthiness with respect to the investments held by the fund. This
assessment takes into consideration the financial capacity of the issuers and of
any guarantors, insurers, lessees, or mortgagors with respect to such
investments. The assessment, however, does not take into account the extent to
which fund expenses will reduce payment to an investor of the interest and
principal required to be paid on portfolio assets. In addition, the rating is
not a recommendation to purchase, sell, or hold units, as the rating does not
comment as to market price of the units or suitability for a particular
investor.
AAA--Units rated AAA represent interests in funds composed exclusively of
securities that, together with their credit support, are rated AAA by Standard &
Poor's and/or certain short-term investments. This AAA rating is the highest
rating assigned by Standard & Poor's to a security. Capacity to pay interest and
repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal, and differs from the highest rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The ratings may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
A provisional rating, indicated by 'p' following a rating, assumes the
successful completion of the project being financed by the issuance of the debt
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.
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
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well safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Rating symbols may include numerical modifiers 1, 2 or 3. The numerical
modifier 1 indicates that the security ranks at the high end, 2 in the
mid-range, and 3 nearer the low end, of the generic category. These modifiers of
rating symbols are to give investors a more precise indication of relative debt
quality in each of the historically defined categories.
Conditional ratings, indicated by 'Con.', are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.
FITCH INVESTORS SERVICES, INC.
AAA--These bonds are considered to be investment grade and of the
highest quality. The obligor has an extraordinary ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--These bonds are considered to be investment grade and of high
quality. The obligor's ability to pay interest and repay principal, which is
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.
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APPENDIX B
INITIAL OFFERING SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
---------------------------------
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS PRIMARY MARKET
OFFER SIDE PUBLIC NET AMOUNT PERCENT OF PUBLIC CONCESSION TO
NUMBER OF UNITS OFFERING PRICE INVESTED OFFERING PRICE INTRODUCING DEALERS
- ------------------------------------------- ----------------- ------------- -------------------- -------------------
MONTHLY PAYMENT SERIES, INSURED SERIES:
<S> <C> <C> <C> <C>
Less than 250.............................. 4.50 % 4.712 % 2.925 % $ 32.40
250 - 499.................................. 3.50 3.627 2.275 25.20
500 - 749.................................. 3.00 3.093 1.950 21.60
750 - 999.................................. 2.50 2.564 1.625 18.00
1,000 or more.............................. 2.00 2.041 1.300 14.40
</TABLE>
INTERMEDIATE SERIES:
<TABLE>
<S> <C> <C> <C> <C>
Less than 250.............................. 4.00 % 4.167 % 2.600 % $ 28.80
250 - 499.................................. 3.00 3.093 1.950 21.60
500 - 749.................................. 2.50 2.564 1.625 18.00
750 - 999.................................. 2.00 2.040 1.300 14.40
1,000 or more.............................. 1.50 1.523 0.975 10.00
</TABLE>
SECONDARY MARKET SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
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
--------------- ------------- --------------------
MONTHLY PAYMENT SERIES, INSURED SERIES:
<S> <C> <C> <C>
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
</TABLE>
INTERMEDIATE SERIES:
<TABLE>
<S> <C> <C> <C>
Less than 250......................................... 4.75% 4.987% 3.088%
250 - 499............................................. 3.75 3.896 2.438
500 - 749............................................. 2.75 2.828 1.788
750 - 999............................................. 2.00 2.041 1.300
1,000 or more......................................... 1.50 1.523 0.975
</TABLE>
b-1
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Defined
Asset FundsSM
<TABLE>
<S> <C>
Sponsors: Corporate Income Fund
Merrill Lynch, Intermediate Term Series--54
Pierce, Fenner & (A Unit Investment Trust)
Smith Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, NJ
08543-9051
(609) 282-8500
Units of this Fund may no longer be available and
therefore
Smith Barney Inc. information contained herein may be subject to amendment.
Unit Trust A registration statement relating to securities of a
Department future series has been filed with the Securities and
388 Greenwich Exchange Commission. These securities may not be sold nor
Street--23rd Floor may offers to buy be accepted prior to the time the
New York, NY 10013 registration statement becomes
1-800-223-2532
PaineWebber effective. For more complete information about a future
Incorporated series, including additional information on charges and
1200 Harbor Blvd. expenses, please call or write one of the Sponsors listed
Weehawken, NJ 07087 here for a prospectus. Read the prospectus before you
(201) 902-3000 invest or send money.
Prudential
Securities
Incorporated
One Seaport Plaza
199 Water Street ------------------------------------
New York, NY 10292
(212) 776-1000 This Prospectus does not contain all of the information
with respect to the investment company set forth in its
registration statement and exhibits relating thereto
which have been filed
Dean Witter Reynolds with the Securities and Exchange Commission, Washington,
Inc. D.C. under the Securities Act of 1933 and the Investment
Two World Trade Company Act of 1940, and to which reference is hereby
Center made.
59th Floor
New York, NY 10048
(212) 392-2222
------------------------------------
Evaluator:
Interactive Data
Services, Inc.
14 Wall Street No person is authorized to give any information or to
New York, NY 10005 make any representations with respect to this investment
company not contained in this Prospectus; and any
information or representation not contained herein must
not be relied upon
Trustee: as having been authorized. This Prospectus does not
The Chase Manhattan constitute an offer to sell or a solicitation of an offer
Bank, N.A. to buy securities in any state in which such offer,
(a National Banking solicitation or sale would be unlawful prior to
Association) registration or qualification under the securities laws
Defined Asset Funds of any such state.
Box 2051
New York, NY 10081
1-800-323-1508
</TABLE>
15103-5/95
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