CIF ITS 55 DAF, 487, 1995-10-12

CIF ITS 55 DAF
487, 1995-10-12

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 12, 1995

REGISTRATION NO. 33-59367
<TABLE>
<CAPTION>

- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549
------------------------

AMENDMENT NO. 1
TO
FORM S-6
------------------------

FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------

A. EXACT NAME OF TRUST:

CORPORATE INCOME FUND
INTERMEDIATE TERM SERIES-55
DEFINED ASSET FUNDS
(A UNIT INVESTMENT TRUST)

B. NAMES OF DEPOSITORS:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.

C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:

MERRILL LYNCH, PIERCE, FENNER & SMITH BARNEY INC.
SMITH INCORPORATED 388 GREENWICH STREET
DEFINED ASSET FUNDS 23RD FLOOR
P.O. BOX 9051 NEW YORK, N.Y. 10013
PRINCETON, N.J. 08543-9051

PRUDENTIAL SECURITIES INCORPORATED DEAN WITTER REYNOLDS INC. PAINEWEBBER INCORPORATED
ONE SEAPORT PLAZA TWO WORLD TRADE CENTER 1285 AVENUE OF THE AMERICAS
199 WATER STREET 59TH FLOOR NEW YORK, N.Y. 10019
NEW YORK, N.Y. 10292 NEW YORK, N.Y. 10048

D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:

TERESA KONCICK, ESQ. DOUGLAS LOWE, ESQ. LEE B. SPENCER, JR.
P.O. BOX 9051 130 LIBERTY STREET-29TH FLOOR ONE SEAPORT PLAZA
PRINCETON, N.J. 08543-9051 NEW YORK, N.Y. 10006 199 WATER STREET
NEW YORK, N.Y. 10292

LAURIE A. HESSLEIN ROBERT E. HOLLEY COPIES TO:
388 GREENWICH STREET 1200 HARBOR BLVD. PIERRE DE SAINT PHALLE, ESQ.
NEW YORK, N.Y. 10013 WEEHAWKEN, N.J. 07087 450 LEXINGTON AVENUE
NEW YORK, N.Y. 10017

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:

$500 (as required by Rule 24f-2)

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 at 9:30 a.m. on October 12, 1995 pursuant to Rule 487.
- -----------------------------------------------------------------------

</TABLE>

<PAGE>
Defined Asset FundsSM

<S> <C>
CORPORATE 6.20 % ESTIMATED CURRENT RETURN shows the estimated annual cash to be
INCOME FUND received from interest-bearing bonds in the Portfolio (net of estimated
INTERMEDIATE TERM SERIES--55 annual expenses) divided by the Public Offering Price (including the
(A UNIT INVESTMENT maximum sales charge).
TRUST)
6.36 % ESTIMATED LONG TERM RETURN is a measure of the estimated return
- ----------------------------------- over the estimated life of the Fund. This represents an average of the
/ / INTERMEDIATE TERM MATURITIES yields to maturity (or in certain cases, to an earlier call date) of
/ / DESIGNED FOR HIGH the individual bonds in the Portfolio, adjusted to reflect the maximum
CURRENT INCOME sales charge and estimated expenses. The average yield for the
/ / DEFINED PORTFOLIO OF Portfolio is derived by weighting each bond's yield by its market value
CORPORATE BONDS and the time remaining to the call or maturity date, depending on how
/ / MONTHLY INCOME the bond is priced. Unlike Estimated Current Return, Estimated Long
/ / INVESTMENT GRADE Term Return takes into account maturities, discounts and premiums of
/ / FOREIGN HOLDERS TAX EXEMPT the underlying bonds.

No return estimate can be predictive of your actual return because
returns will vary with purchase price (including sales charges), how
6.20 % long units are held, changes in Portfolio composition, changes in
ESTIMATED CURRENT RETURN 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
6.36 % comparable to an individual bond may be higher or lower than Estimated
ESTIMATED LONG TERM RETURN Current Return or Estimated Long Term Return which are more comparable
to return calculations used by other investment products.

AS OF OCTOBER 11, 1995

------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADE-
QUACY OF THIS DOCUMENT. ANY REPRESENTATION TO
SPONSORS: THE CONTRARY IS A CRIMINAL OFFENSE.

Merrill Lynch, Inquiries should be directed to the Trustee at 1-800-221-7771.
Pierce, Fenner & Smith Incorporated Prospectus dated October 12, 1995.
Smith Barney Inc.
Prudential Securities Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR
Dean Witter Reynolds Inc. FUTURE REFERENCE.
PaineWebber Incorporated

</TABLE>

<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 $6,000,000 face amount of bonds issued by 10 different
corporate issuers.

APPROXIMATE
PORTFOLIO
ISSUERS PERCENTAGE
- -------------------------------------

<S> <C>
Financial 84%
Utility 8 %
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.

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.
A-2

<PAGE>
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Defining Your Investment
- --------------------------------------------------------------------------

PUBLIC OFFERING PRICE PER UNIT $1,002.90

The Public Offering Price as of October 11, 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 ($5,776,875 ), plus cash ($76,000), divided by the
number of units outstanding (6,076 ) plus a maximum sales charge of 4.00% on the
value of the underlying bonds. The Public Offering Price on any subsequent date
will vary. An amount equal to principal cash, if any, as well as net accrued but
undistributed interest on the unit is added to the Public Offering Price. The
underlying bonds are evaluated by an independent evaluator at 3:30 p.m. Eastern
time on every business day.

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 $11,190.00 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 any of the bonds in the
Portfolio were acquired.

<S> <C>

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

P.O. Box 9051,

Princeton, NJ 08543-9051 70.37 %

SMITH BARNEY INC.

388 Greenwich Street--23rd Floor,

New York, NY 10013 14.81 %

PRUDENTIAL SECURITIES INCORPORATED

One Seaport Plaza--199 Water Street,

New York, NY 10292 4.94 %

DEAN WITTER REYNOLDS INC.

Two World Trade Center--59th Floor,

New York, NY 10048 4.94 %

PAINEWEBBER INCORPORATED

1285 Avenue of the Americas,

New York, NY 10019 3.29 %

GRUNTAL & CO. INCORPORATED

14 Wall Street,

New York, NY 10005 1.65 %
------------

100.00%
------------

</TABLE>

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Defining Your Risks
- --------------------------------------------------------------------------

RISK FACTORS

Unit price fluctuates and could be adversely affected by increasing interest
rates as well as the financial condition of the issuers of the bonds. Because of
the possible maturity, sale or other disposition of securities, the size,
composition and return of the portfolio may change at any time. Because of the
sales charges, returns of principal and fluctuations in unit price, among other
reasons, the sale price will generally be less than the cost of your units. Unit
prices could also be adversely affected if a limited trading market exists in
any security to be sold. There is no guarantee that the Fund will achieve its
investment objective.

The Fund is concentrated in bonds issued by financial institutions and is
therefore dependent to a significant degree on revenues generated from those
particular activities (see Risk Factors in Part B).
A-3

<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.

As a %
As a % of Secondary
of Initial Offering Market
Period Public Public Offering
Offering Price Price
-------------------- ----------------

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

As a %
of Average
Net Assets* Per Unit
------------- -----------

<S> <C> <C>
Trustees' Fee .072 % $ .69

Maximum Portfolio
Supervision,
Bookkeeping and
Administrative Fees .047 % $ .45

Organizational Expenses .020 % $ .20

Evaluator's Fee .021 % $ .20

Other Operating Expenses .025 % $ .24
------------ --------

TOTAL .185 % $ 1.78

</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:

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
October 11, 1995 was $958.34 ($44.56 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):

<S> <C>
First Distribution per unit
(November 25, 1995): $ 4.83

Regular Monthly Income per unit
(Beginning on December 25, 1995): $ 5.18

Annual Income per unit: $ 62.18

</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>
- --------------------------------------------------------------------------
Defined Portfolio
- --------------------------------------------------------------------------

Corporate Income Fund
Intermediate Term Series--55
October 12, 1995

RATINGS OF ISSUES (1)
-----------------------

OPTIONAL SINKING
STANDARD REFUNDING FUND COST
PORTFOLIO TITLE & POOR'S MOODY'S FITCH REDEMPTIONS (2) REDEMPTIONS (2) TO FUND (3)
- ----------------------------------- --------- ------- ----- --------------- --------------- -----------------

1. $500,000 Australia & New Zealand A A2 NR -- -- $ 485,000.00
Banking Group Limited, Subordinated
Notes, 6.250%,
2/01/04

2. $500,000 BankAmerica A- A3 A+ -- -- 498,125.00
Corporation, Subordinated Notes,
6.750%, 9/15/05

3. $1,000,000 Bankers Trust A A3 A -- -- 902,500.00
Company, Subordinated Notes,
6.000%, 10/15/08

4. $500,000 Bank of Montreal, A+ A1 NR -- -- 476,250.00
Subordinated Notes, 6.100%,
9/15/05

5. $1,000,000 Banque Paribas, A- A2 NR -- -- 962,500.00
Subordinated Notes, 6.875%,
3/01/09

6. $500,000 Chase Manhattan A- A3 A- -- -- 480,000.00
Corporation, Subordinated Notes,
6.500%, 1/15/09

7. $500,000 Citicorp, Subordinated A A2 NR -- -- 500,625.00
Notes, 6.750%, 8/15/05

8. $500,000 Ford Motor Credit, A+ A1 NR -- -- 497,500.00
Notes, 6.750%, 8/15/08

9. $500,000 Joseph E. Seagram & A A2 NR -- -- 503,125.00
Sons, Inc., Guaranteed Debentures,
7.000%, 4/15/08

10. $500,000 Pacific Gas & A A2 NR -- -- 471,250.00
Electric Company, First and
Refunding Mortgage Bonds, Series
93-E, 5.875%, 10/01/05

-----------------
$ 5,776,875.00
-----------------
-----------------

</TABLE>

- ---------
(1) (See Appendix A to Part B.)

(2) None of the bonds are subject to optional refunding redemptions or sinking
fund redemptions .

(3) Evaluation of the bonds by the Evaluator is made on the basis of current
offer side evaluation. On this basis, 17% of the bonds were purchased at a
premium and 83 % at a discount from par.
A-5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders of Corporate Income Fund, Intermediate Term
Series--55, 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 October 12, 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 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 October 12, 1995
in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
NEW YORK, N.Y.
OCTOBER 12, 1995

STATEMENT OF CONDITION AS OF OCTOBER 12, 1995

<S> <C>
TRUST PROPERTY
Investments--Bonds and Contracts to purchase Bonds(1) $ 5,776,875.00
Cash 76,000.00
Accrued interest to initial date of deposit on underlying Bonds 48,323.96
Organizational Costs(2) 18,228.00
----------------
Total $ 5,919,426.96
----------------
----------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by the Trustee for accrued interest(3) $ 48,323.96
Accrued Liability(2) 18,228.00
----------------
Subtotal 66,551.96
----------------
Interest of Holders of 6,076 Units of fractional undivided interest outstanding:
Cost to investors(4) 6,093,606.12
Gross underwriting commissions(5) (240,731.12)
----------------
Subtotal 5,852,875.00
----------------
Total $ 5,919,426.96
----------------
----------------

</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 BNA Bank, New York Branch , in the amount of
$5,893,535.35 and deposited with the Trustee. The amount of the letter of credit
includes $5,841,685.00 for the purchase of $6,000,000 face amount of the bonds,
plus $51,850.35 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 18,228 units. 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>
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.

1 2 3 4 5 6 7 8

<PAGE>
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY MAIL

FIRST CLASS PERMIT NO. 1313 NEW YORK, NY
POSTAGE WILL BE PAID BY ADDRESSEE
THE BANK OF NEW YORK
UNIT INVESTMENT TRUST DEPARTMENT
P.O. BOX 974
WALL STREET STATION
NEW YORK, NY 10268-0974
(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 OF WRITTEN OR TELEPHONIC REQUEST TO THE TRUSTEE, AT THE ADDRESS
AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.

Index

PAGE PAGE
---- -----

Fund Description. . . . . . . . . . . 1 Trust Indenture. . . . . . . . . 9

Risk Factors. . . . . . . . . . . . . 2 Miscellaneous. . . . . . . . . . 10

How to Buy Units. . . . . . . . . . . 5 Exchange Option. . . . . . . . . 11

How to Sell Units. . . . . . . . . . 6 Supplemental Information. . . . . 12

Income, Distributions and Reinvestment 6 Appendix A--Description of Ratings a-1

Fund Expenses. . . . . . . . . . . . 7 Appendix B--Sales Charge Schedules b-1

Taxes. . . . . . . . . . . . . . . . 8

Records & Reports. . . . . . . . . . 9

</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 Bonds
1

<PAGE>
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 payments
2

<PAGE>
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.

<PAGE>
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
(IN MILLIONS OF DOLLARS)
---------------------------------------
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.

<PAGE>
LIQUIDITY

Up to 40% of the value of the Portfolio may consist of Bonds acquired in
private placements or otherwise that may constitute restricted securities that
cannot be sold publicly by the Trustee without registration under the Securities
Act of 1933, as amended. The Sponsors nevertheless believe that, should a sale
of these Bonds be necessary in order to meet redemption of Units, the Trustee
should be able to consummate a sale with institutional investors.

The principal trading market for the Bonds will generally be in the
over-the-counter market and the existence of a liquid trading market for the
Bonds may depend on whether dealers will make a market in them. There can be no
assurance that a liquid trading market will exist for any of the Bonds,
especially since the Fund may be restricted under the Investment Company Act of
1940 from selling Bonds to any Sponsor. The value of the Portfolio will be
adversely affected if trading markets for the Bonds are limited or absent.

HOW TO BUY UNITS

PUBLIC OFFERING PRICE

Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price plus accrued interest on the Units.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Fund. In the 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 11/2 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.

<PAGE>
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 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.

<PAGE>
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.

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.
7

<PAGE>
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 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 investor who itemizes deductions may deduct his pro rata share of
fees and other expenses of the Fund only to the extent that such amount
together with the investor's other miscellaneous deductions exceeds 2% of his
adjusted gross income.

If an investor's tax basis for his pro rata portion of a Bond exceeds the
redemption price at maturity thereof (subject to certain adjustments), the
investor will be considered to have purchased his pro rata portion of the Bond
at a "bond premium". The investor may elect to amortize the bond premium prior
to the maturity of the Bond. The amount amortized in any year should be
applied to offset the investor's interest from the Bond and will result in a
reduction of basis for his pro rata portion of the Bond.

An investor will recognize taxable gain or loss when all or part of his pro
rata portion of a Bond is disposed of by the Fund or when he sells or redeems
all or some of his Units. Any such taxable gain or loss will be capital gain
or loss, except that any gain from the disposition of an investor's pro rata
portion of a Bond acquired by the investor at a "market discount" (i.e., where
the investor's tax basis for his pro rata portion of the Bond 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.

* * *

<PAGE>

Neither the Sponsors nor Davis Polk & Wardwell have made or will make a review
of the facts and circumstances relating to the issuance of any Bonds. To the
best knowledge of the Sponsors, each Bond will be treated as debt for tax
purposes by the respective issuers. The Internal Revenue Service, however, is
not bound by an issuer's treatment and may take the position that a Bond has
more equity than debt features and, accordingly, should be treated as equity. In
the event of such a recharacterization, a withholding tax at the statutory rate
of 30% (or a lesser treaty rate) would apply on distributions to Foreign
Investors in respect of that Bond.

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
9

<PAGE>
a Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated has been appointed
as Agent for the Sponsors by the other Sponsors.

The Sponsors, the Trustee and the Evaluator are not liable to investors or any
other party for any act or omission in the conduct of their responsibilities
absent bad faith, willful misfeasance, negligence (gross negligence in the case
of a Sponsor or the Evaluator) or reckless disregard of duty. The Indenture
contains customary provisions limiting the liability of the Trustee.

MISCELLANEOUS

LEGAL OPINION

The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the Sponsors.

AUDITORS

The Statement of Condition 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
10

<PAGE>
sustain losses in the amount of any difference between the prices at which they
buy Units and the prices at which they resell these Units (which include the
sales charge) or the prices at which they redeem the Units. Cash, if any, made
available by buyers of Units to the Sponsors prior to a settlement date for the
purchase of Units may be used in the Sponsors' businesses to the extent
permitted by Rule 15c3-3 under the Securities Exchange Act of 1934 and may be of
benefit to the Sponsors.

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).

<PAGE>
As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.

SUPPLEMENTAL INFORMATION

Upon 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.

<PAGE>
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.

a-1
<PAGE>
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Rating symbols may include numerical modifiers 1, 2 or 3. The numerical
modifier 1 indicates that the security ranks at the high end, 2 in the
mid-range, and 3 nearer the low end, of the generic category. These modifiers of
rating symbols are to give investors a more precise indication of relative debt
quality in each of the historically defined categories.

Conditional ratings, indicated by "Con.", are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.

FITCH INVESTORS SERVICES, INC.

AAA--These bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--These bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, which 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.

a-2
<PAGE>
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:
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

INTERMEDIATE SERIES:
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 10.80

</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:
Less than 250. . . . . . . . . . . . . 5.50% 5.820% 3.575%
250 - 499. . . . . . . . . . . . . . . 4.50 4.712 2.925
500 - 749. . . . . . . . . . . . . . . 3.50 3.627 2.275
750 - 999. . . . . . . . . . . . . . . 2.50 2.564 1.625
1,000 or more. . . . . . . . . . . . . 2.00 2.041 1.300

INTERMEDIATE SERIES:
Less than 250. . . . . . . . . . . . . 4.75% 4.987% 3.088%
250 - 499. . . . . . . . . . . . . . . 3.75 3.896 2.438
500 - 749. . . . . . . . . . . . . . . 2.75 2.828 1.788
750 - 999. . . . . . . . . . . . . . . 2.00 2.041 1.300
1,000 or more. . . . . . . . . . . . . 1.50 1.523 0.975

</TABLE>

b-1
<PAGE>
Defined
Asset FundsSM

<S> <C>

SPONSORS: CORPORATE INCOME FUND
Merrill Lynch,
Pierce, Fenner & Smith Incorporated
Defined Asset Funds Intermediate Term Series--55
P.O. Box 9051 (A Unit Investment Trust)
Princeton, NJ 08543-9051
(609) 282-8500 This Prospectus does not contain all of the information with respect
to the investment company set forth in its registration statement
Smith Barney Inc. and exhibits relating thereto which have been filed with the
Unit Trust Department Securities and Exchange Commission, Washington, D.C. under the
388 Greenwich Street--23rd Floor Securities Act of 1933 and the Investment Company Act of 1940, and
New York, NY 10013 to which reference is hereby made.
1-800-223-2532 ---------------------

PaineWebber Incorporated No person is authorized to give any information or to make
1200 Harbor Blvd. any representations with respect to this investment company not
Weehawken, NJ 07087 contained in this Prospectus; and any information or representation
(201) 902-3000 not contained herein must not be relied upon as having been
authorized.
Prudential Securities Incorporated ---------------------
One Seaport Plaza
199 Water Street When Units of this Series are no longer available, this Prospectus
New York, NY 10292 may be used as a preliminary prospectus for a future series, and
(212) 776-1000 investors should note the following:

Dean Witter Reynolds Inc. Information contained herein is subject to amendment. A registration
Two World Trade Center statement relating to those securities has been filed with the
59th Floor Securities and Exchange Commission. These securities may not be sold
New York, NY 10048 nor may offers to buy be accepted prior to the time the registration
(212) 392-2222 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,
EVALUATOR: solicitation or sale would be unlawful prior to registration or
Interactive Data Services, Inc. qualification under the securities laws of any such state.
14 Wall Street
New York, NY 10005

TRUSTEE:
The Bank of New York
(A New York Banking Corporation)
P.O. Box 974
Wall Street Station
New York, NY 10268-0974
1-800-221-7771

15152 -10/95

</TABLE>

<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.

SEC FILE OR
IDENTIFICATION NUMBER
------------------------

<S> <C> <C>
I. Bonding Arrangements and Date of Organization of the Depositors filed
pursuant to Items A and B of Part II of the Registration Statement on Form
S-6 under the Securities Act of 1933:

Merrill Lynch, Pierce, Fenner & Smith Incorporated. . . . . . . . . . . 2-52691

Prudential Securities Incorporated. . . . . . . . . . . . . . . . . . . 2-61418

Smith Barney Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 33-29106

Dean Witter Reynolds Inc.. . . . . . . . . . . . . . . . . . . . . . . 2-60599

PaineWebber Incorporated. . . . . . . . . . . . . . . . . . . . . . . . 2-87965

II. Information as to Officers and Directors of the Depositors filed pursuant to
Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934:

Merrill Lynch, Pierce, Fenner & Smith Incorporated. . . . . . . . . . . 8-7221

Prudential Securities Incorporated. . . . . . . . . . . . . . . . . . . 8-27154

Smith Barney Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 8-8177

Dean Witter Reynolds Inc.. . . . . . . . . . . . . . . . . . . . . . . 8-14172

PaineWebber Incorporated. . . . . . . . . . . . . . . . . . . . . . . . 8-16267

III. Charter documents of the Depositors filed as Exhibits to the Registration
Statement on Form S-6 under the Securities Act of 1933 (Charter, By- Laws):

Merrill Lynch, Pierce, Fenner & Smith Incorporated. . . . . . . . . . . 2-73866, 2-77549

Prudential Securities Incorporated. . . . . . . . . . . . . . . . . . . 2-86941, 2-86941

Smith Barney Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 33-20499

Dean Witter Reynolds Inc.. . . . . . . . . . . . . . . . . . . . . . . 2-60599, 2-86941

PaineWebber Incorporated. . . . . . . . . . . . . . . . . . . . . . . . 2-87965, 2-87965

B. The Internal Revenue Service Employer Identification Numbers of the Sponsors and Trustee are as
follows:

Merrill Lynch, Pierce, Fenner & Smith Incorporated. . . . . . . . . . . 13-5674085

Prudential Securities Incorporated. . . . . . . . . . . . . . . . . . . 22-2347336

Smith Barney Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1912900

Dean Witter Reynolds Inc.. . . . . . . . . . . . . . . . . . . . . . . 94-1671384

PaineWebber Incorporated. . . . . . . . . . . . . . . . . . . . . . . . 13-2638166

The Bank of New York, Trustee. . . . . . . . . . . . . . . . . . . . . 13-4941102

</TABLE>

The Sponsors undertake that they will not instruct the Trustee to accept from
(i) Asset Guaranty Reinsurance Company, MBIA Insurance 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 MUNICIPAL INSURED SERIES, EQUITY INCOME FUND
AND MUNICIPAL INVESTMENT TRUST FUND
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933

SEC
SERIES NUMBER FILE NUMBER

<S> <C>

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 Trust Fund, Multistate Series 6E. . . . . . . . . . . . . . . 33-29412

Municipal Investment Trust Fund, Multistate Series-48. . . . . . . . . . . . . . . 33-50247

Equity Income Fund Select Ten Portfolios--1995 Spring Series. . . . . . . . . . . 33-55807

Defined Asset Funds, Municipal Insured Series. . . . . . . . . . . . . . . . . . . 33-54565

</TABLE>

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). Consent of
independent accountants.

The following exhibits:

<S> <C> <C>
1.1 -- Form of Trust Indenture (incorporated by reference to Exhibit 1.1.1 to the Registration Statement of
The Corporate Income Fund, Insured Series-22, 1933 Act File No. 33-49833).

1.1.1 -- Form of Standard Terms and Conditions of Trust Effective October 21, 1993 (incorporated by reference
to Exhibit 1.1.1 to the Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).

1.2 -- Form of Master Agreement Among Underwriters (incorporated by reference to Exhibit 1.2 to the
Registration Statement of The Corporate Income Fund, One Hundred Ninety-Fourth Monthly Payment
Series, 1933 Act File No. 2-90925).

2.1 -- Form of Certificate of Beneficial Interest (included in Exhibit 1.1.1).

3.1 -- Opinion of counsel as to the legality of the securities being issued including their consent to the
use of their name under the headings "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 No. 9.1 to the Registration Statement of
Corporate Income Fund, Intermediate Term Series, 1933 Act File No. 33-57973).

</TABLE>

<PAGE>
SIGNATURES

The registrant hereby identifies the series numbers of The Corporate Income
Fund, Defined Asset Funds Municipal Insured Series, Equity Income Fund and
Municipal Investment Trust Fund 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 12TH DAY OF
OCTOBER, 1995.

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.

<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
<TABLE>
<CAPTION>

<S> <C>

By the following persons, who constitute a majority of Powers of Attorney have been filed under
the Board of Directors of Merrill Lynch, Pierce, Form SE and the following 1933 Act File
Fenner & Smith Incorporated: Numbers: 33-43466 and 33-51607

</TABLE>

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

ERNEST V. FABIO

By: ERNEST V. FABIO
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
<PAGE>
SMITH BARNEY INC.
DEPOSITOR
<TABLE>
<CAPTION>

<S> <C>

By the following persons, who constitute a majority of Powers of Attorney have been filed under the
the Board of Directors of Smith Barney Inc.: following 1933 Act File Numbers: 33-56722 and
33-51999

</TABLE>

STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT F. GREENHILL
JEFFREY LANE
ROBERT H. LESSIN
JACK L. RIVKIN

GINA LEMON

By: GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
<TABLE>
<CAPTION>

<S> <C>

By the following persons, who constitute a majority of Powers of Attorney have been filed under
the Board of Directors of Prudential Securities Form SE and the following 1933 Act File
Incorporated: Number: 33-41631

</TABLE>

ALAN D. HOGAN
GEORGE A. MURRAY
LELAND B. PATON
HARDWICK SIMMONS

RICHARD R. HOFFMANN

By: RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)

<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
<TABLE>
<CAPTION>

<S> <C>

By the following persons, who constitute a majority of Powers of Attorney are being filed under
the Board of Directors of Dean Witter Reynolds Inc.: Form SE and the following 1933 Act File
Number: 33-17085

</TABLE>

NANCY DONOVAN
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH

MICHAEL D. BROWNE

By: MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc. and
Attorney-in-fact for the persons listed above)
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
<TABLE>
<CAPTION>

<S> <C>

By the following persons, who constitute a majority of Powers of Attorney are being filed under
the Executive Committee of the Board of Form SE and the following 1933 Act File
Directors of PaineWebber Incorporated: Number: 33-55073

</TABLE>

JOSEPH J. GRANO, JR.
DONALD B. MARRON

ROBERT E. HOLLEY

By: ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated and
Attorney-in-fact for the persons listed above)

<PAGE>

EXHIBIT 3.1

DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000

OCTOBER 12, 1995

Corporate Income Fund,
Intermediate Term Series-55
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, N.J. 08543-9051

Dear Sirs:

We have acted as special counsel for you, as sponsors (the "Sponsors") of
Intermediate Term Series--55 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 Sponsors and (ii) the Units, when duly executed and delivered
by the Sponsors and the Trustee in accordance with the Indenture, will be
legally issued, fully paid and non- assessable.

We hereby consent to the use of this opinion as Exhibit 3.1 to the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the headings "Taxes" and "Miscellaneous--Legal
Opinion".

Very truly yours,

Davis Polk & Wardwell

<PAGE>

EXHIBIT 4.1

OCTOBER 12, 1995

Interactive Data
14 Wall Street
New York, N.Y. 10005
212-285-4242

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Defined Asset Funds
P.O. Box 9051
Princeton, N.J. 08543-9051

The Bank of New York
Unit Investment Trust Department
P.O. Box 974
Wall Street Division
New York, NY 10268-0974

RE: CORPORATE INCOME FUND, INTERMEDIATE TERM SERIES-55, DEFINED ASSET FUNDS (A
UNIT INVESTMENT TRUST) UNITS OF FRACTIONAL UNDIVIDED INTEREST--REGISTERED
UNDER THE SECURITIES ACT OF 1933, FILE NO. 33-59367.

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 copies of this letter with the Securities and
Exchange Commission.

Very truly yours,

James E. Perry
Vice President

<PAGE>

EXHIBIT 5.1

CONSENT OF INDEPENDENT ACCOUNTANTS

The Sponsors and Trustee of
Corporate Income Fund,
Intermediate Term Series-55, Defined Asset Funds:

We hereby consent to the use in this Registration Statement No. 33-59367 of our
opinion dated October 12, 1995, relating to the Statement of Condition of
Corporate Income Fund, Intermediate Term Series-55, Defined Asset Funds and to
the reference to us under the heading "Auditors" in the Prospectus which is a
part of this Registration Statement.

DELOITTE & TOUCHE, LLP
New York, N.Y.
October 12, 1995

<PAGE>
CORPORATE INCOME FUND--DEFINED ASSET FUNDS

INFORMATION SUPPLEMENT

CASH OR ACCRETION BOND SERIES MONTHLY PAYMENT SERIES
FIRST GNMA SERIES PREFERRED STOCK PUT SERIES
INSURED SERIES SELECT SERIES
INTERMEDIATE TERM SERIES

This Information Supplement provides additional information concerning the
structure, operations and risks of corporate bond trusts (each, a "Fund") of
Defined Asset Funds not found in the prospectuses for the Funds. This
Information Supplement is not a prospectus and does not include all of the
information that a prospective investor should consider before investing in a
Fund. This Information Supplement should be read in conjunction with the
prospectus for the Fund in which an investor is considering investing
("Prospectus"). Copies of the Prospectus can be obtained by calling or writing
the Trustee at the telephone number and address indicated in the Prospectus.

This Information Supplement is dated May 15, 1995. Capitalized terms have been
defined in the Prospectus.

TABLE OF CONTENTS

PAGE PAGE
---- -----

</TABLE>

FUND STRUCTURE

The Fund, a series of Corporate Income Fund, is a "unit investment trust"
created by a Trust Indenture (the "Indenture") among the Sponsors, the Trustee
and the Evaluator. The First GNMA Series was created under Massachusetts law and
all other Series were created under New York law. Most Funds were formed for the
purpose of providing a high level of current income through investment in a
fixed portfolio (the "Portfolio") of Securities issued primarily by
corporations, although an additional objective of the INSURED SERIES, and FIRST
GNMA SERIES is to obtain substantial safety of capital. Additional objectives of
the PREFERRED STOCK PUT SERIES are to provide dividend income that is eligible
for the dividends-received deductions for corporations, and to minimize loss of
capital and reduce fluctuations in the value of the Units. In addition, the
objective of the CASH OR ACCRETION BOND SERIES and the SELECT SERIES is to
provide investors a choice between semi-annual distributions of cash or
additional Units through compounding. The Debt Obligations may include taxable
obligations issued or guaranteed by the United States or foreign governments, or
agencies, political subdivisions or instrumentalities thereof, and payable in
United States currency. The Debt Obligations held by the Fund may be secured or
unsecured (including both senior unsecured indebtedness and indebtedness which
is subordinated to other indebtedness), have fixed final maturity dates and do
not have any conversion or equity features. To the extent that references in
this Prospectus are to articles and sections of the Indenture, which are hereby
incorporated by reference, the statements made herein are qualified in their
entirety by this reference. The Fund may be an appropriate investment vehicle
for investors who desire to participate in a portfolio of taxable fixed rate
securities with greater diversification than they might be able to acquire
individually. In addition, securities of the type deposited in the Fund often
are not available in small amounts.

The Portfolio contains different issues of debt obligations with fixed final
maturity or disposition dates. As used herein, the terms "Debt Obligations" and
"Securities" mean the bonds, debt obligations or securities initially deposited
in the Fund and described under Portfolio in Part A and replacement and
additional bonds, debt obligations or securities acquired and held by the Fund
pursuant to the provisions of the Indenture (see Description of the Fund--The
Portfolio; Administration of the Fund--Portfolio Supervision).

The deposit of the Securities in the Fund on the Initial Date of Deposit
established a proportionate relationship among the face amounts of Securities of
specified interest rates and maturities in the Portfolio. For certain Series,
1

<PAGE>
following the Initial Date of Deposit, the Sponsors may deposit additional
Securities ("Additional Securities"), contracts to purchase Additional
Securities or cash (or a bank letter of credit in lieu of cash) with
instructions to purchase Additional Securities in order to create new Units.
Replacement Securities may be acquired under specified conditions (see
Description of the Fund--The Portfolio; Administration of the Fund--Portfolio
Supervision).

The holders ("Holders") of units of interest ("Units") will have the right to
have their Units redeemed (see Redemption) at a price based on the aggregate bid
side evaluation of the Securities ("Redemption Price per Unit") if the Units
cannot be sold in the over-the-counter market which the Sponsors propose to
maintain at prices determined in the same manner (see Market for Units). On the
Evaluation Date, each Unit represented the fractional undivided interest in the
Securities in the Fund as set forth under Investment Summary in Part A, plus any
cash adjustments and accrued interest. Thereafter, if any Units are redeemed,
the face amount of Securities in the Fund will be reduced and the fractional
undivided interest represented by each remaining Unit in the balance will be
increased. Units will remain outstanding until redeemed upon tender to the
Trustee by any Holder (which may include the Sponsors) or until termination of
the Indenture (see Redemption; Administration of the Fund-- Amendment and
Termination).

RISK FACTORS

GENERAL

An investment in Units of the Fund should be made with an understanding of the
risks which an investment in fixed-rate securities may entail, including the
risk that the value of the Portfolio and hence of the Units will decline with
increases in interest rates, as described below. In recent years there have been
wide fluctuations in interest rates and thus in the value of fixed rate
securities generally. The Sponsors cannot predict future economic policies or
their consequences or, therefore, the course or extent of any similar
fluctuations in the future. The Portfolio consists primarily of publicly held
Securities which, in many cases, do not have the benefit of covenants which
would prevent the issuer from engaging in capital restructurings or borrowing
transactions in connection with corporate acquisitions, leveraged buyouts or
restructurings, which could have the effect of reducing the ability of the
corporation to meet its obligations and may in the future result in the ratings
of the Debt Obligations and the value of the underlying Portfolio being reduced.

Units offered in the secondary market may reflect redemptions or prepayments,
in whole or in part, or defaults on, certain of the Securities originally
deposited in the Fund or the disposition of certain Securities originally
deposited in the Fund to satisfy redemptions of Units or pursuant to the
exercise by the Sponsors of their supervisory role over the Fund (see Payment of
the Debt Obligations and Life of the Fund and Administration of the
Fund--Portfolio Supervision). Accordingly, the face amount of Units may be less
than their original face amount at the time of the creation of the Fund. A
reduced value per Unit does not therefore mean that a Unit is necessarily valued
at a market discount; market discounts, as well as market premiums, on Units are
determined solely by a comparison of a Unit's outstanding face amount and its
evaluated price.

The Securities are generally not listed on a national securities exchange.
Whether or not the Securities are listed, the principal trading market for the
Securities will generally be in the over the counter market. As a result, the
existence of a liquid trading market for the Securities may depend on whether
dealers will make a market in the Securities. There can be no assurance that a
market will be made for any of the Securities, that any market for the
Securities will be maintained or of the liquidity of the Securities in any
markets made. In addition, the Fund may be restricted under the Investment
Company Act of 1940 from selling Securities to any Sponsor. The price at which
the Securities may be sold to meet redemptions and the value of the Fund will be
adversely affected if trading markets for the Securities are limited or absent.

A Fund may contain or be concentrated in one or more of the classifications
set forth below under Other Factors. A Fund is considered to be "concentrated"
in a particular classification when the aggregate face amount, or par or stated
value, of those securities constitutes more than 25% of the aggregate face
amount, or par or stated value, of the Securities in the Fund. An investment in
Units should be made with an understanding of the risks which these investments
may entail, certain of which are described under Other Risk Factors below.

INSURED SERIES

The Investment Summary in Part A sets forth 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 while the bonds are held by the Fund ("portfolio
insurance").

Permanent Insurance

The Debt Obligations in FIRST THROUGH FOURTH INSURED SERIES (the "Insured Debt
Obligations") have been insured by Financial Security Assurance Inc. ("Financial
Security") (see The Insurers below). These surety bonds
2

<PAGE>
are non-cancelable and will continue in force so long as the Insured Debt
Obligations 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 Debt
Obligations 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 Debt Obligations ("Portfolio-Insured Debt Obligations") while
they are owned by the Fund. Since the Portfolio Insurance applies to Debt
Obligations only while they are owned by the Fund, the value of
Portfolio-Insured Debt Obligations (and hence the value of the Units) may
decline if the credit quality of any Portfolio-Insured Debt Obligation is
reduced. Premiums for Portfolio Insurance are payable monthly in advance by the
Trustee on behalf of the Fund. The insurance obtained by the Fund is only
effective as to Debt Obligations owned by and held in the Fund and,
consequently, does not cover Debt Obligations for which the contract for
purchase fails. A "when issued" bond will be covered under each policy upon the
settlement date of the "when issued" bond. Each policy shall continue in force
only with respect to Debt Obligations held in and owned by the Fund, and the
Insurer shall not have any liability under the policy with respect to any Debt
Obligations which do not constitute part of the Fund.

By the terms of its policy, the Insurer will unconditionally guarantee to the
Fund the payment, when due, required of the issuer of the Debt Obligations of an
amount equal to the principal of (either at the stated maturity or by any
advancement of maturity pursuant to a mandatory sinking fund payment) and
interest on the Bonds as the payments shall become due but not paid except that
in the event of any acceleration of the due date of principal by reason of
mandatory or optional redemption (other than mandatory sinking fund redemption),
default or otherwise, the payments guaranteed will be made in the amounts and at
the times as would have been due had there not been an acceleration by reason of
mandatory or optional redemption (other than a mandatory sinking fund
redemption), default or otherwise. The Insurer will be responsible for those
payments less any amounts received by the Fund from any trustee for the bond
issuers or from any other source. In the event the due date of the principal of
any Debt Obligation is accelerated, the payments required by the acceleration
are received by the Fund, and the Debt Obligation is cancelled, the Portfolio
Insurance will terminate with respect to that Debt Obligation. Each policy does
not guarantee payment on an accelerated basis, the payment of any redemption
premium or the value of the Units. Each policy also does not insure against
nonpayment of principal of or interest on the Debt Obligations resulting from
the insolvency, negligence or any other act or omission of the trustee or other
paying agent for the Debt Obligations.

Each insurance policy is non-cancelable and will continue in force so long as
the Fund is in existence and the Securities described in the policy continue to
be held in and owned by the Fund. Each policy shall terminate as to any Debt
Obligation which has been redeemed from the Fund or sold by the Trustee on the
date of the redemption or on the settlement date of the sale, and the Insurer
shall not have any liability under the policy as to that Debt Obligation
thereafter. If the date of the redemption or the settlement date of the sale
occurs between a record date and a date of payment of any Debt Obligation, the
policy will terminate as to that Debt Obligation on the business day next
succeeding the date of payment. The termination of the policy as to any Debt
Obligation shall not affect the Insurer's obligations regarding any other Debt
Obligation in the Fund or any other fund which has obtained an insurance policy
from the Insurer. Each policy will terminate as to all Debt Obligations on the
date on which the last of the Debt Obligations matures, is redeemed or is sold
by the Fund. As Portfolio-Insured Debt Obligations are redeemed by their
respective issuers or are sold by the Trustee, the amount of the premium payable
for the Portfolio Insurance will be correspondingly reduced. Nonpayment of
premiums on the policy obtained by the Fund will not result in the cancellation
of insurance but will permit the Insurer to take action against the Trustee to
recover premium payments due it. The Trustee in turn will be entitled to recover
the payments from the Fund.

Upon the sale of a Portfolio-Insured Debt Obligation 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 Debt
Obligation upon the payment of a single predetermined insurance premium from the
proceeds of the sale. Accordingly, any Debt Obligation in the Fund is eligible
to be sold on an insured basis. It is expected that the Trustee will exercise
the right to obtain Permanent Insurance upon instructions from the Sponsors only
if the Fund would receive net proceeds from the sale of the Debt Obligation
(sale proceeds less the insurance premium attributable to the Permanent
Insurance and the related custodial and rating agency fees) in excess of the
sale proceeds that would be received if the Debt Obligation were sold on an
uninsured basis. The premiums for Permanent Insurance for each Portfolio-Insured
Debt Obligation will decline over the life of the Debt Obligation. The
predetermined Permanent Insurance premium with respect to each Debt Obligation
is based upon the insurability of each
3

<PAGE>
Debt Obligation as of the Date of Deposit and will not be increased for any
change in the creditworthiness of such Debt Obligation unless that Debt
Obligation is in default as to payment of principal and/or interest. In such
event, the Permanent Insurance premium shall be subject to an increase
predetermined at the Date of Deposit and payable from the proceeds of the sale
of that Debt Obligation.

Although all Debt Obligations are individually insured, neither the Fund, the
Units nor the Portfolio is insured directly or indirectly by the Insurer.

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 Debt
Obligations are in default in payment of principal or interest or, in the
opinion of Defined Asset Funds research analysts, in significant risk of
default. In making this determination the Agent for the Sponsors has established
as a general standard that Portfolio-Insured Debt Obligation which is rated less
than BB by Standard & Poor's or Ba by Moody's will be deemed in significant risk
of default although the Agent for the Sponsors retains the discretion to
conclude that a Portfolio-Insured Debt Obligation is in significant risk of
default even though at the time it has a higher rating, or not to reach that
conclusion even if it has a lower rating. (See Description of Ratings). The
value of the insurance will be equal to the difference between (i) the market
value of the Portfolio-Insured Debt Obligation assuming the exercise of the
right to obtain Permanent Insurance (less the insurance premium attributable to
the purchase of Permanent Insurance and the related custodial and rating agency
fees) and (ii) the market value of the Portfolio- Insured Debt Obligation not
covered by Permanent Insurance.

With respect to MBIA Portfolio Insurance, in the event that interest on or
principal of a Debt Obligation is due for payment but is unpaid by reason of
nonpayment by the issuer thereof, MBIA will make payments to its fiscal agent,
Citibank, N.A., New York, New York (the "Fiscal Agent"), equal to the unpaid
amounts of principal and interest not later than one business day after MBIA has
been notified by the Trustee that the nonpayment has occurred (but not earlier
than the date such payment is due). The Fiscal Agent will disburse to the
Trustee the amount of principal and interest which is then due for payment but
is unpaid upon receipt by the Fiscal Agent of (i) evidence of the Trust's right
to receive payment of the principal and interest and (ii) evidence, including
any appropriate instruments of assignment, that all of the rights to payment of
the principal or interest then due for payment shall thereupon vest in MBIA.
Upon payment by MBIA of any principal or interest payments with respect to any
Debt Obligation, MBIA shall succeed to the rights of the owner of such Debt
Obligation with respect to that payment.

The MBIA policies of insurance are not covered by the Property/Casualty
Insurance Security Fund specified in Article 76 of the New York Insurance Law.

Ratings of Bonds and Units. The Debt Obligations, as insured, have been rated
AAA by Standard & Poor's. In addition, Moody's has rated the Debt Obligations
backed by Portfolio Insurance Aaa. The Portfolio Insurance is effective only
while the Debt Obligations are retained in the Fund.

Standard & Poor's has rated the Units of the Insured Series AAA because of the
insurance on the Debt Obligations. The assignment of the AAA rating is due to
Standard & Poor's assessment of the creditworthiness of the Insurer and of its
ability to pay claims on its policies of insurance. In the event that Standard &
Poor's reassesses the creditworthiness of the Insurer which would result in the
Fund's rating being reduced, the Sponsors are authorized to direct the Trustee
to obtain additional insurance in order to maintain the AAA rating on the Units
(see Expenses and Charges).

The Insurers

Financial Security is a monoline property and casualty insurance company
incorporated in New York in 1984. It is a wholly-owned subsidiary of Financial
Security Assurance Holdings Ltd, which was acquired in 1989 by US West, Inc.
which is currently seeking to sell FSA. FSA is licensed to engage in the surety
business in 42 states and the District of Columbia. FSA is engaged exclusively
in the business of writing financial guaranty insurance on both tax-exempt and
non-municipal securities. As of September 30, 1994, Financial Security had
policyholders' surplus of approximately $369,000,000 and total admitted assets
of approximately $776,000,000. Copies of quarterly and annual financial
statements prepared in accordance with generally accepted accounting principles
are available upon written request to Financial Security Assurance Inc., 350
Park Avenue, New York, New York 10022, Attn: Market Development. Copies of the
statutory quarterly and annual statements filed with the State of New York
Insurance Department by Financial Security are available upon request to the
State of New York Insurance Department.

MBIA Corp. is the principal operating subsidiary of MBIA Inc. The principal
shareholders of MBIA Inc. were originally AEtna Casualty and Surety Company, The
Fund American Companies Inc., subsidiaries of CIGNA Cor-
4

<PAGE>
poration and Credit Local de France, CAECL, S.A. These shareholders now own
approximately 13% of the outstanding common stock of MBIA Inc. following a
series of four public equity offerings over a five-year period. As of September
30, 1994, MBIA had admitted assets of $3,314,000,000 and policyholders' surplus
of $1,083,000,000.

Moody's rates all bond issues insured by MBIA and BIG "Aaa" and short term
loans "MIG 1," both designated to be of the highest quality. Standard and Poor's
rates all issues insured by MBIA and BIG "AAA", short term debt A-1+ and notes
SP-1+. The Moody's rating of MBIA should be evaluated independently of the
Standard & Poor's rating of MBIA. No application has been made to any other
rating agency in order to obtain additional ratings on the Debt Obligations. The
ratings reflect the respective agency's current assessment of the
creditworthiness of MBIA and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency. The above ratings are
not recommendations to buy, sell or hold the Debt Obligations, and those ratings
may be subject to revision or withdrawal at any time by the rating agencies. Any
downward revision or withdrawal of either or both ratings may have an adverse
effect on the market price of the Debt Obligations. The above financial
information has been obtained from publicly available information. No
representation is made herein as to the accuracy or adequacy of the above
information relating to the Insurers or as to the absence of material adverse
changes since the information was made available to the public. The Sponsors are
not aware that the information herein is inaccurate or incomplete as of the date
hereof.

Regulation of Insurance Companies

Insurance companies are subject to regulation and supervision in the
jurisdictions in which they do business under statutes which delegate
regulatory, supervisory and administrative powers to state insurance
commissioners. This regulation, supervision and administration relate, among
other things, to: the standards of solvency which must be met and maintained;
the licensing of insurers and their agents; the nature of and limitations on
investments; deposits of securities for the benefit of policyholders; approval
of policy forms and premium rates; periodic examinations of the affairs of
insurance companies; annual and other reports required to be filed on the
financial condition of insurers or for other purposes; and requirements
regarding reserves for unearned premiums, losses and other matters. Insurance
regulation in many states also includes "assigned risk" plans, reinsurance
facilities, and joint underwriting associations, under which all insurers
writing particular lines of insurance within the jurisdiction must accept, for
one or more of those lines, risks unable to secure coverage in voluntary
markets. A significant portion of the assets of insurance companies is required
by law to be held in reserve for potential claims on policies and is not
available to general creditors.

Although the Federal government does not regulate the business of insurance,
Federal initiatives can significantly impact the insurance business. Current and
proposed Federal measures which may significantly affect the insurance business
include pension regulation (ERISA), controls on medical care costs, minimum
standards for no- fault automobile insurance, national health insurance,
personal privacy protection, tax law changes affecting life insurance companies
or the relative desirability of various personal investment vehicles and repeal
of the current antitrust exemption for the insurance business. (If this
exemption is eliminated, it will substantially affect the way premium rates are
set by all property-liability insurers). In addition, the Federal government
operates in some cases as a co-insurer with the private sector insurance
companies.

Insurance companies are also affected by a variety of state and Federal
regulatory measures and judicial decisions that define and extend the risks and
benefits for which insurance is sought and provided. These include judicial
redefinitions of risk exposure in areas such as products liability and state and
Federal extension and protection of employee benefits, including pension,
workers' compensation, and disability benefits. These developments may result in
short-term adverse effects on the profitability of various lines of insurance.
Longer-term adverse effects can often be minimized through prompt repricing of
coverages and revision of policy terms. In some instances these developments may
create new opportunities for business growth. All insurance companies write
policies and set premiums based on actuarial assumptions about mortality,
injury, the occurrence of accidents and other insured events. These assumptions,
while well supported by past experience, necessarily do not take account of
future events. The occurrence in the future of unforeseen circumstances could
affect the financial condition of one or more insurance companies. The insurance
business is highly competitive and with the deregulation of financial service
businesses, it should become more competitive. In addition, insurance companies
may expand into non-traditional lines of business which may involve different
types of risks.

The above financial information relating to the Insurance Companies has been
obtained from publicly available information. No representation is made as to
the accuracy or adequacy of the information or as to the absence of material
adverse changes since the information was made available to the public.

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FIRST GNMA SERIES

The Portfolio of the FIRST GNMA SERIES consists primarily of mortgage-backed
securities of the modified pass-through type fully guaranteed as to payment of
principal and interest by the Government National Mortgage Association ("GNMA").
An investment in Units should be made with an understanding of the risks which
an investment in fixed rate long-term debt obligations without prepayment
protection may entail, including the risk that the value of the Portfolio and
hence of the Units will decline with increases in interest rates and that
payments of principal may be received sooner than anticipated, especially if
interest rates decline. The potential for appreciation on the Securities, which
could otherwise be expected to result from a decline in interest rates, may tend
to be limited by any increased prepayments by mortgagors as interest rates
decline. In addition, prepayments of principal on Ginnie Maes purchased at a
premium over par will result in some loss on investment while prepayments on
Ginnie Maes purchased at a discount from par will result in some gain on
investment. The Sponsors cannot predict future economic policies or their
consequences or, therefore, the course or extent of interest rate fluctuations
in the future. (For a discussion of the average life of the Ginnie Maes and the
Fund see below under Payment of the Securities and Life of the Fund-First GNMA
Series.)

GNMA is a wholly-owned U.S. government corporation within the Department of
Housing and Urban Development. GNMA is authorized by Section 306(g) of Title III
of the National Housing Act to guarantee the timely payment of the principal of,
and interest on, certificates which are based on and backed by pools of
residential mortgage loans insured or guaranteed by the Federal Housing
Administration ("FHA"), the Farmers' Home Administration ("FMHA") or the
Department of Veteran's Affairs ("VA"). In order to meet its obligation under
its guaranty, GNMA may issue its general obligations to the United States
Treasury. In the event it is called upon at any time to make good its guaranty,
GNMA has the full power and authority to borrow from the Treasury of the United
States, if necessary, amounts sufficient to make payments of principal and
interest on the GNMA Certificates ("GNMA Pass-throughs" or "Ginnie Maes").

Section 306(g) provides further that the full faith and credit of the United
States is pledged to the payment of all amounts which may be required to be paid
under any guaranty under that subsection. An opinion of an Assistant Attorney
General of the United States, dated December 9, 1969, states that these
guaranties "constitute general obligations of the United States backed by its
full faith and credit." Any statement in this Prospectus that a particular
Security is backed by the full faith and credit of the United States is based
upon the opinion of an Assistant Attorney General of the United States and
should be so construed.

GNMA Pass-throughs. The Ginnie Maes are of the "modified pass-through" type,
the terms of which provide for timely monthly payments by the issuers to the
registered holders (including the Fund) of their pro rata shares of the
scheduled principal payments, whether or not collected by the issuers, on
account of the mortgages backing these Ginnie Maes, plus any prepayments of
principal of such mortgages received, and interest (net of the servicing and
other charges described above) on the aggregate unpaid principal balance of
these Ginnie Maes, whether or not interest on account of these mortgages has
been collected by the issuers. Ginnie Maes are guaranteed by GNMA as to timely
payment of principal and interest. Funds received by the issuers on account of
the mortgages backing the several issues of the Ginnie Maes are intended to be
sufficient to make the required payments of principal and interest on these
Ginnie Maes but, if these funds are insufficient for that purpose, the guaranty
agreements between the issuers and GNMA require the issuers to make advances
sufficient for these payments. If the issuers fail to make these payments GNMA
will do so. The full faith and credit of the United States is pledged to the
payment of all amounts which may be required to be paid under the guaranty. The
payment cycle of Ginnie Maes is 45 days between the date of security issuance
and the first investor payments.

Origination of Mortgage-Backed Securities. The pool of mortgages that is to
underlie a particular new issue of Ginnie Maes, such as the Ginnie Maes in the
Fund, is assembled by the proposed issuer of these Ginnie Maes. This issuer is
typically a mortgage banking firm, savings institution or commercial bank and in
every instance must be a mortgagee approved by and in good standing with the
FHA. In addition, GNMA imposes its own criteria on the eligibility of issuers,
including a net worth requirement and a requirement that a principal element of
its business operation be the origination or servicing of mortgage loans.

The mortgages which are to compose the new pool may have been originated by
the issuer itself in its capacity as a mortgage lender, or they may be acquired
by the issuer from a third party, such as another mortgage banker, a banking
institution, the VA, which in certain instances acts as a direct lender and thus
originates its own mortgages, or one of several other governmental agencies. All
mortgages in any given pool will be insured under the National Housing Act, as
amended ("FHA-insured") or Title V of the Housing Act of 1949 ("YMHA-insured")
or insured or guaranteed under Chapter 37 of Title 38, U.S.C. ("VA-guaranteed");
will have a date for the first scheduled monthly payment of principal and
interest that is not more than 24 months prior to the issue date of the Ginnie
Mae to be issued; will have homogeneity as to interest rate, maturity and type
of dwelling (e.g., project mortgages on
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apartment projects and hospitals will not be mixed with 1-to 4-family
mortgages); and will meet additional criteria of GNMA. All mortgages in the
pools backing the Ginnie Maes contained in the Portfolio are mortgages on 1-to
4- family dwellings (amortizing over a period of up to 30 years). In general,
the mortgages in these pools provide for equal monthly payments over the life of
the mortgage (aside from prepayments), designed to repay the principal of the
mortgage over this period, together with interest at a fixed rate on the unpaid
balance.

In seeking GNMA approval of a new pool, the issuer files with GNMA an
application containing information concerning itself, describing generally the
pooled mortgages, and requesting that GNMA approve the issue and issue its
commitment (subject to its satisfaction with the mortgage documents and other
relevant documentation) to guarantee the timely payment of principal of and
interest on the Ginnie Maes to be issued by the issuer on the basis of that
pool. If the application is in order, GNMA issues its commitment, assigning a
GNMA pool number to the pool. Upon completion of the required documentation,
including detailed information as to the underlying mortgages, a custodial
agreement with a Federal or state regulated financial institution satisfactory
to GNMA pursuant to which the underlying mortgages will be held in safekeeping,
and a detailed guaranty agreement between GNMA and the issuer, the issuance of
the Ginnie Maes is permitted, and GNMA, upon their issuance, endorses its
guaranty thereon. The aggregate principal amount of Ginnie Maes issued will be
equal to the then aggregate unpaid principal balances of the pooled mortgages.
The interest rate borne by the Ginnie Maes is currently fixed at .5 of 1% below
the interest rate of the pooled 1-to 4-family mortgages, the differential being
applied to the payment of servicing and custodial charges as well as GNMA's
guaranty fee.

Each group of Ginnie Maes described above as having a specified range of
maturities includes individual Ginnie Maes having varying ranges of maturities
within that mentioned. Each group is described as one category of Securities
with a single range of maturities because of current market conditions that
accord no difference in price among the Securities grouped together on the basis
of the difference in their maturity ranges. Accordingly, as long as this market
condition prevails, a purchase of securities with the same coupon rate and a
maturity date within the range mentioned above will be considered as an
acquisition of the same security.

The Ginnie Maes are based upon and backed by the aggregate indebtedness
secured by the underlying FHA- insured, FMHA-insured or VA-guaranteed mortgages
and, except to the extent of funds received by the issuers on account of these
mortgages, the Ginnie Maes do not constitute a liability of nor evidence any
recourse against the issuers, but recourse thereon is solely against GNMA.
Holders of Ginnie Maes have no security interest in or lien on the pooled
mortgages.

The GNMA guaranties referred to herein relate only to payment of principal of
and interest on the Ginnie Maes in the Portfolio and not to the Units offered
hereby.

CASH OR ACCRETION BOND SERIES AND SELECT SERIES

The Bonds in the Portfolios of the CASH OR ACCRETION BOND SERIES and SELECT
SERIES contain Compound Interest Bonds that initially do not make periodic
payments of interest. It should also be noted that the potential for
appreciation on the Securities which would otherwise be expected to result from
a decline in interest rates, may tend to be limited by any increased prepayments
by mortgagors as interest rates decline.

The Compound Interest Bonds contained in CASH OR ACCRETION BONDS SERIES and
SELECT SERIES initially do not pay either principal or interest, although they
do accrue interest. As used herein the term "Payment Commencement Date" means
the time prior to maturity at which all other classes of bonds of an issue
issued by the issuers have been fully paid and at which payment of interest and
principal on the Compound Interest Bonds commences. Prior to the Payment
Commencement Date of any Compound Interest Bond accrued but unpaid interest will
be added to principal and compounded, generally on a quarterly or semi-annual
basis, and additional Units will be issued to Holders and credited to the
accounts of Holders ratably on each semi-annual Unit Accretion Distribution Day.
Additional Units credited to Holders during this period may be sold at any time.
When all of the Compound Interest Bonds have reached their respective Payment
Commencement Dates, they pay interest and principal.

The value of the Compound Interest Bonds and therefore of the Units, may be
subject to greater fluctuations in response to changing interest rates than
obligations making current interest payments. During the period prior to their
Payment Commencement Dates, however, the Compound Interest Bonds provide a
substantial degree of protection from prepayment because no payments of
principal may be made on the Compound Interest Bonds until the principal amount
of the other classes of bonds issued by the respective issuers concurrently with
the Compound Interest Bonds have been paid in full. The Compound Interest Bonds
also provide protection from reinvestment risk because, during this initial
period, the accrued interest is added to principal and therefore automatically
reinvested at the same interest rate as the original principal amount of the
Compound Interest Bonds. Accordingly, an investor in the Units who does not
elect automatic liquidation, unlike an investor in a fund composed of customary
securities, lessens his risk of being unable to invest cash distributions at a
rate as high as the rate on the Compound
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Interest Bonds, but may forego the ability to reinvest fully at higher rates in
the future. (See Administration of the Fund--Automatic Unit Accretion
Liquidations below.) Because the interest on the Compound Interest Bonds accrues
but is not paid until their respective Payment Commencement Dates and because
these Bonds may have been originally issued at a price less than their original
stated principal amounts, the Compound Interest Bonds will be treated for
Federal income tax purpose as having "original issue discount". Holders of Units
will accordingly be required to report as taxable income, in each year, a
portion of this original issue discount prior to the receipt of the cash
attributable to such income (see Taxes below).

If a bankruptcy proceeding is commenced involving an issuer of a compound
interest or original issue discount security, under Section 502(b)(2) of Title
11 of the United States Code, generally the claim of holders of the security
would be limited to the initial public offering price of the security plus
accrued but unpaid interest and the amortized portion of the difference between
the original principal amount and the initial public offering price of the
security to the commencement of the proceeding. Similar limitations may result
under applicable state law. Similarly, the respective Bond Indentures under
which the Compound Interest Bonds were issued generally provide that the bond
trustee named in the Bond Indenture as the registered holder of the primary
collateral for the Compound Interest Bonds (the "Bond Trustee") may accelerate
the Compound Interest Bonds if an event of default occurs and is continuing.
Under these circumstances, the claim of a holder of a Compound Interest Bond may
be limited to an amount equal to the then outstanding principal amount of the
Compound Interest Bond plus accrued interest to the date of actual payment.

For CASH OR ACCRETION BOND SERIES and SELECT SERIES, principal and interest
payments received by a Bond Trustee will generally be used to pay interest on
and the outstanding principal amount of classes of bonds with earlier stated
maturities issued by the issuers of the Compound Interest Bonds before any
principal or interest payments are applied to pay the principal or interest on
the Compound Interest Bonds included in the Portfolio. For certain Bond issues,
the initial principal payments may be paid into a fund held by the Bond Trustee
and, together with any cash reserves deposited by the issuer which may be used
by the Bond Trustee to make any required payments of principal and interest on
the bonds to the extent cash is not otherwise available, reinvested on behalf of
the bondholders (including the Fund). Whenever, because of the reinvestment rate
of interest, the amount of principal being prepaid or otherwise, the Bond
Trustee does not believe it will have sufficient collateral if all the bonds
remain outstanding, the Bond Trustee will prepay the appropriate amount of bonds
so that the bonds then outstanding will be fully collateralized. The Bonds may
also be redeemed at the option of the issuer under circumstances permitted under
the respective Bond Indentures.

The Fund may be an appropriate medium for investors who desire to participate
in a portfolio of taxable fixed income bonds offering the safety of capital
provided by an investment which is primarily secured by collateral backed by the
guarantees of GNMA, FNMA or FHLMC (see below) and who wish to have a degree of
prepayment protection from the effects of redemption by the issuers of similar
securities due to the call protection features of the Bonds.

The Bond Indentures require that the collateral for the Bonds of each issuer
include Ginnie Maes, Fannie Maes or Freddie Macs with a principal amount which,
together with any other collateral for the bonds held by the Bond Trustee for
payments of principal on the bonds, will be at least equal to the aggregate
unpaid principal amount of the bonds, and for the Ginnie Maes, Fannie Maes or
Freddie Macs and other collateral held by the Bond Trustee for the bonds to
produce a cash flow sufficient to make interest payments required to be made on
the outstanding bonds until the earlier of the maturity of the bonds or their
redemption. The foregoing assumes that there will be timely payment of principal
and interest on the Ginnie Maes, Fannie Maes or Freddie Macs, that the issuers
and the Bond Trustees will comply with the provisions of the Bond Indentures,
and that collateral for the Bonds of each issuer is invested by the Bond Trustee
in a manner which will produce the return anticipated at the time such
investments are made. Frequently, as a condition to the issuance of a rating on
the bonds, the rating agency will require the issuer to deposit excess
collateral with the Bond Trustee to insure the availability of funds to make
payments on outstanding bonds. This other collateral may include cash reserves
or letters of credit which may be drawn upon to satisfy cash requirements. Thus,
the Sponsors believe that the Bonds will be fully collateralized at all times.

GNMA. For a description of GNMA and Ginnie Maes, see above under First GNMA
Series.

FNMA. The Federal National Mortgage Association ("FNMA") is a Federally
chartered, privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act. It is the nation's largest supplier
of residential mortgage funds. FNMA was originally established in 1938 as a
United States government agency to provide supplemental liquidity to the
mortgage market but was transformed into a stockholder owned and privately
managed corporation by legislation enacted in 1968. The Secretary of Housing and
Urban Development exercises general regulatory power over FNMA. Although the
Secretary of the Treasury has discre-
8

<PAGE>
tionary authority to lend FNMA up to $2.25 billion outstanding at any time,
neither the United States nor any agency thereof is obligated to finance FNMA's
obligations or to assist FNMA in any other matter, and obligations issued by
FNMA are not guaranteed by and do not constitute a debt or obligation of the
United States or of any agency or instrumentality thereof other than FNMA. FNMA
provides funds to the mortgage market primarily by purchasing home mortgage
loans from local lenders, thereby replenishing funds for additional lending.
FNMA acquires funds to purchase home mortgage loans from many capital market
investors which may not ordinarily invest in mortgages, thereby expanding the
total amount of funds available for housing.

FNMA Pass-throughs ("Fannie Maes"). Fannie Maes are certificates of beneficial
interest evidencing pro rata undivided ownership interests in pools of
residential mortgages either previously owned by FNMA or purchased by it in
connection with the formation of a pool. FNMA guarantees the full and timely
payment of principal and interest (adjusted to the pass-through rate) on the
mortgage loans in the pool, whether or not received by FNMA or recovered by it
in foreclosure. If FNMA were unable to fulfill its guaranty, distributions to
holders of FNMA Certificates would consist solely of payments and other
recoveries upon the underlying mortgages, and, accordingly, delinquencies and
defaults would diminish distributions to the holders.

FHLMC. The Federal Loan Mortgage Corporation ("FHLMC") is a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970 (the "FHLMC Act"). The principal activity of FHLMC consists
of the purchase of the first lien, fixed rate conventional mortgage loans and
participations therein and the resale of these loans as participation
certificates. Mortgage loans retained by FHLMC are financed by debt and equity
capital.

FHLMC PCs ("Freddie Macs"). Freddie Macs represent an undivided interest in
identified pools of residential mortgages (a "FHLMC Certificate group")
purchased by FHLMC. Each mortgage loan must meet the applicable standards set
forth in the FHLMC Act. A FHLMC Certificate group may include whole loans,
participation interests in whole loans and undivided interest in whole loans or
participations comprising another FHLMC Certificate group. FHLMC guarantees the
full and timely payment of interest at the rate provided for by Freddie Macs on
the unpaid principal balance outstanding on the underlying mortgage loans in the
FHLMC Certificate group represented by the Freddie Mac, whether or not received.
FHLMC also guarantees collection of all principal on the underlying mortgage
loans, without any offset or deduction, but does not guarantee the timely
payment of scheduled principal. Freddie Macs are not guaranteed by the United
States or by any Federal Home Loan Bank and do not constitute debts or
obligations of the United States or any Federal Home Loan Bank. The obligations
of FHLMC under its guarantee are obligations solely of FHLMC and are not backed
by, nor entitled to, the full faith and credit of the United States.

Liquidity. The Bonds in the Portfolio have been registered under the
Securities Act of 1933 and, therefore, may be sold by the Fund at any time to
provide funds for purposes of redemption of Units. However, the Securities are
generally not listed on a national securities exchange or on the National
Association of Securities Dealers Automated Quotation System, Inc. Whether or
not the Securities are listed, the principal trading market for the Securities
will generally be in the over-the-counter market. As a result, the existence of
a liquid trading market for the Securities may depend on whether dealers will
make a market in the Securities. There can be no assurance that a market will be
made for any of the Securities, that any market for the Securities will be
maintained or of the liquidity of the Securities in any markets made. The price
at which the Securities may be sold to meet redemptions and the value of the
Fund will be adversely affected if trading markets for the Securities are
limited or absent. However, taking into account the foregoing and other factors,
the Sponsors believe that the Standard & Poor's rating of the Bonds and the
nature of the Ginnie Maes, Fannie Maes or Freddie Macs and other collateral
securing payments of principal and interest due on the Bonds make the Bonds
adequately marketable for purposes of redemptions of Units by the Fund Trustee
(see Redemption).

Limited Assets and Limited Liability. Except as indicated under Investment
Summary in Part A, the issuers of the Bonds generally are limited purpose
corporations organized solely for the purpose of issuing GNMA, FNMA or
FHLMC-collateralized bonds. The issuers thus do not have, nor are they expected
in the future to have, any significant assets other than assets pledged to
secure the GNMA, FNMA or FHLMC-collateralized bonds issued by them. None of the
Bonds are guaranteed by the parent company or any other affiliate of any issuer.
Consequently, holders of the Bonds (including the Fund) must rely upon payments
on the collateral securing Bonds for the payment of principal and interest due.
If the collateral is insufficient to make payments on those Bonds, it is
unlikely that any other asset of the issuer will be available for payment of the
deficiency. The collateral securing the Bonds of each issuer will be held by the
Bond Trustee as security for the bonds of that issuer. Although payment of
principal of, and interest on, Ginnie Maes, Fannie Maes or Freddie Macs securing
the Compound Interest Bonds is guaranteed by GNMA, FNMA or FHLMC, the Bonds
represent obligations solely of the issuers and are not insured or guaranteed by
GNMA, FNMA or FHLMC or any other governmental agency. A default with respect to
the Bonds
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<PAGE>
of a particular issuer may not necessarily result from a corresponding default
with respect to the Ginnie Maes, Fannie Maes or Freddie Macs securing those
Bonds.

Sale of Collateral on Default; Interest Rate Fluctuations. If an event of
default occurs with respect to the Bonds of any issuer and the bonds are
declared due and payable, there can be no assurance that the collateral securing
the bonds will be sufficient to pay the principal and interest then due on the
bonds. The value of the Ginnie Maes, Fannie Maes or Freddie Macs securing the
bonds and the value of the property in which other collateral for the bonds have
been invested in accordance with the respective Bond Indentures ("Eligible
Investments") will fluctuate with changes in prevailing rates of interest
generally. Consequently, the Ginnie Maes, Fannie Maes or Freddie Macs and the
Eligible Investments may have to be liquidated at a discount from par value or
from their purchase price, in which case the proceeds of liquidation might be
less than the outstanding principal and interest due on the bonds. In that
event, the issuer of the bonds may be unable to pay in full the principal and
interest due on the bonds. However, the Bond Indentures generally provide that
the Bond Trustees may, in their discretion if they determine the action to be in
the best interests of the bondholders, refrain from liquidating the collateral
for the bonds if the collateral continues to provide sufficient funds for the
payment of principal of, and interest on, the bonds as the principal and
interest would have become due had the bonds not been declared due and payable.
The Bond Trustee would then continue to apply payments received from the Ginnie
Maes, Fannie Maes or Freddie Macs and other collateral to the payment of
principal and interest on the bonds and for other purposes as provided in the
respective Bond Indentures. Furthermore, the Bond Indentures may prohibit the
Bond Trustee from selling the Ginnie Maes, Fannie Maes or Freddie Macs and the
other collateral unless (i) the proceeds from the sale are sufficient to pay in
full the principal and accrued interest on the outstanding bonds of the Issuer
at the date of the sale or (ii) the Bond Trustee determines that the Ginnie
Maes, Fannie Maes or Freddie Macs and the other collateral would not be
sufficient on an ongoing basis to make all payments on the bonds as they would
have become due if the bonds had not been declared immediately due and payable
and the Bond Trustee obtains, pursuant to the requirements of the relevant Bond
Indenture, the consent of the requisite number of holders (including the Fund)
of all or substantially all of the bonds.

Payments Directly to the Issuers and Withdrawals of Collateral. The Bond
Indentures pursuant to which the Bonds were issued may provide either that the
issuer may recalculate the amount of collateral required by the Bond Indenture
and may, under certain circumstances, withdraw excess collateral from the lien
of the Bond Indenture, or that the Bond Trustee may, under certain
circumstances, release to the issuer certain excess proceeds of the collateral
from the lien of the Bond Indenture. Any amount so paid to any issuer will no
longer be subject to the lien of the Bond Indenture or available to make
payments on outstanding Bonds of the issuer.

PREFERRED STOCK PUT SERIES

An investment in Units of the Fund should be made with an understanding of the
risks which an investment in preferred stocks may entail, including the risk
that the value of the Portfolio and hence of the Units will decline with
increases in interest rates. There have been recent wide fluctuations in
interest rates and thus in the value of preferred stocks generally. The Sponsors
cannot predict future economic policies or their consequences, or, therefore,
the course or extent of any similar fluctuations in the future.

Holders of preferred stocks of the type held in the Portfolio have the right
to receive dividends at a fixed or adjustable rate, as the case may be, when and
as declared by the issuer's Board of Directors but do not participate in other
amounts available for distribution by the issuing corporation. Preferred stock
dividends must be paid before common stock dividends and any cumulative
preferred stock dividend omitted is added to future dividends payable to holders
of the cumulative preferred stock before holders of common stock may receive a
dividend. For that reason, preferred stocks entail less risk than common stocks.
Preferred stocks are, however, equity securities in the sense that they do not
represent a liability of the issuer and therefore do not offer as great a degree
of protection of capital or assurance of continued income as investments in
corporate debt securities. In addition, the issuance of debt securities or
senior issues of preferred stock may create prior claims for payment of
principal, interest and dividends which could adversely affect the ability of
the issuer to pay dividends or the rights of holders of preferred stock with
respect to the assets of the issuer upon liquidation.

From time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. Enactment into law of such a proposal would
adversely affect the after-tax return to corporate investors who can take
advantage of the deduction.

Sellers

The Securities in these Funds were acquired from one or more savings banks,
savings and loan associations and similar institutions ("thrifts") or insurance
companies or affiliates of any of the foregoing (the "Seller" or "Sellers")
which have committed under certain circumstances described below to repurchase
the Securities from
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the Fund ("purchase commitment"). In view of the fact that each Security is
backed by a purchase commitment of a Seller, an investment in Units of these
Funds should be made with an understanding of the characteristics of these
institutions and of the risks which such an investment may entail.

An investment in Units of a Fund containing any of these types of
credit-supported Bonds should be made with an understanding of the
characteristics of the commercial banking and thrift industries and of the risks
which an investment in Units may entail. Banks and thrifts are subject to
extensive governmental regulations which may limit both the amounts and types of
loans and other financial commitments which may be made and interest rates and
fees which may be charged. The profitability of these industries is largely
dependent upon the availability and cost of funds for the purpose of financing
lending operations under prevailing money market conditions. Also, general
economic conditions play an important part in the operations of this industry
and exposure to credit losses arising from possible financial difficulties of
borrowers might affect an institution's ability to meet its obligations. These
factors also affect bank holding companies and other financial institutions,
which may not be as highly regulated as banks, and may be more able to expand
into other non-financial and non-traditional businesses.

In December 1991 Congress passed and the President signed into law the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") and the
Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991. Those laws imposed many new limitations on the way in which banks, savings
banks, and thrifts may conduct their business and mandated early and aggressive
regulatory intervention for unhealthy institutions.

Investors should recognize that they are subject to having all or part of the
principal amount of their investment returned prior to the termination date of
the Fund if a thrift becomes or is deemed to be insolvent or in any of the
situations outlined under Purchase Commitments below.

The thrift industry has experienced severe strains as demonstrated by the
failure of numerous savings banks and savings and loan associations. One
consequence of this was the insolvency of the deposit insurance fund of the
Federal Savings and Loan Insurance Corporation ("FSLIC"). As a result, in 1989
Congress enacted the Financial Institutions Reform, Recovery and Enforcement Act
("FIRREA") which significantly altered the legal rules and regulations governing
banks and thrifts. Among other things, FIRREA abolished the FSLIC and created a
new agency, the Resolution Trust Corporation ("RTC"), investing it with certain
of the FSLIC's powers. The balance of the FSLIC's powers were transferred to the
Federal Deposit Insurance Corporation ("FDIC"). Under FIRREA, as subsequently
amended, the RTC is normally appointed as receiver or conservator of thrifts
that fail between January 1, 1989 and a date that may occur as late as July 1,
1995 if their deposits, prior to FIRREA, were insured by the FSLIC. The FDIC is
normally appointed as receiver or conservator for all thrifts the deposits of
which, before FIRREA, were insured by the FDIC, and those thrifts the deposits
of which, prior to FIRREA, were insured by the FSLIC that fail on or after the
RTC appointment period.

In certain cases, the Sponsors have agreed that the sole recourse in
connection with any default, including insolvency, by thrifts whose
collateralized letter of credit, guarantee or Purchase Commitments may back any
of the Debt Obligations will be to exercise available remedies with respect to
the collateral pledged by the thrift; should the collateral be insufficient, the
Fund will, therefore, be unable to pursue any default judgment against that
thrift. Certain of these collateralized letters of credit, guarantees or
Purchase Commitments may provide that they are to be called upon in the event
the thrift becomes or is deemed to be insolvent. Accordingly, investors should
recognize that they are subject to having the principal amount of their
investment represented by a Debt Obligation secured by a collateralized letter
of credit, guarantee or Purchase Commitment returned prior to the termination
date of the Fund or the maturity or disposition dates of the Debt Obligation, if
the thrift becomes or is deemed to be insolvent, as well as in any of the
situations outlined under Purchase Commitments below.

FIRREA generally permits the FDIC or the RTC, as the case may be, to prevent
the exercise of a Seller's Insolvency purchase commitment and empowers that
agency to repudiate a Seller's contracts, including a Seller's other purchase
commitments. FIRREA also creates a risk that damages against the FDIC or RTC
would be limited and that investors could be left without the full protections
afforded by the Purchase Commitments and the Collateral. Policy statements
adopted by the FDIC and the RTC concerning collateralized purchase commitments
have partially ameliorated these risks for the Funds. According to these policy
statements, the FDIC or the RTC, as conservator or receiver, will not assert the
position that it can repudiate the purchase commitments without the payment of
damages from the collateral, and will instead either (i) accelerate the
collateralized purchase commitments, in which event payment will be made under
the purchase commitments to the extent of available collateral, or (ii) enforce
the purchase commitments, except that any insolvency clause would not be
enforceable against the FDIC and the RTC. Should the FDIC choose to accelerate,
however, there is some question whether the payment made would include interest
on the defaulted Debt Obligations for the period after the appointment of the
receiver or conservator through the payment date.

<PAGE>
The RTC has also given similar comfort with respect to collateralized letters
of credit, but the FDIC has not done so at this time. Consequently, there can be
no assurance that collateralized letters of credit issued by thrifts for which
the FDIC would be the receiver or conservator appointed, as described three
paragraphs earlier, will be available in the event of the failure of any such
thrift.

The possibility of early payment has been increased significantly by the
enactment of FDICIA, which requires federal regulators of insured banks, savings
banks, and thrifts to act more quickly to address the problems of
undercapitalized institutions than previously, and specifies in more detail the
actions they must take. One such requirement virtually compels the appointment
of a receiver or conservator for any institution when its ratio of tangible
equity to total assets declines to two percent. Others force aggressive
intervention in the business of an institution at even earlier stages of
deterioration. Upon appointment of a receiver, if the FDIC of RTC pays as
provided, in the policy statements and notwithstanding the possibility that the
institution might not have deteriorated to zero book net worth (and therefore
might not satisfy traditional definitions of "insolvent"), the payment could
therefore come substantially earlier than might have been the case prior to
FDICIA.

Each Seller has made its purchase commitments only with respect to Securities
which that Seller has sold; consequently, if a particular Seller fails to meet
its commitments, no recourse is available against any other Seller. The Sponsors
have agreed that the sole recourse in connection with any default, including
insolvency, by a Seller whose purchase commitments are collateralized will be to
exercise available remedies with respect to that Seller's Collateral on deposit
with the Collateral Agent; should this Collateral be insufficient, therefore, it
will not be possible to pursue any default judgment against the Seller.

Each Seller that is subject to regulations by the New York Superintendent of
Banks has agreed to provide without charge to each person to whom this
prospectus is delivered, upon written request, a copy of its financial statement
most recently prepared for delivery to depositors in accordance with the banking
laws of the State of New York and the regulations prescribed by the New York
Superintendent of Banks thereunder. Each Seller which is a thrift that is not
subject to regulation by the New York Superintendent of Banks has agreed to
provide without charge to each person to whom this prospectus is delivered, upon
written request, a copy of its most recent audited financial statements. Each
Seller that is an insurance company has agreed to provide without charge to each
person to whom this prospectus is delivered, upon written request, a copy of its
financial statements most recently prepared for delivery to policy holders in
accordance with the insurance laws of the jurisdiction under which the Seller is
chartered or otherwise organized and the regulations thereunder, or other
applicable laws, rules and regulations. Written requests should be directed to
the Trustee.

Purchase Commitments

Pursuant to a purchase commitment made by each Seller, the Trustee may at any
time not later than two hours after the Evaluation Time on any Purchase Date
(annual for the FIRST THROUGH THIRD PREFERRED STOCK PUT SERIES and semi-annual
for subsequent Preferred Stock Put Series) as set forth under Investment Summary
in Part A (or if a Purchase Date is not a business day, on the next business day
thereafter), deliver written notice requiring the Seller of any Security sold by
it to the Fund to purchase the Security if necessary to satisfy redemptions of
Units (a "Liquidity Purchase"). Settlement of the purchase of a Security by a
Seller will occur on the seventh calendar day following the Purchase Date (or if
the seventh calendar day is not a business day, on the next business day
thereafter).

Each Seller, severally and not jointly, has also made the following
commitments with respect to each Security sold by it: (i) to purchase at any
time on 14 calendar days' notice (seven calendar days' notice for the Sixth
Preferred Stock Put Series) any Security if the issuer should fail to make any
sinking fund or other redemption payments related to the Securities it has
issued or fail to declare and pay a dividend at a rate at least equal to the
dividend rate prescribed for the Preferred Stock at issuance (the "Stated
Dividend Rate") (a "Default Purchase"); (ii) to purchase at any time immediately
(on 14 calendar days' notice for the FIRST PREFERRED STOCK PUT SERIES) all
Securities if a Seller becomes or is deemed to be bankrupt or insolvent (an
"Insolvency Purchase"); and (iii) (except with respect to the FIRST PREFERRED
STOCK PUT SERIES) to purchase on 14 calendar days' notice (seven calendar days'
notice for the SIXTH PREFERRED STOCK PUT SERIES) prior to the Final Disposition
Date as listed under Portfolio all Preferred Stocks remaining in the Fund on the
Final Disposition Date (a "Disposition Purchase"). (With respect to clause (ii)
of the previous sentence, although a bankrupt Seller would likely be incapable
of honoring the Insolvency Purchase commitment, for the SECOND PREFERRED STOCK
PUT AND SUBSEQUENT PUT SERIES the Insolvency Purchase commitment would create
for the Fund an immediate right to the Seller's collateral. The ability of the
Fund to exercise this right is described above under Sellers.)

Any purchase of a Security from the FIRST PREFERRED STOCK PUT SERIES as
described in this paragraph will be at a price (the "Put Price") equal to the
fair market value of the Preferred Stock together with the Default and
Insolvency Purchase Commitments on the fifty-third day after the Date of
Deposit, as determined by the Evaluator. The
12

<PAGE>
Put Price of a Security purchased from the SECOND THROUGH FIFTH PREFERRED STOCK
PUT SERIES as described in this paragraph will be equal to the cost of that
Security to the Fund increased or decreased by any increase or decrease in the
evaluation of that Security without the purchase commitments between the Date of
Deposit and the forty- sixth day after settlement for purchase of the Preferred
Stocks. For the SIXTH PREFERRED STOCK PUT SERIES, the Put Price for any
Liquidity or Disposition Purchase of a Security will be equal to its original
cost to the Fund, while any Default or Insolvency Purchase will be at its Put
Price plus (or minus) the portion of any discount (or premium) which has accrued
(or amortized) to the repurchase date. With respect to any missed dividend, any
purchase will also include an amount equal to such missed dividend. With respect
to the FIRST PREFERRED STOCK PUT SERIES, the amount for any missed dividend will
be calculated so that every Holder receives what he would have received from the
payment of the dividend, after taxes and other applicable charges, were he
subject to Federal income taxation at the maximum tax rate applicable to
corporations and entitled to a deduction for dividends received by the Fund at
the maximum percentage applicable to corporations.

If the sale of a Security by the Fund to a third party is necessary to satisfy
redemptions of Units prior to the Security's final redemption or disposition
date, the related Liquidity Purchase and Disposition Purchase commitments will
be transferable and will be exercisable by the buyer free from the restriction
that the annual or semi- annual purchase right may only be exercised to satisfy
redemption of Units. The Default Purchase and Insolvency Purchase commitments
also will not terminate upon disposition of the Security by the Fund. Prior to
the sale of Securities by the Fund to a third party, the Seller will have the
right to purchase the Securities at a price equal to the greater of the Put
Price or the price offered by the third party (then current market value or may
separately pay for the cancellation of all or some of the purchase commitments
related thereto for the FIRST PREFERRED STOCK PUT SERIES).

In addition, with respect to the FIRST PREFERRED STOCK PUT SERIES, under
certain circumstances relating to actions by Federal or state regulatory
authorities, the Seller has the right to substitute a new obligor for the
purchase commitments so long as (i) the Units would continue to be rated AAA by
Standard & Poor's; (ii) the new obligor shall have issued or guaranteed
obligations rated AAA by Standard & Poor's; and (iii) the fair market value of
the Seller's Securities, including its purchase commitments, after the
substitution shall, in the opinion of the Evaluator, remain at least 97.5% of
their fair market value prior to the substitution. As a condition to its sale of
the Securities, the Seller has required that it be permitted to act as agent
with respect to waivers, amendments or other modifications to the Securities
sold by it. As agent, the Seller shall make all decisions regarding amendments
to the Securities sold by it, but prior to taking any action relating to the
face amount, liquidation value, dividend rate or redemption schedule of a
Security, it shall notify the Agent for the Sponsors whether it recommends
approval or rejection of the proposed change. In the event that the Agent for
the Sponsors disapproves of the proposed action, the Seller will have a right to
purchase the Security at a price equal to no less than its Put Price.

Collateralized Purchase Commitments (SECOND AND SUBSEQUENT PREFERRED STOCK PUT
SERIES)

The purchase commitments of each Seller to these Series are secured by a
security interest in "Eligible Collateral". Eligible Collateral may consist of
mortgage-backed securities issued by private parties and guaranteed as to full
and timely payment of interest and principal by GNMA or FNMA, mortgage-backed
securities issued and guaranteed as to full and timely payment of interest and
full collection of principal by FHLMC, conventional, FHA insured, VA guaranteed
and privately insured mortgages ("Mortgages"), debt obligations of states and
their political subdivisions and public authorities ("Municipal Obligations"),
debt obligations of public nongovernmental corporations, or in the case of the
SIXTH PREFERRED STOCK PUT SERIES, preferred stocks of such corporations
("Corporate Obligations"), U.S. Government securities and cash. For a
description of GNMA, FNMA and FHLMC obligations, see above under Cash or
Accretion Bond Series and Select Series. The remaining types of Eligible
Collateral are described below. In addition, Eligible Collateral may also
consist of other securities with collateral requirements specified by the
Sponsors. The types of Eligible Collateral and the lowest required percentages
of the aggregate market value of each type to the aggregate Put Prices of the
Securities (the "Collateral Requirements") are as follows:

<PAGE>
<TABLE>
<CAPTION>
REQUIRED
TYPES OF ELIGIBLE COLLATERAL PERCENTAGE
------------------------------------------ -----------

<S> <C>
Cash. . . . . . . . . . . . . . . . . . . 105%
U.S. Governments. . . . . . . . . . . . . 113
GNMA Pass-Throughs. . . . . . . . . . . . 145
FNMA Pass-Throughs. . . . . . . . . . . . 155
FHLMC PCs. . . . . . . . . . . . . . . . 155
Mortgages. . . . . . . . . . . . . . . . 170
Municipal Obligations. . . . . . . . . . 150
Corporate Obligations--Bonds. . . . . . . 155
Corporate Obligations--Preferred Stocks. 160

</TABLE>

The market value of all collateral other than cash is to be determined no less
often than quarterly. If on any valuation date it is determined that the
aggregate market value of the Eligible Collateral does not satisfy the
applicable Collateral Requirements, additional Eligible Collateral must be
delivered. Eligible Collateral may be withdrawn or substituted at any time,
provided that the remaining or substituted Eligible Collateral meets the
applicable Collateral Requirements. Although the Sponsors believe that the
Collateral Requirements are sufficient to provide a high degree of protection
against loss on the Preferred Stocks, investors in the Units should be aware
that if liquidation of the collateral is required and proves insufficient to
provide for payment in full of the Put Price and any past unpaid dividends on
such Preferred Stocks, then the full amount of their investment could not be
returned.

Mortgages--In order to be eligible as Collateral a Mortgage must either be
insured by FHA or guaranteed by VA or must (i) secure a loan not in excess of
80% of the lesser of the purchase price or appraised value, (ii) be secured by
a first lien on a single-family (one unit) detached structure that at the time
of origination was owner-occupied and designated and intended for use as a
primary residence, (iii) not have had any payment of principal or interest or
escrow payment in arrears for 60 or more days at any time during the twelve
months preceding its pledge date and, as of its pledge date, have no payments
more than 30 days due and unpaid, (iv) provide for level monthly payments of
principal and interest for an original term to maturity not in excess of 30
years, (v) bear interest at a fixed annual rate and (vi) if originated
subsequent to January 1, 1977, be written on then-applicable FHLMC/FNMA
documentation.

FHA Insurance--The regulations governing the FHA single family programs
under which a Mortgage may be insured provide that a mortgage will be
considered to be in default if the mortgagor fails to make any payment or
perform any other obligation under the mortgage and such failure continues for
a period of thirty days. Insurance benefits are payable to the mortgagee
either upon foreclosure or other acquisition of the property (which, in either
case, may be subject to certain delays) or upon assignment of the defaulted
mortgage to the United States Department of Housing and Urban Development
("HUD"). Under most FHA insurance programs for single family residences the
Federal Housing Commissioner has the option of paying insurance claims in cash
or in debentures, although current FHA policy is to pay insurance claims in
cash.

VA Guarantee--Claims for the payment of a VA guarantee may be submitted
when any default of the mortgagor continues for a period of three months. A
guarantee may be paid without the mortgagee instituting foreclosure
proceedings or otherwise acquiring title. The maximum amount of guarantee that
may be paid is limited to the lesser of (1) sixty percent (60%) of the
original principal balance of the mortgage loan or (2) $27,500 for mortgage
loans made on or after October 7, 1980. The liability on the guarantee is
reduced or increased pro rata with any reduction or increase in the amount of
the indebtedness.

Private Mortgage Insurance--Private mortgage insurance policies currently
being issued by private mortgage insurers approved by FHLMC contain provisions
substantially as follows: (a) the private mortgage insurer must pay a claim,
including unpaid principal, accrued interest and certain expenses, within 60
days of presentment of the claim by the insured; (b) in order for the insured
to present a claim, the insured must have acquired, and tendered to the
insurer, title to the property free and clear of all liens and encumbrances
including any right of redemption by the mortgagor; (c) when a claim is
presented, the insurer will have the option of paying the claim in full and
taking title to the property and arranging for its sale or of paying the
insured percentage of the claim (the insured percentages vary but are
customarily 20-25% of the claim) and allowing the insured to retain title to
the property; and (d) claims may also be settled by the insurer at the option
of the insured for actual losses where such losses are less than the insured
percentage of the claim.

Delays in Foreclosure--Mortgages insured by FHA or guaranteed by VA are
subject to current Federal regulations which provide that a mortgagee may not
initiate foreclosure proceedings on an FHA insured or VA
14

<PAGE>
guaranteed loan unless at least three full monthly installments are due and
unpaid. An administrative appeal prior to foreclosure is available to a
mortgagor, and, if the mortgagor utilizes this procedure, the foreclosure may
be delayed an additional three months. No delay in the foreclosure action is
required if the property is encumbered by an FHA/VA mortgage and is abandoned
by the mortgagor.

Municipal Obligations--Debt Obligations issued by or on behalf of states or
their political subdivisions or public authorities, bearing interest at a
fixed or variable rate, insured as to timely payments of principal and
interest due and rated at least BBB by Standard & Poor's (or another
acceptable rating agency).

U.S. Government Securities--Direct obligations of the United States that
mature within 30 years at the time of being pledged under the Collateral
Agreement.

Corporate Obligations--Marketable direct obligations of public,
nongovernmental corporations payable in U.S. dollars, bearing dividends or
interest at a fixed or variable rate and rated at least A, or marketable
preferred stocks bearing dividends rated at least BBB, by Standard & Poor's
(or another acceptable rating agency at the time rating the Fund).

Liquidity

All of the Securities in PREFERRED STOCK PUT SERIES were purchased by the
Sponsors from the Sellers and were originally acquired by one of the Sellers in
the ordinary course of its business and held in its investment portfolio or the
portfolios of its subsidiaries prior to the sale of the Sponsors. There may be
no established secondary market for certain of the Securities initially
deposited in the Portfolios of these Series. However, based upon the experience
of the Sponsors in the markets which are established for similar Securities and
based upon the Sponsors' analysis of the market for Securities similar to those
in the Portfolio (including Securities subject to purchase commitments and
"puts" which have been marketed to the public in recent years) for which there
is no established market, the Sponsors believe that there should be a readily
available market among institutional investors for these Securities in the event
it is necessary to sell these Securities to meet redemptions of Units. In
addition, upon the sale of a Security to meet redemptions by the Fund to a third
party prior to the Security's final redemption or disposition date, the related
Liquidity Purchase and any Disposition Purchase commitment will be exercisable
by the buyer free from the restriction that the annual or semi-annual purchase
right may only be exercised to satisfy redemptions of Units.

Liquidity of the Fund is additionally augmented by the Sellers' Liquidity
Purchase commitments in the event it is necessary to sell any Securities to meet
redemptions of Units. There can be no assurance that the prices that can be
obtained for the Securities at any time in the open market will exceed the Put
Prices of the Securities. In addition, the Evaluator has valued the Securities
due in large part to the existence of the Sellers' Liquidity Purchase and any
Disposition Purchase commitments, which are transferable if the Security is sold
to meet redemptions. Because these Purchase commitments may be called upon
during the life of the Fund, the Securities are comparable to short-term
instruments and carry a yield comparable to instruments of short-term maturity
issued by obligors of similar credit standing.

The Portfolio may consist partly of privately placed issues of Securities. Any
privately placed issues, while not registered under the Securities Act of 1933,
have in most cases been held by the Sellers for more than three years and would
therefore generally be transferable in the open market without registration. Any
Securities that are not freely transferable should be readily marketable to
institutional investors. However, if the Sellers should become unable to honor
their purchase commitments and the Trustee is consequently forced to sell these
Securities in the open market, it is possible that the price realized on this
sale of these Securities would be adversely affected by the absence of an
established secondary market for certain of these Securities.

OTHER RISK FACTORS

As set forth under Investment Summary in Part A, the Fund may contain or be
concentrated in one or more of the classifications of obligations referred to
below. An investment in Units of the Fund should be made with an understanding
of the risks which these investments may entail, certain of which are described
below.

Utilities

The ability of utilities to meet their obligations with respect to revenue
bonds issued on their behalf is dependent on various factors, including the
rates they may charge their customers, the demand for a utility's services and
the cost of providing those services. Utilities, in particular investor-owned
utilities, are subject to extensive regulation relating to the rates which they
may charge customers. Utilities can experience regulatory, political and
consumer resistance to rate increases. Utilities engaged in long-term capital
projects are especially sensitive to regulatory lags in granting rate increases.
Any difficulty in obtaining timely and adequate rate increases could adversely
affect a utility's results of operations.

<PAGE>
The demand for a utility's services is influenced by, among other factors,
competition, weather conditions and economic conditions. Electric utilities, for
example, have experienced increased competition as a result of the availability
of other energy sources, the effects of conservation on the use of electricity,
self-generation by industrial customers and the generation of electricity by
co-generators and other independent power producers. Also, increased competition
will result if federal regulators determine that utilities must open their
transmission lines to competitors. Utilities which distribute natural gas also
are subject to competition from alternative fuels, including fuel oil, propane
and coal.

The utility industry is an increasing cost business making the cost of
generating electricity more expensive and heightening its sensitivity to
regulation. A utility's costs are influenced by the utility's cost of capital,
the availability and cost of fuel and other factors. In addition, natural gas
pipeline and distribution companies have incurred increased costs as a result of
long-term natural gas purchase contracts containing "take or pay" provisions
which require that they pay for natural gas even if natural gas is not taken by
them. There can be no assurance that a utility will be able to pass on these
increased costs to customers through increased rates. Utilities incur
substantial capital expenditures for plant and equipment. In the future they
will also incur increasing capital and operating expenses to comply with
environmental legislation such as the Clean Air Act of 1990, and other energy,
licensing and other laws and regulations relating to, among other things, air
emissions, the quality of drinking water, waste water discharge, solid and
hazardous substance handling and disposal, and siting and licensing of
facilities. Environmental legislation and regulations are changing rapidly and
are the subject of current public policy debate and legislative proposals. It is
increasingly likely that some or many utilities will be subject to more
stringent environmental standards in the future that could result in significant
capital expenditures. Future legislation and regulation could include, among
other things, regulation of so-called electromagnetic fields associated with
electric transmission and distribution lines as well as emissions of carbon
dioxide and other so-called greenhouse gases associated with the burning of
fossil fuels. Compliance with these requirements may limit a utility's
operations or require substantial investments in new equipment and, as a result,
may adversely affect a utility's results of operations.

The electric utility industry in general is subject to various external
factors including (a) the effects of inflation upon the costs of operation and
construction, (b) substantially increased capital outlays and longer
construction periods for larger and more complex new generating units, (c)
uncertainties in predicting future load requirements, (d) increased financing
requirements coupled with limited availability of capital, (e) exposure to
cancellation and penalty charges on new generating units under construction, (f)
problems of cost and availability of fuel, (g) compliance with rapidly changing
and complex environmental, safety and licensing requirements, (h) litigation and
proposed legislation designed to delay or prevent construction of generating and
other facilities, (i) the uncertain effects of conservation on the use of
electric energy, (j) uncertainties associated with the development of a national
energy policy, (k) regulatory, political and consumer resistance to rate
increases and (l) increased competition as a result of the availability of other
energy sources. These factors may delay the construction and increase the cost
of new facilities, limit the use of, or necessitate costly modifications to,
existing facilities, impair the access of electric utilities to credit markets,
or substantially increase the cost of credit for electric generating facilities.
In addition, there are various proposals for a new energy tax before Congress.
The Sponsors cannot predict at this time the ultimate effect of such factors on
the ability of any issuers to meet their obligations with respect to Debt
Obligations.

The National Energy Policy Act ("NEPA"), which became law in October, 1992,
makes it mandatory for a utility to permit non-utility generators of electricity
access to its transmission system for wholesale customers, thereby increasing
competition for electric utilities. NEPA also mandated demand-side management
policies to be considered by utilities. NEPA prohibits the Federal Energy
Regulatory Commission from mandating electric utilities to engage in retail
wheeling, which is competition among suppliers of electric generation to provide
electricity to retail customers (particularly industrial retail customers) of a
utility. However, under NEPA, a state can mandate retail wheeling under certain
conditions.

There is concern by the public, the scientific community, and the U.S.
Congress regarding environmental damage resulting from the use of fossil fuels.
Congressional support for the increased regulation of air, water, and soil
contaminants is building and there are a number of pending or recently enacted
legislative proposals which may affect the electric utility industry. In
particular, on November 15, 1990, legislation was signed into law that
substantially revises the Clean Air Act (the "1990 Amendments"). The 1990
Amendments seek to improve the ambient air quality throughout the United States
by the year 2000. A main feature of the 1990 Amendments is the reduction of
sulphur dioxide and nitrogen oxide emissions caused by electric utility power
plants, particularly those fueled by coal. Under the 1990 Amendments the U.S.
Environmental Protection Agency ("EPA") must develop limits for nitrogen oxide
emissions by 1993. The sulphur dioxide reduction will be achieved in two phases.
Phase I addresses specific generating units named in the 1990 Amendments. In
Phase II the total U.S. emissions will be capped at 8.9 million tons by the year
2000. The 1990 Amendments contain provisions for allocating allowances to power
plants
16

<PAGE>
based on historical or calculated levels. An allowance is defined as the
authorization to emit one ton of sulphur dioxide.

The 1990 Amendments also provide for possible further regulation of toxic air
emissions from electric generating units pending the results of several federal
government studies to be conducted over the next three to four years with
respect to anticipated hazards to public health, available corrective
technologies, and mercury toxicity.

Electric utilities which own or operate nuclear power plants are exposed to
risks inherent in the nuclear industry. These risks include exposure to new
requirements resulting from extensive federal and state regulatory oversight,
public controversy, decommissioning costs, and spent fuel and radioactive waste
disposal issues. While nuclear power construction risks are no longer of
paramount concern, the emerging issue is radioactive waste disposal. In
addition, nuclear plants typically require substantial capital additions and
modifications throughout their operating lives to meet safety, environmental,
operational and regulatory requirements and to replace and upgrade various plant
systems. The high degree of regulatory monitoring and controls imposed on
nuclear plants could cause a plant to be out of service or on limited service
for long periods. When a nuclear facility owned by an investor-owned utility or
a state or local municipality is out of service or operating on a limited
service basis, the utility operator or its owners may be liable for the recovery
of replacement power costs. Risks of substantial liability also arise from the
operation of nuclear facilities and from the use, handling, and possible
radioactive emissions associated with nuclear fuel. Insurance may not cover all
types or amounts of loss which may be experienced in connection with the
ownership and operation of a nuclear plant and severe financial consequences
could result from a significant accident or occurrence. The Nuclear Regulatory
Commission (the "NRC") has promulgated regulations mandating the establishment
of funded reserves to assure financial capability for the eventual
decommissioning of licensed nuclear facilities. These funds are to be accrued
from revenues in amounts currently estimated to be sufficient to pay for
decommissioning costs.

Telecommunications. The Portfolio may contain obligations of companies engaged
in providing local, long- distance and cellular services, in the manufacture of
telecommunications products and in a wide range of other activities including
directory publishing, information systems and the operation of voice, data and
video telecommunications networks. Technological innovations in fiber optics,
cellular products and services, voice messaging, call waiting and automatic
dialing offer additional potential for significant expansion. Advances like
formation of a national cellular grid should also contribute to the anticipated
growth of this industry. The Fund may contain obligations of the Regional Bell
Holding Companies ("RBOCs") which were spun off from AT&T in 1984 pursuant to
approval of the U.S. District Court for the District of Columbia (the "Court"),
implementing a consent decree relating to antitrust proceedings brought by the
U.S. Department of Justice. The RBOCs include: Ameritech Corporation, Bell
Atlantic Corporation, BellSouth Corporation, NYNEX Corporation, Pacific Telesis
Group, Southwestern Bell Corporation and U.S. West, Inc. These companies provide
near monopoly local and intrastate telephone service as well as cellular and
other generally unregulated services. The Fund may contain obligations of
certain independent telephone companies which are subject to regulation by the
Federal Communications Commissions (the "FCC") and state utility commissions but
not subject to the consent decree binding the RBOCs and AT&T or of certain
long-distance telecommunications carriers, certain telecommunications equipment
manufacturers or of U.S. companies which provide telecommunications services or
equipment mainly outside the United States. International communications
facilities in the United States are also subject to the jurisdiction of the FCC,
and the provision of service to foreign countries is subject to the approval of
the FCC and the appropriate foreign governmental agencies.

In accordance with the consent decree, the RBOCs provide local telephone
service, including exchange access for long-distance companies, and may provide
directory advertising and new customer equipment. Many of the RBOCs, pursuant to
waivers, may also engage in a broad range of businesses including foreign
consulting, servicing computers and marketing or leasing office equipment. AT&T
provides interexchange long distance telephone service in competition with
numerous other providers and certain other products, services and customer
equipment.

The Court's order approving the consent decree provided for periodic reviews
of the restrictions imposed by it. In April 1990, a Federal appeals court
directed the Court to review its ruling that restricts RBOC involvement in the
information services business and to determine whether removal of the
information services restriction would be in the public interest. On July 25,
1991, the Court lifted the information services ban. Other portions of the
consent decree are being litigated. As RBOCs are released from the restrictions
of the 1984 divestiture decree, they and other telephone companies are being
freed to create new products, services and businesses. For example, a federal
district court recently permitted Bell Atlantic to enter the cable business and
it has recently proposed a merger with Tele-Communications, Inc., a large cable
corporation. Bills have been introduced in the U.S. House of Representatives and
the Senate that would require the RBOCs to pass a competitive market test that
would block them from offering information services in the near future.

<PAGE>
The independent telephone companies, like the RBOCs, provide local
telecommunications services, but operate in a more limited area. These companies
are not subject to the consent decree and therefore can provide the full range
of telecommunications services including local exchange services, the
installation of business systems, telephone consulting, the manufacture of
telecommunications equipment, operation of voice and data networks and directory
publishing. Cellular service is providing an increasing component of the
revenues of the RBOCs and independent telephone companies. Both the RBOCs and
independents are subject to regulation by the FCC and state regulatory
authorities. The FCC also has the power to regulate the types of
telecommunications equipment which may be used and therefore may affect the
business of companies in the manufacturing of telecommunications equipment.
Long-distance companies which provide long-distance telecommunications services
are subject to regulation by the FCC. The long-distance industry is
consolidating into larger carriers.

Certain telecommunications services have in the past been fairly resistant to
recession with the exception of long-distance carriers. During the recession of
1982-83, growth in access lines simply slowed down for the independent telephone
companies and only one of the predecessor Bell operating companies experienced
such a downturn. The Sponsors believe that companies in the telephone business
may remain resistant to recession the next few years and may experience some
growth in access lines and message units. Cellular telephone service should
continue to expand, although at lesser rates of growth than in the recent past.
Also, ongoing technological change may lead to an increase in the development of
new services such as voice messaging, call screening and automatic dialing and
the demand for business services such as the use of fax machines and the
movement of data information should continue to grow. Of course, there can be no
assurance that dividends on the Stocks in the Fund will be increased or
maintained.

Business conditions in the telecommunications industry may affect the
performance of the Fund. The FCC and certain state utility regulators have
introduced certain incentive plans such as price-cap regulation which apply to
certain portions of the business of certain local exchange carriers. Price-cap
regulation offers local exchange carriers an opportunity to share in higher
earnings provided they become more efficient. These new approaches to regulation
by the FCC and various state or other regulatory agencies result in increased
competition and could lead to greater risks as well as greater rewards for
operating telephone companies such as those in the Fund. Technology has tended
to offset the effects of inflation and is expected to continue to do so. Under
traditional regulation, continuing cost increases, to the extent not offset by
improved productivity and revenues from increased volume of business, would
result in a decreasing rate of return and a continuing need for rate increases.
Although allowance is generally made in ratemaking proceedings for cost
increases, delays may be experienced in obtaining the necessary rate increases
through these proceedings and there can be no assurance that these regulatory
commissions in the future will grant rate increases adequate to cover operating
and other expenses and debt service requirements. The long-distance industry has
been increasingly opened to competition over the last number of years. As a
result, the major long-distance companies compete actively for market share.
Indeed, to meet increasing competition, telecommunications companies will have
to commit substantial capital, technological and marketing resources.

Cellular and cable companies provide wireless services including paging,
dispatch and cellular services throughout the U.S. Most of the RBOCs, as well as
long distance companies, are seeking to increase their share of the cellular
market in view of perceived future growth prospects. It is unclear what effect,
if any, increased competition between wireless and traditional services will
have on the telecommunications industry. Other potential competition for local
service has also developed. The deregulated cellular telephone industry has a
limited operating history and there is significant uncertainty regarding its
future, particularly with regard to increased competition, the continued growth
in the number of customers, the usage and pricing of cellular services, and the
cost of providing cellular services, including the cost of attracting new
customers, developing new technology and the ability to obtain licenses to
provide cellular services. Recent industry developments may provide increased
competition and reduced revenues from cellular service for RBOCs and independent
telephone companies. The uncertain outcomes of future labor agreements and
employee and retiree benefit costs may also have a negative impact on
profitability. Telephone usage, and therefore revenues, could also be adversely
affected by any sustained economic recession. Each of these problems would
adversely affect the profitability of the telecommunications issuers of the
Securities, the value of the Securities and the ability of the issuers of the
Securities to meet their obligations.

Telecommunications equipment companies design, manufacture, and distribute
telecommunication equipment such as central office switching equipment,
switches, displays, mobile and cellular equipment and systems, network
transmission equipment, PBXs, satellite, microwave, antennas, and digital
communication networks. Growth of these companies may result from telephone
service industry expansion, modernization requirements and possible new
technology such as interactive television. As less developed countries modernize
their telecommunications infrastructure, the demand for these products
increases. This segment of the industry is subject to rapidly changing
technology and the risk of technological obsolescence. This sector of the
industry is generally not subject to regulation as other telecommunications
issuers are.

<PAGE>
In addition, the portfolio may contain securities issued by telephone
companies which provide telecommunications services or equipment outside the
United States; these companies are subject to regulation by foreign governments
or governmental authorities which have broad authority regulating the provision
of telecommunications services and the use of certain telecommunication
equipment. Consequently, certain Securities in the Fund may be affected by the
rules and regulations adopted by regulatory agencies in other countries from
time to time as well as United States dollar foreign exchange rates for the
relevant currencies. Also, investment risks will include future political and
economic development, the establishment of exchange controls or other
governmental restrictions that might adversely affect the payment or receipt of
payment of dividend on, or the value of, the relevant securities.

Banks and Other Financial Institutions

Banks are subject to extensive governmental regulations which may limit both
the amounts and types of loans and other financial commitments which may be made
and interest rates and fees which may be charged. The profitability of financial
institutions is largely dependent upon the availability and cost of funds for
the purpose of financing lending operations under prevailing money market
conditions. General depositor worries over perceived risks at many banks may
keep funding costs unusually high. Also, general economic conditions play an
important part in the operations of this industry and exposure to credit losses
arising from possible financial difficulties of borrowers might affect an
institution's ability to meet its obligations.

In the late 1980s and early 1990s, the credit ratings of U.S. banks and bank
holding companies were subject to extensive downgrades due primarily to
deterioration in asset quality and the attendant impact on earnings and capital
adequacy. Major U.S. banks, in particular, suffered from a decline in asset
quality in the area of construction and commercial real-estate loans. These
problem loans have been largely addressed. The FDIC indicated that in 1990 168
federally insured banks with an aggregate total of $45.7 billion in assets
failed, in 1991 124 federally insured banks with an aggregate total of $64.3
billion in assets failed. During 1992, the FDIC resolved 120 failed banks with
combined assets of $44.2 billion. In 1993, a total of 41 banks with combined
assets of $3.5 billion were closed. The 1993 total was the lowest level in
twelve years. Bank holding companies and other financial institutions may not be
as highly regulated as banks, and may be more able to expand into other
non-financial and non- traditional businesses. During the early 1990s, the
credit ratings of many foreign banks have also been subject to significant
downgrades due to a deterioration in asset quality which has negatively impacted
earnings and capital adequacy. The decline in asset quality of major foreign
banks has been brought about largely by recessionary conditions in their local
economies.

Recent legislation, including the Resolution Trust Corporation Refinancing,
Restructuring and Improvement Act of 1991, FIRREA and FDICIA imposed many new
limitations on the way in which banks, savings banks, and thrifts may conduct
their business and mandated early and aggressive regulatory intervention for
unhealthy institutions. Periodic efforts by recent Administrations to introduce
legislation broadening the ability of banks and thrifts to compete with new
products have not been successful, but if enacted could lead to more failures as
a result of increased competition and added risks. Failure to enact such
legislation, on the other hand, may lead to declining earnings and an inability
to compete with unregulated financial institutions. Efforts to expand the
ability of federal thrifts to branch on an interstate basis have been initially
successful through promulgation of regulations. The Securities and Exchange
Commission ("SEC") is attempting to require the expanded use of market value
accounting by banks and thrifts, and has imposed rules requiring market
accounting for investment securities held for sale. Adoption of additional such
rules may result in increased volatility in the reported health of the industry,
and mandated regulatory intervention to correct such problems.

Hospitals and Health Care Facilities

The ability of hospitals and other health care facilities to meet their
obligations with respect to revenue bonds issued on their behalf is dependent on
various factors, including the level of payments received from private third-
party payors and government programs and the cost of providing health care
services.

A significant portion of the revenues of hospitals and other health care
facilities is derived from private third- party payors and government programs,
including the Medicare and Medicaid programs. Both private third-party payors
and government programs have undertaken cost containment measures designed to
limit payments made to health care facilities. Furthermore, government programs
are subject to statutory and regulatory changes, retroactive rate adjustments,
administrative rulings and government funding restrictions, all of which may
materially decrease the rate of program payments for health care facilities.
There can be no assurance that payments under governmental programs will remain
at levels comparable to present levels or will, in the future, be sufficient to
cover the costs allocable to patients participating in such programs. In
addition, there can be no assurance that a
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<PAGE>
particular hospital or other health care facility will continue to meet the
requirements for participation in such programs.

The costs of providing health care services are subject to increase as a
result of, among other factors, changes in medical technology and increased
labor costs. In addition, health care facility construction and operation is
subject to federal, state and local regulation relating to the adequacy of
medical care, equipment, personnel, operating policies and procedures,
rate-setting, and compliance with building codes and environmental laws.
Facilities are subject to periodic inspection by governmental and other
authorities to assure continued compliance with the various standards necessary
for licensing and accreditation. These regulatory requirements are subject to
change and, to comply, it may be necessary for a hospital or other health care
facility to incur substantial capital expenditures or increased operating
expenses to effect changes in its facilities, equipment, personnel and services.

Hospitals and other health care facilities are subject to claims and legal
actions by patients and others in the ordinary course of business. Although
these claims are generally covered by insurance, there can be no assurance that
a claim will not exceed the insurance coverage of a health care facility or that
insurance coverage will be available to a facility. In addition, a substantial
increase in the cost of insurance could adversely affect the results of
operations of a hospital or other health care facility. The Clinton
Administration may impose regulations which could limit price increases for
hospitals, the level of reimbursements for third-party payors or other measures
to reduce health care costs and make health care available to more individuals,
which would reduce profits for hospitals. Some states, such as New Jersey, have
significantly changed their reimbursement systems. If a hospital cannot adjust
to the new system by reducing expenses or raising rates, financial difficulties
may arise. Also, Blue Cross has denied reimbursement for some hospitals for
services other than emergency room services. The lost volume would reduce
revenue unless replacement patients were found.

Certain hospital bonds may provide for redemption at par at any time upon the
sale by the issuer of the hospital facilities to a non-affiliated entity, if the
hospital becomes subject to ad valorem taxation, or in various other
circumstances. For example, certain hospitals may have the right to call bonds
at par if the hospital may be legally required because of the bonds to perform
procedures against specified religious principles or to disclose information
that it considers confidential or privileged. Certain FHA-insured bonds may
provide that all or a portion of those bonds, otherwise callable at a premium,
can be called at par in certain circumstances. If a hospital defaults upon a
bond obligation, the realization of Medicare and Medicaid receivables may be
uncertain and, if the bond obligation is secured by the hospital facilities,
legal restrictions on the ability to foreclose upon the facilities and the
limited alternative uses to which a hospital can be put may severely reduce its
collateral value.

The Internal Revenue service is currently engaged in a program of intensive
audits of certain tax-exempt hospital and health care facility organizations.
Although these audits have not yet been completed, it has been reported that the
tax-exempt status of some of these organizations will be revoked. At this time,
it is uncertain whether any of the hospital and health care facility obligations
held by the Fund will be affected by such audit proceedings.

Retailing Companies

The profitability of companies engaged in the retailing industry will be
affected by various factors including the general state of the economy and
consumer spending trends. There have been major changes in the retail
environment in recent years due to the declaration of bankruptcy by some of the
major corporations involved in the retail industry, and the department store
segment in particular. The continued viability of the retail industry will
depend on the industry's ability to adapt and to compete in changing economic
and social conditions, to attract and retain capable management, and to finance
expansion. Continued weakness in the banking and real estate industry, the
current recessionary economic climate with the consequent slowdown in employment
growth, less favorable trends in unemployment and a marked deceleration in real
disposable personal income growth has resulted in significant pressure on both
consumer wealth and consumer confidence. In addition, competitiveness of the
retail industry will require large capital outlays for investment in the
installation of automated checkout equipment to control inventory, to track the
sale of individual items and to gauge the success of sales campaigns. Increasing
employee and retiree benefit costs may also have an adverse effect on the
industry.

Consumer Products Companies

Investment in securities issued by consumer products companies should be made
with an understanding of the many factors which may have an adverse impact on
the credit quality of the particular company or industry. These include
cyclicality of revenues and earnings, changing consumer demands, regulatory
restrictions, products liability litigation and other litigation resulting from
accidents, extensive competition (including that of low-cost foreign companies),
unfunded pension fund liabilities and employee and retiree benefit costs and
financial deterioration resulting from leveraged buy-outs, takeovers or
acquisitions. In general, expenditures on consumer products will be affected by
the economic health of consumers. A continuing weak economy with its consequent
effect on con-
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<PAGE>
sumer spending would have an adverse effect on the industry. Other factors of
particular relevance to the profitability of the industry are the effects of
increasing environmental regulation on packaging and on waste disposal, the
continuing need to conform with foreign regulations governing packaging and the
environment, the outcome of trade negotiations and their effect on foreign
subsidies and tariffs, foreign exchange rates, the price of oil and its effect
on energy costs, inventory cutbacks by retailers, transportation and
distribution costs, health concerns relating to the consumption of certain
products, the effect of demographics on consumer demand, the availability and
cost of raw materials and the ongoing need to develop new products and to
improve productivity.

Real Estate Companies

Investment in securities issued by real estate companies should be made with
an understanding of the many factors which may have an adverse impact on the
credit quality of the particular company or industry. These include economic
recession, competitive overbuilding, unusually adverse weather conditions,
changing demographics, changes in government regulations (including tax laws and
environmental, building zoning and sales regulation by various federal, state
and local authorities), increases in real estate taxes or costs of material and
labor, the inability to secure performance guarantees as required and the
unavailability of construction financing or mortgage loans at rates acceptable
to builders and home buyers.

In particular, commercial real estate was especially hard hit by the crisis in
the savings and loan industry. The collapse of hundreds of lending institutions
has removed many of the most aggressive lenders and investors, and most of the
remaining institutions have become wary of new real estate loans. Furthermore,
FIRREA places restrictions on developers through limiting the amount of
acquisition, development and construction lending by financial institutions.
This restriction in credit to the real estate industry is reducing asset prices
and further restricting demand for new construction. At present, vacancy rates
for apartments and commercial buildings remain high, which also depresses the
demand for new construction. According to the U.S. Department of Commerce,
growth in white collar employment is likely to slow over the next several years,
due to demographic reasons and this factor will tend to keep office vacancy
rates high. In addition, The Fair Housing Act of 1988, which requires a certain
portion of apartments in newly constructed buildings be made accessible to the
handicapped, is expected to increase costs and reduce overall profit margins for
these projects. According to the U.S. Department of Commerce, the commercial
real estate slump is likely to persist for several years.

Manufacturing Companies

Growth in the manufacturing industry is closely linked to expansion in the
domestic and global economies. The ongoing global recession with its consequent
effect on industrial growth, employment and consumer spending in addition to any
increase in oil prices or in interest rates may lead to a decrease in demand for
the products of companies engaged in manufacturing industrial and automotive
products. Also, since the federal government and many state, local and foreign
governments now have a budget deficit, financial expenditures by these entities
on capital improvements may be extremely limited. The lack of funds allocated by
public entities to capital improvement projects may adversely affect
manufacturers engaged in the production of industrial materials used for capital
improvements or for the upgrade of the infrastructure. Indeed, government
contracts with certain issuers may contain unfavorable provisions, including
provisions allowing the government to terminate these contracts without prior
notice, or to audit and redetermine amounts payable to the issuer pursuant to
these contracts or to require the issuer to pay for cost overruns. Additionally,
legislation to limit excess profits on government contracts is introduced in the
United States Congress from time to time. Cutbacks in defense spending by the
federal and foreign governments has adversely impacted many of the companies
engaged in the aerospace and arms/defense sectors of the manufacturing industry.

Environmental and safety issues increasingly affect the manufacturing
industry. Issuers may experience decreases in profitability as legislative
mandates impose costs associated with compliance with environmental regulations
and manufacturing more environmentally sound and safer equipment. Furthermore,
the cost of product liability insurance and the inability of some manufacturing
companies to obtain this insurance may have an adverse impact on the industry.
Financial Accounting Standard Board regulations with regard to accounting for,
among other things, post retirement benefits may lead to changes in accounting
which could have significant negative effects on reported earnings and reported
long term liabilities and book value of some manufacturing companies. The lack
of demand for new home and office construction will affect the demand for
certain tools and industrial machinery products. Inflation, slow growth in
personal disposable income, tighter loan qualification standards, higher
downpayments, the lower rate of job creation, increased cost of vehicle
ownership and operation and oil prices will also affect companies engaged in
manufacturing, particularly in the automotive industry. Shortages of skilled
labor, particularly in the machine tools industry, may become a major problem in
the future.

<PAGE>
The long-term outlook is largely dependent upon the growth and competitiveness
of the U.S. manufacturing base. Increased consolidation and merger activity
increases competitiveness in general but individual companies may experience
severe financial problems due to this increased competitiveness. Strong
competition from foreign nations, particularly Latin American and Pacific Rim
countries which have lower labor costs, will severely impact the profitability
of the U.S. manufacturing business. The continuing establishment of
manufacturing and sales facilities abroad to take advantage of international
marketing operations is crucial and the success of these foreign operations
could be affected by a strengthening of the dollar which could lead to a
decrease in demand for U.S. products, the outcome of trade negotiations which
will affect foreign tariffs on U.S. exports abroad and U.S. taxes on foreign
imports to the U.S. and the ability to provide attractive financing packages to
customers in the current tight credit market.

U.S. manufacturers may also experience increased outlays of capital in their
efforts to manufacture products which comply with foreign standards for certain
manufacturing products. Also, since contracts may often be concluded with
entities or governments of unstable foreign nations in, for example, Eastern
Europe, South America or the Middle East, completion of and payment for certain
products and services will be subject to the risks associated with political
instability such as the risk of insurrection, hostilities from the local
population, government policies against businesses owned by non-nationals and
the possibility of expropriation. Certain of these nations may not honor
obligations under contracts when payments are due. Furthermore, it may be more
difficult to enforce a judgment against a foreign contracting party.

Natural Resource Companies

Investment in securities issued by companies primarily engaged in the
extraction or sale of natural resources should be made with an understanding of
the many factors which may have an adverse impact on the credit quality of the
particular company or industry. These include declining prices for natural
resource products, over-supply, regulation throughout the world of production
(including price control regulation in the United States by state andfederal
agencies), federal, state and local environmental laws and regulations,
extensive competition for reserve acquisitions and exploration leases, licenses
and concessions, litigation resulting from accidents or environmentally-caused
illnesses and unavailability of exploration financing.

In particular, the impact of increasing environmental regulation with
legislation such as the Clean Air Act and the Resource Conservation and Recovery
Act, among others, in addition to the increasing pressure to withdraw land from
the mining and forestry industries due to environmental and conservation
concerns may adversely affect companies engaged in the natural resource
industries. Other issues which affect these industries are the possibility of
labor stoppages through strikes, the impact of regulation of worker conditions
by the Occupational Safety and Health Administration, the imposition of taxes on
the extraction of certain materials, fluctuations in the price of oil, the cost
of raw materials, the slump in the construction industry and the consequent
decrease in the demand for wood products, intellectual property disputes, the
time lapse between exploration and the commencement of mining which may
discourage continued investment in exploration in the future, international
competition, foreign exchange rates and the outcome of trade negotiations.

FOREIGN OBLIGORS

On the basis of the best information available to the Sponsors, except as
indicated in Part A, under existing law there are no withholding taxes
applicable to any foreign Debt Obligations in the Portfolio. Issues of foreign
obligors may involve investment risks that are different from those of domestic
issues, including fluctuations in the value of the U.S. dollar and foreign
currencies, future political and economic developments and the possible
imposition of withholding taxes on interest income payable on the Debt
Obligations and the possible imposition of exchange controls or other foreign
governmental restrictions (including expropriation, burdensome or confiscatory
taxation and moratoriums) which might adversely affect the payment or receipt of
payment of amounts due on the Debt Obligations. In addition, it may be more
difficult to obtain and enforce a judgment against a foreign obligor, there may
be less publicly available information about a foreign obligor than about
domestic issuers, foreign obligors generally operate in different regulatory
environments than comparable domestic issuers and foreign obligors are not
generally subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
issuers.

PAYMENT OF THE SECURITIES AND LIFE OF THE FUND

Because certain of the Debt Obligations from time to time may be redeemed or
prepaid or will mature in accordance with their terms or may be sold under
certain circumstances described herein, no assurance can be given that the Fund
will retain for any length of time its present size and composition. Many of the
Debt Obligations may be subject to redemption prior to their stated maturity
dates pursuant to optional refunding or sinking fund redemption provisions or
otherwise. Issues of preferred stock generally provide that the preferred stock
may be liquidated,
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<PAGE>
either by a partial scheduled redemption pursuant to a sinking fund or by a
refunding redemption pursuant to which, at the option of the issuer, all or part
of the issue can be retired from any available funds, at prices which may or may
not include a premium over the involuntary liquidation preference, which is the
same as the par or stated value of the Preferred Stocks except as referred to
under Investment Summary in Part A. In general, optional refunding redemption
provisions are more likely to be exercised when the Securities are valued at a
premium over par or stated value than when they are valued at a discount from
par or stated value. Generally, the value of the Securities will be at a premium
over par when market interest rates fall below the coupon rate. The percentage
of the face amount, or par or stated value, of Securities in the Portfolio which
were valued on the Evaluation Date in excess of par is set forth under
Investment Summary in Part A.

Certain Debt Obligations in the Portfolio may be currently subject to sinking
fund provisions. These provisions are designed to redeem a significant portion
of an issue gradually over the life of the issue; obligations to be redeemed are
generally chosen by lot. In addition, certain issues of mortgage bonds require
that the issuer make either scheduled additions to the property securing the
bonds or deposit cash into a replacement, maintenance or similar fund. Under
certain circumstances the deposited cash may be used to redeem bonds at prices
lower than those permissible for optional redemptions. 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 and the consequent sale of Securities
(see Redemption). Principally, this will depend upon the number of Holders
seeking to sell or redeem their Units and whether or not the Sponsors continue
to reoffer Units acquired by them in the secondary market. Factors that the
Sponsors will consider in the future in determining to cease offering Units
acquired in the secondary market include, among other things, the diversity of
the portfolio remaining at that time, the number of units of all series of funds
which they hold in their inventories, the saleability of the units and their
estimate of the time required to sell the units and general market conditions,
the size of the Fund relative to its original size, the ratio of Fund expenses
to income, the Fund's current return and 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 would otherwise be the case (see Administration of the
Fund--Amendment and Termination).

FIRST GNMA SERIES. Monthly payments and prepayments of principal are made to
the Fund in respect of the mortgages underlying the Ginnie Maes (see Income;
Estimated Current Return; Estimated Long Term Return below). All of the
mortgages in the pools relating to the Ginnie Maes are subject to prepayment
without any significant premium or penalty at the option of the mortgagors (i.e.
the homeowners). While the mortgages on 1-to 4- family dwellings underlying the
Ginnie Maes are amortized over a period of up to 30 years, it has been the
experience of the mortgage industry that the average life of comparable
mortgages, owing to prepayments, is much less. Pricing of GNMA Securities has
been based upon yield assumptions grounded in this historical experience of the
FHA relating to 26-30 year mortgages on 1-to 4-family dwellings at various
interest rates (which, in general, have been lower than the rates of the Ginnie
Maes in the Portfolios.) Yield tables for Ginnie Maes utilize a 12-year average
life assumption for Ginnie Mae pools of 30 year mortgages on 1-to 4-family
dwellings. This assumption was derived from the FHA experience relating to
prepayments on such mortgages during the period from the mid 1950's to the mid
1970's. This 12 year average life assumption was calculated in respect of a
period during which mortgage lending rates were fairly stable. That assumption
is probably no longer an accurate measure of the average life of Ginnie Maes or
their underlying single family mortgage pools. While the mortgages on 1-to
4-family dwellings underlying the FHLMC Certificates are amortized over a period
of up to 15 years, the average life of comparable mortgages, owing to
prepayments, is much less. Freddie Mac's current estimate of the weighted
average life of 30-year conventional mortgages is approximately 8.5 years. The
weighted average life of 15-year conventional mortgages is approximately 6
years. Pricing of FHLMC Certificates has been based upon yield assumptions based
on this estimate. The principal repayment behavior of any individual mortgage
will likely vary from this estimate. The extent of this variation will depend on
a variety of factors, including the relationship between the coupon rate on a
mortgage and prevailing mortgage origination rates. As prevailing mortgage
origination rates increase in relationship to a mortgage coupon rate, the
likelihood of prepayment of that mortgage decreases. Conversely, during periods
in which prevailing mortgage origination rates are significantly less than a
mortgage coupon rate, prepayment of that mortgage becomes increasingly likely.
Freddie Mac revises its weighted average life estimate from time to time to
better reflect both actual and projected payment experience. The bases for the
calculation of the estimated average life and the relationship of this
calculation to Estimated Long Term Return are more fully described below under
Description of the Fund-- Income; Estimated Current Return; Long Term Return.

While the industry estimates that Freddie Mac PCs and Ginnie Maes will prepay
as described herein, it is not possible to predict meaningfully prepayment
levels on those Securities in the Fund. Today, research analysts use
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<PAGE>
complex formulae to scrutinize the prepayments of mortgage pools in an attempt
to predict more accurately the average life of these mortgage backed securities.

Generally speaking, a number of factors, including mortgage market interest
rates and homeowners mobility, will affect the average life of these Securities.
Changes in prepayment patterns, as reported by the agencies on a periodic basis,
if generally applicable to the mortgage pools related to specific
mortgage-backed securities, could influence yield assumptions used in pricing
the securities. Shifts in prepayment patterns are influenced by changes in
housing cycles and mortgage refinancing and are also subject to certain
limitations on the gathering of the data; it is impossible to predict how new
statistics will affect the yield assumptions that determine mortgage industry
norms and pricing of mortgage backed securities. Moreover, there is no assurance
that the pools of mortgage loans relating to the Securities in the Fund will
conform to prepayment experience as reported by the agencies on a periodic
basis, or the prepayment experience of other mortgage lenders.

While the value of these mortgage backed securities generally fluctuates
inversely with changes in interest rates, it should also be noted that their
potential for appreciation, which could otherwise be expected to result from a
decline in interest rates, may tend to be limited by any increased prepayments
by mortgagors as interest rates decline. Accordingly, the termination of the
Fund might be accelerated as a result of prepayments made as described above. It
is also possible that, in the absence of a secondary market for the Units or
otherwise, redemptions of Units may occur in sufficient numbers to reduce the
Portfolio to a size resulting in such termination (termination for this reason
would be delayed if additional Units are issued). Early termination of the Fund
or early payments of principal may have important consequences to the Holders.
To the extent that Units were purchased with a view to an investment of longer
duration, the overall investment program of the investor may require
readjustment or the overall return on investment may be less or greater than
anticipated, depending in part on whether the purchase price paid for Units
represented the payment of an overall premium or a discount, respectively, above
or below the stated principal amounts of the underlying mortgages. In this
connection, attention is directed to The GNMA Fund Investment Accumulation
Program and the Reinvestment Plan described below under Administration of the
Fund, which afford to Holders the opportunity to automatically reinvest
distributions of principal resulting from prepayments and termination as
described above (as well as regular payments of interest and distributions of
principal received upon maturity).

CASH OR ACCRETION BOND SERIES AND SELECT SERIES. Periodic payments of
principal and interest on the Ginnie Maes, Fannie Maes or Freddie Macs which
back the Compound Interest Bonds in the Portfolio will be made to the respective
Bond Trustees subsequent to the Payment Commencement Dates of the respective
Compound Interest Bonds. In addition, prepayments of principal on the Ginnie
Maes, Fannie Maes or Freddie Macs will be made to the Bond Trustees and the
Ginnie Maes, Fannie Maes or Freddie Macs may be prepaid in their entirety prior
to their stated maturity. All or a portion of the principal and interest
payments and prepayments received on Ginnie Maes, Fannie Maes or Freddie Macs
included in the collateral for the Bonds deposited in the Fund will be used to
make principal and interest payments on the bonds of the issuer (other than the
Compound Interest Bonds) until the bonds are paid in full. Thereafter, principal
and interest payments will be used to pay principal and interest on the Compound
Interest Bonds. Payments of principal will first be allocated to the holders of
any bonds of the issuer which have the earliest stated maturity. When these
bonds have been fully paid, principal payments will next be allocated to the
holders of the remaining bonds of the issuer in the order of their respective
stated maturities. Bonds may also be redeemed or sold under certain
circumstances (See Redemption; Administration of the Fund--Portfolio
Supervision). Because the principal on the Ginnie Maes, Fannie Maes or Freddie
Macs and the proceeds of any sales of Bonds received by the Fund (less certain
amounts deducted by the Fund Trustee) may be distributed to Holders after an
initial period or paid out upon redemptions, the aggregate principal amount of
the Compound Interest Bonds in the Portfolio, and accordingly the principal
amount of Compound Interest Bonds underlying each Unit, will decrease over time.
(For a description of Ginnie Maes, see above under Risk Factors--First GNMA
Series; for a description of Fannie Maes and Freddie Macs see above under Risk
Factors--Cash or Accretion Bond Series and Select Series.)

As noted above, all of the mortgages in the pools relating to the Ginnie Maes,
Fannie Maes or Freddie Macs are subject to prepayment without any significant
premium or penalty at the option of the mortgagors (i.e., the homeowners). While
the mortgages on the single-family dwellings underlying the Ginnie Maes and the
1-to 4-family dwellings underlying the Fannie Maes and Freddie Macs which back
the Compound Interest Bonds have a stated maturity of up to 30 years, it has
been the experience of the mortgage industry that the average life of comparable
mortgages, owing to prepayments, is considerably less. Prepayments on mortgages
are commonly measured relative to a prepayment standard or model (a "Prepayment
Model"), which represents an assumed rate of prepayment each month relative to
the then outstanding principal balance of a pool of new mortgage loans. 100% of
the Prepayment Model assumes prepayment rates of 0.2% per annum of the then
outstanding principal balance of such mortgage loans in the first month of the
life of the mortgage loans and an additional 0.2% per annum in each month
24

<PAGE>
thereafter until the 30th month. Beginning in the 30th month and in each month
thereafter during the life of the mortgage loans, 100% of the Prepayment Model
assumes a constant prepayment rate of 6% per annum. The principal repayment
behavior of any individual mortgage will likely vary from these assumptions. The
extent of this variation will depend on a variety of factors, including the
relationship between the coupon rate on a mortgage and prevailing mortgage
origination rates. As prevailing mortgage origination rates increase in
relationship to a mortgage coupon rate, the likelihood of prepayment of that
mortgage decreases. Conversely, during periods in which prevailing mortgage
origination rates are significantly less than a mortgage coupon rate, prepayment
of that mortgage becomes increasingly likely.

By creating separate "fast pay/slow pay" classes of debt obligations, the
issuers are able to create a class of Compound Interest Bonds for which the
"weighted average life" may exceed the average life of a typical mortgage. A
number of factors, including mortgage market interest rates and homeowners'
mobility, will affect the average life of the Ginnie Maes, Fannie Maes or
Freddie Macs which back the Compound Interest Bonds in the Portfolio and,
accordingly, there can be no assurance that the prepayment levels which will be
actually realized will conform to the Prepayment Model. While the value of
Ginnie Maes, Fannie Maes or Freddie Macs fluctuates inversely with changes in
interest rates, it should also be noted that the potential for appreciation on
Ginnie Maes, Fannie Maes or Freddie Macs, which could otherwise be expected to
result from a decline in interest rates, may tend to be limited by any increased
prepayments by mortgagors as interest rates decline. Accordingly, the
termination of the Fund might be accelerated as a result of prepayments made as
described above. In addition, it is possible that, in the absence of a secondary
market for the Units or otherwise, redemptions of Units may occur in sufficient
numbers to reduce the Portfolio to a size resulting in the termination of the
Fund (termination for this reason would be delayed if additional Units are
issued). Early termination of the Fund may have important consequences to the
Holders, e.g., to the extent that Units were purchased with a view to an
investment of longer duration, the overall investment program of the investor
may require readjustment, or the overall return on investment may be less or
greater than anticipated, depending in part on whether the purchase price paid
for Units represented the payment of an overall premium or a discount,
respectively, above or below the stated principal amounts of the underlying
mortgages.

The following table, based on a standard prepayment model, illustrates the
prepayment pattern of a typical Compound Interest Bond and, by comparison, the
prepayment pattern of the "fast-pay" classes of the same issue. THIS TABLE IS
INCLUDED ONLY AS AN EXAMPLE AND DOES NOT REPRESENT THE ACTUAL COMPOUND INTEREST
BONDS IN THE FUND PORTFOLIO. NEITHER THE TABLE NOR ANY OTHER PREPAYMENT MODEL OR
ASSUMPTION PURPORTS TO BE EITHER AN HISTORICAL DESCRIPTION OF THE PREPAYMENT
EXPERIENCE OF ANY POOL OF MORTGAGES OR A PREDICTION OF THE ANTICIPATED RATE OF
PREPAYMENT ON THE COMPOUND INTEREST BONDS IN THE PORTFOLIO.

As used in the table, "0% of the Prepayment Model" assumes no prepayments;
"100% of the Prepayment Model" assumes prepayment rates equal to 100% of 100% of
the Prepayment Model; "175% of the Prepayment Model" assumes prepayment rates
equal to 175% of 100% of the Prepayment Model; and "250% of the Prepayment
Model" assumes prepayment rates equal to 250% of 100% of the Prepayment Model.
The percentage of the Prepayment Model used for a specific Fund is set forth
under Investment Summary in Part A.

<TABLE>
<CAPTION>
PERCENT OF INITIAL PRINCIPAL AMOUNT OUTSTANDING

0% OF THE PREPAYMENT MODEL 100% OF THE PREPAYMENT MODEL
-------------------------------- ---------------------------------
COMPOUND COMPOUND
INTEREST INTEREST
DATE CLASS A CLASS B CLASS C CLASS CLASS A CLASS B CLASS C CLASS
- --------------------------------- ------- ------- ------- -------- ------- ------- ------- ---------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Balance. . . . . . . . . 100 100 100 100 100 100 100 100
August 20, 1989. . . . . . . . . 76 100 100 132 45 100 100 132
August 20, 1990. . . . . . . . . 67 100 100 145 20 100 100 145
August 20, 1991. . . . . . . . . 57 100 100 160 0 97 100 160
August 20, 1992. . . . . . . . . 46 100 100 176 0 73 100 176
August 20, 1995. . . . . . . . . 7 100 100 233 0 5 100 233
August 20, 1998. . . . . . . . . 0 52 100 310 0 0 57 310
August 20, 2000. . . . . . . . . 0 6 100 374 0 0 29 374
August 20, 2001. . . . . . . . . 0 0 85 411 0 0 18 411
August 20, 2003. . . . . . . . . 0 0 68 497 0 0 3 497
August 20, 2004. . . . . . . . . 0 0 60 546 0 0 0 455
August 20, 2008. . . . . . . . . 0 0 20 797 0 0 0 61
August 20, 2009. . . . . . . . . 0 0 8 876 0 0 0 0

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
PERCENT OF INITIAL PRINCIPAL AMOUNT OUTSTANDING (Continued)

<S> <C> <C> <C> <C> <C> <C> <C> <C>
August 20, 2013. . . . . . . . . 0 0 0 39 0 0 0 0
August 20, 2014. . . . . . . . . 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1) 5.6 12.2 19.1 25.6 2.9 7.2 12.9 20.1

</TABLE>

<TABLE>
<CAPTION>
PERCENT OF INITIAL PRINCIPAL AMOUNT OUTSTANDING

175% OF THE PREPAYMENT MODEL 250% OF THE PREPAYMENT MODEL
-------------------------------- ---------------------------------
COMPOUND COMPOUND
INTEREST INTEREST
DATE CLASS A CLASS B CLASS C CLASS CLASS A CLASS B CLASS C CLASS
- --------------------------------- ------- ------- ------- -------- ------- ------- ------- ---------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Balance. . . . . . . . . 100 100 100 100 100 100 100 100
August 20, 1989. . . . . . . . . 22 100 100 132 1 100 100 132
August 20, 1990. . . . . . . . . 0 88 100 145 0 56 100 145
August 20, 1991. . . . . . . . . 0 55 100 160 0 19 100 160
August 20, 1992. . . . . . . . . 0 25 100 176 0 0 90 176
August 20, 1995. . . . . . . . . 0 0 64 233 0 0 36 233
August 20, 1998. . . . . . . . . 0 0 22 310 0 0 3 310
August 20, 2000. . . . . . . . . 0 0 2 374 0 0 0 123
August 20, 2001. . . . . . . . . 0 0 0 284 0 0 0 25
August 20, 2003. . . . . . . . . 0 0 0 110 0 0 0 0
August 20, 2004. . . . . . . . . 0 0 0 36 0 0 0 0
August 20, 2008. . . . . . . . . 0 0 0 0 0 0 0 0
August 20, 2009. . . . . . . . . 0 0 0 0 0 0 0 0
August 20, 2013. . . . . . . . . 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1) 2.3 5.4 10.3 16.3 2.0 4.4 8.6 13.9

</TABLE>

DESCRIPTION OF THE FUND

THE PORTFOLIO

The Portfolio contains different issues of Debt Obligations with fixed final
maturity or disposition dates or of Preferred Stocks. In addition up to 10% of
the initial value of the Portfolio may have consisted of units ("Other Fund
Units") of previously-issued Series of The Corporate Income Fund ("Other Funds")
sponsored and underwritten by certain of the Sponsors and acquired by the
Sponsors in the secondary market. The Other Fund Units are not debt obligations
as such but represent interests in the securities, primarily corporate debt
obligations, in the portfolios of the Other Funds. The Portfolio may also
contain Securities which were acquired in private placements or otherwise and
which cannot, in the opinion of counsel designated by the Sponsors and
satisfactory to the Trustee, be sold publicly by the Trustee without
registration (or perfection of an exemption) under the Securities Act of 1933,
as amended, or similar provisions of law subsequently enacted ("Restricted
Securities"). See Investment Summary in Part A for a summary of particular
matters relating to the Portfolio.

In selecting Debt Obligations for deposit in the Fund, the Defined Asset Funds
research analysts considered the following factors, among others: (i) whether
the Debt Obligations were rated in the category A or better by at least one
nationally recognized rating agency--see Description of Ratings below) or, in
the opinion of Defined Asset Funds research analysts, on the Date of Deposit had
comparable credit characteristics; (ii) the yield and price of the Debt
Obligations relative to other comparable debt securities and the yield and price
of the Preferred Stocks relative to other comparable preferred stocks; (iii) the
diversification of the Portfolio as to various utility and industrial
classifications, taking into account the availability in the market of issues
which met the Fund's price criteria; and (iv) (for certain Funds organized in
1984 and thereafter as grantor trusts) whether the Debt Obligations were issued
after July 18, 1984 if interest thereon is United States source income. For
FIRST GNMA SERIES, selection criteria also included the maturities of the
available Ginnie Maes and the extent to which they were trading at a premium
over or at a discount from par. For PREFERRED STOCK PUT SERIES the selection
factors included: (a) the yield and price of the Securities, relative to other
comparable preferred stocks; and (b) the terms and conditions of the purchase
commitments of the Sellers with respect to the Securities. For CASH OR ACCRETION
BOND SERIES and SELECT SERIES, selection factors also included the payment
provisions applicable to the Securities. The restrictions applica-
26

<PAGE>
ble to the purchase of replacement Securities summarized under Administration of
the Fund--Portfolio Supervision were also considered.

The Portfolio may contain debt obligations rated BBB by Standard & Poor's and
Baa by Moody's, which are the lowest "investment grade" ratings assigned by the
two rating agencies, or debt obligations rated below investment grade. Certain
Funds contain bonds that have been downgraded to non-investment grade since
their deposit into the Fund. The Portfolio may also contain debt obligations
that have received investment grade ratings from one rating agency but "junk
bond" ratings from the other rating agency. In addition, the Portfolio may
contain debt obligations which are not rated by either agency but have in the
opinion of Defined Asset Funds research analysts, comparable credit
characteristics to debt obligations rated below investment grade. Investors
should therefore be aware that these debt obligations may have speculative
characteristics and that changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments on these debt obligations than is the case with higher rated bonds.
Moreover, conditions may develop with respect to any of the issuers of debt
obligations in the Portfolio which may cause the rating agencies to lower their
ratings below investment grade on a given security or cause Defined Asset Funds
research analysts to determine that the credit characteristics of a given
security are comparable to debt obligations rated below investment grade. As a
result of timing lags or a lack of current information, there can be no
assurance that the rating currently assigned to a given debt obligation by
either agency or the credit assessment of the Defined Asset Funds research
analysts actually reflects all current information about the issuer of that debt
obligation.

Subsequent to the Date of Deposit, a Debt Obligation may cease to be rated,
its rating may be reduced or the credit assessment of the Agent for the Sponsors
may change. Because of the fixed nature of the Portfolio, none of these events
require an elimination of that Debt Obligation from the Portfolio, but the
lowered rating or changed credit assessment may be considered in the Sponsors'
determination to direct the disposal of the Debt Obligation (see Administration
of the Fund--Portfolio Supervision).

Because ratings may be lowered or the credit assessment of Defined Asset Funds
research analysts may change, an investment in Units of the Trust should be made
with an understanding of the risks of investing in "junk bonds" (bonds rated
below investment grade or unrated bonds having similar credit characteristics),
including increased risk of loss of principal and interest on the underlying
debt obligations and the risk that the value of the Units may decline with
increases in interest rates. In recent years there have been wide fluctuations
in interest rates and thus in the value of fixed-rate debt obligations
generally. Debt obligations which are rated below investment grade or unrated
debt obligations having similar credit characteristics are often subject to
greater market fluctuations and risk of loss of income and principal than
securities rated investment grade, and their value may decline precipitously in
response to rising interest rates. This effect is so not only because increased
interest rates generally lead to decreased values for fixed-rate instruments,
but also because increased interest rates may indicate a slowdown in the economy
generally, which could result in defaults by less creditworthy issuers. Because
investors generally perceive that there are greater risks associated with
lower-rated securities, the yields and prices of these securities tend to
fluctuate more than higher-rated securities with changes in the perceived credit
quality of their issuers, whether these changes are short-term or structural,
and during periods of economic uncertainty.

Debt rated below investment grade or having similar credit characteristics
also tends to be more thinly traded than investment-grade debt and held
primarily by institutions, and this lack of liquidity can negatively affect the
value of the debt. Debt which is not rated investment grade or having similar
credit characteristics may be subordinated to other obligations of the issuer.
Senior debtholders would be entitled to receive payment in full before
subordinated debtholders receive any payment at all in the event of a bankruptcy
or reorganization. Lower rated debt obligations and debt obligations having
similar credit characteristics may also present payment-expectation risks. For
example, these bonds may contain call or redemption provisions that would make
it attractive for the issuers to redeem them in periods of declining interest
rates, and investors would therefore not be able to take advantage of the higher
yield offered.

The Investment Summary in Part A contains the number of bonds that are
non-investment grade and the percentage of the aggregate face amount of the
Portfolio representing any defaulted bonds. Lower-rated securities generally
involve greater risks of loss of income and principal than higher-rated
securities, and recent studies have indicated that the number of defaults by
issuers and the amount of debt in default have increased substantially in the
past few years. Issuers of lower-rated securities may possess less creditworthy
characteristics than issuers of higher-rated securities and, especially in the
case of issuers whose obligations or credit standing have recently been
downgraded, may be subject to claims by debtholders, suppliers, owners of
property leased to the issuer or others which, if sustained, would make it more
difficult for the issuers to meet their payment obligations. Therefore,
investors should consider carefully the relative risks associated with
investment in securities which carry lower ratings.

<PAGE>
Debt Obligations that are rated lower than BBB or Baa and unrated bonds with
similar credit characteristics should be considered speculative as such ratings
indicate a quality of less than investment grade. In addition, the limited
market for these Debt Obligations may affect the price of the particular
Security to be sold for purposes of redemption and the amount actually realized
by the Fund upon a sale. Any sale may therefore result in a loss to the Fund.

The value of the Units reflects the value of the portfolio Securities,
including the value (if any) of Securities in default. Should the issuer of any
Debt Obligation default in the payment of principal or interest, the Fund may
incur additional expenses seeking payment on the defaulted Debt Obligation.
Because amounts (if any) recovered by the Fund in payment under the defaulted
Debt Obligation may not be reflected in the value of the Units until actually
received by the Fund, and depending upon when a Holder purchases or sells his
Units, it is possible that a Holder would bear a portion of the cost of recovery
without receiving any portion of the payment recovered. It is possible that new
laws could be enacted which could hurt the market for bonds which are not rated
investment grade. For example, federally regulated financial institutions could
be required to divest their holdings of these bonds, or proposals could be
enacted which might limit the use, or tax or other advantages, of these bonds.

The yields on Securities of the type deposited in the Fund are dependent on a
variety of factors, including general money market conditions, general
conditions of the corporate bond market, size of a particular offering, the
maturity of the obligation and rating or other credit assessment of the issue.
Accordingly, the yields of debt obligations deposited in the Fund will vary with
changes in these factors, including changes in ratings or other credit
assessments. The ratings represent the opinions of the rating organizations as
to the quality of the debt obligations that they undertake to rate. Similarly,
the credit assessments of the Agent for the Sponsors represent its opinion as to
the credit quality of the debt obligations that it assesses. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality. Investors should be aware that ratings and other credit assessments of
debt securities evaluate the ability of the issuer to pay interest and principal
but do not evaluate the risk of decline in the market value of the debt
securities for other reasons. Consequently, debt obligations with the same
maturity, coupon and rating may have different yields, while debt obligations of
the same maturity and coupon with different ratings may have the same yield.

The Agent for the Sponsors might have made arrangements with a number of
different issuers which create a framework within which debt obligations may be
acquired for deposit in various series of corporate Defined Funds on a private
placement basis. Under these arrangements the Agent for the Sponsors may make
bids to purchase debt obligations for deposit in a particular series on the
basis of a price and other terms determined for the particular bid. It is not,
however, obligated to make any bids to purchase debt obligations under these
arrangements and the issuers are not obligated to accept any bid which the Agent
for the Sponsors may choose to make.

The portfolios underlying any Other Fund Units (the units of no one Other Fund
represented more than 5%, and all Other Fund Units represented less than 10%, of
the aggregate offering side evaluation of the Portfolio on the Date of Deposit)
are substantially similar to that of the Fund. The percentage of the Portfolio,
if any, represented by Other Fund Units on the Evaluation Date is set forth
under Investment Summary in Part A. On their respective dates of deposit, the
underlying debt obligations in any Other Funds were rated BBB or better by
Standard & Poor's or Baa or better by Moody's. While certain of those debt
obligations may not currently meet these criteria, they did not represent more
than 0.5% of the face amount of the Portfolio on the Date of Deposit. Debt
obligations in each Other Fund which do not mature according to their terms
within 10 years after the Date of Deposit had an aggregate bid side evaluation
of at least 40% of the initial face amount of the Other Fund. The investment
objectives of the Other Funds are similar to the investment objective of the
Fund, and the Sponsors, Trustee and Evaluator of the Other Funds have
responsibilities and authority paralleling in most important respects those
described in this Prospectus and receive similar fees. The names of any Other
Funds represented in the Portfolio and the number of units of each Other Fund in
the Fund may be obtained without charge by writing to the Trustee.

The Fund consists of the Securities listed under Portfolio in Part A
(including any additional or replacement Securities acquired and held by the
Fund pursuant to the terms of the Indenture) as long as they may continue to be
held in the Fund, together with accrued and undistributed interest thereon and
undistributed and uninvested cash realized from the disposition or redemption of
Securities (see Administration of the Fund--Portfolio Supervision). CASH OR
ACCRETION BOND SERIES and SELECT SERIES consist of the principal amount of the
Compound Interest Bonds, appreciating through compounding of interest, and the
principal amount of the interest-bearing bonds, as they may continue to be held
from time to time in the Fund together with accrued and undistributed interest
thereon and undistributed cash representing payments and prepayments of
principal and proceeds realized from the disposition of Compound Interest Bonds.
The Indenture for certain Funds may authorize the Sponsors to increase the size
and the number of Units of the Fund by the deposit of Additional Securities and
the issue of a corresponding number of additional Units subsequent to the
Initial Date of Deposit provided that the original relationship among
28

<PAGE>
the face amounts of Securities of specified issuers, interest rates, maturities
and call provisions, if any, is maintained. Also, Securities may be sold under
certain circumstances (see Redemption; Administration of the Fund-- Portfolio
Supervision). As a result, the aggregate face amount of the Securities in the
Portfolio will vary over time.

Subsequent to the initial Date of Deposit, if any Units are redeemed by the
Trustee the face amount of Securities in the Fund will be reduced by amounts
allocable to redeemed Units, and the fractional undivided interest represented
by each Unit in the balance will be increased. However, if additional Units are
issued by the Fund (through deposit of Securities by the Sponsor in connection
with the sale of additional Units or reinvestment), the aggregate value of
Securities in the Fund will be increased by amounts allocable to additional
Units, and the fractional undivided interest represented by each Unit in the
balance will be decreased. Units will remain outstanding until redeemed upon
tender to the Trustee by any Holder (which may include the Sponsor) until the
termination of the Indenture (see Redemption; Administration of the
Fund--Amendment and Termination). Neither the Sponsors nor the Trustee shall be
liable in any way for any default, failure or defect in any Security. In the
event of a failure to deliver any Security that has been purchased for the Fund
under a contract, including any Security purchased on a when, as and if issued
basis, the Sponsors are authorized under the Indenture to direct the Trustee to
acquire other obligations to make up the original Portfolio of the Fund. If
substitute Securities are not acquired, the Sponsors will, on or before the next
following Distribution Day, cause to be refunded the attributable sales charge,
plus the attributable Cost of Securities to Fund listed under Portfolio in Part
A of the Prospectus, plus interest attributable to the failed obligation. (See
Administration of the Fund--Portfolio Supervision.)

INCOME; ESTIMATED CURRENT RETURN; ESTIMATED LONG-TERM RETURN (MONTHLY PAYMENT
SERIES, FIRST GNMA SERIES, INSURED SERIES, AND INTERMEDIATE-TERM SERIES)

Generally. The estimated net annual interest rate per Unit on the Evaluation
Date is set forth under Investment Summary in Part A of the Prospectus. This
rate shows the percentage return based on the face amount per Unit after
deducting estimated annual fees and expenses expressed as a percentage. Interest
on the Securities in the Fund, less estimated fees of the Trustee and (if
applicable) Sponsors and certain other expenses, is expected to accrue at the
daily rate (based on a 360-day year) shown under Investment Summary in Part A of
the Prospectus. The rate will vary if any Securities default and as Securities
mature, are exchanged, redeemed, prepaid, paid or sold, or as the expenses of
the Fund change.

Estimated Current Return on a Unit represents annual cash receipts from
coupon-bearing debt obligations in the Portfolio (after estimated annual
expenses) divided by the maximum Public Offering Price (including the sales
charge). For investors interested primarily in cash flow, current return is a
readily ascertainable measure.

"Current return" provides different information than "yield" or "long-term
return". Under accepted bond practice, tax-exempt bonds are customarily offered
to investors on a "yield" basis, which involves a computation of yield to
maturity (or earlier call date), and which takes into account not only the
interest payable on the bonds but also the amortization or accretion to a
specified date of any premium over or discount from the par (maturity) value in
the bond's purchase price. Various formulas exist for calculating long-term
return on a portfolio of debt obligations. Different assumptions regarding,
among other things, reinvestment, term to maturity or call date, application of
sales charge and deduction for expenses, result in different long-term return
figures. Additionally, the resulting figure may be overstated or understated
depending on the manner in which a formula takes into account delays in
distributions of principal and interest on Units and sales charges. For
investors intending to hold Units until the final maturity of the Fund, both
current return and long-term return are relevant measures of performance. For
the investor who redeems Units earlier, both the current return and the
long-term return realized may be diminished, particularly on a sale shortly
after acquisition of those Units--because the price received will not reimburse
the investor for the sales charge paid.

Generally, the long-term return of a Unit offered in the secondary market will
be lower, sometimes significantly, than its current return, primarily as a
result of changes in market rates of interest and any resulting decrease in the
terms to maturity of the Debt Obligations in the Portfolio, as well as the
likelihood that at least certain of the Debt Obligations will be valued at
market premiums. Furthermore, changes in the composition of the Portfolio,
defaults on interest payments, changes in market valuation as well as the
estimated fees and expenses payable by the Fund will cause current and long-term
returns, as well as the difference between them, to fluctuate. Because debt
obligations are more likely to be redeemed when valued at a premium over par
(generally, those debt obligations bearing the higher coupons), the current
return and long-term return realized by an investor may be substantially lower
than originally estimated.

In addition, for the FIRST GNMA SERIES, in actual operation, payments received
in respect of the mortgages underlying the Ginnie Maes will consist of a portion
representing interest and a portion representing principal. Although the
aggregate monthly payment made by the obligor on each mortgage remains constant
(aside from optional prepayments of principal), in the early years the larger
proportion of each payment will represent interest,
29

<PAGE>
while in later years, the proportion representing interest will decline and the
proportion representing principal will increase, although, of course, the
interest rate remains constant. Moreover, by reason of optional prepayments,
payments in the earlier years on the mortgages in the pools may be substantially
in excess of those required by the amortization schedules of these mortgages;
conversely, payments in later years may be substantially less since the
aggregate unpaid principal balances of the underlying mortgages may have been
greatly reduced--ultimately even sufficiently reduced to accelerate termination
of a Fund. To the extent that those underlying mortgages, bearing the higher
interest rates represented in a Portfolio are prepaid faster than the other
underlying mortgages, the net annual interest rate per Unit and the return on
the Units can be expected to decline. Monthly payments to the Holder will
reflect all of the foregoing factors. If a Holder sells all or a portion of his
Units, he will receive his proportionate share of the accrued interest from the
purchaser of his Units. Similarly, if a Holder redeems all or a portion of his
Units, the Redemption Price per Unit will include accrued interest on the
Securities. And if a Security is sold, redeemed or otherwise disposed of,
accrued interest will be received by the Fund and will be distributed
periodically to Holders.

INCOME; ESTIMATED CURRENT RETURN; ESTIMATED AFTER-TAX RETURN (PREFERRED STOCK
PUT SERIES)

The estimated current return is computed by dividing the anticipated net
annual income per Unit by the Public Offering Price. The estimated net annual
income rate per Unit shows the percentage return based on the face amount or par
or stated value per Unit after deducting estimated annual fees and expenses,
including the cost of insurance, if any, expressed as a percentage.

The Estimated After-Tax Return assumes that Holders are taxed at the highest
current corporate tax rate and that all dividends on the Preferred Stocks
received by the Fund and distributed to Holders will be eligible for the
dividends-received deduction for corporations and is determined without regard
to any capital gains which may be recognized by such a Series and distributed to
Holders. Any such capital gains distributed to Holders will be taxed as a
dividend but will not be eligible for the dividends-received deduction. See
Taxes below. Net income will change as Securities are exchanged, redeemed, paid
or sold, as substitute Securities are purchased, and as the expenses of the Fund
change. The Public Offering Price will vary in accordance with fluctuations in
the prices of the underlying Securities. Any change in the net income per Unit
or the Public Offering Price will result in a change in the current return and
the after-tax return.

There is no assurance that all dividends will be paid in the future on the
Preferred Stocks in the Portfolio. Therefore there is no assurance that the
estimated annual income or income rate set forth under Investment Summary in
Part A of the Prospectus will be realized in the future.

Because dividends on the Securities in the Fund are paid at varying intervals,
usually quarterly, any monthly income distribution may be more or less than the
income actually received by the Fund. In order to reduce fluctuations in
distributions, the Trustee is required to advance the amounts necessary to
provide approximately equal Monthly Income Distributions. The Trustee will be
reimbursed, without interest, for these advances from income received on the
Securities.

In addition to the Public Offering Price, the price of a Unit includes the
amount per Unit in the Income Account at the date of delivery of Units to the
purchaser. If a Holder sells all or a portion of his Units, he will receive his
proportionate share of the amount in the Income Account from the purchaser of
his Units. Similarly, if a Holder redeems all or a portion of his Units, the
Redemption Price per Unit will include the amount per Unit in the Income
Account.

Some of the Securities in the Portfolio may provide for scheduled sinking fund
redemptions and optional redemptions prior to maturity. Payments received in
respect of the Securities together with amounts realized upon sale of the
Securities under certain circumstances (see Redemption) will be distributed to
Holders of Units or paid out upon redemption of Units; thus the aggregate par or
liquidation value of the Securities in the Portfolio, and accordingly the par or
liquidation value of the Securities underlying each Unit, may decrease over
time. Although the dividend rates on the Securities will remain constant, as
redemptions of Securities are made the subsequent dividend payments will
decline. Monthly payments to Holders will reflect the foregoing factors.

Units are offered to investors on a "dollar price" basis whereby the rate of
return on an investment in the Units is stated in terms of estimated current
return. The use of "current return" should be contrasted with the "yield to
maturity" basis often used in offerings of debt obligations, whereby the rate of
return of a debt obligation is expressed as a percentage which is the yield to
maturity or to an earlier redemption date of the debt obligation and takes into
account not only the interest payable on the debt obligation but also the
amortization of discount or premium to the specified date. If the price of the
Units is less than $1,000, the yield to maturity will be greater than the
current return; if the price of the Units is greater than $1,000, the yield to
maturity will be less than the current return.

<PAGE>
INCOME AND ESTIMATED RATE TO PROJECTED MATURITY (CASH OR ACCRETION BOND SERIES
AND SELECT SERIES)

Estimated Rate to Projected Maturity of the Compound Interest Bonds is
calculated assuming that the mortgages underlying the Ginnie Mae, Fannie Mae or
Freddie Mac collateral for the Compound Interest Bonds are prepaid at a certain
percentage of the Prepayment Model, that payment on any Compound Interest Bond
is not accelerated due to the default of an issuer, that the principal amount of
the interestbearing bonds is distributed when it matures, that interest received
on the interestbearing bonds will precisely cover the expenses of the Fund, that
a Holder does not redeem or sell any Units (including new Units credited
annually in respect of the aggregate increase in Accreted Principal Amount of
the Compound Interest Bonds) prior to Projected Maturity (which is also
calculated assuming prepayments on the underlying mortgages at the specified
percentage of the Prepayment Model). See Notes to Portfolio in Part A of the
Prospectus for the specific percentage of the Prepayment Model used for these
calculations; see Risk Factors--Payment of the Securities and Life of the
Fund--Cash or Accretion Bond Series and Select Series above for a discussion of
the Prepayment Model. If the Public Offering Price is less than the current
principal amount of the Compound Interest Bonds and if the mortgages underlying
the Ginnie Mae, Fannie Mae or Freddie Mac collateral prepay faster than the
specified assumed rates of the Prepayment Model, the actual return will be
greater; if prepayment occurs more slowly than these rates, the actual return
will be less. The Public Offering Price will vary in accordance with
fluctuations in the prices of the Securities and any reductions in applicable
sales charges in the case of quantity purchases of Units (see Public Sale of
Units--Public Offering Price). Any change in the Public Offering Price will
result in a change in the actual return.

The economic effect of purchasing Units of the Fund is that the investor who
holds his Units until the underlying Compound Interest Bonds are paid or prepaid
receives an actual return on his investment over the life of the Compound
Interest Bonds that reflects the assumed or implicit automatic reinvestment
(accretion) of the compounded interest. This feature differentiates this Fund
from funds comprised of customary securities on which periodic interest is paid
at market rates at time of issue. An investor in the Units, unlike an investor
in a fund comprised of customary securities, lessens his risk of being unable to
invest distributions at a comparable rate of return, but may forgo the ability
to reinvest fully at higher rates in the future.

RETIREMENT PLANS

The CASH OR ACCRETION SERIES and SELECT SERIES may be well suited for purchase
by individual retirement accounts (IRAs), Keogh plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from these plans are generally
treated as ordinary income but may, in some cases, be eligible for special 5 or
10 year averaging or tax-deferred rollover treatment. Holders of units in IRAs,
Keogh plans and other tax-deferred retirement plans should consult their plan
custodian as to the appropriate disposition of distributions. Investors
considering participation in any of these plans should review specific tax laws
related thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any of these plans. These plans are
offered by brokerage firms, including each of the Sponsors, and other financial
institutions. Fees and charges with respect to these plans may vary.

Retirement Plans for the Self-Employed--Keogh Plans. Units of the Funds may be
purchased by retirement plans established pursuant to the Self-Employed
Individuals Tax Retirement Act of 1962 ("Keogh plans") for self- employed
individuals, partnerships or unincorporated companies. Qualified individuals may
generally make annual tax-deductible contributions up to the lesser of 20% of
annual compensation or $30,000 to Keogh plans. The assets of the plan must be
held in a qualified trust or other arrangement which meets the requirements of
the Code. Generally there are penalties for premature distributions from a plan
before attainment of age 59, except in the case of a participant's death or
disability and certain other circumstances. Keogh plan participants may also
establish separate IRAs (see below) to which they may contribute up to an
additional $2,000 per year ($2,250 if a spousal account) is also established.

Individual Retirement Account--IRA. Any individual (including one covered by
an employer retirement plan) can establish an IRA or make use of a qualified IRA
arrangement set up by an employer or union for the purchase of Units of the
Fund. Any individual can make a contribution to an IRA equal to the lesser of
$2,000 ($2,250 if a spousal account is also established) or 100% of earned
income; such investment must be made in cash. However, the deductible amount an
individual may contribute will be reduced if the individual's adjusted gross
income exceeds $25,000 (in the case of a single individual), $40,000 (in the
case of married individuals filing a joint return) or $200 (in case of a married
individual filing a separate return). A married individual filing a separate
return will not be entitled to any deduction if the individual is covered by an
employer-maintained retirement plan, without regard to whether the individual's
spouse is an active participant in an employer retirement plan. Unless
nondeductible contributions were made in 1987 or a later year, all distributions
from an IRA will be treated as ordinary income but generally are eligible for
tax-deferred rollover treatment. It should be noted that certain transactions
31

<PAGE>
which are prohibited under Section 408 of the Code will cause all or a portion
of the amount in an IRA to be deemed to be distributed and subject to tax at
that time. A participant's entire interest in an IRA must be, or commence to be,
distributed to the participant not later than the April 1 following the taxable
year during which the participant attains age 701/2. Taxable distributions made
before attainment of age 591/2, except in the case of a participant's death or
disability, or where the amount distributed is part of a series of substantially
equal periodic (at least annual) payments that are to be made over the life
expectancies of the participant and his or her beneficiary, are generally
subject to a surtax in an amount equal to 10% of the distribution.

Corporate Pension and Profit-Sharing Plan. A pension or profit-sharing plan
established for employees of a corporation may purchase Units of the Funds.

The Trustee is empowered to sell Securities in order to make funds available
for redemption (Article V) if funds are not otherwise available in the Capital
and Income Accounts (see Administration of the Fund--Accounts and
Distributions). The Securities to be sold will be selected from a list supplied
by the Sponsors. Securities will be chosen for this list by the Sponsors on the
basis of those market and credit factors as they may determine are in the best
interests of the Fund. Provision is made under the Indenture for the Sponsors to
specify minimum face amounts in which blocks of Securities are to be sold in
order to obtain the best price for the Fund. While these minimum amounts may
vary from time to time in accordance with market conditions, the Sponsors
believe that the minimum face amounts which would be specified would range from
$25,000 for readily marketable Securities to $250,000 for certain less
marketable Securities or Restricted Securities which can be distributed on short
notice only by private sale, usually to institutional investors. Provision is
also made that sales of Securities may not be made so as to (i) result in the
Fund owning less than $250,000 of any Restricted Security or (ii) result in more
than 50% of the Fund consisting of Restricted Securities. In addition, the
Sponsors will use their best efforts to see that these sales of Securities are
carried out in such a way that no more than 40% in face amount of the Fund is
invested in Restricted Securities, provided that sales of unrestricted
Securities may be made if the Sponsors' best efforts with regard to timely sales
of Restricted Securities at prices they deem reasonable are unsuccessful and if
as a result of these sales more than 50% of the Fund does not consist of
Restricted Securities. Thus the redemption of Units may require the sale of
larger amounts of Restricted Securities than of unrestricted Securities.

ADMINISTRATION OF THE FUND

AUTOMATIC UNIT ACCRETION LIQUIDATIONS (CASH OR ACCRETION BOND SERIES AND SELECT
SERIES)

In order to permit Holders whose Units are held in brokers' accounts to
receive quarterly or semi-annual cash payments substantially equivalent to the
accrued but unpaid interest on the Compound Interest Bonds, Holders may elect
(by promptly notifying their account executive so that the broker can notify the
Fund Trustee of the election, not later than ten days prior to the quarterly or
semi-annual Record Day for Unit Accretion Distribution of each year to sell or
redeem the additional Units that have been credited to their account during the
previous six months. Holders of Units registered with the Fund Trustee should
notify the Fund Trustee in writing of their election not later than ten days
prior to the Record Day for Unit Accretion Distribution. Once a Holder has
elected automatic liquidation, the election will remain in effect until the Fund
Trustee has received notice to rescind the election in the same manner as
notified of the election to automatically liquidate. The proceeds from the sale
or redemption will be distributed to the Holder within seven calendar days of
the Unit Accretion Distribution Date. When additional Units are credited to the
account of a Holder, although the Holder's pro rata portion of each Bond does
not change, the portion of each Bond represented by each of the Holder's Units
(including additional Units) decreases. The Holder's tax cost for his pro rata
portion of each Bond, as discussed under Taxes, also does not change, but is
spread over the portion of each Bond represented by each of the Holder's Units
(including additional Units). Therefore the Holder's tax cost for his per Unit
portion of each Bond will decrease. Although additional Units will have been
credited to a Holder's account on the basis of one Unit per one dollar of
aggregate increase in Accreted Principal Amount of the Compound Interest Bonds,
the Units sold or redeemed may not generate proceeds equal to one dollar per
Unit because the amount of proceeds depends, of course, on the bid or offering
side evaluations of the Bonds at that time.

If Holders make this election, the Units will be sold to the Sponsors for
resale in the secondary market if at the time the Sponsors are making a market
for Units at a price which will be computed on the basis of the offering side of
the market. If no secondary market is being maintained by the Sponsors, the
Units will be redeemed. Notice of election to have Unit Accretion Distributions
automatically liquidated quarterly must be received by the Fund Trustee at least
ten days prior to the first quarterly Record Day for Unit Accretion Distribution
as to which the election is to apply.

<PAGE>
INVESTMENT ACCUMULATION PROGRAMS

Distributions of interest and any principal or premium received by the Fund
will be paid in cash. However, except for FIRST GNMA SERIES, PREFERRED STOCK PUT
SERIES, CASH OR ACCRETION BOND SERIES and SELECT SERIES, a Holder may elect to
have these distributions reinvested without sales charge in The Corporate Fund
Accumulation Program, Inc., which is an open-end management investment company
whose primary investment objective is to obtain a high level of current income
through investing in a diversified portfolio consisting primarily of corporate
debt obligations with investment grade credit characteristics. Holders of Units
of the FIRST GNMA SERIES may reinvest their distributions in the GNMA Fund
Accumulation Program, Inc. For more complete information about a reinvestment
program, including charges and expenses, return the enclosed form for a
prospectus. Read it carefully before you decide to participate. It should be
noted that interest distributions to Foreign Holders from a reinvestment program
will be subject to U.S. Federal income taxes, including withholding taxes and
that income on shares of a program will not be eligible for the dividends
received deduction for corporations. Investors should note that obligations in
these programs are not insured or backed by other third-party obligations.
Holders participating in these reinvestment programs will be taxed on their
reinvested distributions in the manner described under Taxes even though
distributions are automatically reinvested.

Notice of election to participate must be received by the Trustee in writing
at least ten days before the Record Day for the first distribution to which the
notice is to apply.

PORTFOLIO SUPERVISION

The Fund is a unit investment trust which normally follows a buy and hold
investment strategy and is not actively managed. Traditional methods of
investment management for a managed fund typically involve frequent changes in a
portfolio of securities on the basis of economic, financial and market analyses.
The Portfolio of the Fund, however, will not be actively managed and therefore
the adverse financial condition of an issuer will not necessarily require the
sale of its securities from the Portfolio. Defined Asset Funds investment
professionals are dedicated exclusively to selecting and then monitoring
securities held by the various Defined Funds. On an ongoing basis, experienced
financial analysts regularly review the portfolios and may direct the
disposition of Securities upon default in payment of amounts due on any of the
Securities, institution of certain legal proceedings, existence of any other
legal questions or impediments affecting a Security or the payment of amounts
due on the Security, default under certain documents adversely affecting debt
service, default in payment of amounts due on other securities of the same
issuer or guarantor, decline in projected income pledged for debt service on
revenue bond issues, if a Security is not consistent with the investment
objective of the Fund, if the Trustee has a right to sell or redeem a Security
pursuant to any applicable guarantee or other credit support or decline in price
or the occurrence of other market or credit factors, including advance refunding
(i.e., the issuance of refunding bonds and the deposit of the proceeds thereof
in trust or escrow to retire the refunded Securities on their respective
redemption dates), that in the opinion of the Sponsors would make the retention
of these Securities detrimental to the interest of the Holders; and, for Funds
qualified as "regulated investment companies" (see Section A of Taxes above), if
the disposition of these Securities is desirable in order to maintain the
qualification of the Fund as a "regulated investment company" under the Code. If
a default in the payment of amounts due on any Security occurs and if the
Sponsors fail to give instructions to sell or to hold the Security, the
Indenture provides that the Trustee, within 30 days of that failure by the
Sponsors, may sell the Security. Within five days after the elimination of a
Debt Obligation and the deposit of a different Debt Obligation in exchange or
substitution therefor, the Trustee is required to give notice thereof to each
Holder, identifying the Debt Obligations eliminated and the Debt Obligations
substituted therefor.

<PAGE>

<ARTICLE>6
<MULTIPLIER>1

<S> <C>

<PERIOD-TYPE> OTHER

<FISCAL-YEAR-END> OCT-12-1995

<PERIOD-END> OCT-17-1995

<INVESTMENTS-AT-COST> 5,776,875

<INVESTMENTS-AT-VALUE> 5,776,875

<RECEIVABLES> 48,324

<ASSETS-OTHER> 18,228

<OTHER-ITEMS-ASSETS> 76,000

<TOTAL-ASSETS> 5,919,427

<PAYABLE-FOR-SECURITIES> 0

<SENIOR-LONG-TERM-DEBT> 0

<OTHER-ITEMS-LIABILITIES> 66,552

<TOTAL-LIABILITIES> 66,552

<SENIOR-EQUITY> 0

<PAID-IN-CAPITAL-COMMON> 5,852,875

<SHARES-COMMON-STOCK> 6,076

<SHARES-COMMON-PRIOR> 0

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<OVERDISTRIBUTION-GAINS> 0

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<NET-ASSETS> 5,852,875

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<NET-CHANGE-FROM-OPS> 0

<EQUALIZATION> 0

<DISTRIBUTIONS-OF-INCOME> 0

<DISTRIBUTIONS-OF-GAINS> 0

<DISTRIBUTIONS-OTHER> 0

<PAGE>

<S> <C>

<NUMBER-OF-SHARES-SOLD> 6,076

<NUMBER-OF-SHARES-REDEEMED> 0

<SHARES-REINVESTED> 0

<NET-CHANGE-IN-ASSETS> 0

<ACCUMULATED-NII-PRIOR> 0

<ACCUMULATED-GAINS-PRIOR> 0

<OVERDISTRIB-NII-PRIOR> 0

<OVERDIST-NET-GAINS-PRIOR> 0

<GROSS-ADVISORY-FEES> 0

<INTEREST-EXPENSE> 0

<GROSS-EXPENSE> 0

<AVERAGE-NET-ASSETS> 0

<PER-SHARE-NAV-BEGIN> 0

<PER-SHARE-NII> 0

<PER-SHARE-GAIN-APPREC> 0

<PER-SHARE-DIVIDEND> 0

<PER-SHARE-DISTRIBUTIONS> 0

<RETURNS-OF-CAPITAL> 0

<PER-SHARE-NAV-END> 0

<EXPENSE-RATIO> 0

<AVG-DEBT-OUTSTANDING> 0

<AVG-DEBT-PER-SHARE> 0

<PAGE>

</TABLE>