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DEFINED ASSET FUNDSSM
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CORPORATE INCOME FUND
INTERMEDIATE TERM SERIES--101
(A UNIT INVESTMENT TRUST)
O PORTFOLIO OF INTERMEDIATE TERM CORPORATE BONDS
O DESIGNED FOR HIGH CURRENT INCOME
O MONTHLY INCOME DISTRIBUTIONS
O U.S. TAX EXEMPT FOR MANY FOREIGN HOLDERS
SPONSORS:
Merrill Lynch,
Pierce, Fenner & Smith -------------------------------------------------
Incorporated The Securities and Exchange Commission has not
Salomon Smith Barney Inc. approved or disapproved these Securities or
PaineWebber Incorporated passed upon the adequacy of this prospectus. Any
Prudential Securities representation to the contrary is a criminal
Incorporated offense.
Dean Witter Reynolds Inc. Prospectus dated November 20, 1998.
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Defined Asset FundsSM
For more than 25 years, Defined Asset FundsSM has been a leader in unit
investment trust research and product innovation. Our family of 'DefinedSM'
Funds helps investors work toward their financial goals with a full range of
quality investments, including municipal, corporate and government bond
portfolios, as well as domestic and international equity portfolios.
Defined Asset Funds offer a number of advantages:
o Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
o Preselected Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
o Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
o Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, tolerance for risk or time horizon,
there's probably a Defined Asset Fund that suits your investment style. Your
financial professional can help you select a Defined Asset Fund that works best
for your investment portfolio.
THE FINANCIAL INFORMATION IN THIS PROSPECTUS IS AS OF THE EVALUATION DATE. JULY
31, 1998.
CONTENTS
PAGE
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Risk/Return Summary..................................... 3
What You Can Expect From Your Investment................ 6
Monthly Income....................................... 6
Return Figures....................................... 6
Records and Reports.................................. 6
The Risks You Face...................................... 7
Interest Rate Risk................................... 7
Call Risk............................................ 7
Reduced Diversification Risk......................... 7
Liquidity Risk....................................... 7
Concentration Risk................................... 7
Bond Quality Risk.................................... 8
Litigation Risk...................................... 8
Selling or Exchanging Units............................. 8
Sponsors' Secondary Market........................... 8
Selling Units to the Trustee......................... 8
Exchange Option...................................... 9
How The Fund Works...................................... 10
Pricing.............................................. 10
Evaluations.......................................... 10
Income............................................... 10
Expenses............................................. 10
Portfolio Changes.................................... 11
Fund Termination..................................... 11
Certificates......................................... 12
Trust Indenture...................................... 12
Legal Opinion........................................ 13
Auditors............................................. 13
Sponsors............................................. 13
Trustee.............................................. 13
Underwriters' and Sponsors' Profits.................. 13
Public Distribution.................................. 14
Code of Ethics....................................... 14
Year 2000 Issues..................................... 14
Taxes................................................... 14
Supplemental Information................................ 15
Financial Statements.................................... D-1
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RISK/RETURN SUMMARY
1. WHAT IS THE FUND'S OBJECTIVE?
The Fund seeks high current interest income by investing in
a fixed portfolio consisting primarily of corporate bonds
with an estimated average life of approximately 10 years.
2. WHAT ARE CORPORATE BONDS?
Corporate bonds are bonds issued by companies, governments
or other institutions to raise money to use in their
business or to fund their activities. In return, they pay a
fixed rate of interest and principal at maturity.
3. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Fund plans to hold to maturity 11 intermediate-term
corporate bonds, and some short-term U.S. Treasury notes
reserved to pay the deferred sales fee for a current
aggregate face amount of $35,400,000. The Fund is a unit
investment trust which means that, unlike a mutual fund,
the Fund's portfolio is not managed.
o When the bonds were initially deposited they were rated A
or better by Standard & Poor's, Moody's or Fitch. The
credit quality of the bonds may currently be lower.
o Many of the bonds can be called at a premium declining over
time to par value. Some bonds may be called earlier at par
for extraordinary reasons.
The Portfolio consists of corporate bonds of the following
types:
APPROXIMATE
PORTFOLIO
PERCENTAGE
o Conglomerates 8%
o Corporate Utilities 8%
o Financial Institutions 72%
o Foreign Government 8%
o U.S. Government 4%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
o Rising interest rates, an issuer's worsening financial
condition or a drop in bond ratings can reduce the price of
your units.
o Because the Fund is concentrated in financial institution
bonds, adverse developments in this industry may affect the
value of your units.
o Assuming no changes in interest rates, when you sell your
units, they will generally be worth less than your cost
because your cost included a sales fee.
o The Fund will receive early returns of principal if bonds
are called or sold before they mature. If this happens your
income will decline and you may not be able to reinvest the
money you receive at as high a yield or as long a maturity.
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want current monthly income. You will benefit
from a professionally selected and supervised portfolio
whose risk is reduced by investing in bonds of several
different issuers.
The Fund is not appropriate for you if you want a
speculative investment that changes to take advantage of
market movements or if you cannot tolerate any risk.
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DEFINING YOUR INCOME
WHAT YOU MAY EXPECT (Payable on the 25th day each month):
Regular Monthly Income per unit: $ 5.28
Annual Income per unit: $ 63.39
RECORD DAY: 10th day of each month
These figures are estimates on the evaluation date; actual
payments may vary.
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
INVESTOR FEES
3.00%
Maximum Sales Fee (Load) on new purchases
(as a percentage of $1,000 invested)
You will pay an up-front sales fee of .896%, as well as a
deferred sales fee of $3.36 per unit quarterly November,
February, May and August through August, 2000. Employees
of some of the Sponsors and their affiliates may be
charged a reduced sales fee of no less than $5.00 per
Unit.
The maximum sales fee is reduced if you invest at least
$100,000 as follows:
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
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Less than $100,000 3.00%
$100,000 to $249,999 2.75%
$250,000 to $499,999 2.50%
$500,000 to $999,999 2.25%
$1,000,000 and over 2.00%
Maximum Exchange Fee 2.00%
ESTIMATED ANNUAL FUND OPERATING EXPENSES
AMOUNT
PER UNIT
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$ 0.72
Trustee's Fee
$ 0.46
Portfolio Supervision,
Bookkeeping and
Administrative Fees
$ 0.20
Organization Costs
$ 0.32
Evaluator's Fee
$ 0.13
Other Operating Expenses
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$ 1.83
TOTAL
7. HOW HAVE SIMILAR FUNDS PERFORMED IN THE PAST?
In the following chart we show past performance of prior
Intermediate Term Series of Corporate Income Fund, which
had the same investment objectives, strategies and types of
bonds as this Fund. These prior Series differed in that
they charged a higher sales fee. These prior Intermediate
Term Series were offered between September 15, 1993 and
April 9, 1996 and were outstanding on September 30, 1998.
OF COURSE, PAST PERFORMANCE OF PRIOR SERIES IS NO GUARANTEE
OF FUTURE RESULTS OF THIS FUND.
AVERAGE ANNUAL COMPOUND TOTAL RETURNS
FOR PRIOR SERIES
Reflecting all expenses. For periods ended 9/30/98.
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
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High 9.09% 6.29% 14.44% 7.31%
Average 6.03 5.80 11.22 6.81
Low 2.91 5.50 7.93 6.51
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Average
Sales fee 4.97% 4.95%
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Note: All returns represent changes in unit price with distributions reinvested
into the Corporate Fund Investment Accumulation Program.
8. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and bonds are
not sold because of market changes. Rather, experienced
Defined Asset Funds financial analysts regularly review the
bonds in the Fund. The Fund may sell a bond if certain
adverse credit or other conditions exist.
9. HOW DO I BUY UNITS?
You can buy units from any of the Sponsors and other
broker-dealers. The Sponsors are listed later in this
prospectus. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply.
The minimum investment is $250.
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UNIT PRICE PER UNIT $1,040.93
(as of July 31, 1998)
Unit price is based on the net asset value of the Fund plus
the up-front sales fee. An amount equal to any principal
cash, as well as net accrued but undistributed interest on
the unit, is added to the unit price. An independent
evaluator prices the bonds at 3:30 p.m. Eastern time every
business day. Unit price changes every day with changes in
the prices of the bonds in the Fund.
10. HOW DO I SELL UNITS?
You may sell your units at any time to any Sponsor or the
Trustee for the net asset value determined at the close of
business on the date of sale, less any remaining deferred
sales fee. You will not pay any other fee when you sell
your units.
11. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays income monthly. Interest on the bonds in this
Fund is subject to federal income taxes for U.S. investors,
but if you are a non-U.S. investor, your interest may be
exempt from U.S. federal income taxes, including
withholding taxes. Interest on the U.S. Treasury notes will
be exempt from state and local personal income taxes. You
will receive this interest at the end of each of the next
two years.
You will also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per unit. You will be subject to tax on any gain
realized by the Fund on the disposition of bonds.
12. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You will receive your monthly income in cash unless you
choose to compound your income by reinvesting at no sales
fee in the Corporate Fund Investment Accumulation Program,
Inc. This Program is an open-end mutual fund with a
comparable investment objective. Income from this Program
will be subject to U.S. federal income taxes for both U.S.
and foreign investors. For more complete information about
the Program, including charges and fees, ask the Trustee
for the Program's prospectus. Read it carefully before you
invest. The Trustee must receive your written election to
reinvest at least 10 days before the record day of an
income payment.
EXCHANGE PRIVILEGES
You may exchange units of this Fund for units of certain
other Defined Asset Funds. You may also exchange into this
Fund from certain other funds. We charge a reduced sales
fee on exchanges.
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WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
MONTHLY INCOME
The Fund will pay you regular monthly income. Your monthly income may vary
because of:
o elimination of one or more bonds from the Fund's portfolio because of
calls, redemptions or sales;
o a change in the Fund's expenses; or
o the failure by a bond's issuer to pay interest.
Changes in interest rates generally will not affect your monthly income because
the portfolio is fixed.
Along with your monthly income, you will receive your share of any available
bond principal.
RETURN FIGURES
We cannot predict your actual return, which will vary with unit price, how long
you hold your investment and changes in the portfolio, interest income and
expenses.
Estimated Current Return equals the estimated annual cash to be received from
the bonds in the Fund less estimated annual Fund expenses, divided by the Unit
Price (including the maximum sales fee):
Estimated Annual Estimated
Interest Income - Annual Expenses
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Unit Price
Estimated Long Term Return is a measure of the estimated return over the
estimated life of the Fund. Unlike Estimated Current Return, Estimated Long Term
Return reflects maturities, discounts and premiums of the bonds in the Fund. It
is an average of the yields to maturity (or in certain cases, to an earlier call
date) of the individual bonds in the portfolio, adjusted to reflect the Fund's
maximum sales fee and estimated expenses. We calculate the average yield for the
portfolio by weighting each bond's yield by its market value and the time
remaining to the call or maturity date.
Yields on individual 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.
These return quotations are designed to be comparative rather than predictive.
RECORDS AND REPORTS
You will receive:
o a monthly statement of income payments and any principal payments;
o a notice from the Trustee when new bonds are deposited in exchange or
substitution for bonds originally deposited;
o an annual report on Fund activity; and
o annual tax information. This will also be sent to the IRS. You must report the
amount of interest received during the year.
You may request:
o copies of bond evaluations to enable you to comply with federal and state tax
reporting requirements; and
o audited financial statements of the Fund.
You may inspect records of Fund transactions at the Trustee's office during
regular business hours.
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THE RISKS YOU FACE
INTEREST RATE RISK
Investing involves risks, including the risk that your investment will decline
in value if interest rates rise. Generally, bonds with longer maturities will
change in value more than bonds with shorter maturities. Bonds in the Fund are
more likely to be called when interest rates decline. This would result in early
returns of principal to you and may result in early termination of the Fund. Of
course, we cannot predict how interest rates may change.
CALL RISK
Many bonds can be prepaid or 'called' by the issuer before their stated
maturity.
For example, an issuer might call its bonds if it no longer needs the money for
the original purpose or, during periods of falling interest rates, if the
issuer's bonds have a coupon higher than current market rates. If the bonds are
called, your income will decline and you may not be able to reinvest the money
you receive at as high a yield or as long a maturity. An early call at par of a
premium bond will reduce your return.
REDUCED DIVERSIFICATION RISK
If many investors sell their units, the Fund will have to sell bonds. This could
reduce the diversification of your investment and increase your share of Fund
expenses.
LIQUIDITY RISK
The bonds will generally trade in the over-the-counter market. We cannot assure
you that a liquid trading market will exist, especially since current law may
restrict the Fund from selling bonds to any Sponsor. The value of the bonds, and
of your investment, may be reduced if trading in bonds is limited or absent.
CONCENTRATION RISK
When a certain type of bond makes up 25% or more of the portfolio, the Fund is
said to be 'concentrated' in that bond type, which makes the Fund less
diversified.
Here is what you should know about the Fund's concentration in bonds issued by
financial institutions:
o the profitability of a financial institution is largely dependent upon the
credit quality of its loan portfolio; credit quality of its loan portfolio
is affected by the institution's underwriting criteria, concentrations
within the portfolio and industry and general economic conditions; and
o operating performance of a financial institution is also impacted by
changes in interest rates, the availability and cost of funds, intensity of
competition and degree of government regulation.
Changes to the portfolio from bond redemptions, maturities and sales may affect
the Fund's concentration over time.
BOND QUALITY RISK
A reduction in a bond's rating may decrease its value and, indirectly, the value
of your investment in the Fund.
LITIGATION RISK
We do not know of any pending litigation that might have a material adverse
effect upon the Fund.
SELLING OR EXCHANGING UNITS
You can sell your units at any time for a price based on net asset value. Your
net asset value is calculated each business day by:
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o adding the value of the bonds, net accrued interest, cash and any other
Fund assets;
o subtracting accrued but unpaid Fund expenses, unreimbursed Trustee
advances, cash held to buy back units or for distribution to investors and
any other Fund liabilities; and
o dividing the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the portfolio.
SPONSORS' SECONDARY MARKET
While we are not obligated to do so, we will buy back units at net asset value
without any other fee or charge other than any remaining deferred sales charge.
We may resell the units to other buyers or to the Trustee. You should consult
your financial professional for current market prices to determine if other
broker-dealers or banks are offering higher prices.
We have maintained a secondary market continuously for over 25 years, but we
could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by sending the Trustee a letter (with any outstanding
certificates if you hold Unit certificates). You must properly endorse your
certificates (or execute a written transfer instrument with signatures
guaranteed by an eligible institution). Sometimes, additional documents are
needed such as a trust document, certificate of corporate authority, certificate
of death or appointment as executor, administrator or guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee may sell your units in the over-the-counter market for a
higher price, but it is not obligated to do so. In that case, you will receive
the net proceeds of the sale.
If the Fund does not have cash available to pay you for units you are selling,
the agent for the Sponsors will select bonds to be sold. Bonds will be selected
based on market and credit factors. These sales could be made at times when the
bonds would not otherwise be sold and may result in your receiving less than the
unit par value and also reduce the size and diversity of the Fund.
If you acquire 25% or more of the outstanding units of the Fund and you sell
units with a value exceeding $250,000, the Trustee may choose to pay you 'in
kind' by distributing bonds and cash with a total value equal to the price of
those units. The Trustee will try to distribute bonds in the portfolio pro rata,
but it reserves the right to distribute only one or a few bonds. The Trustee
will act as your agent in an in kind distribution and will either hold the bonds
for your account or sell them as you instruct. You must pay any transaction
costs as well as transfer and ongoing custodial fees on sales of bonds
distributed in kind.
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There could be a delay in paying you for your units:
o if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
bonds not reasonably practicable; and
o for any other period permitted by SEC order.
EXCHANGE OPTION
You may exchange units of certain Defined Asset Funds for units of this Fund at
a maximum exchange fee of 2.00%. You may exchange units of this Fund for units
of certain other funds at a reduced sales fee if your investment goals change.
To exchange units, you should talk to your financial professional about what
funds are exchangeable, suitable and currently available.
Normally, an exchange is taxable and you must recognize any gain or loss on the
exchange. However, the IRS may try to disallow a loss if the portfolios of the
two funds are not materially different; you should consult your own tax adviser.
We may amend or terminate this exchange option at any time without notice.
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HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the bonds, less expenses, from
the most recent Record Day up to, but not including, the settlement date, which
is usually three business days after the purchase date of the unit.
A portion of the price of a unit consists of cash so that the Trustee can
provide you with regular monthly income. When you sell your units you will
receive your share of this cash.
In addition, as with mutual funds, the Fund (and therefore the investors) pay
all or some of the costs of organizing the Fund including:
o cost of initial preparation of legal documents;
o federal and state registration fees;
o initial fees and expenses of the Trustee;
o initial audit; and
o legal expenses and other out-of-pocket expenses.
EVALUATIONS
An independent Evaluator values the bonds on each business day (excluding
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas).
Bond values are based on current bid or offer prices for the bonds or comparable
bonds. In the past, the difference between bid and offer prices of publicly
offered bonds has ranged from 0.25% of face amount on actively traded issues to
1.5% on inactively traded issues; the difference has averaged between 0.5% and
1%.
INCOME
The Trustee credits interest to an Income Account and other receipts to a
Capital Account. The Trustee may establish a Reserve Account by withdrawing from
these accounts amounts it considers appropriate to pay any material liability.
These accounts do not bear interest.
EXPENSES
The Trustee is paid monthly. It also benefits when it holds cash for the Fund in
non-interest bearing accounts. The Trustee may also receive additional amounts:
o to reimburse the Trustee for the Fund's operating expenses;
o for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
o costs of actions taken to protect the Fund and other legal fees and
expenses;
o expenses for keeping the Fund's registration statement current; and
o Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 45 cents per $1,000 face amount
annually for providing portfolio supervisory, bookkeeping and administrative
services and for any other expenses properly chargeable to the Fund. While this
fee may exceed the amount of these costs and expenses attributable to this Fund,
the total of these fees for all Series of Defined Asset Funds will not exceed
the aggregate amount attributable to all of these Series for any calendar year.
The Fund also pays the Evaluator's fees.
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The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
Any quarterly deferred sales charges you owe are paid with interest and
principal from certain bonds. If these amounts are not enough, the rest will be
paid out of distributions to you from the Fund's Capital and Income Accounts.
The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell bonds if cash is not available.
PORTFOLIO CHANGES
The Sponsors and Trustee are not liable for any default or defect in a bond.
Unlike a mutual fund, the portfolio is designed to remain intact and we may keep
bonds in the portfolio even if their credit quality declines or other adverse
financial circumstances occur. However, we may sell a bond in certain cases if
we believe that certain adverse credit or certain other conditions exist.
If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which will affect the size
and composition of the portfolio. Units offered in the secondary market may not
represent the same face amount of bonds that they did originally.
We decide whether or not to offer units for sale that we acquire in the
secondary market after reviewing:
o diversity of the portfolio;
o size of the Fund relative to its original size;
o ratio of Fund expenses to income;
o current and long-term returns;
o degree to which units may be selling at a premium over par; and
o cost of maintaining a current prospectus.
FUND TERMINATION
The Fund will terminate following the stated maturity or sale of the last bond
in the portfolio. The Fund may also terminate earlier with the consent of
investors holding 51% of the units or if total assets of the Fund have fallen
below 40% of the face amount of bonds deposited. We will decide whether to
terminate the Fund early based on the same factors used in deciding whether or
not to offer units in the secondary market.
When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. On or shortly before termination, we
will sell any remaining bonds, and you will receive your final distribution. Any
bond that cannot be sold at a reasonable price may continue to be held by the
Trustee in a liquidating trust pending its final sale.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling bonds. This may reduce the amount you receive as your
final distribution.
CERTIFICATES
Certificates for units are issued on request. You may transfer certificates by
complying with the requirements for redeeming certificates, described above. You
can replace lost or mutilated certificates by delivering
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satisfactory indemnity and paying the associated costs.
TRUST INDENTURE
The Fund is a 'unit investment trust' governed by a Trust Indenture, a contract
among the Sponsors, the Trustee and the Evaluator, which sets forth their duties
and obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
o to cure ambiguities;
o to correct or supplement any defective or inconsistent provision;
o to make any amendment required by any governmental agency; or
o to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.
The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
o it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
o it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors and the Trustee without the consent of
investors. The resignation or removal of either becomes effective when a
successor accepts appointment. The Sponsors will try to appoint a successor
promptly; however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee or Evaluator may petition a court to appoint
a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
o remove it and appoint a replacement Sponsor;
o liquidate the Fund; or
o continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
special counsel for the Sponsors, has given an opinion that the units are
validly issued.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statement of Condition included in this
prospectus.
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SPONSORS
The Sponsors are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PRUDENTIAL SECURITIES INCORPORATED (an
indirect wholly-owned subsidiary of the
Prudential Insurance Company of America)
One New York Plaza
New York, NY 10292
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
TRUSTEE
The Bank of New York,101 Barclay Street-- 17W, New York, New York 10268, is the
Trustee. It is supervised by the Federal Deposit Insurance Corporation, the
Board of Governors of the Federal Reserve System and New York State banking
authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. The Sponsors also
realized a profit or loss on the initial deposit of the bonds. Any cash made
available by you to the Sponsors before the settlement date for those units may
be used in the Sponsors' businesses to the extent permitted by federal law and
may benefit the Sponsors.
A Sponsor or Underwriter may realize profits or sustain losses on bonds in the
Fund which were acquired from underwriting syndicates of which it was a member.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its employees
with access to information on portfolio transactions. The goal of the code is to
prevent fraud, deception or misconduct against the Fund and to provide
reasonable standards of conduct.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900
13
<PAGE>
(commonly known as the 'Year 2000 Problem'). We do not expect that the computer
system changes necessary to prepare for the Year 2000 will cause any major
operational difficulties for the Fund.
TAXES
The following summary describes some of the important income tax consequences of
holding units. It assumes that you are not a dealer, financial institution,
insurance company or other investor with special circumstances. You should
consult your own tax adviser about your particular circumstances.
In the opinion of our counsel, under existing law:
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Fund will not be taxed as a corporation for federal income tax purposes, and
you
will be considered to own directly your share of each bond in the Fund.
INCOME OR LOSS UPON DISPOSITION
When all or part of your share of a bond is disposed of (for example, when the
Fund sells, exchanges or redeems a bond or when you sell or exchange your
units), you will generally recognize capital gain or loss. Your gain, however,
will generally be ordinary income to the extent of any accrued 'market
discount'. Generally you will have market discount to the extent that your basis
in a bond when you purchase a unit is less than its stated redemption price at
maturity (or, if it is an original issue discount bond, the issue price
increased by original issue discount that has accrued on the bond before your
purchase). You should consult your tax adviser in this regard.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain from the Fund will be long-term if you are considered to have held
your investment on each bond for more than one year and short-term if you held
it for one year or less. Because the deductibility of capital losses is subject
to limitations, you may not be able to deduct all of your capital losses. You
should consult your tax advisor in this regard.
YOUR BASIS IN THE BONDS
Your aggregate basis in the bonds will be equal to the cost of your units,
including any sales charges and the organizational expenses you pay, adjusted to
reflect any accruals of 'original issue discount,' 'acquisition premium' and
'bond premium'. You should consult your tax adviser in this regard.
EXPENSES
If you are an individual who itemizes deductions, you may deduct your share of
Fund expenses, but only to the extent that such amount, together with your other
miscellaneous deductions, exceeds 2% of your adjusted gross income. Your ability
to deduct Fund expenses will be limited further if your adjusted gross income
exceeds a specified amount (for 1998, $124,500 or $62,250 for a married person
filing separately).
14
<PAGE>
FOREIGN INVESTORS
If you are a foreign investor and you are not engaged in a U.S. trade or
business, you generally will not be subject to U.S. federal income tax,
including withholding tax, on the interest or gain on a bond issued after July
18, 1984 if you meet certain requirements, including the certification of
foreign status and other matters. You should consult your tax adviser about the
possible application of federal, state and local, and foreign taxes.
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Fund by calling
the Trustee. The supplemental information includes more detailed risk disclosure
about the types of bonds that may be in the Fund's portfolio, general risk
disclosure concerning any insurance securing certain bonds, and general
information about the structure and operation of the Fund. The supplemental
information is also available from the SEC.
15
CORPORATE INCOME FUND
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Corporate Income Fund,
Intermediate Term Series - 101,
Defined Asset Funds:
We have audited the accompanying statement of condition of Corporate
Income Fund, Intermediate Term Series - 101, Defined Asset Funds,
including the portfolio, as of July 31, 1998 and the related
statements of operations and of changes in net assets for the period
August 7, 1997 to July 31, 1998. These financial statements are the
responsibility of the Trustee. Our responsibility is to express an
opinion on these financial statements 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 statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Securities owned at July 31, 1998, as shown in
such portfolio, were confirmed to us by The Bank of New York, the
Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by the Trustee, as well as
evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Corporate
Income Fund, Intermediate Term Series - 101, Defined Asset Funds at
July 31, 1998 and the results of its operations and changes in its
net assets for the above-stated period in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
November 2, 1998
D - 1
CORPORATE INCOME FUND,
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
AS OF JULY 31, 1998
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
(cost $35,269,598)(Note 1)..................... $35,396,228
Accrued interest receivable..................... 779,940
Accrued interest on segregated bonds............ 40,081
Deferred organization costs...................... 28,917
_____________
Total trust property................. 36,245,166
LESS LIABILITIES:
Deferred sales charge............................ $ 342,692
Advance from Trustee............................. 255,642
Accrued expenses................................. 13,999 612,333
_____________ _____________
NET ASSETS, REPRESENTED BY:
34,299 units of fractional undivided
interest outstanding (Note 3).................. 35,436,867
Undistributed net investment income.............. 195,966
_____________
$35,632,833
_____________
UNIT VALUE ($35,632,833/34,299 units).............. $1,038.89
</TABLE>
See Notes to Financial Statements.
D - 2
CORPORATE INCOME FUND,
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
August 7,
1997
to
July 31,
1998
_____________
<S> <C>
INVESTMENT INCOME:
Interest income........................... $1,748,879
Interest income on segregated bonds........ $67,159
Trustee's fees and expenses............... (27,023)
Sponsors' fees............................ (12,693)
Organizational expenses................... (7,229)
_____________
Net investment income..................... 1,769,093
_____________
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain on securities sold
or redeemed............................. 474
Unrealized appreciation of investments.... 126,630
_____________
Net realized and unrealized gain on
investments............................. 127,104
_____________
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................... $1,896,197
_____________
</TABLE>
See Notes to Financial Statements.
D - 3
CORPORATE INCOME FUND,
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
August 7,
1997
to
July 31,
1997
_____________
<S> <C>
OPERATIONS:
Net investment income....................... $ 1,769,093
Realized gain on securities sold
or redeemed............................... 474
Unrealized appreciation of investments...... 126,630
_____________
Net increase in net assets resulting
from operations........................... 1,896,197
_____________
DISTRIBUTIONS TO HOLDERS (Note 2):
Income...................................... (1,684,034)
Principal................................... (6,829)
_____________
Total distributions......................... (1,690,863)
_____________
CAPITAL SHARE TRANSACTIONS:
Issuance of 29,574 units.................... 30,980,735
Redemptions of 1,847 units................... (1,854,751)
Deferred sales charge....................... (381,790)
_____________
Net capital share transactions.............. 28,744,194
_____________
NET INCREASE IN NET ASSETS.................... 28,949,528
NET ASSETS AT BEGINNING OF PERIOD............. 6,683,305
_____________
NET ASSETS AT END OF PERIOD................... $35,632,833
PER UNIT:
Income distributions during period.......... $59.75
Principal distributions during period....... $0.19
Net asset value at end of period............ $1,038.89
TRUST UNITS OUTSTANDING AT END OF PERIOD...... 34,299
</TABLE>
See Notes to Financial Statements.
D - 4
CORPORATE INCOME FUND,
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as
a Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
(a) Securities are stated at value as determined by the Evaluator
based on bid side evaluations for the securities (see "How to
Sell Units - Trustee's Redemption of Units" in this Prospectus,
Part B), except that value on August 7, 1997 was based upon
offer side evaluations at August 5, 1997 the day prior to the
Date of Deposit. Cost of securities at August 7, 1997 was also
based on such offer side evaluations.
(b) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(c) Interest income is recorded as earned.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each
month. Receipts other than interest, after deductions for
redemptions and applicable expenses, are distributed as explained
in "Income, Distributions and Reinvestment - Distributions" in this
Prospectus, Part B.
3. NET CAPITAL
<TABLE>
<S> <C>
Cost of 34,299 units at Date of Deposit............. $35,629,527
______________
Net amount applicable to Holders.................... 35,629,527
Redemptions of units - net cost of 1,847 units
redeemed less redemption amounts.................. 68,855
Realized gain on securities sold or redeemed........ 474
Principal distributions............................. (6,829)
Unrealized appreciation of investments.............. 126,630
Deferred sales charge............................... (381,790)
______________
Net capital applicable to Holders................... $35,436,867
______________
</TABLE>
4. INCOME TAXES
As of July 31, 1998, unrealized appreciation of investments, based
on cost for Federal income tax purposes, aggregated $126,630 of
which $356,090 related to appreciated securities and $229,460
related to depreciated securities. The cost of investment
securities for Federal income tax purposes was $35,269,598 at
July 31, 1998.
D - 5
CORPORATE INCOME FUND,
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
5. DEFERRED SALES CHARGE
The sales charges are being paid from principal proceeds from the
periodic sales or maturity of the short-term U.S. Treasury securities
in the portfolio. A deferred sales charge of $ 4.48 per unit is
charged on a quarterly basis, and paid to the sponsors annually by
the Trustee on behalf of the Holders, up to an aggregate of $ 40.32
per unit over the first three years of the life of the Fund. Should
a Holder redeem units prior to the third anniversary of the Fund, the
remaining balance of the deferred sales charge will be charged.
D - 6
CORPORATE INCOME FUND,
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
PORTFOLIO
AS OF JULY 31, 1998
<TABLE><CAPTION>
Rating of Issues(1) Optional
Portfolio No. and Title of Moody's Standard & Face Redemption
Securities Investors Poor's Corp. Amount Coupon Maturities(3) Provisions(3) Cost(2) Value(2)
__________ _________ ____________ ______ ______ _____________ _____________ _______ ________
<S> <C> <C> <C> <C> <C> <C> <C>
1 Bank America Corporation, A1 A $ 2,750,000 6.625% 2007 None $ 2,770,942 $2,800,405
Subordinated Notes
2 Chase Manhattan Corporation, A1 A 2,750,000 6.750 2008 None 2,795,062 2,823,571
Subordinated Notes
3 Corestates Capital Corporation, A2 A- 2,750,000 6.750 2006 None 2,815,761 2,830,688
Company Guaranty Ser. Mtn
4 Hutchison Whampoa Financial, A3 A+ 2,750,000 6.950 2007 None 2,694,339 2,471,444
Notes, Company Guaranty, Ser. 144A
5 Mellon Finacial Company, A3 A 2,750,000 6.700 2008 None 2,791,928 2,813,186
Subordinated Debentures, Company
Guaranty
6 Midland Bank, Plc, Subordinated AA3 A 1,220,000 6.950 2011 None 1,245,292 1,253,946
Notes
7 PNC Funding Corporation, A3 BBB+ 2,445,000 6.875 2007 None 2,499,643 2,531,487
Subordinated Notes
8 Province of Quebec, Government A2 A+ 2,750,000 6.500 2006 None 2,765,375 2,794,770
Debentures, Ser. NY
9 Royal Bank of Scotland, A2 A+ 5,500,000 6.375 2011 None 5,328,753 5,437,905
Subordinated Notes
10 Santander Financial Issuances, A1 A+ 5,500,000 6.375 2011 None 5,307,537 5,386,810
Subordinated Notes Company
Guaranty
11 Southern California Edison A2 A 2,750,000 6.375 2006 None 2,753,810 2,757,425
Company, Notes
</TABLE>
D - 7
CORPORATE INCOME FUND,
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
PORTFOLIO
AS OF JULY 31, 1998
<TABLE><CAPTION>
Rating of Issues(1) Optional
Portfolio No. and Title of Moody's Standard & Face Redemption
Securities Investors Poor's Corp. Amount Coupon Maturities(3) Provisions(3) Cost(2) Value(2)
__________ _________ ____________ ______ ______ _____________ _____________ _______ ________
<S> <C> <C> <C> <C> <C> <C> <C>
12 United States Treasury Notes (4) AAA N/R $ 495,000 5.875% 1998 None $ 498,616 $ 495,000
13 United States Treasury Notes (4) AAA N/R 495,000 6.250 2000 None 502,544 502,116
14 United States Treasury Notes (4) AAA N/R 495,000 6.000 1999 None 499,996 497,475
______________ _____________
_____________
TOTAL $35,400,000 $35,269,598 $35,396,228
</TABLE>
See Notes to Portfolio.
D - 8
CORPORATE INCOME FUND,
INTERMEDIATE TERM SERIES - 101,
DEFINED ASSET FUNDS
NOTES TO PORTFOLIO
AS OF JULY 31, 1998
(1) The ratings of the bonds are by Standard & Poor's Ratings Group,
or by Moody's Investors Service, Inc. if followed by "(m)", or by
Fitch Investors Service, Inc. if followed by "(f)"; "NR" indicates
that this bond is not currently rated by any of the above-mentioned
rating services. These ratings have been furnished by the Evaluator
but not confirmed with the rating agencies. A description of the rating
symbols and their meanings appears under "Descriptions of Ratings" in
this Prospectus, Part B.
(2) See Notes to Financial Statements.
(3) Optional redemption provisions, which may be exercised in whole
or in part, are initially at prices of par plus a premium, then
subsequently at prices declining to par. Certain securities may
provide for redemption at par prior or in addition to any
optional or mandatory redemption dates or maturity, for
example, through the operation of a maintenance and replacement
fund, if proceeds are not able to be used as contemplated, the
project is condemned or sold or the project is destroyed and
insurance proceeds are used to redeem the securities. Many of
the securities are also subject to mandatory sinking fund
redemption commencing on dates which may be prior to the date
on which securities may be optionally redeemed. Sinking fund
redemptions are at par and redeem only part of the issue. Some
of the securities have mandatory sinking funds which contain
optional provisions permitting the issuer to increase the
principal amount of securities called on a mandatory redemption
date. The sinking fund redemptions with optional provisions
may, and optional refunding redemptions generally will, occur
at times when the redeemed securities have an offering side
evaluation which represents a premium over par. To the extent
that the securities were acquired at a price higher than the
redemption price, this will represent a loss of capital when
compared with the Public Offering Price of the Units when
acquired. Distributions will generally be reduced by the amount
of the income which would otherwise have been paid with respect
to redeemed securities and there will be distributed to Holders
any principal amount and premium received on such redemption
after satisfying any redemption requests for Units received by
the Fund. The estimated current return may be affected by
redemptions. The tax effect on Holders of redemptions and
related distributions is described under "Taxes" in this
Prospectus, Part B.
(4) DEFERRED SALES CHARGE
It is anticipated that principal received from these bonds will be
applied to the payment of the Trust's deferred sales charges.
D - 9
<PAGE>
Defined
Asset FundsSM
HAVE QUESTIONS ? CORPORATE INCOME FUND
Request the most recent free INTERMEDIATE TERM SERIES--101
Information Supplement (A Unit Investment Trust)
that gives more details about ---------------------------------------
the Fund, by calling: This Prospectus does not contain
The Bank of New York complete information about the
1-800-221-7771 investment company filed with the
Securities and Exchange Commission in
Washington, D.C. under the:
o Securities Act of 1933 (file no.
333-21529) and
o Investment Company Act of 1940 (file
no. 811-2295).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
Units of any future series may not be
sold nor may offers to buy be accepted
until that series has become effective
with the Securities and Exchange
Commission. No units can be sold in any
State where a sale would be illegal.
11310--10/98
