<PAGE>
DEFINED ASSET FUNDSSM
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CORPORATE INCOME FUND
INTERMEDIATE TERM SERIES 201
(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, The Securities and Exchange Commission has not
Pierce, Fenner & Smith approved or disapproved these Securities or
Incorporated passed upon the adequacy of this prospectus. Any
Salomon Smith Barney Inc. representation to the contrary is a criminal
PaineWebber Incorporated offense.
Dean Witter Reynolds Inc. Prospectus dated February 24, 1999.
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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.
CONTENTS
PAGE
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RISK/RETURN SUMMARY AND PORTFOLIO....................... 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.................................... 7
LITIGATION RISK...................................... 7
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..................................... 12
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................................ 16
FINANCIAL STATEMENTS.................................... 17
REPORT OF INDEPENDENT ACCOUNTANTS.................... 17
STATEMENT OF CONDITION............................... 17
2
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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 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 12 intermediate term
corporate bonds with an aggregate face amount of
$6,000,000, and some short-term U.S. Treasury notes
reserved to pay the deferred sales fee. The Fund is a unit
investment trust which means that, unlike a mutual fund,
the Fund's portfolio is not managed.
o The bonds are rated A or better by Standard & Poor's,
Moody's or Fitch.
o Most of the bonds cannot be called for several years, and
after that they 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 Corporate Utilities 8%
o Financial Institutions 74%
o Manufacturing 16%
o U.S. Government 2%
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. These risks are discussed later in
this prospectus under Concentration Risk.
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 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.
3
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DEFINING YOUR INCOME AND ESTIMATING YOUR RETURN
WHAT YOU MAY EXPECT
First payment per 1,000 units (3/25/99) $ 2.41
Regular Monthly Income per 1,000 units
(beginning 4/25/99): $ 4.53
Annual Income per 1,000 units: $ 54.38
RECORD DAY: 10th day of each month
These figures are estimates on the business day before the
initial date of deposit; actual payments may vary.
Estimated Current Return 5.39%
Estimated Long Term Return 5.48%
These returns will vary (see page 6)
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 1.00%, as well as a
total deferred sales fee of $20.00 per 1,000 units
(beginning in August, 1999, eight quarterly payments of
$2.50 per 1,000 units). Employees of some of the Sponsors
and their affiliates may be charged a reduced sales fee of
no less than $5.00 per 1,000 Units.
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
AS A % OF AMOUNT
$1,000 PER 1,000
INVESTED UNITS
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.071% $ 0.71
Trustee's Fee
.045% $ 0.45
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
.032% $ 0.32
Evaluator's Fee
.021% $ 0.20
Other Operating Expenses
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.169% $ 1.68
TOTAL
AMOUNT
PER 1,000
UNITS
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$ 2.00
ORGANIZATIONAL COSTS (deducted from
Fund assets at the close of the
initial offering period)
The Sponsors historically paid organization costs and
updating expenses.
EXAMPLE
This example may help you compare the cost of investing in
the Fund to the cost of investing in other funds.
The example assumes that you invest $10,000 in the Fund for
the periods indicated and sell all your units at the end of
those periods. The example also assumes a 5% return on your
investment each year and that the Fund's operating expenses
stay the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
$337 $374 $414 $534
You will pay the following expenses if you do not sell
your units:
1 Year 3 Years 5 Years 10 Years
$237 $374 $414 $534
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 May 27, 1990 and April 9,
1996 and were outstanding on December 31, 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 12/31/98.
WITH SALES FEE NO SALES FEE
1 YEAR 5 YEARS 1 YEAR 5 YEARS
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High 5.89% 6.63% 11.09% 7.49%
Average 3.81 6.04 8.89 7.05
Low 0.43 5.66 5.30 6.67
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Average
Sales fee 4.98% 4.95%
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Note: All returns represent changes in unit price with distributions reinvested
into the Corporate Fund Investment Accumulation Program.
4
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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.
UNIT PRICE PER 1,000 UNITS $1,009.44
(as of February 23, 1999)
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. Unit
price also includes the estimated organization costs shown
on the previous page. 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.
UNIT PAR VALUE $1.00
Unit par value means the total amount of money you should
generally receive on each unit by the termination of the
Fund (other than interest and premium on the bonds). This
total amount assumes that all bonds in the Fund are either
paid at maturity or called by the issuer at par or are
sold by the Fund at par. If you sell your units before the
Fund terminates, you may receive more or less than the
unit par value.
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 are 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 also receive principal payments if bonds are sold
or called or mature, when the cash available is more than
$5.00 per 1,000 units. 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.
5
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DEFINED PORTFOLIO
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Intermediate Term Series--201
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<CAPTION>
RATINGS OF ISSUES (1)
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STANDARD &
PORTFOLIO TITLE COUPON MATURITY POOR'S MOODY'S FITCH
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COST
PORTFOLIO TITLE TO FUND (2)
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CORPORATE UTILITIES (8%):
<S> <C> <C> <C> <C>
1. $500,000 GTE California, Debentures 5.50% 1/15/09 AA- A2 NR
1. $500,000 GTE California, Debentures $487,190.00
FINANCIAL INSTITUTIONS (74%):
2. $500,000 First Union National Bank, Subordinated Notes 5.80 12/1/08 A A1 NR
3. $500,000 Fleet National Bank, Subordinated Notes 5.75 1/15/09 A A2 A
4. $500,000 Ford Motor Credit Company, Senior Notes 5.80 1/12/09 A A1 NR
5. $500,000 General Motors Acceptance Corporation, Senior 5.85 1/14/09 A A2 A
Unsubordinated Notes
6. $500,000 Household Finance Corporation, Senior Unsubordinated 5.875 2/1/09 A A2 A+
Notes
7. $500,000 National City Corporation Subordinated Notes 5.75 2/1/09 A- A2 NR
8. $500,000 Norwest Financial Incorporated, Senior Notes 5.625 2/3/09 A+ Aa3 AA
9. $500,000 Toyota Motor Credit Corporation, Notes 5.50 12/15/08 AAA Aa1 NR
10. $500,000 Wachovia Corporation, Subordinated Notes 5.625 12/15/08 A+ A1 NR
2. $500,000 First Union National Bank, Subordinated Notes 489,970.00
3. $500,000 Fleet National Bank, Subordinated Notes 487,690.00
4. $500,000 Ford Motor Credit Company, Senior Notes 490,985.00
5. $500,000 General Motors Acceptance Corporation, Senior 492,460.00
Unsubordinated Notes
6. $500,000 Household Finance Corporation, Senior Unsubordinated 487,190.00
Notes
7. $500,000 National City Corporation Subordinated Notes 487,660.00
8. $500,000 Norwest Financial Incorporated, Senior Notes 487,405.00
9. $500,000 Toyota Motor Credit Corporation, Notes 486,170.00
10. $500,000 Wachovia Corporation, Subordinated Notes 487,870.00
MANUFACTURING (16%):
11. $500,000 IBM Corporation, Notes 5.375 2/1/09 A+ A1 AA-
12. $500,000 Lucent Technologies, Notes 5.50 11/15/08 A A2 NR
11. $500,000 IBM Corporation, Notes 484,690.00
12. $500,000 Lucent Technologies, Notes 489,510.00
U.S. GOVERNMENT (2%):
13. $124,000 United States Treasury Notes (3) 5.875- 6/30/00- AAA Aaa AAA
6.625 6/30/01
13. $124,000 United States Treasury Notes (3) 127,119.41
------------------
$5,985,909.41
------------------
------------------
</TABLE>
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(1) Ratings A through AAA indicate good to highest quality bonds with a strong
to very strong capacity to pay interest and repay principal. 'NR' indicates
that no rating has been assigned.
(2) Approximately 2% of the bonds were deposited at a premium and 98% at a
discount from par. Sponsors' profit on deposit was $21,020.66.
(3) It is anticipated that principal received upon the sale or maturity of
these securities will be applied to the payment of the investors' deferred
sales charge; the interest income will be distributed at the end of each
year. These amounts have not been included in the calculation of the Fund's
Estimated Current or Long Term Returns.
------------------------------------
PLEASE NOTE THAT IF THIS PROSPECTUS IS USED AS A PRELIMINARY
PROSPECTUS
FOR A FUTURE FUND IN THIS SERIES, THE PORTFOLIO WILL CONTAIN
DIFFERENT
BONDS FROM THOSE DESCRIBED ABOVE.
6
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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
- -------------------------------------------------
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.
6
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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 of
financial institutions.
The profitability of a financial institution depends to a great extent on the
credit quality of its loan portfolio, which is affected by:
o the institution's underwriting criteria;
o Concentrations within its loan portfolio; and
o general economic conditions.
A financial institution's operating performance is also impacted by:
o changes in interest rates;
o availability and cost of funds;
o intensity of competition; and
o 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:
7
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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.
As of the close of the initial offering period, the price you receive will be
reduced to reflect estimated organization costs.
If you sell your units before the final deferred sales fee installment, the
amount of any remaining installments will be deducted from your proceeds.
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
8
<PAGE>
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.
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.
9
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HOW THE FUND WORKS
PRICING
The price of a unit includes interest accrued on the bonds, less expenses, from
the initial date of deposit up to, but not including, the settlement date, which
is usually three business days after the purchase date of the unit.
Bonds also carry accrued but unpaid interest up to the initial date of deposit.
To avoid having you pay this additional accrued interest (which earns no return)
when you buy, the Trustee advances this amount to the Sponsors. The Trustee
recovers this advance from interest received on the bonds.
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, a portion of the price of a unit also consists of cash to 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 corporate 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
Interest on any bonds purchased on a when-issued basis or for a delayed delivery
does not begin to accrue until the bonds are delivered to the Fund. The Trustee
may advance money to provide you with income for this non-accrual period. If a
bond is not delivered on time and the Trustee's annual fee and expenses do not
cover the additional accrued interest, we will treat the contract to buy the
bond as failed.
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;
10
<PAGE>
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. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Fund's registration statement yearly are also now
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.
Certain of these expenses were previously paid for by the Sponsors.
The Trustee's, Sponsors' and Evaluator's fees may be adjusted for inflation
without investors' approval.
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; if
a contract to buy any bond fails in the first 90 days of the Fund, we generally
will deposit a replacement corporate bond with a similar yield, maturity, rating
and price.
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
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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 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
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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.
SPONSORS
The Sponsors and their underwriting percentages are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051 76.90%
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013 8.25%
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048 8.25%
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019 6.60%
100.00%
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 Chase Manhattan Bank, 4 New York Plaza--6th Floor, New York, New York 10004,
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. Sponsors also realize a
profit or loss on deposit of the bonds shown under Defined Portfolio. 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
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<PAGE>
were acquired from underwriting syndicates of which it was a member. None of the
bonds in the Portfolio were purchased from any of the Sponsors (as sole
underwriter, managing underwriter or member of an underwriting syndicate).
During the initial offering period, the Sponsors also may realize profits or
sustain losses on units they hold. 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
During the initial offering period, units will be distributed to the public by
the Sponsors and dealers who are members of the National Association of
Securities Dealers, Inc. This period is 30 days or less if all units are sold.
The Sponsors may extend the initial period up to 120 days.
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.
In the initial offering period, the concession to dealers will be $20 per 1,000
units. We may change the concession at any time. Dealers may resell units to
other dealers with a concession not in excess of the original concession to
dealers.
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 (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.
The Year 2000 Problem may adversely affect the issuers of the securities
contained in the Fund, but we cannot predict whether any impact will be material
to the Fund as a whole.
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.
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<PAGE>
GAIN 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 are
considered to have 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 (currently $124,500 or $62,250 for a married person
filing separately).
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 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.
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<PAGE>
RETIREMENT PLANS
You may wish to purchase units for an Individual Retirement Account (IRA) or
other retirement plan. Generally, capital gains and income received in each of
these plans are exempt from federal taxation. All distributions from such plans
are generally treated as ordinary income but may, in some cases, be eligible for
tax-deferred rollover treatment. You should consult your attorney or tax adviser
about the specific tax rules relating to thse plans. These plans are offered by
brokerage firms, including the Sponsors of this Fund, and other financial
institutions. Fees and charges with respect to such plans may vary.
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.
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Corporate Income Fund, Intermediate Term
Series--201, Defined Asset Funds (the 'Fund'):
We have audited the accompanying statement of condition and the related defined
portfolio included in the prospectus of the Fund as of February 24, 1999. 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 February 24,
1999 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
NEW YORK, N.Y.
FEBRUARY 24, 1999
STATEMENT OF CONDITION AS OF FEBRUARY 24, 1999
TRUST PROPERTY
Investments--Bonds and Contracts to purchase Bonds(1) $ 5,985,909.41
Cash 72,120.00
Accrued interest to Initial Date of Deposit on underlying
Bonds 44,879.59
--------------------
Total $ 6,102,909.00
--------------------
--------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Advance by Trustee for accrued interest (2) $ 44,879.59
Reimbursement of Sponsors for organization expenses (3) $ 12,120.00
--------------------
Subtotal 56,999.59
--------------------
Interest of Holders of 6,060,000 Units of fractional
undivided interest outstanding:
Cost to investors (3)(4)(5) 6,117,235.61
Organization expenses (3) (71,326.20)
--------------------
Subtotal 6,045,909.41
--------------------
Total $ 6,102,909.00
--------------------
--------------------
- ---------------
(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 Deutsche Genossenschaftsbank, A.G., New York
Branch, in the amount of $6,011,655.83 and deposited with the Trustee. The
amount of the letter of credit includes $5,964,888.75 for the purchase of
$6,124,000.00 face amount of the bonds, plus $46,767.08 for accrued interest.
(2) Representing a special distribution to the Sponsors by the Trustee
of an amount equal to the accrued interest on the bonds.
(3) A portion of the Unit Price consists of cash in an amount
sufficient to pay for costs incurred in establishing the Fund. These costs have
been estimated at $2.00 per 1,000 Units. A distribution will be made at the
close of the initial offering period to an account maintained by the Trustee
from which the organization expense obligation of the investors to the Sponsors
will be satisfied.
(4) Assumes the maximum up-front sales fee per 1,000 units of 1.00% of
the Unit Price. A deferred sales fee of $20.00 per 1,000 Units is payable over a
two-year period (eight quarterly payments of $2.50 per 1,000 Units).
Distributions will be made to an account maintained by the Trustee from which
the deferred sales fee obligation of the investors will be satisfied. If units
are redeemed prior to the end of the second anniversary of the Fund, the
remaining portion of the deferred sales fee applicable to such units will be
transferred to the account on the redemption date.
(5) Aggregate Unit 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.
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<PAGE>
Defined
Asset FundsSM
HAVE QUESTIONS ? CORPORATE INCOME FUND
Request the most recent free INTERMEDIATE TERM SERIES 201
Information Supplement (A Unit Investment Trust)
that gives more details about ---------------------------------------
the Fund, by calling: This Prospectus does not contain
The Chase Manhattan Bank complete information about the
1-800-323-1508 investment company filed with the
Securities and Exchange Commission in
Washington, D.C. under the:
o Securities Act of 1933 (file no.
333-64581) 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.
32756--2/99
18
