EQUITY INCOME FUND SEL TEN PORT 1996 INTL SER B SPRING DAF, 487, 1996-05-17

EQUITY INCOME FUND SEL TEN PORT 1996 INTL SER B SPRING DAF
487, 1996-05-17

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As filed with the Securities and Exchange Commission on May 17, 1996
REGISTRATION NO. 333-00593

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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
AMENDMENT NO. 2
TO
FORM S-6
------------------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------------------------

A. EXACT NAME OF TRUST:
EQUITY INCOME FUND
SELECT TEN PORTFOLIO 1996 INTERNATIONAL SERIES B
(UNITED KINGDOM AND JAPAN PORTFOLIOS)
DEFINED ASSET FUNDS

B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.

C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:

MERRILL LYNCH, PIERCE, SMITH BARNEY INC. DEAN WITTER REYNOLDS INC.
FENNER & 388 GREENWICH STREET TWO WORLD TRADE
SMITH INCORPORATED 23RD FLOOR CENTER--59TH FLOOR
DEFINED ASSET FUNDS NEW YORK, N.Y. 10013 NEW YORK, N.Y. 10048
P.O. BOX 9051
PRINCETON, N.J.
08543-9051

PRUDENTIAL SECURITIES PAINEWEBBER INCORPORATED
INCORPORATED 1285 AVENUE OF THE
ONE SEAPORT PLAZA AMERICAS
199 WATER STREET NEW YORK, N.Y. 10019
NEW YORK, N.Y. 10292

D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:

TERESA KONCICK, ESQ. LAURIE A. HESSLEIN LEE B. SPENCER, JR.
P.O. BOX 9051 388 GREENWICH STREET ONE SEAPORT PLAZA
PRINCETON, N.J. NEW YORK, N.Y. 10013 199 WATER STREET
08543-9051 NEW YORK, N.Y. 10292
COPIES TO:
ROBERT E. HOLLEY DOUGLAS LOWE, ESQ. PIERRE DE SAINT PHALLE,
1285 AVENUE OF THE 130 LIBERTY STREET--29TH ESQ.
AMERICAS FLOOR 450 LEXINGTON AVENUE
NEW YORK, N.Y. 10019 NEW YORK, N.Y. 10006 NEW YORK, N.Y. 10017

E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:

An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.

F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED:
Indefinite

G. AMOUNT OF FILING FEE:
$500 (as required by Rule 24f-2)

/ x / Check box if it is proposed that this Registration Statement will become
effective upon filing on May 17, 1996 pursuant to Rule 487.

EQUITY INCOME FUND The objective of these Defined Portfolios is total
SELECT TEN PORTFOLIO return through a combination of capital
1996 INTERNATIONAL appreciation and current dividend income.
SERIES B The common stocks in the United Kingdom Portfolio
UNITED KINGDOM were selected by following a strategy that invests
AND for a period of about one year in the ten common
JAPAN PORTFOLIOS stocks in the Financial Times Industrial Ordinary
(UNIT INVESTMENT TRUSTS) Share Index (the FT Index) having the highest
- ------------------------------dividend yields two business days prior to the
/ / DESIGNED FOR TOTAL RETURN date of this Prospectus.
/ / DEFINED PORTFOLIOS OF 10 The common stocks in the Japan Portfolio were
HIGHEST DIVIDEND selected by following a strategy that invests for
YIELDING INDEX STOCKS a period of about one year in the ten common
/ / SEMI-ANNUAL DIVIDEND stocks in the Nikkei 225 Index having the highest
INCOME dividend yields four business days prior to the
date of this Prospectus.
The Portfolios, especially the Japan Portfolio,
may be considered speculative and therefore they
may be appropriate only for those investors able
or willing to assume the increased risks of higher
price volatility and currency fluctuations
associated with investments in international
equities. The Portfolios should be considered as
vehicles for investing a portion of an investor's
assets in foreign securities and not as a complete
equity investment program. The value of units will
fluctuate with the value of the common stocks in
the applicable Portfolio and currency fluctuations
and no assurance can be given that dividends will
be paid or that the units will appreciate in
value.
Unless otherwise indicated, all amounts herein are
stated in U.S. dollars computed on the basis of
the exchange rate for British pounds sterling or
Japanese yen, as applicable, on May 17, 1996.
An investor may invest in Units of one or both
Portfolios.
Minimum purchase: $250 per Portfolio.

-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
SPONSORS: HAS THE COMMISSION OR ANY STATE SECURITIES
Merrill Lynch, COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Pierce, Fenner & Smith OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Incorporated CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-323-1508.
Prudential Securities Prospectus dated May 17, 1996.
Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Dean Witter Reynolds Inc. AND RETAIN IT FOR FUTURE REFERENCE.

<PAGE>
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Defined Asset FundsSM

Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $100 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.

Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.

Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:

o Municipal portfolios
o Corporate portfolios
o Government portfolios
o Equity portfolios
o International portfolios

The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.

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Defining the Strategy
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The Select Ten Portfolios follow a simple, time-tested Strategy: buy
approximately equal amounts of the ten highest dividend-yielding stocks of the
Financial Times Industrial Ordinary Share Index or the Nikkei 225 Index* and
hold them for about one year. At the end of the year, each Portfolio will be
liquidated and the Strategy reapplied to that Index to select a new portfolio.
Each Select Ten Portfolio is designed to be part of a longer term strategy and
investors are advised to follow the Strategy for at least a three to five year
period. So long as the Sponsors continue to offer new portfolios, investors will
have the option to reinvest into a new portfolio at a reduced sales charge. The
Sponsors reserve the right not to offer new portfolios.

- ------------
* The publishers of these Indexes are not affiliated with the Sponsors, have not
participated in any way in the creation of the Portfolios or in the selection of
stocks included in the Portfolios and have not reviewed or approved any
information included in this Prospectus.

The Strategy provides a disciplined approach to investing based on a buy and
hold philosophy, which ignores market timing and investment research and rejects
active management. The Sponsors anticipate that each Portfolio will remain
unchanged over its one-year life despite any adverse developments concerning an
issuer, an industry or the economy or a stock market generally.

Although Select Ten International Portfolios were not available until 1993, a
strategy of investing in approximately equal values of the Strategy Stocks (but
not necessarily a given Portfolio) each year generally would have yielded a
higher total return than an investment in all of the stocks of the relevant
index, on a hypothetical basis. Of course, past performance cannot guarantee
future results and there can be no assurance that any Portfolio will outperform
the related Index over its one-year life, especially because of sales charges
and expenses, or that the Strategy will not lose money over consecutive annual
periods.

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

The Strategy Stocks, as the 10 highest dividend yielding stocks in the related
Index, generally share attributes that have caused them to have lower prices or
higher yields relative to the other stocks in those Indexes. The Strategy Stocks
may, for example, be experiencing financial difficulty, or be out of favor in
the market because of weak performance, poor earnings forecasts or negative
publicity; or they may be reacting to general market cycles. The Strategy is
therefore contrarian in nature. The Strategy Stocks are chosen solely by
application of the Strategy to determine the highest-yielding Index stocks. The
Portfolios do not reflect any investment recommendations of the Sponsors and one
or more of the stocks in a Portfolio may, from time to time, be subject to sell
recommendations from one or more of the Sponsors.

The Portfolios are not appropriate investments for those who are not comfortable
with the Strategy. They may not be appropriate for investors seeking either
preservation of capital or high current income, nor would they be appropriate
for investors unable or unwilling to assume the increased risks of higher price
volatility and currency fluctuations associated with investments in
international equities trading in non-U.S. currencies. The Portfolios should be
considered as vehicles for investing a portion of an investor's assets in
foreign securities and not as a complete equity investment program.

A-2
<PAGE>
There can be no assurance that the market factors that caused the relatively low
prices and high yields of the Strategy Stocks will change, that any negative
conditions adversely affecting the stock price will not deteriorate, that the
dividend rates on the Strategy Stocks will be maintained or that share prices
will not decline further during the life of a Portfolio, or that the Strategy
Stocks will continue to be included in the related index.

Unit price fluctuates with the value of a Portfolio, and the value of a
Portfolio could be affected by changes in the financial condition of the
issuers, changes in the various industries represented in the Portfolios,
movements in stock prices generally and in currency exchange rates, the impact
of purchase and sale of securities for a Portfolio (especially during the
primary offering period of units and during the rollover period) and other
factors. Also, the return on an investment in a Portfolio will be lower than the
hypothetical returns on Strategy Stocks because the Portfolio has sales charges,
brokerage commissions and expenses, purchases Strategy Stocks at different
prices and is not fully invested at all times and because of other factors
described under Performance Information.

Unlike mutual funds, the Portfolios are not actively managed and the Sponsors
receive no management fee. The adverse financial condition of an issuer or any
market movement in the price of a security will not require the sale of
securities from a Portfolio. Although the Sponsors may instruct the Trustee to
sell securities under certain limited circumstances, given the investment
philosophy of the Portfolios, the Sponsors are not likely to do so. The
Portfolios may continue to purchase or hold securities originally selected even
though the market value and yields on the securities may have changed or the
securities may no longer be included in the related Index.

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Defining Your Investment
- ----------------------------------------------------------------

PUBLIC OFFERING PRICE PER 1,000 UNITS $1,000.00

The Public Offering Price as of May 17, 1996 is based on the aggregate value of
the underlying securities and any cash held to purchase securities, divided by
the number of units outstanding times 1,000, plus the initial sales charge. The
Public Offering Price on any subsequent date will vary. The underlying
securities are valued by the Trustee on every business day on the basis of their
closing sale prices (11:30 a.m. New York Time for the London Stock Exchange and
1:00 a.m. New York Time for the Tokyo Stock Exchange).

SALES CHARGES

The total sales charge for this investment combines an initial up-front sales
charge and a deferred sales charge that will be deducted from the net asset
value of a Portfolio monthly beginning August 23, 1996 and thereafter on the 1st
of each month for the remaining nine months of the Portfolio.

ROLLOVER OPTION

When these Select Ten International Portfolios are about to terminate, you may
have the option to roll your proceeds into the next portfolio of the then
current Strategy Stocks. If you notify your financial consultant by May 23,
1997, your units will be redeemed and your proceeds will be reinvested in units
of a new United Kingdom or Japan Portfolio. If you decide not to roll over your
proceeds, you will receive a cash distribution after the Fund terminates. Of
course you can sell or redeem your Units at any time prior to termination.

SEMI-ANNUAL DISTRIBUTIONS

You will receive distributions of any dividend income, net of expenses, on the
25th of September 1996 and March 1997, if you own units on the 10th of those
months.

REINVESTMENT OPTION

You can elect to automatically reinvest your distributions into additional units
of a Portfolio subject only to the deferred sales charge remaining at the time
of reinvestment. Reinvesting helps to compound your income for a greater total
return.

TAXES

In the opinion of counsel, you will be considered to have received all the
dividends paid on your pro rata portion of each security in a Portfolio when
those dividends are received by the Portfolio, even though a portion of the
dividend payments may be used to pay expenses of the Portfolio and regardless of
whether you reinvest your dividends in the Portfolio.

A-3
<PAGE>
TAX BASIS REPORTING

The proceeds received when you sell this investment will reflect the deduction
of the deferred sales charge and the charge for organizational expenses. In
addition, the annual statement and the relevant tax reporting forms you receive
at year-end will be based upon the amount paid to you (net of the deferred sales
charge and the charge for organizational expenses). Accordingly, you should not
increase your basis in your units by the deferred sales charge and the charge
for organizational expenses. (See Taxes).

TERMINATION DATE

The Portfolios will terminate by June 27, 1997. The final distribution will be
made within a reasonable time afterward. A Portfolio may be terminated earlier
if its value is less than 40% of the value of the securities when deposited.

SPONSORS' PROFIT OR LOSS

The Sponsors' profit or loss from the Portfolios will include applicable sales
charges, fluctuations in the Public Offering Price or secondary market price of
units and a gain or loss on the initial and subsequent deposits of securities
(see Defined Portfolios; Sponsors' and Underwriters' Profits in Part B).

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Defining Your Costs
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SALES CHARGES

First-time investors pay a 1% maximum sales charge when they buy. For example,
on a $1,000 investment, $990 is invested in the Strategy Stocks. In addition, a
deferred sales charge of $1.75 per 1,000 units will be deducted from a
Portfolio's net asset value each month over the last ten months of the
Portfolio's life ($17.50 total). This deferred method of payment keeps more of
your money invested over a longer period of time. If you roll the proceeds of
your investment into a new portfolio, you will not be subject to the 1% initial
charge, just the $17.50 deferred fee. Although this is a unit investment trust
rather than a mutual fund, the following information is presented to permit a
comparison of fees and an understanding of the direct or indirect costs and
expenses that you pay.

As a %
of Initial
Public Amount per
Offering Price 1,000 Units
--------------- --------------
Maximum Initial Sales Charge 1.00% $ 10.00
Deferred Sales Charge per Year 1.75% 17.50
--------------- --------------
2.75% $ 27.50
--------------- --------------
--------------- --------------
Maximum Sales Charge Imposed Per
Year on Reinvested Dividends 1.40% $ 14.00

Estimated Operating Expenses and the cumulative costs are provided below for
each Portfolio.

SELLING YOUR INVESTMENT

You may sell or redeem your units at any time prior to the termination of a
Portfolio. Your price will be based on the then current net asset value. The
redemption and secondary market repurchase price as of May 17, 1996 was $972.50
per 1,000 units ($27.50 per 1,000 units less than the Public Offering Price).
This price reflects deductions of the deferred sales charge which declines over
the last ten months of a Portfolio ($17.50 initially). If you sell your units
before the termination of the Portfolio, you will pay the remaining balance of
the deferred sales charge. In addition, after the initial offering period, the
repurchase and cash redemption prices for units will be further reduced to
reflect the estimated costs of liquidating securities to meet the redemption. If
you reinvest in a new Portfolio, you will pay your share of any brokerage
commissions on the sale of underlying securities when your units are liquidated
during the rollover.

A-4
<PAGE>
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Defining Your United Kingdom Portfolio
- ----------------------------------------------------------------

Investing in the Portfolio, rather than in only one or two of the Strategy
Stocks, is a way to diversify your investment. Based upon the principal business
of each issuer and current market values, the following industries are
represented in the Portfolio:

APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Conglomerate 20%
/ / Utilities/Gas 10
/ / Electrical Equipment 10
/ / Pharmaceuticals 10
/ / Wines/Spirits 10
/ / Telecommunications 10
/ / Transportation/Marine 10
/ / Banks 10
/ / Insurance 10

The United Kingdom Portfolio is not concentrated in stocks of any particular
industry, although all of the stocks represent United Kingdom issuers.

U.K. TAXES

The Portfolio will report as gross income each investor's pro rata share of
dividends earned by the Portfolio grossed-up to reflect the payment of certain
U.K. taxes by the relevant U.K. corporation. As a practical matter, investors
may not receive a refund of any amount of such U.K. taxes under the U.S.-U.K.
Treaty in the absence of the Portfolio agreeing to a special procedure with the
U.K. Inland Revenue.

ESTIMATED ANNUAL OPERATING EXPENSES

AS A % OF AMOUNT PER
NET ASSETS 1,000 UNITS
----------------- --------------
Trustee's Fee .082% $ 0.81
Maximum Portfolio Supervision,
Bookkeeping and Administrative
Fees .045% $ 0.45
Organizational Expenses .164% $ 1.62
Other Operating Expenses .129% $ 1.28
----------------- --------------
TOTAL .420% $ 4.16

The Portfolio (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Portfolio--as is common for mutual
funds.

These estimates do not include the costs of purchasing and selling the
underlying Strategy Stocks.

COSTS OVER TIME

You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$32 $78 $126 $260

Although the Portfolio has a term of only one year and is a unit investment
trust rather than a mutual fund, this information is presented to permit a
comparison of fees, assuming the principal amount and distributions are rolled
over each year into a new Series subject only to the deferred sales charge and
fund expenses.

This example assumes reinvestment of all dividends and distributions and uses a
5% annual rate of return as mandated by SEC regulations applicable to mutual
funds. For purposes of the example, the deferred sales charge imposed on
reinvestment of dividends is not reflected until the year following payment of
the dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment.

The example should not be considered a representation of past or future expenses
or annual rates of return; the actual expenses and annual rates of return may be
more or less than the example. Reductions to the repurchase and cash redemption
prices in the secondary market to recoup the costs of liquidating securities to
meet redemption, currently estimated at $1.99 per 1,000 units, have not been
reflected.

A-5
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<TABLE><CAPTION>
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Defined United Kingdom Portfolio
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Equity Income Fund
Select Ten Portfolio 1996 International Series B May 17, 1996

PRICE
PER SHARE COST
TO PORTFOLIO TO FUND
PERCENTAGE CURRENT IN IN U.S. DOLLARS
NAME OF ISSUER OF PORTFOLIO (1) DIVIDEND YIELD (2) U.S. DOLLARS (3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. British Gas PLC 10.10% 8.17% $ 2.690 $ 30,935.14
2. Hanson PLC 9.71 6.30 2.887 29,736.38
3. Peninsular & Oriental Steam
Navigation Company 9.87 5.81 7.956 30,234.23
4. BTR PLC 9.93 5.37 4.539 30,410.78
5. British Telecommunications PLC 10.09 5.32 5.153 30,916.20
6. Allied Domecq PLC 9.77 4.30 7.487 29,946.28
7. Glaxo Wellcome PLC 10.14 4.10 12.942 31,061.69
8. National Westminster Bank PLC 10.14 3.83 10.017 31,054.11
9. BICC PLC 10.01 3.64 5.198 30,669.17
10. Royal Insurance Holdings PLC 10.24 3.56 6.820 31,370.85
----------------- -----------------
100.00% $ 306,334.83
----------------- -----------------
----------------- -----------------
</TABLE>

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(1) Based on Cost to Fund in U.S. dollars.

(2) Current Dividend Yield for each security was generally calculated by adding
the most recent interim and final dividends declared on the security and
dividing the result by its market value as of the close of trading on May
17, 1996.

(3) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on May 17, 1996, converted into U.S. dollars on the offer
side of the exchange rate at the evaluation time on that date. Loss to the
Sponsors on deposit of the Securities was $2,150.90.

------------------------------------

The securities were acquired on May 17, 1996 and are represented entirely by
contracts to purchase the securities. Any of the Sponsors may have acted as
underwriters, managers or co-managers of a public offering of the securities in
this Fund during the last three years. Affiliates of the Sponsors may serve as
specialists in the securities in this Fund on one or more stock exchanges and
may have a long or short position in any of these securities or in options on
any of them, and may be on the opposite side of public orders executed on the
floor of an exchange where the securities are listed. An officer, director or
employee of any of the Sponsors may be an officer or director of one or more of
the issuers of the securities in the Fund. A Sponsor may trade for its own
account as an odd-lot dealer, market maker, block positioner and/or arbitrageur
in any of the securities or in options on them. Any Sponsor, its affiliates,
directors, elected officers and employee benefits programs may have either a
long or short position in any securities or in options on them.

A-6
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Performance Information--FT Strategy
- --------------------------------------------------------------------------------
The following table compares the actual performance of the FT Index and the
hypothetical performance of approximately equal amounts invested in each of the
FT Strategy Stocks (but not any Select Ten Portfolio) at the beginning of each
year and reinvesting the proceeds annually for the past 20 years as of December
31 in each of these years. These results represent past performance of the FT
Strategy Stocks, and may not be indicative of future results of the Strategy or
the Portfolio. The FT Strategy Stocks underperformed the FT Index in certain
years including five of the last 20 years. Also, an investment in the Portfolio
will not realize as high a total return as a direct investment in the FT
Strategy Stocks, since the Portfolio has sales charges and expenses and may not
be fully invested at all times. In addition, dividends on the FT Strategy Stocks
are subject to withholding by the U.K. Actual performance of a Portfolio will
also differ from quoted performance of the FT Strategy Stocks and the FT Index
because the quoted performance figures are annual figures based on closing sales
prices on December 31, while the Portfolios are established and liquidated at
various times during the year. Performance variances may also result because
stocks are normally purchased or sold at prices and currency exchange rates
different from the closing price and currency exchange rate used to determine
the Portfolio's net asset value and not all stocks may be weighted equally at
all times.

<TABLE><CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
(FIGURES REFLECT CONVERSION INTO U.S. DOLLARS AT APPLICABLE CURRENCY EXCHANGE
RATES
BUT NOT SALES CHARGES, FUND EXPENSES, COMMISSIONS OR TAXES)

FT STRATEGY STOCKS(1) FT INDEX*
--------------------------------------------------------------- ---------------------------------------------
YEAR APPRECIATION(2) ACTUAL DIVIDEND YIELD(3) TOTAL RETURN(4) APPRECIATION(2) ACTUAL DIVIDEND YIELD(3)
- --------- ---------------- --------------------------- ---------------- ---------------- ---------------------------
<S> <C> <C> <C> <C> <C>
1976 -23.33% 7.44% -15.89% -20.59% 5.01%
1977 73.41 13.86 87.27 53.46 8.46
1978 7.22 10.51 17.73 3.57 6.35
1979 -5.75 10.51 4.76 -3.94 7.53
1980 16.49 13.66 30.15 22.57 9.20
1981 -14.02 7.76 -6.26 -10.36 5.06
1982 34.04 9.99 44.03 -4.41 4.83
1983 34.17 7.89 42.06 16.60 5.34
1984 -0.85 6.35 5.50 -2.26 4.41
1985 69.36 9.28 78.64 48.25 6.49
1986 26.35 6.53 32.88 19.14 5.22
1987 40.49 7.61 48.10 32.97 6.02
1988 5.19 6.19 11.38 1.62 5.12
1989 22.08 6.63 28.71 17.57 5.23
1990 1.91 7.35 9.26 4.31 5.98
1991 8.70 7.87 16.57 9.36 5.29
1992 -1.41 5.68 4.27 -6.33 4.00
1993 31.55 6.14 37.69 14.24 4.16
1994 0.42 5.04 5.46 -2.43 4.32
1995 5.20 5.63 10.83 13.07 4.56
1996 4.34 0.83 5.17 1.22 0.99
(through 3/31)
<CAPTION>

FT INDEX*
---------------
YEAR TOTAL RETURN(4)
- --------- ----------------
<S> <C>
1976 -15.58%
1977 61.92
1978 9.92
1979 3.59
1980 31.77
1981 -5.30
1982 0.42
1983 21.94
1984 2.15
1985 54.74
1986 24.36
1987 38.99
1988 6.74
1989 22.80
1990 10.29
1991 14.65
1992 -2.33
1993 18.40
1994 1.89
1995 17.63
1996 2.21
(through 3/31)
</TABLE>

Changes in the exchange rates of the pound sterling relative to the U.S. dollar
affected these figures significantly in certain years. These changes ranged from
minus 25% in 1981 and 1984 to plus 21% in 1987, and averaged minus 2.7% over the
last 20 years. See Foreign Currency Exchange Rates table under Risk Factors in
Part B.

- ------------------------------------
* Source: Datastream International, Inc. The Sponsors have not independently
verified these data, but they have no reason to believe these data are
incorrect in any material respect.
(1) The FT Strategy Stocks for any given year were selected by ranking the
dividend yields for each of the stocks in the FT Index as of the beginning
of that year, as provided by Datastream International Inc. The yields were
generally computed by adding together the interim and final dividends for
each of the stocks (these companies generally pay one interim and a final
dividend per fiscal year) declared in the preceding year divided by that
stock's market value on the first trading day that year on the London Stock
Exchange.
(2) Appreciation for the Strategy Stocks is calculated by subtracting the market
value of these stocks at the opening value on the first trading day on the
London Stock Exchange in a given year from the market value of those stocks
at the closing value on the last trading day in that year, and dividing the
result by the market value of the stocks at the opening value on the first
trading day in that year. Appreciation for the FT Index is calculated by
subtracting the opening value of the FT Index on the first trading day in
each year from the closing value of the FT Index on the last trading day in
that year, and dividing the result by the opening value of the FT Index on
the first trading day in that year.
(3) Actual Dividend Yield for the FT Strategy Stocks is calculated by adding the
total dividends received on the stocks in the year and dividing the result
by the market value of the stocks on the first trading day in that year.
Actual Dividend Yield for the FT Index is calculated by taking the total
dividends credited to the FT Index and dividing the result by the opening
value of the FT Index on the first trading day of the year.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Return does not take into consideration any reinvestment of dividend
income.
A-7
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Defining Your Japan Portfolio
- ----------------------------------------------------------------
Investing in the Portfolio, rather than in only one or two of the Strategy
Stocks, is a way to diversify your investment. Based upon the principal business
of each issuer and current market values, the following industries are
represented in the Portfolio:

APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Utilities/Gas and Electric 40%
/ / Electrical Equipment 20
/ / Oil/Gas 10
/ / Textiles 10
/ / Electronics 10
/ / Chemicals 10

The Japan Portfolio is concentrated in gas and electric utility stocks, and all
of the stocks represent Japanese issuers. (See Risk Factors in Part B.)

The Portfolio will report as gross income each investor's pro rata share of
dividends earned by the Portfolio grossed-up to reflect any taxes withheld on
the dividends.

ESTIMATED ANNUAL OPERATING EXPENSES

AS A % OF AMOUNT PER
NET ASSETS 1,000 UNITS
----------------- ---------------
Trustee's Fee .083% $ 0.82
Maximum Portfolio Supervision,
Bookkeeping and
Administrative Fees .045% $ 0.45
Organizational Expenses .207% $ 2.05
Other Operating Expenses .147% $ 1.45
----------------- ---------------
TOTAL .482% $ 4.77

These estimates do not include the costs of purchasing and selling the
underlying Strategy Stocks.

COSTS OVER TIME

You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:

1 Year 3 Years 5 Years 10 Years
$33 $80 $129 $266

A-8
<PAGE>

<TABLE><CAPTION>
- --------------------------------------------------------------------------------
Defined Japan Portfolio
- --------------------------------------------------------------------------------
Equity Income Fund
Select Ten Portfolio 1996 International Series B May 17, 1996

PRICE
PER SHARE COST
TO PORTFOLIO TO FUND
PERCENTAGE CURRENT IN IN U.S. DOLLARS
NAME OF ISSUER OF PORTFOLIO (1) DIVIDEND YIELD (2) U.S. DOLLARS (3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Tonen Corp. 9.89% 2.55% $ 14.721 $ 44,163.15
2. Kansai Electric Power 10.10 1.96 23.722 45,072.67
3. Chubu Electric Power Company,
Inc. 9.79 1.92 24.285 43,713.08
4. Tokyo Electric Power 10.07 1.76 26.442 44,950.77
5. Fuji Electric Co., Ltd. 9.98 1.35 5.570 44,556.96
6. Konica Corp. 9.96 1.27 7.407 44,444.44
7. Toshiba Corp. 9.94 1.27 7.398 44,388.19
8. Tokyo Gas Co., Ltd. 9.98 1.26 3.713 44,556.96
9. Mitsubishi Electric Corp. 10.06 1.25 7.482 44,894.51
10. Toyobo Ltd. 10.23 1.23 3.807 45,682.14
----------------- -----------------
100.00% $ 446,422.87
----------------- -----------------
----------------- -----------------
</TABLE>
- ------------------------------------
(1) Based on Cost to Fund in U.S. dollars.

(2) Current Dividend Yield for each security was calculated by adding the most
recent interim and final dividends declared on the security and dividing the
result by its market value as of the close of trading on May 17, 1996.

------------------------------------

A-9
<PAGE>
- --------------------------------------------------------------------------------
Performance Information--Nikkei 225 Strategy
- --------------------------------------------------------------------------------
The following table compares the actual performance of the Nikkei 225 Index and
the hypothetical performance of approximately equal amounts invested in each of
the Nikkei Strategy Stocks (but not any Select Ten Portfolio) at the beginning
of each year and reinvesting the proceeds annually for the past 20 years as of
December 31 in each of these years. These results represent past performance of
the Nikkei Strategy Stocks, and may not be indicative of future results of the
Strategy or the Portfolio. The Nikkei Strategy Stocks underperformed the Nikkei
225 Index in certain years, including seven of the last 20 years. Also, an
investment in the Japan Portfolio will not realize as high a total return as a
direct investment in the Nikkei Strategy Stocks, since the Portfolio has sales
charges and expenses and may not be fully invested at all times. Actual
performance of a Portfolio will also differ from quoted performance of the
Nikkei Strategy Stocks and the Nikkei 225 Index because the quoted performance
figures are annual figures based on closing sales prices on December 31, while
the Portfolios are established and liquidated at various times during the year.
Performance variances may also result because stocks are normally purchased or
sold at prices and currency exchange rates different from the closing price and
currency exchange rate used to determine the Portfolio's net asset value and not
all stocks may be weighted equally at all times.

<TABLE><CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
(FIGURES REFLECT CONVERSION INTO U.S. DOLLARS AT APPLICABLE EXCHANGE RATES
BUT NOT SALES CHARGES, FUND EXPENSES, COMMISSIONS OR TAXES)

NIKKEI STRATEGY STOCKS(1) NIKKEI 225 INDEX*
--------------------------------------------------------------- ---------------------------------------------
YEAR APPRECIATION(2) ACTUAL DIVIDEND YIELD(3) TOTAL RETURN(4) APPRECIATION(2) ACTUAL DIVIDEND YIELD(3)
- --------- ---------------- --------------------------- ---------------- ---------------- ---------------------------
<S> <C> <C> <C> <C> <C>
1976 5.51% 5.06% 10.57% 19.14% 2.79%
1977 49.39 4.89 54.28 19.14 2.41
1978 69.05 3.05 72.10 52.35 2.97
1979 -3.31 2.42 -0.89 -11.49 1.49
1980 34.72 4.21 38.93 27.20 2.27
1981 14.89 3.55 18.44 0.49 1.71
1982 -5.61 3.07 -2.54 -2.26 1.49
1983 27.00 4.04 31.04 25.01 2.07
1984 -0.05 3.16 3.11 7.43 1.49
1985 49.46 3.55 53.01 42.41 1.78
1986 75.32 2.51 77.83 81.97 1.81
1987 91.23 2.44 93.67 49.58 1.13
1988 61.43 1.61 63.04 35.60 0.97
1989 21.99 0.97 22.96 12.21 0.59
1990 -41.87 0.88 -40.99 -35.08 0.29
1991 5.35 1.55 6.90 4.74 0.82
1992 -17.66 1.49 -16.17 -26.33 0.57
1993 19.55 1.97 21.52 14.87 1.07
1994 26.11 1.88 27.99 27.16 1.14
1995 -6.31 1.33 -4.98 -2.99 0.69
1996 4.38 0.62 5.00 3.88 0.17
(through 3/31)
<CAPTION>
NIKKEI 225 INDEX*
-------------------
YEAR TOTAL RETURN(4)
- --------- ----------------
1976 21.93%
1977 21.55
1978 55.32
1979 -10.00
1980 29.47
1981 2.20
1982 -0.77
1983 27.08
1984 8.92
1985 44.19
1986 83.78
1987 50.71
1988 36.57
1989 12.80
1990 -34.79
1991 5.56
1992 -25.76
1993 15.94
1994 28.30
1995 -2.30
1996 4.05
(through 3/31)
</TABLE>

Changes in the exchange rates of the Japanese yen relative to the U.S. dollar
affected these figures significantly. These changes ranged from minus 23% in
1979 to plus 23% in 1987 and averaged plus 4.61% annually over the last 20
years. See Foreign Currency Exchange Rates table under Risk Factors in Part B.
There can be no assurance that similar appreciation will continue during the
life of the Portfolio or successive rollover periods.

- ------------------------------------
* Source: Datastream International, Inc. The Sponsors have not independently
verified these data, but they have no reason to believe these data are
incorrect in any material respect.
(1) The Nikkei Strategy Stocks for any given year were selected by ranking the
dividend yields for each of the stocks in the Nikkei 225 Index as of the
beginning of that year, as provided by Datastream International Inc. The
yields were generally computed by adding together the interim and final
dividends for each of the stocks (these companies generally pay one interim
and a final dividend per fiscal year) declared in the preceding year divided
by that stock's market value on the first trading day that year on the Toyko
Stock Exchange.
(2) Appreciation for the Nikkei Strategy Stocks is calculated by subtracting the
market value of these stocks at the opening value on the first trading day
on the Toyko Stock Exchange in a given year from the market value of those
stocks at the closing value on the last trading day in that year, and
dividing the result by the market value of the stocks at the opening value
on the first trading day in that year. Appreciation for the Nikkei 225 Index
is calculated by subtracting the opening value of the Nikkei 225 Index on
the first trading day in each year from the closing value of the Nikkei 225
Index on the last trading day in that year, and dividing the result by the
opening value of the Nikkei 225 Index on the first trading day in that year.
(3) Actual Dividend Yield for the Nikkei Strategy Stocks is calculated by adding
the total dividends received on the stocks in the year and dividing the
result by the market value of the stocks on the first trading day in that
year. Actual Dividend Yield for the Nikkei 225 Index is calculated by taking
the total dividends credited to the Nikkei 225 Index and dividing the result
by the opening value of the Nikkei 225 Index on the first trading day of the
year.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Return does not take into consideration any reinvestment of dividend
income.
A-10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders of Defined Asset Funds Equity Income Fund,
Select Ten Portfolio 1996 International Series B (United Kingdom and Japan
Portfolios) (the 'Fund'):

We have audited the accompanying statements of condition and the related
portfolios included in the prospectus of the Fund as of May 17, 1996. These
financial statements are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits 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. Our procedures included
confirmation of the irrevocable letters of credit deposited for the purchase of
securities, as described in the statements 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 audits provide 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 the Fund as of May 17, 1996 in
conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, N.Y.
May 17, 1996

<TABLE><CAPTION>
STATEMENTS OF CONDITION AS OF MAY 17, 1996

UNITED KINGDOM JAPAN
TRUST PROPERTY PORTFOLIO PORTFOLIO
-------------------- --------------------
<S> <C> <C>
Investments--Contracts to purchase Securities(1).........$ 306,334.83 $ 446,422.87
Organizational Costs(2).................................. 162,000.00 143,500.00
-------------------- --------------------
Total..........................................$ 468,334.83 $ 589,922.87
-------------------- --------------------
-------------------- --------------------
LIABILITIES AND INTEREST OF HOLDERS
Liabilities: Payment of deferred portion of sales
charge(3)................................................$ 5,415.01 $ 7,891.31
Accrued Liability(2) 162,000.00 143,500.00
-------------------- --------------------
Subtotal $ 167,415.01 $ 151,391.31
-------------------- --------------------
Interest of Holders of fractional undivided interest
outstanding
(United Kingdom Portfolio--309,429 units;
Japan Portfolio--450,932 units)(4):
Cost to investors(5)...................................$ 309,429.00 $ 450,932.00
Gross underwriting commissions(6)...................... (8,509.18) (12,400.44)
-------------------- --------------------
Subtotal $ 300,919.82 $ 438,531.56
-------------------- --------------------
Total $ 468,334.83 $ 589,922.87
-------------------- --------------------
-------------------- --------------------
</TABLE>

- ---------------

(1) Aggregate cost to each Portfolio of the securities listed under
Defined Portfolio based on the U.S. dollar offer side value of the relevant
exchange rate determined by the Trustee at the evaluation time on May 17, 1996.
The contracts to purchase securities are collateralized by irrevocable letters
of credit which have been issued by The Sakura Bank, Limited, New York Branch,
and DBS Bank, New York Branch, in the amount of $756,886.59 and deposited with
the Trustee. The amount of the letters of credit includes $752,757.70 for the
purchase of securities.

(2) This represents a portion of the Fund's organizational costs which
will be deferred and amortized over the life of the Fund. Organizational costs
have been estimated based on projected total assets of $170 million. To the
extent the Fund is larger or smaller, the estimates may vary.

(3) Represents the aggregate amount of mandatory distributions of $1.75
per 1,000 Units per month payable on August 23, 1996 and thereafter on the 1st
day of each month from September, 1996 through May, 1997. Distributions will be
made to an account maintained by the Trustee from which the deferred sales
charge obligation of the investors to the Sponsors will be satisfied. If units
are redeemed prior to May 1, 1997, the remaining portion of the distribution
applicable to such units will be transferred to such account on the redemption
date.

(4) Because the value of securities at the evaluation time on the
Initial Date of Deposit may differ from the amounts shown in these statements of
condition, the number of Units offered on the day following the Initial Date of
Deposit will be adjusted from the initial number of Units to maintain the $1,000
per 1,000 Units offering price.

(5) Aggregate public offering price computed on the basis of the U. S.
dollar value of the underlying securities based on the U.S. dollar offer side
value of the relevant exchange rate at the evaluation time on May 17, 1996.

(6) Assumes the maximum sales charge per 1,000 units of 2.75% of the
Public Offering Price.
A-11
<PAGE>

DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INCOME FUND SELECT TEN PORTFOLIOS--INTERNATIONAL SERIES
UNITED KINGDOM AND JAPAN PORTFOLIOS
FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
BY WRITING OR CALLING THE TRUSTEE AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.

Index

PAGE
---------
Fund Description...................................... 1
Risk Factors.......................................... 4
How to Buy Units...................................... 7
How to Sell Units..................................... 9
Income, Distributions and Reinvestment................ 10
Portfolio Expenses.................................... 11
Taxes................................................. 12
PAGE
---------
Foreign Taxation...................................... 13
Records and Reports................................... 16
Trust Indenture....................................... 16
Miscellaneous......................................... 16
Exchange Option....................................... 18
Supplemental Information.............................. 19

FUND DESCRIPTION

THE STRATEGY

Simple strategies can sometimes be the most effective. The United Kingdom
and Japan Portfolios seek total return by acquiring the ten highest yielding
stocks in the Financial Times Industrial Share Index (FT Index) and the Nikkei
225 Index, respectively, as of the dates indicated in Part A, after giving
effect to any forthcoming changes to an index announced prior to those dates,
and holding them for about one year. This investment strategy is based on three
time-tested investment principles: time in the market is more important than
timing the market; the stocks to buy are the ones everyone else is selling; and
dividends can be an important part of total return. Today's global marketplace
offers many opportunities. Defined Asset Funds can make some of them available
to investors with the Select Ten International Portfolios. Global markets can
move in different directions. While some markets may be experiencing rapid
growth, others may be in decline. These markets can offer attractive growth
opportunities. An investment in the Fund can be cost-efficient, avoiding the
odd-lot costs of buying small quantities of securities directly. Purchasing a
portfolio of these stocks as opposed to one or two provides a more diversified
holding. For each Portfolio there are only one investment decision and two
semi-annual dividends. Investment in a number of companies with high dividends
relative to their stock prices is designed to increase a Portfolio's potential
for higher total returns. Each Portfolio's return will consist of a combination
of capital appreciation and current dividend income. Each Portfolio will
terminate in about one year, when investors may choose to either receive the
distribution in cash or reinvest in the next Series (if available) at a reduced
sales charge. There can be no assurance that the dividend rates on the selected
stocks will be maintained. Reduction or elimination of a dividend could
adversely affect the stock price as well.

The FT Index. The FT Index began as the Financial News Industrial Ordinary
Share Index in London in 1935 and became the Financial Times Industrial Ordinary
Share Index in 1947. This Index is an unweighted average of the share prices of
selected companies, which are highly capitalized, major factors in their
industries; their stocks are widely held by individuals and institutional
investors. The following are the stocks currently represented in the FT Index:

1
<PAGE>

Allied Domecq PLC
ASDA Group PLC
BICC PLC
The BOC Group PLC
BTR PLC
Blue Circle Industries PLC
The Boots Company PLC
The British Petroleum Company PLC
British Telecommunications PLC
British Gas PLC
British Airways PLC
Cadbury Schweppes PLC
Courtaulds PLC
The General Electric Company PLC
Glaxo Wellcome PLC
Grand Metropolitan PLC
GKN PLC
Guinness PLC
Hanson PLC
Imperial Chemical Industries PLC
Lucas Industries PLC
Marks & Spencer PLC
National Westminster Bank PLC
The Peninsular & Oriental Steam
Navigation Company
Reuters Holdings PLC
Royal Insurance Holdings PLC
SmithKline Beecham PLC
Tate & Lyle PLC
Thorn EMI PLC
Vodafone Group PLC

The Nikkei 225 Index. The Nikkei Stock Average, or Nikkei 225 Index is a
price-weighted index of 225 Japanese companies listed in the First Section of
the Tokyo Stock Exchange. The Nikkei 225 was first published in 1950, and is
well known both inside and outside Japan. The Nikkei 225 average is calculated
as a price-weighted average of the component stock prices, adjusted by a divisor
to account for non-market factors, rights and changes to the constituent issues.
The following are the stocks currently represented in the Nikkei 225 Index:

Ajinomoto Co. Inc.
All Nippon Airways Co. Ltd.
Aoki Corporation
Asahi Breweries Ltd.
Asahi Chemical Industry Co. Ltd.
Asahi Denka Kogyo K.K.
Asahi Glass Co. Ltd.
Bridgestone Corporation
Canon Inc.
Chichibu Onoda Cement
Corporation
Chiyoda Corporation
Chubu Electric Power Co.
Citizen Watch Co. Ltd.
Dai Ichi Kangyo Bank Ltd.
Dai Nippon Printing Co. Ltd.
Dainippon Pharmaceutical Co. Ltd.
Daiwa House Industry Co. Ltd.
Denki Kagaku Kogyo K.K.
Dowa Mining Co. Ltd.
Ebara Corporation
Fuji Bank Ltd.
Fuji Electric Co. Ltd.
Fuji Photo Film Co. Ltd.
Fuji Spinning Co. Ltd.
Fujikura Ltd.
Fujita Corporation
Fujitsu Ltd.
Furukawa Co. Ltd.
Furukawa Electric Co. Ltd.
Hazama Corporation
Heiwa Real Estate Co. Ltd.
Hino Motors Ltd.
Hitachi Ltd.
Hitachi Zosen Corporation
Hokuetsu Paper Mills Ltd.
Honda Motor Co. Ltd.
Honen Corporation Industries Inc.
Honshu Paper Co. Ltd.
Iseki and Co. Ltd.
Ishikawajima-Harima Heavy
Industries
Isuzu Motors Ltd.
Itochu Corporation
Iwatani International Corporation
Japan Energy Corporation
Japan Securities Finance Co. Ltd.
Japan Steel Works Ltd.
Kajima Corporation
Kanebo Ltd.
Kansai Electric Power Co. Inc.
Kawasaki Heavy Ind. Ltd.
Kawasaki Kisen Kaisha Ltd.
Kawasaki Steel Corporation
Keihin Electric Express
Railway Co.
Keio Teito Electric
Railway Co. Ltd.
Keisei Electric Railway Co. Ltd.
Kikkoman Corporation
Kirin Brewery Co. Ltd.
Kobe Steel Ltd.
Komatsu Ltd.
Konica Corporation
Koyo Seiko Co. Ltd.
Kubota Corporation
Kumagai Gumi Co.
Kuraray Co. Ltd.
Kyokuyo
Kyowa Hakko Kogyo
Marubeni Corporation
Marui Co., Ltd.
Maruzen Co., Ltd.
Matsushita Electric Industrial Co.
Mazda Motor
Meidensha Corporation
Meiji Milk Products
Meiji Seika
Mercian Corporation
Minebea Co., Ltd.
Mitsubishi Bank
Mitsubishi Chemical Corporation
Mitsubishi Corporation
Mitsubishi Electric Corporation
Mitsubishi Estate Co. Ltd.
Mitsubishi Heavy Industries
Mitsubishi Materials Corporation
Mitsubishi Oil Co. Ltd.
Mitsubishi Papers Mills Ltd.
Mitsubishi Rayon Co. Ltd.
Mitsubishi Steel Manufacturing Co.
Mitsubishi Trust and
Banking Corporation
Mitsubishi Warehouse and Transport
Mitsui and Co. Ltd.
Mitsui Engineering and
Shipbuilding Co. Ltd.
Mitsui Fuddsan Co. Ltd.
Mitsui Marine and Fire Insurance Co.
Mitsui Mining and Smelting Ltd.
Mitsui Mining Co. Ltd.
Mitsui O.S.K. Lines Ltd.
Mitsui Soko Co. Ltd.
Mitsui Toatsu Chemicals Inc.
Mitsui Trust and Banking Co. Ltd.
Mitsukoshi Ltd.
Morinaga and Co. Ltd.
Nachi Fujikoshi Corporation
Navix Line Ltd.
NEC Corporation
New Oji Paper Co.
NGK Insulators Ltd.
Nichirei Corporation
Nichiro Corporation
Nichiro Gyogyo Kaisha Ltd.
Nihon Cement Co. Ltd.
Niigata Engineering Co. Ltd.
Nikko Securities Co. Ltd.
Nikon Corporation
Nippon Beet Sugar Manufacturing Co.
Nippon Carbide Industries Co. Inc.
Nippon Carbon Co. Ltd.
Nippon Chemical Industrial Co. Ltd.

2
<PAGE>
Nippon Denko Co. Ltd.
Nippon Express Co. Ltd.
Nippon Flour Mills Co. Ltd.
Nippon Kayaku Co. Ltd.
Nippon Light Metal Co. Ltd.
Nippon Metal Industry Co. Ltd.
Nippon Oil Co. Ltd.
Nippon Paper Ind. Co. Ltd.
Nippon Piston Ring Co. Ltd.
Nippon Sharyo Ltd.
Nippon Sheet Glass Co. Ltd.
Nippon Shinpan Co. Ltd.
Nippon Soda Co. Ltd.
Nippon Steel Corporation
Nippon Suisan Kaisha Ltd.
Nippon Synthetic Chemical Industry
Nippon Telegraph and
Telephone NTT
Nippon Yakin Kogyo
Nippon Yusen K.K.
Nippondenso Co. Ltd.
Nissan Chemical Industries Ltd.
Nissan Motor Co. Ltd.
Nisshin Flour Milling Co. Ltd.
Nisshin Oil Mills Ltd.
Nisshinbo
Nissho Iwai Corporation
Nitto Boseki Co. Ltd.
NKK Corporation
NOF Corporation
Nomura Securities Co. Ltd.
Noritake Co. Ltd.
NSK Limited
NTN Corporation
Obayashi Corporation
Odakyu Electric Railway
OKI Electric Industry Co.
Okuma Corporation
Osaka Gas Co. Ltd.
Pioneer Electronic Corporation
Rasa Industries Ltd.
Ricoh Company Ltd.
Sakura Bank Ltd.
Sankyo Co. Ltd.
Sankyu Inc.
Sanyo Electric Co. Ltd.
Sapporo Breweries Ltd.
Sato Kogyo Co. Ltd.
Seika Corporation
Sharp Corporation
Shimizu Corporation
Shimura Kako Co., Ltd.
Shin Etsu Chemical Co. Ltd.
Shinagawa Refractories
Co. Ltd.
Shionogi and Co. Ltd.
Showa Shell Sekiyu K.K.
Showa Denko K.K.
Showa Line Ltd.
Showa Electric Wire and
Cable Co. Ltd.
Sony Corporation
Sumitomo Bank Ltd.
Sumitomo Chemical Co. Ltd.
Sumitomo Coal Mining Co. Ltd.
Sumitomo Corporation
Sumitomo Electric Industries Ltd.
Sumitomo Heavy Industries Ltd.
Sumitomo Metal Industries Ltd.
Sumitomo Metal Mining Ltd.
Sumitomo Osaka Cement Co. Ltd.
Suzuki Motor Corporation
Taisei Corporation
Takara Shuzo
Takeda Chemical Industries
Teijin Ltd.
Teikoku Oil
Tekken Corporation
Toa Corporation
Toagosei Chemical Industry
Tobishima Corporation
Tobu Railway
Toei Co.
Toho Rayon
Toho Zinc Co. Ltd.
Tokai Carbon Co. Ltd.
Tokio Marine and Fire
Insurance Co.
Tokyo Dome Corporation
Tokyo Electric Power Co. Inc.
Tokyo Gas Co. Ltd.
Tokyo Rope Mfg.
Tokyu Corporation
Tokyu Department Store
Tomen Corporation
Tonen Corporation
Toppan Printing Co. Ltd.
Topy Industries
Toray Industries
Toshiba Corporation
Tosoh Corporation
Toto Ltd.
Toyo Seikan Kaisha
Toyobo Co. Ltd.
Toyota Motor Corporation
UBE Industries Unitika Ltd.
Yamaha Corporation
Yamanouchi Pharmaceutical
Yasuda Fire & Marine Insurance
Yokogawa Electric
Yokohama Rubber Company Ltd.
Yuasa Corporation

PORTFOLIO SELECTION

The Fund consists of two separate portfolios, the United Kingdom Portfolio
and the Japan Portfolio, which contain common stocks in the FT Index and the
Nikkei 225 Index, respectively, having the highest dividend yield as of the
dates indicated in Part A. 'Highest dividend yield' means the yield for each
Security calculated by adding the most recent interim and final dividends
declared on that Security and dividing the result by the market value of that
Security. This rate is historical and there is no assurance that any dividends
will be declared or paid in the future on the Securities. No leverage or
borrowing is used nor do the Portfolios contain other kinds of securities to
enhance yield.

The Strategy selection process is a straightforward, objective,
mathematical application that ignores any subjective factors concerning an
issuer in the related index, an industry or the economy generally. The
application of the Strategy may cause a Portfolio to own a stock that the
Sponsors do not recommend for purchase and, in fact, the Sponsors may have sell
recommendations on a number of the stocks in a Portfolio at the time the stocks
are selected for inclusion in the Portfolio. Various theories attempt to explain
why a common stock is among the ten highest yielding stocks in the related index
at any given time: the issuer may be in financial difficulty or out of favor in
the market because of weak earnings or performance or forecasts or negative
publicity; uncertainties relating to pending or threatened litigation or pending
or proposed legislation or government regulation; the stock may be a cyclical
stock reacting to national or international economic developments; or the market
may be anticipating a reduction in or the elimination of the company's dividend.
Some of the foregoing
3
<PAGE>
factors may be relevant to only a segment of an issuer's
overall business yet the publicity may be strong enough to outweigh otherwise
solid business performance. In addition, companies in certain industries have
historically paid high dividends.

The deposit of the Securities in each Portfolio on the initial date of
deposit established a proportionate relationship among the number of shares of
each Security in that Portfolio. During the 90-day period following the initial
date of deposit the Sponsors may deposit additional Securities in order to
create new Units, maintaining to the extent possible that original proportionate
relationship. Deposits of additional Securities subsequent to the 90-day period
must generally replicate exactly the proportionate relationship among the number
of shares of each Security in a Portfolio at the end of the initial 90-day
period. The ability to acquire each Security at the same time will generally
depend upon the Security's availability and any restrictions on the purchase of
that Security under the federal securities laws or otherwise.

Additional Units may also be created by the deposit of cash (including a
letter of credit) with instructions to purchase additional Securities. This
practice could cause both existing and new investors to experience a dilution of
their investments and a reduction in their anticipated income because of price
fluctuations in the Securities between the time of the cash deposit and the
actual purchase of the additional Securities and because the associated
brokerage fees will be an expense of the Portfolio. To minimize the risk of
price fluctuations when purchasing Securities, each Portfolio will try to
purchase Securities as close to the Evaluation Time or at prices as close to the
evaluated prices as possible and may purchase Securities on exchanges other than
the London and Tokyo Stock Exchanges. A Portfolio may also enter into program
trades with unaffiliated broker/dealers, which could have the effect of
increasing brokerage commissions while reducing market risk.

Because each Portfolio in a Defined Asset Fund is a preselected portfolio,
you know the securities before you invest. Of course, the Portfolios will change
somewhat over time, as Securities are purchased upon creation of additional
Units, as Securities are sold to meet Unit redemptions or in other limited
circumstances.

PORTFOLIO SUPERVISION

Each Portfolio follows a buy and hold investment strategy in contrast to
the frequent portfolio changes of a managed fund based on economic, financial
and market analyses. Although each Portfolio is regularly reviewed, because of
the Strategy the Portfolio is unlikely to sell any of the Securities other than
to satisfy redemptions of units, or to cease buying additional shares in
connection with the issuance of Additional Units. More specifically, adverse
developments concerning a Security including the adverse financial condition of
the issuer, a failure to maintain a current dividend rate, the institution of
legal proceedings against the issuer, a default under certain documents
materially and adversely affecting the future declaration of dividends, or a
decline in the price or the occurrence of other market or credit factors
(including a public tender offer or a merger or acquisition transaction) that
might otherwise make retention of the Security detrimental to the interest of
investors, will generally not cause a Portfolio to dispose of a Security or
cease buying it. Furthermore, each Portfolio will likely continue to hold a
Security and purchase additional shares notwithstanding its ceasing to be
included among the ten highest dividend yielding stocks in the related Index or
even its deletion from that Index.

RISK FACTORS

An investment in a Portfolio entails certain risks, including the risk that
the value of your investment will decline if the financial condition of the
issuers of the Securities becomes impaired or if the general condition of the
relevant stock market worsens and the risk that holders of common stocks have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Moreover, common stocks do not represent an obligation of
the issuer and therefore do not offer any assurance of income or provide the
degree of protection of capital provided by debt securities. Common stocks in
general may be especially susceptible to general stock market movements and to
volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic or banking crises. The
Sponsors cannot predict the direction or scope of any of these factors.

Foreign Issuers. Investments in securities of foreign issuers involve risks
that are different from investments in securities of domestic issuers. These
risks may include future political and economic developments, the possibility of
exchange controls or other governmental restrictions on the payment of
dividends, less publicly
4
<PAGE>

available information and the absence of uniform
accounting, auditing and financial reporting standards, practices and
requirements.

The information set forth below has been extracted from various
governmental and private publications, but no representation can be made as to
its accuracy; furthermore, no representation is made that any correlation exists
between the state of the economy of the United Kingdom and the value of any
Securities held by the United Kingdom Portfolio or between the economy of Japan
and the value of any Securities held by the Japan Portfolio.

UNITED KINGDOM PORTFOLIO RISK FACTORS

The United Kingdom Portfolio contains common stocks of British companies
engaged in such industries as the pharmaceutical industry, the food and beverage
industry, the transportation industry, insurance, telecommunications, finance
and utilities. Many of these industries are subject to extensive government
regulation which may have a materially adverse effect on the performance of
their securities.

The economy of the United Kingdom is focused upon the private services
sector, which includes the wholesale and retail sector, banking, finance,
insurance, and tourism. Services as a whole account for a majority of the United
Kingdom's gross national product and make a significant contribution to the
country's balance of payments. In addition, the United Kingdom, as a member of
the European Union (the 'EU'), formerly known as the European Community, is
subject to the effects of the recent rapid political and social change
throughout Europe although the extent and nature of future economic development
in the United Kingdom and Europe and the impact of such development upon the
value of the securities in the United Kingdom Portfolio is impossible to
predict.

JAPAN PORTFOLIO RISK FACTORS

The Japan Portfolio contains common stocks of Japanese companies trading on
the Tokyo Stock Exchange (the 'TSE').

Volatility of the TSE. Although the market for Japanese stocks traded on
the First Section of the TSE is substantial in terms of trading volume and
liquidity, the TSE has nonetheless exhibited significant market volatility in
the past several years. The general weakness in TSE prices since 1989 has
adversely affected financial institutions (including banks and insurance
companies) heavily invested in the market, in turn contributing to weakness in
the Japanese economy.

Political Factors. Reports of official improprieties, resignations and
political reallignments have recently been followed by significant economic
reforms. There is currently uncertainty as to the future of Japan's political
outlook (including the influence and effectiveness of Japan's bureaucracy) and
the impact of these political factors on the Japanese economy and the stock
market.

Economic Factors. The Japanese economy experienced its worst recession
since World War II in the 1990s and the economy has been largely stagnant since
October 1993. Japan has also recently experienced a period of prolonged price
deflation and weak real estate prices. Despite repeated attempts at a fiscal
stimulus, the Japanese government has not succeeded in fueling strong economic
growth. Strains on the financial system in the form of non-performing loans of
financial institutions and real estate companies have also been one of the major
causes of Japan's economic weakness. Resolution of the bad debt problem may
require disproportionate contributions by major banks. Structural problems of
overregulation, excessive government intervention and under-consumption, coupled
with the current government's relative inexperience in applying fiscal
direction, could undercut Japan's economic recovery. Japanese exports could be
adversely affected by pressure from trading partners -- particularly the U.S. --
to improve trade imbalances. As reflected in the table 'Changes in Foreign
Currency Exchange Rates' below, up until earlier this year, general appreciation
of the Japanese yen relative to the U.S. dollar had been a significant factor in
the overall appreciation. As evidenced by the depreciation of the yen earlier
this year, there can be no assurance that the value of the yen will appreciate,
or might not further depreciate, which could adversely affect the performance of
the Japan Portfolio.

Japanese Utilities. The Japan Portfolio is considered to be concentrated in
common stocks of gas and electric utility companies. The ability of utilities to
pay dividends is dependent on various factors, including the percentage of
earnings paid out in the form of dividends ('pay out ratio'), the rates they may
charge their customers, the demand for a utility's services and the cost of
providing those services. Utilities are particularly sensitive to, among other
things, the effects of inflation on operating and construction costs, the
unpredictability of future usage requirements and the costs and availability of
fuel. The demand for a utility's services is influenced by, among other factors,
competition, weather conditions and economic conditions. Electric utilities,

5
<PAGE>

for example, have experienced increased competition as a result of the
availability of other energy sources, the effects of conservation on the use
of electricity, self-generation by industrial customers and the generation of
electricity by co-generators and other independent power producers. Utilities
which distribute natural gas also are subject to competition from alternative
fuels, including fuel oil, propane and coal.

VOLATILITY

Foreign stock prices may be more volatile than U.S. stock prices. The
following table demonstrates the volatility of the Nikkei 225 Index and the FT
Index in comparison to that of the Hang Seng Index and the Dow Jones Industrial
Average by showing for each index the number of trading days during the period
from January 1, 1989 through March 31, 1996, on which the value of the index in
local currency gained or lost 1%, 2% and 3% of its value as of the previous
trading day.
<TABLE><CAPTION>
NUMBER OF TRADING DAYS WITH GAINS OR LOSSES SHOWN
PERCENTAGE GAINS OR ----------------------------------------------------------------
LOSSES HANG SENG NIKKEI 225 FT DOW JONES
IN VALUE OF INDEX INDEX INDEX INDEX INDUSTRIAL AVERAGE
- ------------------------- ------------- ------------- ----------- ---------------------
<S> <C> <C> <C> <C>
1%....................... 638 632 397 282
2%....................... 231 239 41 37
3%....................... 84 95 35 11
</TABLE>

Previous performance is no guarantee of future results; any index may
display more or less volatility in the future.

FOREIGN EXCHANGE RATES

Because securities of non-U.S. issuers generally pay dividends and trade in
foreign currencies, there is the risk that the U.S. dollar value of these
securities will vary with fluctuations in foreign exchange rates. Most foreign
currencies have fluctuated widely in value against the U.S. dollar because of
changing investor perceptions, currency speculation by institutional investors,
supply and demand of the respective currency, the soundness of the world economy
and the relative strength of the respective economy, the impact of actual and
proposed government policies, interest rate differentials between currencies and
the balance of imports and exports of goods and services and transfers of income
and capital from one country to another.

The following table shows fluctuations in the value of the British pound
and Japanese yen relative to the U.S. dollar in the past 20 years.
<TABLE><CAPTION>
CHANGES IN FOREIGN CURRENCY EXCHANGE RATES

RANGE OF
FLUCTUATIONS CHANGE IN RANGE OF
U.S. DOLLAR/ U.K. POUND FLUCTUATIONS CHANGE IN
U.K. POUND STERLING/ JAPANESE YEN/ JAPANESE YEN/
PERIOD STERLING* U.S. DOLLAR** U.S. DOLLAR* U.S. DOLLAR**
- ----------- ------------- --------------- ----------------------- ---------------
<S> <C> <C> <C> <C>
1976 2.035-1.564 -18.86% 305.99-285.95 4.05%
1977 1.908-1.700 10.68 292.91-285.95 18.03
1978 2.095-1.807 6.32 242.54-177.39 18.92
1979 2.332-1.979 8.52 250.75-193.75 -23.18
1980 2.452-2.134 6.75 259.47-202.30 15.31
1981 2.427-1.763 -25.00 245.39-199.05 -8.33
1982 1.933-1.593 -18.18 278.16-218.75 -6.87
1983 1.623-1.415 -11.30 247.58-226.75 1.19
1984 1.492-1.158 -25.43 251.25-222.70 -8.14
1985 1.494-1.044 19.94 263.43-200.25 20.15
1986 1.555-1.377 2.03 202.70-152.00 20.65
1987 1.886-1.468 21.21 159.40-121.25 23.95
1988 1.896-1.663 -3.48 136.52-121.10 -3.29
1989 1.823-1.500 -12.04 149.62-123.60 -15.01
1990 1.976-1.595 16.37 159.90-125.05 5.53
1991 1.999-1.602 -3.24 141.90-124.90 8.10
1992 2.004-1.505 -23.44 134.53-119.35 -0.02
1993 1.590-1.417 -2.36 126.10-101.10 10.58
1994 1.637-1.461 5.46 113.10- 96.77 10.76
1995 1.641-1.530 -0.77 104.29- 81.09 -3.85
1996 1.555-1.503 -1.66 107.40-103.45 -3.72
(through 3/31)

- ------------------
* DRI/McGrawHill.
** Ibbotson Associates.

6
<PAGE>

A Portfolio's foreign exchange transactions may be conducted either on a
spot (i.e., cash) or forward foreign exchange basis. Foreign currency exchange
transactions are generally conducted on a principal basis and foreign exchange
dealers realize a profit based upon the difference between the price at which
they are willing to buy a particular currency (bid price) and the price at which
they are willing to sell the currency (offer price). The cost to the Portfolio
of engaging in these foreign currency transactions also varies with such factors
as the currency involved, the length of the contract period and
the market conditions then prevailing. Portfolio evaluations include the
cost of buying or selling a forward foreign exchange contract in the
relevant currency to correspond to the settlement period for purchases and
redemptions of Units.

EXCHANGE CONTROLS

At the present time the Sponsors do not believe that any of the Securities
is subject to exchange control restrictions which would materially interfere
with payment to a Portfolio of amounts due on the Securities. There can be no
assurance that exchange control regulations might not be adopted in the future
which might adversely affect payments to a Portfolio. In addition, the adoption
of exchange control regulations or other legal restrictions could have an
adverse impact on the marketability of international securities in a Portfolio
and on the ability of that Portfolio to satisfy redemptions.

LIQUIDITY

Sales of foreign securities by a Portfolio in United States securities
markets are ordinarily subject to severe restrictions and will generally be made
only in foreign securities markets. Securities may be traded in foreign
countries where the securities markets are not as developed or efficient and may
not be as liquid as those in the United States. A foreign market's liquidity
might become impaired as a result of economic or political turmoil in a country
in whose currency a Portfolio had a substantial portion of its assets invested,
or should relations between the United States and such foreign country
deteriorate markedly. Additionally, the principal trading market for the
Securities, even if otherwise listed, may be the over-the-counter market in
which liquidity will depend on whether dealers will make a market in the
Securities.

LITIGATION AND LEGISLATION

The Sponsors do not know of any pending litigation as of the initial date
of deposit that might reasonably be expected to have a material adverse effect
on a Portfolio, although pending litigation may have a material adverse effect
on the value of Securities in a Portfolio. In addition, at any time after the
initial date of deposit, litigation may be initiated on a variety of grounds, or
legislation may be enacted, affecting the Securities in a Portfolio or the
issuers of the Securities. Changing approaches to regulation may have a negative
impact on certain companies represented in a Portfolio. There can be no
assurance that future litigation, legislation, regulation or deregulation will
not have a material adverse effect on a Portfolio or will not impair the ability
of the issuers of the Securities to achieve their business goals.

LIFE OF THE FUND; FUND TERMINATION

The size and composition of a Portfolio will be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units or
participating in a rollover. Each Portfolio will be terminated no later than the
mandatory termination date specified in Part A of the Prospectus. They will
terminate earlier upon the disposition of the last Security in that Portfolio or
upon the consent of investors holding 51% of the Units. A Portfolio may also be
terminated earlier by the Sponsors once its total assets have fallen below the
minimum value specified in Part A of the Prospectus. A decision by the Sponsors
to terminate a Portfolio early, which will likely be made following the
rollover, will be based on factors such as its size relative to its original
size, the ratio of Portfolio expenses to income, and the cost of maintaining a
current prospectus.

Notice of impending termination will be provided to investors and
thereafter units will no longer be redeemable. On or shortly before termination,
the Trustee will seek to dispose of any Securities remaining in a Portfolio
although any Security unable to be sold at a reasonable price may continue to be
held by the Trustee in a liquidating trust pending its final disposition. A
proportional share of the expenses associated with termination, including
brokerage costs in disposing of Securities, will be borne by investors remaining
at that time. This may have the effect of reducing the amount of proceeds those
investors are to receive in any final distribution.

7
<PAGE>

HOW TO BUY UNITS

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

PUBLIC OFFERING PRICE

Units are charged a combination of Initial and Deferred Sales Charges
equal, in the aggregate, to a maximum charge of 2.75% of the Public Offering
Price or, for quantity purchases of units of all Select Portfolios by an
investor and the investor's spouse and minor children, or by a single trust
estate or fiduciary account, made on a single day, the following percentages of
the public offering price:

APPLICABLE SALES CHARGE
(GROSS UNDERWRITING PROFIT)
------------------------------------
AS % OF PUBLIC AS % OF NET
AMOUNT PURCHASED OFFERING PRICE AMOUNT INVESTED
- -------------------------------------------------------- -----------------
Less than $50,000...................... 2.75% 2.778%
$50,000 to $99,999..................... 2.50 2.519
$100,000 to $249,999................... 2.00 2.005
$250,000 or more....................... 1.75 1.750

The Deferred Sales Charge is a monthly charge of $1.75 per 1,000 units and
is accrued in ten monthly installments commencing on the date indicated in Part
A of this Prospectus. Units redeemed or repurchased prior to the accrual of the
final Deferred Sales Charge installment will have the amount of any remaining
installments deducted from the redemption or repurchase proceeds or deducted in
calculating an in-kind distribution, although this deduction will be waived in
the event of the death or disability (as defined in the Internal Revenue Code of
1986) of an investor. The Initial Sales Charge is equal to the aggregate sales
charge, determined as described above, less the aggregate amount of any
remaining installments of the Deferred Sales Charge.

It is anticipated that Securities will not be sold to pay the Deferred
Sales Charge until after the date of the last installment. Investors will be at
risk for market price fluctuations in the Securities from the several
installment accrual dates to the dates of actual sale of Securities to satisfy
this liability.

Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units subject only to the
Deferred Sales Charge.

EVALUATIONS

Evaluations are determined by the Trustee on each Business Day. This
excludes Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. In addition, for the
United Kingdom Portfolio, 'business day' shall exclude the following U.K.
holidays: Easter Monday, May Day, Summer Bank Holiday and Boxing Day; for the
Japan Portfolio, 'business day' shall also exclude the following Japanese
Holidays: the four-day Year End Holiday, Adults Day, National Foundation Day
observance, Vernal Equinox Day, Greenery Day, Constitution Memorial Day,
Childrens Day observance, Respect for the Aged Day observance, Autumnal Equinox
Day, Health-Sports Day, Culture Day observance and Emperor's Birthday. If the
Securities are listed on a securities exchange, evaluations are generally based
on closing sales prices on that exchange (unless the Trustee deems these prices
inappropriate) or, if closing sales prices are not available, at the mean
between the closing bid and offer prices. If the Securities are not listed or if
listed but the principal market is elsewhere, the evaluation is generally
determined based on sales prices of the Securities on the over-the-counter
market or, if sales prices in that market are not available, on the basis of the
mean between current bid and offer prices for the Securities or for comparable
securities or by appraisal or by any combination of these methods. Neither the
Sponsors nor the Trustee guarantee the enforceability, marketability or price of
any Securities. All evaluations are converted to U.S. dollars at the then
current exchange rates which include the cost of a forward foreign exchange
contract in the relevant currency to correspond to the requirement that the
Trustee settle redemption requests in U.S. dollars within seven days.

8
<PAGE>

NO CERTIFICATES
All investors are required to hold their Units in uncertifcated form and in
'street name' by their broker, dealer or financial institution at the Depository
Trust Company ('DTC').

HOW TO SELL UNITS

SPONSORS' MARKET FOR UNITS

You can sell your Units at any time without a fee (other than the remaining
deferred sales charge and deduction after the initial offering period for the
costs of liquidating Securities). The Sponsors (although not obligated to do so)
will normally buy any Units offered for sale at the repurchase price next
computed after receipt of the order. The Sponsors have maintained secondary
markets in Defined Asset Funds for over 20 years. Primarily because of the sales
charge and fluctuations in the market value of the Securities, the sale price
may be less than the cost of your Units. You should consult your financial
professional for current market prices to determine if other broker-dealers or
banks are offering higher prices for Units.

The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons. The Sponsors may reoffer
or redeem Units repurchased.

TRUSTEE'S REDEMPTION OF UNITS

You may redeem your Units by sending the Trustee a redemption request.
Signatures must be guaranteed by an eligible institution. In certain instances,
additional documents may be required such as a certificate of death, trust
instrument, certificate of corporate authority or appointment as executor,
administrator or guardian. If the Sponsors are maintaining a market for Units,
they will purchase any Units tendered at the repurchase price described above.
If they do not purchase Units tendered, the Trustee is authorized in its
discretion to sell Units in the over-the-counter market if it believes it will
obtain a higher net price for the redeeming investor.

The London Stock Exchange and the Tokyo Stock Exchange are open for trading
on certain days which are U.S. holidays on which the Fund will not transact
business. The Securities will continue to trade on those days and thus the value
of the Portfolios may be significantly affected on days when investors cannot
sell or redeem Units.

By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit determined as of the Evaluation Time next
following the tender and converted into U.S. dollars at the then current
exchange rate. Because of market or currency movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Securities, declared but unpaid dividends on the Securities, cash and the
value of any other Portfolio assets; deducting unpaid taxes or other
governmental charges, accrued but unpaid Portfolio expenses and remaining
Deferred Sales Charges, unreimbursed Trustee advances, cash held to redeem Units
or for distribution to investors and the value of any other Portfolio
liabilities; and dividing the result by the number of outstanding Units. All
amounts are reflected at their U.S. dollar equivalent at the bid side of the
relevant exchange rate (which is net of applicable commissions and stamp taxes).

Any investor owning Units representing at least the lesser of Securities
with a value of at least U.S.$500,000 or 10% of the net asset value of a
Portfolio who redeems those Units prior to the rollover notification date
indicated in Part A of the Prospectus may, in lieu of cash redemption, request
distribution in kind of an amount and value of Securities per Unit equal to the
otherwise applicable Redemption Price per Unit. Whole shares of each Security
together with cash from the Capital Account equal to any fractional shares to
which the investor would be entitled (less any Deferred Sales Charge payable)
will be paid over to a distribution agent and either held for the account of the
investor or disposed of in accordance with instructions of the investor. Any
brokerage commissions as well as any transfer and ongoing custodial fees on
sales of Securities in connection with in-kind redemptions will be borne by the
redeeming investors. The in-kind redemption option may be terminated by the
Sponsors at any time upon prior notice to investors.

After the initial offering period, the repurchase and cash redemption
prices will be reduced to reflect the cost to a Portfolio of liquidating
Securities to meet the redemption.

9
<PAGE>
If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Agent for the
Sponsors in a manner designed to maintain, to the extent practicable, the
proportionate relationship among the number of shares of each Security. These
sales are often made at times when the Securities would not otherwise be sold
and may result in lower prices than might be realized otherwise and will also
reduce the size and diversity of the Fund.

Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Securities not reasonably
practicable, or for any other period permitted by the SEC.

ROLLOVER

In lieu of redeeming their Units or receiving liquidation proceeds upon the
termination of the Fund, investors may elect, by written notice to the Trustee
prior to the rollover notification date indicated in Part A, to apply their
proportional interest in the Securities and other Portfolio assets toward the
purchase of units of a new United Kingdom or Japan Portfolio of the Select Ten
Portfolio 1997 International Series (the 'New 1997 International Portfolios')
(if available). The New 1997 International Portfolios will invest in the ten
highest yielding stocks in the FT and Nikkei 225 Indexes, respectively, as of
that time and it is expected that the terms of the New 1997 International
Portfolios, including this rollover feature, will be substantially the same as
those of these Portfolios.

A rollover of an investor's units is accomplished by the in-kind redemption
of his Units followed by the sale of the underlying Securities by a distribution
agent on behalf of participating investors and the reinvestment of the sale
proceeds (net of brokerage fees, governmental charges and other sale expenses)
in units of a New 1997 International Portfolio at their net asset value.

The Sponsors intend to sell the distributed Securities, on behalf of the
distribution agent, as quickly as practicable and then to create units of each
New 1997 International Portfolio as quickly as possible, subject in both cases
to the Sponsors' sensitivity that the concentrated sale and purchase of large
volumes of securities may affect market prices in a manner adverse to the
interest of investors. Accordingly, the Sponsors may, in their sole discretion,
undertake a more gradual sale of the distributed Securities and a more gradual
creation of units of the New 1997 International Portfolios to help mitigate any
negative market price consequences caused by this large volume of securities
trades. In order to minimize potential losses caused by market movement during
the rollover period, the Sponsors may enter into program trades, which could
increase brokerage commissions payable by investors. There can be no assurance,
however, that any trading procedures will be successful or might not result in
less advantageous prices. Pending the investment of rollover proceeds in the
securities to comprise each new 1997 International Portfolio, those moneys may
be uninvested for up to several days. For those Securities in a Portfolio that
will also be in the similar New 1997 International Portfolio, a direct sale of
those securities between the two funds is now permitted pursuant to an SEC
exemptive order. These sales will be effected at the securities' closing sale
prices on the exchanges where they are principally traded, free of any brokerage
costs.

Investors participating in the rollover may realize taxable capital gains
from the rollover but will not be entitled to a deduction for certain capital
losses and, because of the rollover procedures, will not receive a cash
distribution with which to pay those taxes. Investors who do not participate
will continue to hold their Units until the termination of the Portfolio;
however, depending upon the extent of participation in the rollover, the
aggregate size of the Portfolio may be sharply reduced resulting in a
significant increase in per Unit expenses.

The Sponsors may, in their sole discretion and without penalty or liability
to investors, decide not to sponsor a new Select Ten Portfolio 1997
International Series or to modify the terms of the rollover. Prior notice of any
decision would be provided to investors.

The Division of Investment Management of the SEC is of the view that the
rollover option constitutes an 'exchange offer' for the purposes of Section
11(c) of the Investment Company Act of 1940, and would therefore be prohibited
absent an exemptive order. The Sponsors have received exemptive orders under
Section 11(c) which they believe permit them to offer the rollover, but no
assurance can be given that the SEC will concur with the Sponsors' position and
additional regulatory approvals may be required.

10
<PAGE>
INCOME, DISTRIBUTIONS AND REINVESTMENT

INCOME AND DISTRIBUTIONS

The annual U.S. dollar income per Unit that is earned by a Portfolio, after
deducting estimated annual Portfolio expenses per Unit, will depend primarily
upon the amount of dividends declared and paid by the issuers of the Securities,
fluctuations in U.S. dollar exchange rates and changes in the expenses of the
Portfolio and, to a lesser degree, upon the level of purchases of additional
Securities and sales of Securities. There is no assurance that dividends on the
Securities will continue at their current levels or be declared at all.

Each Unit in a Portfolio receives an equal share of distributions of
dividend income on the Securities in that Portfolio net of estimated expenses.
Because dividends on the Securities are not received at a constant rate
throughout the year, any distribution may be more or less than the amount then
credited to the Income Account. Dividends received are credited to an Income
Account in the relevant foreign currency and converted into U.S. dollars at the
current exchange rate upon declaration of a semi-annual Portfolio distribution.
Other receipts are credited to a Capital Account after conversion into U.S.
dollars at the current rate. A Reserve Account may be created by withdrawing
from the Income and Capital Accounts amounts considered appropriate by the
Trustee to reserve for any material amount that may be payable out of a
Portfolio. Funds held by the Trustee in the various accounts do not bear
interest. In addition, distributions of amounts necessary to pay the Deferred
Sales Charge will be made from the Capital Account to an account maintained by
the Trustee for purposes of satisfying investors' sales charge obligations.
Although the Sponsors may collect the Deferred Sales Charge monthly, to keep
Units more fully invested the Sponsors currently do not anticipate sales of
Securities to pay the Deferred Sales Charge until after the rollover
notification date. Proceeds of the disposition of any Securities not used to pay
Deferred Sales Charge or to redeem Units will be held in the Capital Account and
distributed on the final Distribution Day or following liquidation of the
Portfolios.

REINVESTMENT

Principal and semi-annual income distributions on Units may be reinvested
by participating in the reinvestment plan. Under the plan, the Units acquired
for investors will be either Units already held in inventory by the Sponsors or
new Units created by the Sponsors' deposit of additional Securities, contracts
to purchase additional Securities or cash (or a bank letter of credit in lieu of
cash) with instructions to purchase additional Securities. Deposits or purchases
of additional Securities will generally be made so as to maintain the then
existing proportionate relationship among the number of shares of each Security
in a Portfolio. Units acquired by reinvestment will not be subject to the
initial sales charge but will be subject to any remaining installments of
Deferred Sales Charge. The Sponsors reserve the right to amend, modify or
terminate the reinvestment plan at any time without prior notice. Investors
holding Units in 'street name' should contact their broker, dealer or financial
institution if they wish to participate in the reinvestment plan.

PORTFOLIO EXPENSES

Estimated annual Portfolio expenses are listed in Part A of the Prospectus;
if actual expenses exceed the estimate, the excess will be borne by the
Portfolio. The estimated expenses do not include any brokerage commissions
payable by the Portfolio in buying and selling Securities. The Trustee's annual
fee is payable in monthly installments. The Trustee also benefits when it holds
cash for a Portfolio in non-interest bearing accounts. Possible additional
charges include Trustee fees and expenses for extraordinary services, costs of
indemnifying the Trustee and the Sponsors, costs of action taken to protect the
Fund and other legal fees and expenses, Fund termination expenses and any
governmental charges. The Trustee has a lien on Portfolio assets to secure
reimbursement of these amounts and may sell Securities for this purpose if cash
is not available. The Sponsors receive an annual fee of a maximum of $0.35 per
1,000 Units to reimburse them for the cost of providing Portfolio supervisory
services. While the fee may exceed their costs of providing these services to
the Fund, the total supervision fees from all Series of Equity Income Fund will
not exceed their costs for these services to all of those Series during any
calendar year. The Sponsors may also be reimbursed for their costs of providing
bookkeeping and administrative services to the Portfolios, currently estimated
at $0.10 per 1,000 Units. The Trustee's and Sponsors' fees may be adjusted for
inflation without investors' approval.

Expenses incurred in establishing the Portfolios, including the cost of the
initial preparation of documents relating to the Portfolios, any foreign trading
costs (including commissions, custodial fees and stamp taxes),

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Federal and State registration fees, the initial fees and expenses
of the Trustee, legal expenses and any other out-of-pocket expenses,
will be paid by the Portfolios and amortized over the life
of the Portfolios. Advertising and selling expenses will be
paid from the Underwriting Account at no charge to the Portfolios.
Defined Asset Funds can be a cost-effective way to purchase and hold
investments. Annual operating expenses are generally lower than for managed
funds. Because Defined Asset Funds have no management fees, limited transaction
costs and no ongoing marketing expenses, operating expenses are generally less
than 0.25% a year. When compounded annually, small differences in expense ratios
can make a big difference in your investment results.

TAXES

U.S. TAXATION

The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.

As used herein, the term 'U.S. Investor' means an owner of a Unit in the
United Kingdom Portfolio or the Japan Portfolio that (a) is (i) for United
States federal income tax purposes a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in or under
the laws of the United States or of any political subdivision thereof, or (iii)
an estate or trust the income of which is subject to United States federal
income taxation regardless of its source, or (b) is not a U.S. Investor under
(a) and whose income from a Unit is effectively connected with such Investor's
conduct of a United States trade or business. The term also includes certain
former citizens of the United States whose income and gain on the Units will be
taxable.

In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:

The Portfolios are not associations taxable as corporations for federal
income tax purposes. Each U.S. Investor will be considered the owner of a
pro rata portion of each Security in a Portfolio under the grantor trust
rules of Sections 671-679 of the Internal Revenue Code of 1986, as amended
(the 'Code'). Each U.S. Investor will be considered to have received all of
the dividends paid on his pro rata portion of each Security when such
dividends are received by the Portfolio, regardless of whether such
dividends are used to pay a portion of the Portfolio's current ongoing
expenses or whether they are automatically reinvested (see Reinvestment
Plan). The amount of the dividend payment will be the U.S. dollar value
based on the exchange rate in effect on the date the dividend payment is
received by the Portfolio.

Dividends considered to have been received by a U.S. Investor will not
qualify for the dividends-received deduction for corporate investors
because the dividends-received deduction is only available for dividends
received from domestic corporations.

The United Kingdom Portfolio will report as gross income earned by U.S.
Investors their pro rata share of dividends received by the Portfolio as
well as their pro rata share of the associated Tax Credit Amount (as
defined in 'United Kingdom Taxation' below), notwithstanding that it is not
certain that U.S. Investors will receive any refund of U.K. taxes. Although
a U.S. Investor is unlikely to be able to obtain directly Treaty Payments
(as defined in 'United Kingdom Taxation' below) under the U.S.-U.K Treaty,
the U.K. Inland Revenue operates a special procedure under which trustees
of funds such as the Fund may be entitled to claim Treaty Payments on
behalf of investors. The Trustee intends to apply to the U.K. Inland
Revenue for their approval for such a procedure to apply in respect of the
United Kingdom Portfolio. If such approval is given, the amount of any
Treaty Payment to be obtained with respect to a dividend will be reflected
in the net asset value of the Fund and will be distributed to investors on
the first Distribution Date after the dividend is received by the Fund.
Those U.S. Investors who hold Units on the relevant record date for
dividends on the underlying Securities held by the United Kingdom Portfolio
should be entitled, subject to applicable limitations, to either a credit
or a deduction for foreign taxes payable with respect to such dividend
payments. In addition, IRAs and other plans addressed below under
'Retirement Plans' should note that they are not eligible to claim any
Treaty Payment (as defined below under 'United Kingdom Taxation').

The Japan Portfolio will report as gross income earned by U.S. Investors
their pro rata share of dividends received by the Portfolio as well as
their pro rata share of the amount withheld with respect to such dividends.
Those U.S. Investors who hold Units on the relevant record date for
dividends on the underlying Securities held by the Japan Portfolio should
be entitled, subject to applicable limitations, to either a credit or a
deduction for foreign taxes payable with respect to such dividend payments.

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An individual U.S. Investor who itemizes deductions will be entitled to
deduct his pro rata share of current ongoing expenses paid by the Fund only
to the extent that this amount together with the U.S. Investor's other
miscellaneous deductions exceeds 2% of his adjusted gross income.

The U.S. Investor's basis in his Units will equal the cost of his Units,
including the initial sales charge. A portion of the sales charge is
deferred until the termination of the Fund or the redemption of the Units.
The proceeds received by a U.S. Investor upon such event will reflect
deduction of the deferred amount (the 'Deferred Sales Charge' and a charge
for organizational expenses). The annual statement and the relevant tax
reporting forms received by U.S. Investors will be based upon the amounts
paid to them, net of the Deferred Sales Charge and the charge for
organizational expenses. Accordingly, U.S. Investors should not increase
their basis in their Units by the Deferred Sales Charge or any amount used
to pay organizational expenses.

A distribution of Securities by the Trustee to a U.S. Investor (or to
his agent) upon redemption of Units (or an exchange of Units for Securities
by the investor with the Sponsor) will not be taxable to the U.S. Investor
or to other investors. The redeeming or exchanging U.S. Investor's basis
for such Securities will equal his basis for the same Securities
(previously represented by his Units) prior to such redemption or exchange,
and his holding period for such Securities will include the period during
which he held his Units. A U.S. Investor will have a taxable gain or loss,
which will be a capital gain or loss, when the U.S. Investor (or his agent)
sells the Securities received in redemption for cash, when a redeeming or
exchanging U.S. Investor receives cash in lieu of fractional shares, when
the U.S. Investor sells his Units for cash or when the Trustee sells the
Securities from the Portfolio. However, deductions will be disallowed for
such losses realized by U.S. Investors who invest in a Portfolio of a new
1997 International Series within 30 days after incurring such loses to the
extent that the securities in the new series are substantially identical to
the old Securities.

Capital gains are currently taxed at the same rate as ordinary income.
However, the excess of net long-term capital gains over net short-term
capital losses may be taxed at a lower rate than ordinary income for
certain noncorporate taxpayers. A capital gain or loss is long-term if the
asset is held for more than one year and short-term if held for one year or
less. The deduction of capital losses is subject to limitations.

The lower net capital gain tax rate will be unavailable to those
noncorporate U.S. Investors who, as of the mandatory termination date (or
earlier termination of a Portfolio), have held their Units for less than a
year and a day. Similarly, with respect to noncorporate rollover U.S.
Investors, this lower rate will be unavailable if, as of the beginning of
the rollover period, those U.S. Investors have held their shares for less
than a year and a day. The deduction of capital losses is subject to
limitations.

Under the income tax laws of the State and City of New York, the
Portfolios are not associations taxable as corporations and the income of
the Portfolios will be treated as the income of the U.S. Investors in the
same manner as for federal income tax purposes.

The foregoing discussion relates only to the tax treatment of U.S.
Investors with regard to federal and certain aspects of New York State and
City income taxes. U.S. Investors may be subject to taxation in New York or
in other jurisdictions and should consult their own tax advisors in this
regard.
* * * *

The foregoing discussion relates only to U.S. Investors (as defined above).
Since both Portfolios hold Securities of non-U.S. issuers, it is expected that
income earned by investors who are not U.S. Investors will not be treated as
U.S.-source income and should not be subject to any U.S. withholding tax.

At the termination of the Portfolios, the Trustee will furnish to each
investor an annual statement containing information relating to the dividends
received by the Portfolio on the Securities, the gross proceeds received by the
Portfolio from the disposition of any Security (resulting from redemption or the
sale by the Portfolio of any Security), and the fees and expenses paid by the
Portfolio. The Trustee will also furnish annual information returns to each
investor and to the Internal Revenue Service.

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FOREIGN TAXATION

UNITED KINGDOM TAXATION

Tax Consequences of Ownership of Ordinary Shares. In the opinion of
Linklaters & Paines, the Sponsors' U.K. special counsel, based on the
description of the United Kingdom Portfolio in the Prospectus and on certain
representations made by special U.S. counsel to the Sponsors, this summary
accurately describes the material U.K. tax consequences to certain U.S. holders
of Units of the U.K. Portfolio. This summary is based upon current U.S. law,
U.K. taxation law, U.K. Inland Revenue practice, the U.S./U.K. convention
relating to taxes on income and capital gains (the 'Treaty') and the U.S./U.K.
estate and gift taxes convention (the 'Estate Tax Treaty'). The summary is a
general guide only and is subject to any changes in any of aforesaid after the
date of this Prospectus (including changes on a retroactive basis) which may
affect the tax analysis described. Accordingly, prospective investors should
consult their U.K. tax advisors as to the U.K. tax consequences of owning Units
of the United Kingdom Portfolio applicable to their circumstances.

Taxation of Dividends. Subject to the following paragraph, a U.K. resident
who receives a dividend from a U.K. corporation is generally entitled to a tax
credit, which is either offset against U.K. tax liabilities, or, in certain
circumstances, repaid. Under the Treaty, a U.S. Investor, who is resident in the
U.S. for the purposes of the Treaty, may be entitled to repayment of the tax
credit, but such repayment is subject to U.K. withholding tax of 15% on the sum
of the dividend and the tax credit. The tax credit (before such withholding) is
equal to one quarter of the dividend (the 'Tax Credit Amount'). Although such a
U.S. Investor who held shares directly in a U.K. corporation could generally
claim a refund of part of the Tax Credit Amount attributable to the dividend (a
'Treaty Payment'), the ability of such a U.S. Investor in the United Kingdom
Portfolio to claim a Treaty Payment is unclear where dividend payments are made
to an entity such as the Fund. For a U.S. Investor to be able to claim Treaty
Payments it would be necessary to agree to a special procedure with the U.K.
Inland Revenue in advance (see 'U.S. Taxation' above). In the absence of
agreeing to such a procedure, Investors who are U.S. persons may not in practice
be able to claim a Treaty Payment from the U.K. Inland Revenue.

A U.K. company may elect for a dividend to be a 'foreign income dividend'
rather than an ordinary dividend. No tax credits are attributable to such
foreign income dividends.

Taxation of Capital Gains. U.S. Investors who are neither resident nor
ordinarily resident in the U.K. will not be liable for U.K. tax on gains arising
on the disposal of Units unless the Units are used, held or acquired for the
purposes of a trade, profession or vocation carried on in the U.K. through or
for the purposes of permanent establishment or fixed base as defined in the
Treaty.

U.K. Inheritance Tax. Individual U.S. Investors who are domiciled in the
U.S. (as defined by the Estate Tax Treaty) and who are not U.K. nationals (as
defined by the Estate Tax Treaty) will generally not be subject to U.K.
inheritance tax on death or on lifetime gifts of Units in the United Kingdom
Portfolio provided that any applicable U.S. federal gift or estate tax is paid,
unless the Units are part of the business property of U.K. permanent
establishments or pertain to U.K. fixed bases used for the performance of
personal services. Where the Units have been settled on trust, the Units will
generally not be subject to U.K. inheritance tax unless the settlor, at the time
of settlement, was not domiciled in the U.S. or was a U.K. national provided
that any applicable U.S. federal gift or estate tax is paid. In the exceptional
case where Units are subject to both U.K. inheritance tax and to U.S. federal
gift or estate tax, the Estate Tax Treaty generally provides for U.K. tax paid
to be credited against U.S. tax paid or for tax paid in the U.S. to be credited
against tax payable in the U.K based on rules set out in the Estate Tax Treaty.

* * *
The aforesaid discussion addresses the U.K. tax consequences of Units of
the United Kingdom Portfolio held by U.S. Investors only. For the U.S. tax
consequences, to U.S. Investors, see U.S. Taxation. The discussion does not
address the tax consequences for non-U.S. investors who should consult their own
tax advisers in this respect.

JAPANESE TAXATION

The Sponsors have been advised by Tomotsune Kimura and Mitomi, the
Sponsors' special Japanese counsel, that dividends paid to the Japan Portfolio
by Japanese corporations will be subject to a withholding tax of 20%. Generally,
a 'resident of the United States' that holds shares in a Japanese corporation
and has no permanent
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<PAGE>
establishment in Japan is entitled to a reduced withholding
tax rate of 15% under the Convention between Japan and the United States of
America for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (the 'Convention') if an application
signed by such resident or its agent is filed with the appropriate tax
authority. The Convention defines the term 'resident of the United States' to
include trusts which are treated as residents of the United States for United
States income tax purposes. Although there are no applicable guidelines or
precedents published by the national tax authority of Japan, under a strict
interpretation of this definition, in light of the fact that the Japan Portfolio
is not a taxable entity for federal income tax purposes (see 'Taxes--U.S.
Taxation'), the Japan Portfolio would not qualify as a U.S. resident within the
meaning of the Convention, and consequently, each investor in the Japan
Portfolio will be treated as the recipient of his pro rata share of dividends
paid to the Japan Portfolio and will be required to file the specified
application in order to benefit from the reduced withholding rate. The Trustee
intends to apply for a confirmation from the national tax authority of Japan to
the effect that the Japan Portfolio qualifies as a resident of the United States
within the meaning of the Convention or, in the alternative, to the effect that
the Trustee may file the required application on behalf of the investors.
However, it is unclear whether the Trustee will be able to obtain either of the
above confirmations and unless and until such a confirmation is obtained,
investors may not in practice be able to benefit from the reduced withholding
rate provided by the Convention. In addition, Japanese gift and inheritance
taxes may be imposed with respect to Units of the Japan Portfolio upon legatees,
heirs or donees of individuals who are holders thereof.

Securities transaction taxes will be imposed in the event of sales of
portfolio securities within Japan, currently at the rate of 0.21% of the sales
prices thereof. However, gains derived from sales of portfolio securities within
Japan will not be subject to Japanese income tax, assuming that the transferor
does not have a permanent establishment in Japan.

The aforesaid discussion addresses the Japanese tax consequences to
residents of the United States (within the meaning of the Convention) of holding
Units of the Japan Portfolio. The discussion does not address the tax
consequences to an investor who is a non-resident of the United States.
Accordingly, such a non-resident investor should consult his own tax adivsor in
this respect.

RETIREMENT PLANS

This Series of Equity Income Fund may be well suited for purchase by
Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for special 5 or
10 year averaging or tax-deferred rollover treatment. Investors holding IRAs,
Keogh plans and other tax-deferred retirement plans should consult their plan
custodian as to the appropriate disposition of distributions. Investors
considering participation in any of these plans should review specific tax laws
related thereto and should consult their attorneys or tax advisors with respect
to the establishment and maintenance of any of these plans. These plans are
offered by brokerage firms, including the Sponsor of this Fund, and other
financial institutions. Fees and charges with respect to such plans may vary.

Retirement Plans for the Self-Employed--Keogh Plans. Units may be purchased
by retirement plans established for self-employed individuals, partnerships or
unincorporated companies ('Keogh plans'). The assets of a Keogh plan must be
held in a qualified trust or other arrangement which meets the requirements of
the Code. Keogh plan participants may also establish separate IRAs (see below)
to which they may contribute up to an additional $2,000 per year ($2,250 in a
spousal account).

Individual Retirement Account--IRA. Any individual can establish an IRA or
make use of a qualified IRA arrangement for the purchase of Units of the Fund.
Any individual (including one covered by an employer retirement plan) can make a
contribution in an IRA equal to the lesser of $2,000 ($2,250 in a spousal
account) or 100% of earned income; the investment must be made in cash. However,
the deductible amount an individual may contribute will be reduced if the
individual or the individual's spouse is covered by an employer maintained
retirement plan and the individual's adjusted gross income exceeds $25,000 (in
the case of a single individual), $40,000 (in the case of married
individuals filing a joint return) or $200 (in the case of a married individual
filing a separate return). Certain transactions which are prohibited under
Section 408 of the Code will cause all or a portion of the amount in an IRA to
be deemed to the distributed and subject to tax at that time. Unless

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<PAGE>
nondeductible contributions were made in 1987 or a later year, all distributions
from an IRA will be treated as ordinary income but generally are eligible for
tax-deferred rollover treatment. Taxable distributions made before attainment of
age 59 1/2, except in the case of the participant's death or disability or where
the amount distributed is part of a series of substantially equal periodic (at
least annual) payments that are to be made over the life expectancies of the
participant and his or her beneficiary, are generally subject to a surtax in an
amount equal to 10% of the distribution.

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

RECORDS AND REPORTS

Each Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Portfolio,
including a current list of the Securities and a copy of the Indenture, which
may be inspected by investors at reasonable times during business hours.

With each distribution, the Trustee includes a statement of the amounts of
income and any other receipts being distributed. Following the termination of a
Portfolio, the Trustee sends each investor of record a statement summarizing
transactions in the Portfolio's accounts including amounts distributed from
them, identifying Securities sold and purchased and listing Securities held and
the number of Units outstanding at termination and stating the Redemption Price
per 1,000 Units at termination, and the fees and expenses paid by the Portfolio,
among other matters. Portfolio accounts may be audited by independent
accountants selected by the Sponsors and any report of the accountants will be
available from the Trustee on request.

TRUST INDENTURE

Each Portfolio is a 'unit investment trust' created under New York law by a
Trust Indenture among the Sponsors and the Trustee. This Prospectus summarizes
various provisions of the Indentures, but each statement is qualified in its
entirety by reference to the Indentures.

An Indenture may be amended by the Sponsors and the Trustee without consent
by investors to cure ambiguities or to correct or supplement any defective or
inconsistent provision, to make any amendment required by the SEC or other
governmental agency or to make any other change not materially adverse to the
interest of investors (as determined in good faith by the Sponsors). An
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in a Portfolio
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified of the substance of any amendment.

The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The resignation or removal becomes effective upon acceptance of
appointment by a successor; in this case, the Sponsors will use their best
efforts to appoint a successor promptly; however, if upon resignation no
successor has accepted appointment within 30 days after notification, the
resigning Trustee may apply to a court of competent jurisdiction to appoint a
successor.

Any Sponsor may resign so long as one Sponsor with a net worth of
$2,000,000 remains. A new Sponsor may be appointed by the remaining Sponsors and
the Trustee to assume the duties of the resigning Sponsor. If there is only one
Sponsor and it fails to perform its duties or becomes incapable of acting or
bankrupt or its affairs are taken over by public authorities, the Trustee may
appoint a successor Sponsor at reasonable rates of compensation, terminate the
Indentures and liquidate the Fund or continue to act as Trustee without a
Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated has been appointed
as Agent for the Sponsors by the other Sponsors.

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

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<PAGE>

MISCELLANEOUS

LEGAL OPINION

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

AUDITORS

The Statements of Condition in Part A of the Prospectus were audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.

TRUSTEE

The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.

SPONSORS

The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America;
Dean Witter Reynolds, Inc., a principal operating subsidiary of Dean Witter
Discover & Co., and PaineWebber Incorporated, a wholly-owned subsidiary of
PaineWebber Group Inc. Each Sponsor, or one of its predecessor corporations, has
acted as Sponsor of a number of series of unit investment trusts. Each Sponsor
has acted as principal underwriter and managing underwriter of other investment
companies. The Sponsors, in addition to participating as members of various
selling groups or as agents of other investment companies, execute orders on
behalf of investment companies for the purchase and sale of securities of these
companies and sell securities to these companies in their capacities as brokers
or dealers in securities.

PUBLIC DISTRIBUTION

During the initial offering period and thereafter to the extent additional
Units continue to be offered for sale to the public by means of this Prospectus,
Units will be distributed directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above. The Sponsors
intend to qualify Units for sale in all states in which qualification is deemed
necessary through the Underwriting Account and by dealers who are members of the
National Association of Securities Dealers, Inc. The Sponsors do not intend to
qualify Units for sale in any foreign countries and this Prospectus does not
constitute an offer to sell Units in any country where Units cannot lawfully be
sold.

UNDERWRITERS' AND SPONSORS' PROFITS

Upon sale of the Units, the Underwriters, which are listed on the back
cover of the Prospectus, will be entitled to receive sales charges; each
Underwriters' interest in the Underwriting Account will depend on the number of
Units acquired through the issuance of additional Units. The Sponsors also
realize a profit or loss on deposit of the Securities equal to the difference
between the cost of the Securities to the Fund (based on the aggregate value of
the Securities on their date of deposit) and the purchase price of the
Securities to the Sponsors plus commissions payable by the Sponsors. In
addition, a Sponsor or Underwriter may realize profits or sustain losses on
Securities it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Underwriting Account also may realize profits or sustain losses as a result of
fluctuations after the initial date of deposit in the Public Offering Price of
the Units. In maintaining a secondary market for Units, the Sponsors will also
realize profits or sustain losses in the amount of any difference between the
prices at which they buy Units and the prices at which they resell these Units
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'

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<PAGE>

businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.

PERFORMANCE INFORMATION

Total returns, average annualized returns or cumulative returns for various
periods of Strategy Stocks, the related index, the current or one or more prior
Select Ten Portfolios may be included from time to time in advertisements, sales
literature and reports to current or prospective investors. Total return shows
changes in Unit price during the period plus reinvestment of dividends and
capital gains, divided by the maximum public offering price. Average annualized
returns show the average return for stated periods of longer than a year.
Figures for actual Portfolios (but not Strategy Stocks or related index) reflect
deduction of all Portfolio expenses and unless otherwise stated the maximum
sales charge. No provision is made for any income taxes payable. Similar figures
may be given for Strategy Stocks and other Select Ten Portfolios applying the
Strategy to other indexes. Returns of Strategy Stocks of multiple Select Ten
Strategies may also be shown on a combined basis. Investors should bear in mind
that this represents past performance and is no assurance of future results of
the current or any future Portfolio. Advertisements and other material
distributed to prospective investors may include average annual total returns
(with dividends reinvested) of equity markets in major industrialized countries
over the last 10 years, as compiled by Morgan Stanley Capital International
Index.

DEFINED ASSET FUNDS

For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio is relatively fixed) and 'hold with confidence'
(because the portfolio is professionally selected and regularly reviewed).
Defined Asset Funds offers an array of simple and convenient investment choices,
suited to fit a wide variety of personal financial goals--a buy and hold
strategy for capital accumulation, such as for children's education or
retirement, or regular current income consistent with the preservation of
principal. Unit investment trusts are particularly suited for investors who
prefer to seek long-term profits by purchasing and holding investments, rather
than through active trading. Few individuals have the knowledge, resources or
capital to buy and hold a diversified portfolio on their own; it would generally
take a considerable sum of money to obtain the breadth and diversity that
Defined Asset Funds offer. Your investment objectives may call for a combination
of Defined Asset Funds.

Defined Asset Funds reflect a buy and hold strategy that the Sponsors
believe can be more effective and less expensive than active management. This
strategy is premised on selection criteria and procedures, diversification and
regular monitoring by investment professionals. Various advertisements and sales
literature may summarize the results of economic studies concerning how stock
market movement has tended to be concentrated and how longer-term investments
can tend to reduce risk.

One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.

EXCHANGE OPTION

You may exchange Fund Units for units of other Select Ten Portfolios
subject only to the remaining deferred sales charge on the units received. You
may exchange your units of any Select Ten Portfolio, of any other Defined Asset
Fund with a regular maximum sales charge of at least 3.50%, or of any
unaffiliated unit trust with a regular maximum sales charge of at least 2.70%,
for Units of this Fund at their relative net asset values, subject only to a
reduced sales charge, or to any remaining Deferred Sales Charge, as applicable.

To make an exchange, you should contact your financial professional to find
out what suitable exchange funds are available and to obtain a prospectus. You
may acquire units of only those exchange funds in which the

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<PAGE>
Sponsors are maintaining a secondary market and which are lawfully for sale in
the state where you reside. Except for the reduced sales charge, an exchange
is a taxable event normally requiring recognition of any gain or loss on the
units exchanged. However, the Internal Revenue Service may seek to disallow
a loss if the portfolio of the units acquired is not materially different
from the portfolio of the units exchanged; you should consult your own tax
advisor. If the proceeds of units exchanged are insufficient to acquire a
whole number of exchange fund units, you may pay the difference in cash (not
exceeding the price of a single unit acquired).

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

SUPPLEMENTAL INFORMATION

Upon writing or calling the Trustee shown on the back cover of this
Prospectus, investors will receive without charge supplemental information about
a Portfolio, which has been filed with the SEC. The supplemental information
includes more detailed risk factor disclosure about the types of securities that
may be part of the Portfolio and general information about the structure and
operation of the Fund.

19
<PAGE>
Defined
Asset FundsSM

SPONSORS AND UNDERWRITERS: EQUITY INCOME FUND
Merrill Lynch, SELECT TEN PORTFOLIO
Pierce, Fenner & Smith Incorporated1996 INTERNATIONAL SERIES B
Defined Asset Funds (UNITED KINGDOM AND
P.O. Box 9051 JAPAN PORTFOLIOS)
Princeton, N.J. 08543-9051
(609) 282-8500 This Prospectus does not contain all of the
Smith Barney Inc. information with respect to the investment
Unit Trust Department company set forth in its registration
388 Greenwich Street--23rd Floor statement and exhibits relating thereto which
New York, NY 10013 have been filed with the Securities and
1-800-223-2532 Exchange Commission, Washington, D.C. under
PaineWebber Incorporated the Securities Act of 1933 and the Investment
1200 Harbor Blvd. Company Act of 1940, and to which reference
Weehawken, N.J. 07087 is hereby made.
(201) 902-3000 ------------------------------
Prudential Securities Incorporated No person is authorized to give any
One Seaport Plaza information or to make any representations
199 Water Street with respect to this investment company not
New York, N.Y. 10292 contained in its registration statement and
(212) 776-1000 related exhibits; and any information or
Dean Witter Reynolds Inc. representation not contained therein must not
Two World Trade Center--59th Floor be relied upon as having been authorized.
New York, N.Y. 10048 ------------------------------
(212) 392-2222 When Units of this Fund are no longer
TRUSTEE: available and for investors who will reinvest
The Chase Manhattan Bank, N.A. into subsequent International Select Ten
(a National Banking Association) Portfolios, this Prospectus may be used as a
Customer Service Retail Department preliminary prospectus for a future series,
770 Broadway--7th Floor in which case investors should note the
New York, NY 10003 following:
1-800-323-1508 Information contained herein is subject to
amendment. A registration statement relating
to securities of a future series has been
filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer
solicitation or sale would be unlawful prior
to registration or qualification under the
securities laws of any such State.

15319--5/96

<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS

A. The following information relating to the Depositors is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.

</TABLE>
<TABLE><CAPTION>
SEC FILE OR
IDENTIFICATION DATE
NUMBER FILED
----------------------------------------
<S> <C> <C>
I. Bonding Arrangements and Date of Organization of the
Depositors filed pursuant to Items A and B of
Part II of the Registration Statement on Form
S-6 under the Securities Act of 1933:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 2-52691 1/17/95
Smith Barney Inc. .............................. 33-29106 6/29/89
PaineWebber Incorporated........................ 2-87965 11/18/83
Prudential Securities Incorporated.............. 2-61418 4/26/78
Dean Witter Reynolds Inc. ...................... 2-60599 1/4/78
II. Information as to Officers and Directors of the
Depositors filed pursuant to Schedules A and D
of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 8-7221 5/26/94, 6/29/92
Smith Barney Inc. .............................. 8-8177 8/29/94, 8/2/93
PaineWebber Incorporated........................ 8-16267 4/20/94, 7/31/86
Prudential Securities Incorporated.............. 8-27154 6/30/94, 6/20/88
Dean Witter Reynolds Inc. ...................... 8-14172 2/23/94, 4/9/91
III. Charter documents of the Depositors filed as
Exhibits to the Registration Statement on Form
S-6 under the Securities Act of 1933 (Charter,
By-Laws):
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 2-73866, 2-77549 9/22/81, 6/15/82
Smith Barney Inc. .............................. 33-20499 3/30/88
PaineWebber Incorporated........................ 2-87965 11/18/83
Prudential Securities Incorporated.............. 2-52947 3/4/75
Dean Witter Reynolds Inc. ...................... 2-60599 1/4/78
B. The Internal Revenue Service Employer Identification
Numbers of the Sponsors and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 13-5674085
Smith Barney Inc. .............................. 13-1912900
PaineWebber Incorporated........................ 13-2638166
Prudential Securities Incorporated.............. 22-2347336
Dean Witter Reynolds Inc. ...................... 94-0899825
The Chase Manhattan Bank, N.A., Trustee......... 13-2633612

The Sponsors undertake that they will not make any amendment to the
Supplement to this Registration Statement which includes material changes
without submitting the amendment for Staff review prior to distribution.

II-1

<PAGE>

SERIES OF EQUITY INCOME FUND,
INTERNATIONAL BOND FUND,
CORPORATE INCOME FUND
AND DEFINED ASSET FUNDS MUNICIPAL INSURED SERIES
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933

SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
Equity Income Fund, Index Series, S&P 500 Trust 2 and S&P
Midcap Trust................................................ 33-44844
Equity Income Fund, Investment Philosophy Series 1991
Selected Industrial Portfolio............................... 33-39158
Equity Income Fund, Group One Overseas Index Fund Series 1
and 2....................................................... 33-05654
Equity Income Fund, Select Ten Portfolio--1995 Winter
Series...................................................... 33-55811
Equity Income Fund, Select Ten Portfolio--1995 Spring
Series...................................................... 33-55807
International Bond Fund, Australian and New Zealand Dollar
Bonds Series 19............................................. 33-15393
International Bond Fund, Australian and New Zealand Third
Short-Term Series........................................... 33-13200
International Bond Fund, Fourteenth Multi-Currency Series... 33-04447
Corporate Income Fund, First Short-Term Sterling Series..... 2-93990
Defined Asset Funds Municipal Insured Series................ 33-54565

CONTENTS OF REGISTRATION STATEMENT
The Registration Statement on Form S-6 comprises the following papers and
documents:

The facing sheet of Form S-6.

The Cross-Reference Sheet (incorporated by reference from the
Cross-Reference Sheet of the Registration Statement of Defined Asset Funds
Municipal Insured Series, 1933 Act File No. 33-54565).

The Prospectus.

Additional Information not included in the Prospectus (Part II).
The following exhibits:

1.1 --Form of Trust Indenture (incorporated by reference to Exhibit 1.1 to
the Registration Statement of Equity Income Fund Select Ten
Portfolio--1995 Spring Series, 1933 Act File No. 33-55807).
1.1.1 --Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement under the Securities Act
of 1933 of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the headings
'Taxes' and 'Miscellaneous--Legal Opinion' in the Prospectus.
5.1 --Consent of independent accountants.
9.1 --Information Supplement.

R-1
<PAGE>
SIGNATURES

The registrant hereby identifies the series numbers of Equity Income Fund,
International Bond Fund, Corporate Income Fund and Defined Asset Funds Municipal
Insured Series listed on page R-1 for the purposes of the representations
required by Rule 487 and represents the following:

1) That the portfolio securities deposited in the series as to which this
registration statement is being filed do not differ materially in type
or quality from those deposited in such previous series;

2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential information for, the
series with respect to which this registration statement is being filed,
this registration statement does not contain disclosures that differ in
any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined
by the Commission or the staff; and

3) That it has complied with Rule 460 under the Securities Act of 1933.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 17TH DAY OF MAY,
1996.

SIGNATURES APPEAR ON PAGE R-3, R-4, R-5, R-6 AND R-7.

A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.

A majority of the members of the Board of Directors of Smith Barney Inc.
has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.

A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.

A majority of the members of the Board of Directors of Prudential
Securities Incorporated has signed this Registration Statement or Amendment to
the Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.

A majority of the members of the Board of Directors of Dean Witter
Reynolds Inc. has signed this Registration Statement or Amendment to the
Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.

R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR

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

HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By
ERNEST V. FABIO
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
SMITH BARNEY INC.
DEPOSITOR

By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Inc.: have been filed
under the 1933 Act
File Number:
33-49753 and
33-55073

STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT F. GREENHILL
JEFFREY LANE
JACK L. RIVKIN
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
R-4
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR

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

DONALD B. MARRON
JOSEPH J. GRANO, JR.
By
ROBERT E. HOLLEY
(As authorized signatory for PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-5
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR

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

ALAN D. HOGAN
GEORGE A. MURRAY
LELAND B. PATON
HARDWICK SIMMONS
By
RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons listed above)
R-6
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR

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

NANCY DONOVAN
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-7

</TABLE>

EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000

MAY 17, 1996

DEFINED ASSET FUNDS EQUITY INCOME FUND,
SELECT TEN PORTFOLIO 1996 INTERNATIONAL SERIES B
(UNITED KINGDOM AND JAPAN PORTFOLIOS)
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PRUDENTIAL SECURITIES INCORPORATED
PAINEWEBBER INCORPORATED
DEAN WITTER REYNOLDS INC.

C/O MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, N.J. 08543-9051
(609) 282-8500

Dear Sirs:

We have acted as special counsel for you, as sponsors (the 'Sponsors') of
Defined Asset Funds Equity Income Fund, Select Ten Portfolio 1996 International
Series B (United Kingdom and Japan Portfolios) (the 'Fund'), in connection with
the issuance of units of fractional undivided interest in the Fund (the 'Units')
in accordance with the Trust Indentures relating to the Fund (the 'Indentures').

We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.

Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indentures and the issuance of the Units have been duly
authorized by the Sponsors and (ii) the Units, when duly issued and delivered by
the Sponsors and the Trustees in accordance with the Indentures, will be legally
issued, fully paid and non-assessable.

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

Very truly yours,

DAVIS POLK & WARDWELL

EXHIBIT 5.1

CONSENT OF INDEPENDENT ACCOUNTANTS

The Sponsors and Trustee of Defined Asset Funds Equity Income Fund,
Select Ten Portfolio 1996 International Series B (United Kingdom and Japan
Portfolios):

We consent to the use in this Registration Statement No. 333-00593 of our report
dated May 17, 1996, relating to the Statements of Condition of Defined Asset
Funds Equity Income Fund, Select Ten Portfolio 1996 International Series B
(United Kingdom and Japan Portfolios) and to the reference to us under the
heading 'Miscellaneous--Auditors' in the Prospectus which is a part of this
Registration Statement.

DELOITTE & TOUCHE LLP
New York, N.Y.
May 17, 1996

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> UNITED KINGDOM PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> MAY-17-1996
<INVESTMENTS-AT-COST> 306,335
<INVESTMENTS-AT-VALUE> 306,335
<RECEIVABLES> 0
<ASSETS-OTHER> 162,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 468,335
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 167,415
<TOTAL-LIABILITIES> 167,415
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 306,335
<SHARES-COMMON-STOCK> 309,429
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 300,920
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 309,429
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> JAPAN PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> MAY-17-1996
<INVESTMENTS-AT-COST> 446,423
<INVESTMENTS-AT-VALUE> 446,423
<RECEIVABLES> 0
<ASSETS-OTHER> 143,500
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 589,923
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 151,391
<TOTAL-LIABILITIES> 151,391
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 446,423
<SHARES-COMMON-STOCK> 450,932
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 438,532
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 450,932
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

DEFINED ASSET FUNDS
-------------------

INFORMATION SUPPLEMENT
EQUITY INCOME FUND

This Information Supplement provides additional information concerning the
structure, operations and risks of trusts (each, a "Portfolio") of Equity Income
Fund-Defined Asset Funds not found in the prospectuses for the Portfolios. This
Information Supplement is not a prospectus and does not include all of the
information that a prospective investor should consider before investing in a
Portfolio. This Information Supplement should be read in conjunction with the
prospectus for the Portfolio in which an investor is considering investing
("Prospectus".) Copies of the Prospectus can be obtained by calling or writing
the Trustee at the telephone number and address indicated on the back cover of
the Prospectus.
This Information Supplement is dated May 1, 1996. Capitalized terms have
been defined in the Prospectus.

TABLE OF CONTENTS
-----------------

Description of Portfolio Investments . . . . . . . . . . . . . . 2
Portfolio Supervision . . . . . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Equity Securities . . . . . . . . . . . . . . . . . . . . . . 2
International Risk Factors . . . . . . . . . . . . . . . . . 3
Additional Hong Kong Risk Factors
(Select Ten International Series -Hong Kong Portfolio) . . . 6
Additional Japan Risk Factors
(Select Ten International Series -Japan Portfolio) . . . 7
Concentration . . . . . . . . . . . . . . . . . . . . . . 8
The Food and Beverage Industry . . . . . . . . . . . . . . . 8
Consumer Products Companies . . . . . . . . . . . . . . . 8
The Health Care Industry . . . . . . . . . . . . . . . . . 9
Manufacturing Companies . . . . . . . . . . . . . . . . . 12
Natural Gas Companies . . . . . . . . . . . . . . . . . . 13
Petroleum Refining Companies . . . . . . . . . . . . . . . 15
Semiconductor, Computer and Electronics Equipment
Companies . . . . . . . . . . . . . . . . . . . . . . . 16
Utilities . . . . . . . . . . . . . . . . . . . . . . . 17
The Telecommunications Industry . . . . . . . . . . . . . 21
The Real Estate Industry . . . . . . . . . . . . . . . . . 25
Banks and Thrifts . . . . . . . . . . . . . . . . . . . . 27
Standard & Poor's Indexes . . . . . . . . . . . . . . . . 29
Rollover (Income Growth Fund, Select Ten Series and Select
Growth Portfolios) . . . . . . . . . . . . . . . . . . . . 32

<PAGE>
DESCRIPTION OF PORTFOLIO INVESTMENTS

Portfolio Supervision

Each Portfolio is a unit investment trust which normally follows a buy and
hold investment strategy. Traditional methods of investment management for
mutual funds typically involve frequent changes in portfolio holdings based on
economic, financial and market analyses. Because a Portfolio is not actively
managed the adverse financial condition of an issuer or its failure to maintain
its current dividend rate will not necessarily require the sale of its
securities from a Portfolio. In the event a public tender offer is made for a
security or a merger or acquisition is announced affecting a security, the
Sponsors may instruct the Trustee to tender or sell the security on the open
market when in its opinion it is in the best interest of investors to do so.
The Sponsors may also instruct a Trustee to sell a security in the following
circumstances: (i) failure to declare or pay a regular dividend on a security
or anticipated dividends generally; (ii) institution of certain legal
proceedings; (iii) other legal questions or impediments affecting the security
or payments on that security; (iv) default under certain documents adversely
affecting the declaration or payment of anticipated dividends on the security,
the issuer's general credit standing or the sound investment character of the
security, or a default on other outstanding securities of the same issuer; (v)
if a security becomes inconsistent with a Portfolio's investment objectives;
(vi) if the sale is necessary or advisable to maintain the qualification of the
Portfolio as a Regulated Investment Company under the Internal Revenue Code or
to provide funds to make any distribution for a taxable year as required by the
Internal Revenue Code; or (vii) decline in security price or other market or
credit factors that, in the opinion of Defined Asset Funds research, makes
retention of the security detrimental to the interests of investors. If there
is a failure to declare or pay a regular dividend on a security or anticipated
dividends generally on that security and the Agent for the Sponsors fails to
instruct the Trustee within 30 days after notice of the failure, the Trustee
will sell the security.

Voting rights with respect to the securities will be exercised by the Trustee
in accordance with directions given by the Sponsors.

RISK FACTORS

Equity Securities

An investment in Units of a Portfolio should be made with an understanding of
the risks inherent in an investment in equity securities, including the risk
that the financial condition of the issuers of the securities may become
impaired or that the general condition of the relevant stock market may worsen
(both of which may contribute directly to a decrease in the value of the
securities and thus in the value of the Units) or the risk that holders of
common stocks have a right to receive payments from the issuers of those stocks
that is generally inferior to that of creditors of, or holders of debt
obligations issued by, the issuers and that the rights of holders of common
stocks generally rank inferior to the rights of holders of preferred stock.
Common stocks may be especially susceptible to general stock market movements
and to volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic or banking crises.

Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred

<PAGE>
stocks issued by the issuer. Holders of common stocks of the type held by a
Portfolio have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and to participate in
amounts available for distribution by the issuer only after all other claims on
the issuer have been paid or provided for. By contrast, holders of preferred
stocks have the right to receive dividends at a fixed rate when and as declared
by the issuer's board of directors, normally on a cumulative basis, but do not
participate in other amounts available for distribution by the issuing
corporation. Cumulative preferred stock dividends must be paid before common
stock dividends and any cumulative preferred stock dividend omitted is added to
future dividends payable to the holders of cumulative preferred stock.
Preferred stocks are also entitled to rights on liquidation which are senior to
those of common stocks. Moreover, common stocks do not represent an obligation
of the issuer and therefore do not offer any assurance of income or provide the
degree of protection of capital provided by debt securities. Indeed, the
issuance of debt securities or even preferred stock will create prior claims for
payment of principal, interest, liquidation preferences and dividends which
could adversely affect the ability and inclination of the issuer to declare or
pay dividends on its common stock or the rights of holders of common stock with
respect to assets of the issuer upon liquidation or bankruptcy. Further, unlike
debt securities which typically have a stated principal amount payable at
maturity (whose value, however, will be subject to market fluctuations prior
thereto), common stocks have neither a fixed principal amount nor a maturity and
have values which are subject to market fluctuations for as long as the stocks
remain outstanding. The value of the securities in a Portfolio thus may be
expected to fluctuate over the entire life of the Portfolio to values higher or
lower than those prevailing on the Portfolio's initial date of deposit. Any
monies allocated to the purchase of a security will generally be held for the
purchase of the security. However, a Portfolio may not be able to buy each
security at the same time, because of unavailability of the security or because
of any restrictions applicable to the Portfolio relating to the purchase of the
security by reason of the federal securities laws or otherwise.

International Risk Factors

Foreign Issuers. Investments in Portfolios consisting partially or entirely
of securities of foreign issuers involve investment risks that are different in
some respects from an investment in a Portfolio that invests partially or
entirely in securities of domestic issuers. Those investment risks include
future political and economic developments and the possible establishment of
exchange controls or other governmental restrictions which might adversely
affect the payment or receipt of payment of dividends on the relevant
securities. In addition, for foreign issuers that are not subject to the
reporting requirements of the Securities Exchange Act of 1934, there may be less
publicly available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements such as those
applicable to domestic issuers.

Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies, and even if purchased by a Fund in American Depositary Receipt
("ADR") form in the United States, are principally traded in foreign currencies.
Therefore, there is a risk that the United States dollar value of these
securities will vary with fluctuations in the United States dollar foreign
exchange rates for the relevant currencies. Moreover, for those Securities that
are ADRs, currency fluctuations will affect the U.S. dollar equivalent of the
local currency price of the underlying domestic shares and, as a result, are
likely to affect the value of the ADRs and consequently the value of the
Securities. In addition, the rights of holders of ADRs may be different than
those of holders of the underlying shares, and the market for ADRs may be less
liquid than that for the underlying shares.

ADRs evidence American Depositary Shares which, in turn, represent common
stock deposited with a custodian in a depositary. ADRs may be sponsored or
unsponsored. In an unsponsored facility, the depositary initiates and arranges
the facility at the request of market makers and acts as agent for the ADR

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holder, while the company itself is not involved in the transaction. In a
sponsored facility, the issuing company initiates the facility and agrees to pay
certain administrative and shareholder-related expenses. Sponsored facilities
use a single depositary and entail a contractual relationship between the
issuer, the shareholder and the depositary; unsponsored facilities involve
several depositaries with no contractual relationship to the company. ADRs are
registered securities pursuant to the Securities Act of 1933 and may be subject
to the reporting requirements of the Securities Exchange Act of 1934.

Foreign Exchange Rates. A Portfolio of securities that are principally
traded in foreign currencies involves investment risks that are substantially
different from an investment in a fund which invests in securities that are
principally traded in United States dollars. This is because the United States
dollar value of a Portfolio (and hence of the Units) and of the distributions
from the Portfolio will vary with fluctuations in the United States dollar
foreign exchange rates for the relevant currencies. Most foreign currencies
have fluctuated widely in value against the United States dollar for many
reasons, including supply and demand of the respective currency, the soundness
of the world economy and the strength of the respective economy as compared to
the economies of the United States and other countries.

The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty, which established a system of fixed
exchange rates and the convertibility of the United States dollar into gold
through foreign central banks. Starting in 1971, growing volatility in the
foreign exchange markets caused the United States to abandon gold convertibility
and to effect a small devaluation of the United States dollar. In 1973, the
system of fixed exchange rates between a number of the most important industrial
countries of the world, among them the United States and most Western European
countries, was completely abandoned. Subsequently, major industrialized
countries have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating international
market. Many smaller or developing countries have continued to "peg" their
currencies to the United States dollar although there has been some interest in
recent years in "pegging" currencies to "baskets" of other currencies or to a
Special Drawing Right administered by the International Monetary Fund. Since
1983, the Hong Kong dollar has been pegged to the U.S. dollar although there is
no guarantee that the Hong Kong dollar will continue to be "pegged" to the U.S.
dollar in the future. In Europe a European Currency Unit ("ECU") has been
developed. Currencies are generally traded by leading international commercial
banks and institutional investors (including corporate treasurers, money
managers, pension funds and insurance companies.) From time to time, central
banks in a number of countries also are major buyers and sellers of foreign
currencies, mostly for the purpose of preventing or reducing substantial
exchange rate fluctuations.

Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of actual and
proposed government policies on the value of currencies, interest rate
differentials between the currencies and the balance of imports and exports of
goods and services and transfers of income and capital from one country to
another. These economic factors are influenced primarily by a particular
country's monetary and fiscal policies (although the perceived political
situation in a particular country may have an influence as well--particularly
with respect to transfers of capital.) Investor psychology may also be an
important determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative strength or
weakness of a particular currency may sometimes exercise considerable
speculative influence on currency exchange rates by purchasing or selling large
amounts of the same currency or currencies. However, over the long term, the
currency of a country with a low rate of inflation and a favorable balance of
trade should increase in value relative to the currency of a country with a high
rate of inflation and deficits in the balance of trade.

<PAGE>
The Trustee will estimate current exchange rates for the relevant currencies
based on activity in the various currency exchange markets. However, since
these markets are volatile and are constantly changing, depending on the
activity at any particular time of the large international commercial banks,
various central banks, large multi-national corporations, speculators and other
buyers and sellers of foreign currencies, and since actual foreign currency
transactions may not be instantly reported, the exchange rates estimated by the
Trustee may not be indicative of the amount in United States dollars a Portfolio
would receive had the Trustee sold any particular currency in the market.

The foreign exchange transactions of a Portfolio may be concluded by the
Trustee with foreign exchange dealers acting as principals either on a spot
(i.e., cash) buying basis or on a forward foreign exchange basis on the date a
Portfolio is entitled to receive the applicable foreign currency. These forward
foreign exchange transactions will generally be of as short a duration as
practicable and will generally settle on the date of receipt of the applicable
foreign currency involving specific receivables or payables of the Portfolio
accruing in connection with the purchase and sale of its securities and income
received on the securities or the sale and redemption of Units. These
transactions are accomplished by contracting to purchase or sell a specific
currency at a future date and price set at the time of the contract. The cost
to a Portfolio of engaging in these foreign currency transactions varies with
such factors as the currency involved, the length of the contract period and the
market conditions then prevailing. Since transactions in foreign currency
exchange are usually conducted on a principal basis, fees or commissions are not
normally involved. Although foreign exchange dealers trade on a net basis they
do realize a profit based upon the difference between the price at which they
are willing to buy a particular currency (bid price) and the price at which they
are willing to sell the currency (offer price.) The relevant exchange rate used
for evaluations of securities will include the cost of buying or selling, as the
case may be, of any forward foreign exchange contract in the relevant currency
to correspond to the requirement that Units when purchased settle on a regular
basis and that the Trustee settle redemption requests in United States dollars
within seven days.

Exchange Controls. On the basis of the best information available to the
Sponsors at the present time none of the securities, except as otherwise
indicated in a Portfolio's prospectus, is subject to exchange control
restrictions under existing law which would materially interfere with payment to
a Portfolio of amounts due on securities either because the particular
jurisdictions have not adopted any currency regulations of this type or because
the issues qualify for an exemption or the Portfolio, as an extraterritorial
investor, has qualified its purchase of securities as exempt by following
applicable "validation" or similar regulatory or exemptive procedures. However,
there can be no assurance that exchange control regulations might not be adopted
in the future which might adversely affect payments to a Portfolio.

In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of international
securities in a Portfolio and on the ability of a Portfolio to satisfy its
obligation to redeem Units tendered to the Trustee for redemption.

Liquidity. Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration requirements
of the Act. Sales of non-exempt securities by a Portfolio in United States
securities markets are subject to severe restrictions and may not be
practicable. Accordingly, sales of these securities by a Portfolio will
generally be effected only in foreign securities markets. Although the Sponsors
do not believe that a Portfolio will encounter obstacles in disposing of the
securities, investors should realize that the securities may be traded in
foreign countries where the securities markets are not as developed or efficient
and may not be as liquid as those in the United States. To the extent the
liquidity of these markets becomes impaired, however, the value of a Portfolio
when responding to a substantial volume of requests for redemption of Units
(should redemptions be necessary despite the market making activities of the
Sponsors) received at or about the same time could be adversely

<PAGE>
affected. This might occur, for example, as a result of economic or political
turmoil in a country in whose currency a Portfolio had a substantial portion of
its assets invested, or should relations between the United States and a foreign
country deteriorate markedly. Even though the securities are listed, the
principal trading market for the securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the
securities may depend on whether dealers will make a market in the securities.
There can be no assurance that a market will be made for any of the securities,
that any market for the securities will be maintained or of the liquidity of the
securities in any markets made. In addition, a Portfolio may be restricted
under the Investment Company Act of 1940 from selling securities to any Sponsor.
The price at which the securities may be sold to meet redemptions and the value
of a Portfolio will be adversely affected if trading markets for the securities
are limited or absent.

Additional Hong Kong Risk Factors (Select Ten International Series-Hong Kong
Portfolio)

The information set forth below has been extracted from various governmental
and private publications, but no representation can be made as to its accuracy;
furthermore, no representation is made that any correlation exists between the
state of the economy of Hong Kong and the value of any securities held by a Hong
Kong Portfolio.

Hong Kong's Reversion to Chinese Sovereignty. Hong Kong will revert to
Chinese sovereignty effective July 1, 1997 with Hong Kong becoming a Special
Administrative Region ("SAR") of China. Although China has committed by treaty
to preserve for 50 years the economic and social freedoms currently enjoyed in
Hong Kong, the continuation of the economic system in Hong Kong after the
reversion will be dependent on the Chinese government and there can be no
assurances that the commitment made by China regarding Hong Kong will be
maintained. Legislation has recently been enacted in Hong Kong that will extend
democratic voting procedures for Hong Kong's legislature. China has expressed
disagreement with this legislation which it states is in contravention of the
principles evinced in the Basic Law of the Hong Kong SAR. The National People's
Congress of China has passed a resolution to the effect that the Legislative
Council and certain other councils and boards of the Hong Kong Government will
be terminated on June 30, 1997. It is expected that such bodies will be
subsequently reconstituted in accordance with China's interpretation of the
Basic Law. China and Great Britain have also yet to resolve their differences
on other issues relating to the reversion to sovereignty including the financing
of and construction of a new international airport on Lantau Island. Any
increase in uncertainty as to the future economic and political status of Hong
Kong could have a materially adverse effect on the value of a Hong Kong
Portfolio.

Most Favored Nation Status. China (like most other nations) currently enjoys
a most favored nation status ("MFN Status") from the United States, which is
subject to annual review by the President of the United States. On June 3,
1995, President Clinton signed an executive order which renewed China's MFN
Status for another year. Congress, which has to review China's standing every
year, renewed the MFN Status on July 20, 1995. Revocation of the MFN Status
would have a severe effect on China's trade and thus could have a materially
adverse effect on the value of a Hong Kong Portfolio.

Other Economic Factors. The performance of certain companies listed on the
Hong Kong Exchange is linked to the economic climate of China. For example,
between 1985 and 1990, Hong Kong businesses invested US$20 billion in the nearby
Chinese province of Guangdong to take advantage of the lower property and labor
costs than were available in Hong Kong. Recently, however, high economic growth
in this area (industrial production grew at an annual rate of about 20% in 1991,
24% in 1992 and 36.5% in 1993) has been associated with rising inflation and
concerns about the devaluation of the Chinese currency. Any downturn in
economic growth or increase in the rate of inflation in China could have a
materially adverse effect on the value of a Hong Kong Portfolio.

<PAGE>
Additional Japan Risk Factors (Select Ten International Series - Japan Portfolio

The information set forth below has been extracted from various governmental
and private publications, but no representation can be made as to its accuracy;
further, no representation is made that any correlation exists between the state
of the economy of Japan and the value of any securities held by a Japan
Portfolio.

Cross-Shareholding structure. Investing in Japanese stocks involves certain
risks and considerations not associated with investing in securities of
established U.S. companies. Japanese corporate (keiretsu) groups involve a
relatively high level of cross-shareholding among the companies in the groups.
This cross-shareholding is a characteristic of the Japanese equities market.
Consequently, Japanese equities markets may be affected by market developments
in different ways than U.S. securities markets and may be more volatile than
U.S. securities markets.

Export-Led Economy. The Japanese economy is focused on exports, the major
source of Japan's wealth. Natural disasters like the earthquake at Kobe may have
a negative impact on Japan's export-led economy. Trade disputes between Japan
and other countries such as the United States and between Japan and trading
blocs such as the European Community may also have a negative impact on Japan's
export-led economy.

Japanese Government Regulation. In general, the acquisition of shares in a
Japanese company listed on any stock exchange in Japan from a resident of Japan
(including a corporation) by a non-resident of Japan (including a corporation)
requires prior notification to the Minister of Finance of Japan (the "Minister
of Finance") of the proposed transaction. If the acquisition is made from or
through a securities company designated by the Minister of Finance (as will
generally be the case with the Fund), such prior notification is not required,
subject to the quantity restrictions referred to below. The Foreign Exchange and
Foreign Trade Control Law of Japan, as amended, and cabinet orders and
minsterial ordinances thereunder currently in effect (the "Foreign Exchange
Controls"), give the Minister of Finance the power, in certain limited and
exceptional circumstances, to require prior approval for any such acquisition.

If a foreign investor intends to acquire shares of a Japanese corporation and
as a result of such acquisition the foreign investor would directly or
indirectly hold 10% or more of the total outstanding shares of that corporation,
such foreign investor must file a report after such acquisition with the
Minister of Finance and any other Minister with proper jurisdiction. In
instances where such acquisition concerns national security or meets certain
other conditions specified in the Foreign Exchange Controls, such foreign
investor must file a prior notification in respect of the proposed acquisition
with the Minister of Finance and any other Minister with proper jurisdiction.
Such Ministers may make a recommendation to modify or prohibit the proposed
acquisition if they consider that such acquisition falls under certain limited
conditions specified in the Foreign Exchange Controls. If the foreign investor
does not accept the recommendation, such Ministers may issue an order modifying
or prohibiting the acquisition. The Fund will be considered a foreign investor
for this purpose.

The acquisition of shares by non-resident shareholders by way of stock
splits, as well as the acquisition of shares of a Japanese company that are
listed on a Japanese stock exchange by non-residents upon exercise of warrants
or conversion of convertible bonds issued outside Japan, are not subject to any
of the foregoing notification or reporting requirements. Under the Foreign
Exchange Controls, dividends paid on shares held by non-residents of Japan and
the proceeds of any sales of shares within Japan may, in general, be converted
into any foreign currency and remitted abroad. The Fund will be considered a
non-resident of Japan for this purpose.

<PAGE>
There can be no assurance that under the Foreign Exchange Controls the
Minister of Finance will not require prior approval for an acquisition by the
Fund of shares listed on the First Section of the Tokyo Stock Exchange, or that
the Minister of Finance or any other Minister will not recommend modification or
prohibition of the direct or indirect acquisition by the Fund of greater than
10% of the shares of a Japanese corporation.

Concentration

A Portfolio may contain or be concentrated in securities of issuers engaged
in the categories discussed below. An investment in a Portfolio should be made
with an understanding of the risks that these securities may entail, certain of
which are described below.

The Food and Beverage Industry

The Portfolio may be concentrated in stocks of the food and beverage
industry, including manufacturers of packaged foods, processors of agricultural
products, beverage companies and food distributors. There are many factors that
may have an adverse impact on the value of the stocks of these companies and
their ability to pay dividends. These factors include the sensitivity of
revenues, earnings, and financial condition to economic conditions, changing
consumer demands or preferences, fluctuations in the prices of agricultural
commodities, fluctuations in the cost of other raw materials such as packaging,
and the effects of inflation on pricing flexibility. The revenues and earnings
of these companies can also be affected by extensive competition that can result
in lost sales or in lower margins resulting from efforts to maintain market
share. Food and beverage companies are also subject to regulation under various
federal laws--such as the Food, Drug, and Cosmetic Act--as well as state, local
and foreign law and regulations. Costs associated with changing regulatory
restrictions, such as food labeling requirements, could adversely affect
earnings. Food and beverage companies are also becoming increasingly exposed to
risk associated with international operation, including foreign currency
fluctuations and future political and economic developments in other countries.
Other risk factors include potential deterioration in financial condition
resulting from litigation related to product liability, accidents, or trademark
or patent disputes; unfunded pension liability; changing accounting standards,
such as Statement of Financial Accounting Standard No. 106, which requires
accrual accounting for postretirement benefits other than pensions; and
leveraged buyouts, takeovers, or recapitalizations.

Consumer Products Companies

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

<PAGE>
the availability and cost of raw materials and the ongoing need to develop new
products and to improve productivity.

The Health Care Industry

Companies in the health care industry face numerous risks. Most health care
companies are extensively regulated. All are subject to extreme cost-containment
pressures and as a result they cannot readily raise prices for their products or
services, or may experience price declines. Most are subject to intensive
competition and are required to spend vast amounts of capital to keep pace with
technological innovation. These constraints affect the various health care
sectors in the Portfolio in specific ways. Strategic alliances are being formed
by drug companies, hospital supply companies, HMOs, hospitals, and to a lesser
extent other health care companies to reduce costs and benefit from economies of
scale. The inability to form such alliances on favorable terms or to compete
with other alliances could adversely affect a company's profits and the price of
its securities.

Many problems faced by drug companies, hospital supply companies and medical
devices companies typify those faced by health care industry in general. These
companies are regulated by the federal Food and Drug Administration (the "FDA".)
The FDA regulates the development, manufacture and marketing of all drugs and
medical products. Before a product can be sold it must receive FDA approval, a
long and very costly process. Governments and large, private health care
consumers are exerting strenuous efforts to contain health care costs. The
federal government and increasing numbers of insurance companies reimburse
health care providers on a "prospective payment basis". This means the physician
or hospital is only paid a predetermined amount depending upon the patient's
diagnosis. If the cost of treatment exceeds the predetermined amount, the
physician or hospital will lose money, if it is less, money will be made. This
creates an incentive to prescribe cheaper, generic substitutes for brand-name
drugs and causes significant profit erosion for drug companies. Some states have
laws requiring pharmacists to dispense generic drugs unless precluded by the
prescribing physician. Other states set up auctions among drug companies to
determine which company will agree to meet their needs at the lowest
price.Therefore, the cost of marketing a drug is increasing while at the same
time it is becoming increasingly difficult to recoup that cost. Future trends in
drug pricing remain unclear. HMOs and other third-party payors are gaining power
and demanding larger discounts. The United States account for 35% of the global
drug market, so demand for drugs from foreign countries, particularly developed
countries is important, and cannot be predicted. Foreign countries are demanding
discounts as well.

Drug companies must devote large amounts of risk capital to research and
development in order to develop new and unique drugs with patent protection from
generic substitutes and other competitors. Drug companies also face the risk of
large product liability suits and consequently expensive liability insurance.
Finally, technological change is becoming increasingly rapid and products tend
to become obsolete more quickly than before.

Hospital supply companies face the risk that hospitals will delay purchases
because they fear health care reform. (See Health Care Reform below.) Hospitals
are also increasingly demanding discounts and that pressure may continue to grow
as hospitals consolidate.

The facilities served by hospital management companies are subject to
extensive regulation on federal, state and local levels. Many states require
hospital management companies to submit their financial statements for review
and some even regulate the rates they charge. When treatment costs are
reimbursed by third parties such as Medicare or Medicaid, hospitals have to work
within the discipline of the prospective payment system and also face more
specific cost-containment measures. The effort to reduce costs has resulted in a
movement away from more expensive inpatient treatment to treatment on an

<PAGE>
out-patient basis or in specialized facilities. This has reduced bed-occupancy
rates in the large general hospitals and affected revenues adversely.
Furthermore, the revenues and expenses of hospitals and other health care
facilities will be affected by future events and conditions including, among
other things, the demand for health care services at the particular type of
facility, increasing costs of medical technology, utilization practices of
physicians and physicians' confidence in the facilities, the ability of the
facilities to provide the services required by patients, greater longevity and
the higher medical expenses of treating the elderly, medical and other
scientific advances resulting in decreased usage of health care facilities,
increased costs associated with attracting and maintaining qualified physicians,
nurses and other technical staff, employee strikes and other adverse labor
actions, economic developments in the service area, demographic changes, the
occurrence of natural disasters, and increased competition from other similar
facilities or alternative health care providers. Hospital management and medical
devices companies may be adversely affected by proposed health care reforms,
including various insurance market reforms, significant reductions in Medicare
and Medicaid payments to providers, and stringent government cost controls that
would directly control insurance premiums and indirectly affect the fees of
hospitals, physicians and other health care providers. Other proposals,
uncompensated care provided by hospitals. It is not possible at this time to
predict what, if any, reforms will be adopted in the future. (See Health Care
Reform below.)

Hospitals may be adversely affected by competitive pressure to consolidate.
There can be no assurance that hospitals will be able to make profitable
acquisitions. Hospitals may be subject to federal, state or insurer inquiries or
investigations, which may lead to sanctions. Hospitals also face the risk of
large liability suits and must carry expensive liability insurance and maintain
loss reserves, which may not be sufficient to cover claims. To the extent
hospital management companies are adversely impacted by any of the foregoing,
services companies and medical devices companies would also be affected
adversely.

While the biotechnology companies in the Portfolio are among the more
established in their field, the biotechnology industry in general is an emerging
growth industry. They are regulated by the FDA to the same extent as traditional
drug companies. As emerging growth companies, they may be thinly capitalized and
more susceptible to general market fluctuations than companies with greater
capitalization. Also, the stocks of emerging growth companies trade at higher
price-to-earnings multiples than the stock of more established companies because
the price is more influenced by investor confidence in future earnings than
recorded historic earnings. Therefore, the stock prices can be extremely
volatile as investor confidence rises or ebbs or as the issuer or its
competitors announce new products. In addition, the liquidity of the stocks of
young companies can be limited and therefore subject to greater price
fluctuations when large numbers of shares are bought and sold. These companies
often have a limited operating history with inexperienced but highly motivated
management, who may retain effective control over the voting stock of the
company. Earnings are generally retained to finance the company's expansion and
thus no dividends may be paid and additional capital may be required to market
new products on a commercial basis. The biotechnology companies may also be
dependent for their revenues upon only a few products and upon larger drug
companies (who may be their competitors) to produce and market their products.
This dependence upon a limited range or products increases the damage that would
be caused by product obsolescence, a risk that is greater in a rapidly
developing area like biotechnology. There exists doubt as to the extent of
patent protection that will be afforded products developed through
biotechnology. At its simplest, biotechnology involves the identification of
genes that produce proteins useful in the combat of disease. Once identified,
the gene can be separated and used to produce commercial quantities of the
protein. As the protein production processes are broadly similar, patent
protection has generally been extended only to the identified gene. This allows
the identified gene to be used offshore to produce the drug for sale in the
United States, without any infringement of U.S. patent law. If this practice
were to become widespread it would significantly affect the revenues of
biotechnology companies. The application of patent law to biotechnology
companies. The application of patent law to biotechnology in general is the
subject of much academic and legislative attention which may result in changes
in the law.

<PAGE>
HMOs are subject to federal and state regulation. Most states require HMOs to
provide periodic financial reports and some even require HMOs to maintain
minimum reserve requirements. HMOs are paid a fixed membership fee. HMOs are
turning to "capitation," where they contract to provide services for a certain
population for a set price, regardless of whether or not the service is
provided. Depending on the negotiated provisions of the contract, costs in
excess of set fees may be borne either by the HMO or the health care provider.
HMOs run the risk that inflation, epidemics, lack of financial discipline among
professional staff and the need to acquire new technology will increase
treatment costs and erode profits. In addition, HMOs face the risk of saturation
in some markets. Where that occurs, they will be forced to incur the expense of
marketing in new geographic areas and developing new products and services. They
are expected to face extreme pressure to increase premiums, while they face the
risk that regulators may seek to limit their profits. In addition, up to half of
an HMO's enrollees may be Medicare beneficiaries whose membership fees are paid
by the HCFA under so-called "Senior Plans". Thus, for a fixed fee, HMOs are
exposed to higher and more expensive health care utilization by the elderly. The
HCFA also regulates the profit an HMO can make on a Senior Plan and the quality
of care provided by a Senior Plan. Finally, HMOs may be adversely affected by
the proposed Medicare and Medicaid reforms, which would significantly reduce
Medicare and Medicaid payments to providers. It is not possible to predict what,
if any, reforms will be adopted in the future. (See Health Care Reform below.)

Services companies face each of the risks confronted by HMOs. They also face
the pressures of increased competition. To diversify or expand the level of
products or services, some companies have been aggressive in acquiring related
corporations. Often unforeseen costs of an acquisition can negatively affect
profits particularly in the periods immediately subsequent to an acquisition.

Nursing home companies have historically grown through acquisitions, and
there is no assurance that suitable acquisitions can be identified or completed
in the future. Acquisitions are dependent on financing and on personnel, which
may not be available. Even if they are successfully completed, acquisitions may
entail unanticipated business risks or legal liabilities. Nursing homes face
federal, state and local governmental regulation. Failure to comply with
applicable laws and regulations could result, in extreme circumstances, in the
revocation of a facility's license. There can be no assurance that future
regulatory changes will not have an adverse impact. (See Regulation, Litigation
and Other Legislation.) At the same time, nursing home companies face tough
competition from new facilities with greater financing, whether from tax
exemptions, government support, endowments or charitable contributions that are
not available to profit-seeking corporations. Other competitors include
companies providing rehabilitation therapy, home care services, respiratory
treatment and clinical labs. Additional competitive factors may arise in the
future.

Nursing homes may also be affected by the proposed health care reforms.
Proposals include various insurance market reforms, significant reductions in
Medicare and Medicaid payments to providers, and stringent government cost
controls that would directly control insurance premiums and indirectly affect
the fees of hospitals, physicians and other health care providers, particularly
home oxygen respiratory services. It is not possible to predict what, if any,
reforms will be adopted in the future. (See Health Care Reform.) States may also
act to reduce Medicare and Medicaid reimbursement for long-term care.

Home care companies face uncertain payment structures. Presently, some
clients are charged more than others, and regulatory authorities have been
reviewing billing practices for fairness. Home care companies may also be
affected by proposed health care reforms, specifically those which may limit the
fees of health care providers, particularly home oxygen respiratory services. It
is not possible to predict what, if any, reforms will be adopted in the future.
(See Health Care Reform below.) Home care companies are expected to face the
same severe cost containment pressures facing other companies in the health care
industry.

<PAGE>
Health Care Reform. In late 1993, President Clinton submitted to Congress
proposed comprehensive health care reform legislation. Key elements in the
President's proposal included various insurance market reforms, the requirement
that business provide health insurance coverage for their full-time and part-
time employees, significant reductions in future Medicare and Medicaid payments
to providers, and stringent government costs controls that would directly
control insurance premiums and indirectly affect the fees of hospitals,
physicians and other healthcare providers. Several other comprehensive reform
proposals were introduced in the Congress, including alternatives introduced by
the House and Senate majority leaders in 1994. The proposals covered cost
controls on hospitals, insurance market reform to increase the availability of
group health insurance to small businesses, requirements that all businesses
offer health insurance coverage to their employees and the creation of a single
government health insurance plan that would cover all citizens. Health care
reform legislation is also pending in a number of states.

Certain aspects of the proposals offered in 1994, such as reductions in
Medicare/Medicaid payments and increased reliance on managed competition, if
adopted, could adversely affect the issuers in the Portfolio. Other aspects of
the proposals, such as universal health insurance coverage, could have a
positive impact on certain issuers in the Portfolio, for example by reducing the
amount of uncompensated care provided by hospitals. Congress is currently
debating major health care reform proposals. It is not possible at this time to
predict what, if any, reforms will be adopted by the Congress or various state
legislatures, or when such reforms will be adopted or implemented. No assurance
can be given that any such reforms will not have a material adverse impact on
the revenues and earnings of the issuers in the Portfolio.

Regulation, Litigation and Other Legislation. Companies in the health care
industry are subject to extensive federal, state and local governmental
regulation relating to licensing, conduct of operations, billing and
reimbursement, relationships with physicians, construction of new facilities,
expansion or acquisition of existing facilities and the offering of new
services. Failure to comply with applicable laws and regulations could result
in, among other things, the imposition of fines, temporary suspension of
admission of new patients to the facility or, in extreme circumstances,
exclusion from participation in government health care reimbursement programs
such as Medicare and Medicaid or the revocation of facility licenses. There can
be no assurance that future regulatory changes will not have an adverse impact
on any of the issuers in the Portfolio.

Companies in the health care industry continue to derive a substantial
portion of their revenue from the Medicare and Medicaid programs. Funds received
from these programs are subject to audit, which can result in retroactive
adjustments to such payments. These programs are highly regulated and subject to
frequent and, in certain cases, substantial changes. Recent changes designed to
control health care costs have resulted both in pressure on hospitals and other
health care providers to reduce their costs and in reduced levels of
reimbursement for a substantial portion of hospital procedures and costs.

Tax law changes have discouraged private contributions to hospitals and
health care facilities and have limited somewhat the use of tax-exempt bonds to
finance health care facilities, all of which could adversely affect the ability
of these facilities to finance their future capital needs and could have other
adverse effects which cannot be predicted. The Internal Revenue Service has
become more aggressive in penalizing hospitals for violating tax codes.

Manufacturing Companies

Growth in the manufacturing industry is closely linked to expansion in the
domestic and global economies. The ongoing global recession with its consequent
effect on industrial growth, employment and

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

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

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

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

<PAGE>
Natural Gas Companies

Stocks of companies engaged in the exploration and production, transmission
or distribution of natural gas may include integrated natural gas companies that
explore for and produce natural gas and transport and deliver it to customers;
natural gas transmission companies, commonly called pipelines, that sell at
wholesale to other pipelines and to distribution companies; natural gas
distribution companies that service residential, commercial and industrial
customers; natural gas exploration and production companies; and drilling
companies that service natural gas exploration and production companies. These
companies derive or are expected to derive at least 25% of their sales and
operating income from the natural gas industry. Factors which the Sponsors
believe may increase demand for natural gas include the encouragement of the use
of natural gas by the recent amendments to the Clean Air Act, the cleanliness of
natural gas as a fuel coupled with the increased concern about the environment,
use by electric utilities of natural gas as a primary fuel source as a result of
the repeal of the Fuel Use Act in 1987 and the increased use of natural gas in
co-generation of electricity. The profitability of natural gas operations could
be enhanced by the 1990 amendments to the Clean Air Act, which should increase
demand for natural gas products by electric utilities and other energy
consumers. The Commerce Department predicts that natural gas will be a growing
source of energy during the 1990s, because of projected higher costs for oil and
because natural gas is a cleaner burning fuel. The transportation industry may
make increased use of natural gas in order to meet more stringent mileage and
emissions requirements. There are significant constraints on increased use of
natural gas however, including a potential need for additional pipelines.
Additionally, companies involved in natural gas processing may experience
difficulties in the long term if product prices do not keep pace with potential
increases in gas costs.

Natural gas utilities are generally subject to extensive regulation by state
utility commissions or by the Federal Energy Regulatory Commission ("FERC"), in
the case of pipeline companies, which, for example, establish the rates that may
be charged and the appropriate rate of return on an approved asset base. FERC,
through Order 636, unbundles natural gas services and allows for additional
competition. Certain natural gas utilities have had difficulty from time to time
in persuading regulators, who are subject to political pressures, to grant rate
increases necessary to maintain an adequate return on investment and voters in
many states have the ability to influence limits on rate adjustments (for
example, through election of utilities commissioners, by initiative or by
referendum.) Any unexpected limitations could negatively affect the
profitability of natural gas utilities. In addition, gas pipeline and
distribution companies have had difficulties in adjusting to short and surplus
energy supplies, enforcing or being required to comply with long-term contracts
and avoiding litigation from their customers, on the one hand, or suppliers, on
the other.

General problems of the natural gas utility industry include difficulty in
obtaining timely and adequate rate increases, recovery of take-or-pay costs, the
uncertainty of transmission service costs for both interstate and intrastate
transactions, changes in tax laws which adversely affect a natural gas utility's
ability to operate profitably, reduced demand for natural gas in certain areas
of the country, competition from electricity and oil in the residential and
commercial markets, restrictions on operations and increased insurance premiums
and other costs and delays attributable to environmental considerations,
uncertain availability and increased cost of capital and availability and cost
of natural gas for resale. Pipeline companies may be subject to increased
competition because of approval by FERC of the construction of new pipelines and
delays because of the need to obtain FERC approval of new gas contracts. The
natural gas utility business is highly seasonal and weather sensitive. In
addition, natural gas competes directly with oil for industrial uses and large
industries have retained the flexibility to switch from natural gas to oil;
consequently, a fall in oil prices could prevent natural gas prices from rising
or result in a loss of customers because of conversions to oil. Natural gas
competes with coal in the utility market as a boiler fuel. Exploration and
production companies could be impacted in a period of declining natural gas
prices.

<PAGE>
Further, any future scientific advances concerning new sources of energy and
fuels or legislative changes with respect to the energy industry or the
environment could have a negative impact on the natural gas industry. And, while
legislation has recently been enacted to deregulate certain aspects of the
natural gas industry, no assurances can be given that new or additional
regulations will not be adopted. Each of the problems referred to could
adversely affect the financial stability of the issuers of any natural gas
stocks in a Fund.

Petroleum Refining Companies

According to the U.S. Department of Commerce, the factors which will most
likely shape the petroleum refining and marketing industry to 1996 and beyond
include the price and availability of oil, general global economic conditions,
changes in United States regulatory policies, international events and the
continued decline in U.S. production of crude oil. Possible effects of these
factors may be increased U.S. and world dependence on oil from both the
Organization of Petroleum Exporting Countries ("OPEC") and non-OPEC sources,
highly uncertain and potentially more volatile oil prices and a higher rate of
growth for natural gas production than for other fuels.

The refining industry is highly competitive with margins sensitive to supply
and demand cycles. Declining U.S. crude oil production will likely lead to
increased dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruption. The existence of surplus crude oil production
capacity and the willingness to adjust production levels are the two principal
requirements for stable crude oil markets. Without excess capacity, supply
disruptions in some countries cannot be compensated for by others.

Although unused capacity can contribute to market stability, it also creates
pressure to overproduce and contributes to market uncertainty. The likely
restoration of a large portion of Kuwait and Iraq's production and export
capacity over the next few years could lead to market disruptions in the absence
of substantial growth in world oil demand. Formerly, OPEC members attempted to
exercise control over production levels in each country through a system of
mandatory production quotas. The mandatory system has since been replaced with
a voluntary system. Production under the new system has had to be curtailed on
at least one occasion as a result of weak prices, even in the absence of
supplies from Iraq. The pressure to deviate from mandatory quotas, if they are
reimposed, is likely to be substantial and could lead to a weakening of prices.

Fluctuations in demand for oil-related products could also effect the
profitability of oil companies. If world oil demand increases additional
capacity and production will be required to compensate for expected sharp drops
in U.S. crude oil production and exports from the former Soviet Union. Only a
few OPEC countries, particularly Saudi Arabia, have the petroleum reserves that
will allow the required increase in production capacity to be attained. Given
the large-scale financing that is required, the prospect that such expansion
will occur soon enough to meet the increased demand is uncertain. However, no
assurance can be given that the demand for or the price of oil will increase or
that if either anticipated increase does take place, it will not be marked by
great volatility. Lower consumer demand due to increases in energy efficiency,
gasoline reformulations that call for less crude oil, warmer winters or a
general slowdown in economic growth in this country and abroad, could negatively
affect the price of oil and the profitability of oil companies. Cheaper oil
could also decrease demand for natural gas.

Refiners are subject to extensive federal, state and local environmental laws
and regulations that will pose serious challenges to the industry over the
coming decade. Refiners are likely to be required to commit considerable
resources to plant additions and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as the 1990
amendments to the Clean Air Act. If the cost of these changes is substantial
enough to cut deeply into profits, smaller refiners may

<PAGE>
be forced out of the industry entirely. Additionally, refining operations are
hazardous due, in part, to the highly flammable nature of crude oil, natural gas
and refined products. As a result, refining operations are subject to personal
injury and property damage incidents.

Any future scientific advances concerning new sources of energy and fuels or
legislative changes relating to the energy industry or the environment could
have a negative impact on the petroleum product or natural gas industry. While
legislation has been enacted to deregulate certain aspects of the oil industry,
no assurances can be given that new or additional regulations will not be
adopted. Each of the problems referred to above could adversely affect the
financial stability of the issuers of any petroleum industry stocks in a
Portfolio.

Semiconductor, Computer and Electronics Equipment Companies

A Fund may be concentrated in stocks of issuers that manufacture
semiconductors, computers and electronics equipment. These kinds of companies
present certain risks that may not exist to the same degree in other industries.
The industry is rapidly developing and highly competitive, both domestically and
internationally. Technology stocks, in general, tend to be relatively volatile
as compared to other types of investments. While volatility may create
investment opportunities, it does entail risk. Companies throughout the
technology field include many smaller and less seasoned companies. These types
of companies may present greater opportunities for capital appreciation, but
usually involve greater risks. These companies may have limited product lines,
markets or financial resources, or may have limited management or marketing
personnel. In addition, the securities that have wide institutional holding are
more volatile than the securities with lower institutional holding. The
industry is also strongly affected by worldwide scientific and technological
developments and the products of these companies may rapidly fall into
obsolescence. Certain of these companies may offer products or services that
are subject to (or may become subject to) government regulation and may,
therefore, be affected adversely by government policies. Other factors that
characterize the industry include low barriers to entry, short product life
cycles, aggressive pricing and reduced profit margins, dramatic and often
unpredictable changes in growth rates, a high degree of investment needed to
maintain competitiveness, frequent new product introduction, the need to enhance
existing products, intense competition from large established companies, and
potential competition from small start up companies. In addition, these
companies are subject to events that affect manufacturing companies in general,
such as increases in material or labor costs, changes in distribution channels
and the need to manage inventory levels in line with product demand.

The Semiconductor Industry. The semiconductor industry is characterized by
rapid change in both product and manufacturing process technology. As a result,
companies are required to introduce, on an ongoing basis, more advanced process
technologies in order to respond to customer requirements. Shortages of supplies
for raw materials and equipment could occur in the future in various critical
materials and equipment due to interruption of supply or increased industry
demand. Any such shortages could result in higher costs or production delays
which could have a material adverse effect on an issuer's business and financial
condition. The industry is subject to a variety of governmental regulations
related to the use, discharge and disposal of toxic, volatile or otherwise
hazardous materials used in the manufacturing process. Any failure by a company
to use, discharge or dispose of hazardous materials appropriately could subject
it to substantial liability or could require it to suspend or adversely modify
its manufacturing operations. The semiconductor industry historically has been
characterized by wide fluctuations in product supply and demand. From time to
time, the industry also has experienced significant downturns. These downturns
have been characterized by diminished product demand, production overcapacity
and accelerated erosion of average selling prices of semiconductor products. In
some cases, these downturns have lasted for more than a year. No assurance can
be given that any company's business will not be adversely affected in the
future by cyclical conditions in the semiconductor industry. Furthermore, there
can be no

<PAGE>
assurance that changes in environmental regulations in the future will not
require companies to make significant capital expenditures to modify, supplement
or replace equipment or to change methods of disposal or discharge or the manner
in which they manufacture products or operate their business. Fixed costs
represent a substantial portion of the total operating costs of a semiconductor
manufacturing operation. As a result, any failure by a company to operate at
near full capacity, whether due to mechanical failure, lack of orders, fire or
natural disaster, or other causes could result in diminished profitability or
losses. The consequences of a fire, natural disaster or similar occurrence
affecting production could be particularly significant for any company. These
companies are also dependent to a substantial degree upon skilled professional
and technical personnel and there is considerable competition for the services
of qualified personnel in the semiconductor industry.

Utilities

The ability of utilities to pay dividends is dependent on various factors,
including the percentage of earnings paid out in the form of dividends ("pay out
ratio"), the rates they may charge their customers, the demand for a utility's
services and the cost of providing those services. Utilities, in particular
investor-owned utilities, are subject to extensive regulation relating to the
rates which they may charge customers. Utilities can experience regulatory,
political and consumer resistance to rate increases. Utilities engaged in long-
term capital projects are especially sensitive to regulatory lags in granting
rate increases. Any difficulty in obtaining timely and adequate rate increases
could adversely affect a utility's results of operations.

The demand for a utility's services is influenced by, among other factors,
competition, weather conditions and economic conditions. Electric utilities,
for example, have experienced increased competition as a result of the
availability of other energy sources, the effects of conservation on the use of
electricity, self-generation by industrial customers and the generation of
electricity by co-generators and other independent power producers. Also,
increased competition will result from the recent approval by the Federal Energy
Regulatory Commission ("FERC") of a proposal that forces electric utilities to
open their transmission systems to power generated by competitors. Utilities
which distribute natural gas also are subject to competition from alternative
fuels, including fuel oil, propane and coal. In addition, there is the
possibility in the future of a trend toward utilities breaking off assets under
the constraints of competition, for example, spinning off generating plants,
which will no longer be regulated. The movement to introduce competition in the
investor-owned electric utility industry is likely to induce them to maintain
rates as low as possible. In this effort to keep rates low, utilities may have
trouble raising rates to completely recover investment in generating plant.

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

<PAGE>
legislation and regulation could include, among other things, regulation of
so-called electromagnetic fields associated with electric transmission and
distribution lines as well as emissions of carbon dioxide and other so-called
greenhouse gases associated with the burning of fossil fuels. Compliance with
these requirements may limit a utility's operation, offset by credits having
been built up, or require substantial investments in new equipment and, as a
result, may adversely affect a utility's results of operations.

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

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

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

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

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

The Public Utility Holding Company Act of 1935 (the "1935 Act") regulates,
among other things, certain acquisitions of voting securities of electric
utility companies and gas utility companies by anyone who is an "affiliate" of a
public utility company (a person or organized group of persons that directly or
indirectly owns, controls or holds with power to vote 5% or more of the
outstanding voting securities of a public utility company.) In addition, the
1935 Act requires a "holding company" (among other categories, a company which
directly or indirectly owns, controls or hold with power to vote 10% or more of
the outstanding voting securities of a public utility company or a "holding
company") to register as such with the Securities and Exchange Commission and be
otherwise subject to certain restrictions on the acquisition of securities and
other interests in public utility companies. No Fund intends to make any
investment that would result in its becoming subject to the 1935 Act. If a Fund
were considered to be a member of an organized group of persons, the 1935 Act
might limit the Fund's acquisition of the voting securities of public utility
companies by reason of the control by the group of 5% or more of the voting
securities of a public utility company.

New legislation will eliminate some of the barriers that prevent utilities
from offering telecommunications services, providing opportunities for
additional revenue and earnings growth. Currently, registered utilities must
obtain Securities and Exchange Commission approval to provide telecommunications
services. The Telecommunications Act of 1996; Communication Decency Act of 1996
(the "Communications Act"), which became law on February 8, 1996, permits
greater competition, ending restrictions on utilities entering
telecommunications markets and repealing SEC authority under the 1935 Act. Many
utilities are considering partnerships with communications companies. A utility
company, in leveraging its network to provide telecommunications, faces many
options with different levels of investment and risk.

The following illustrates the performance of electric utility stocks compared
to stocks in general and highgrade corporate bonds over the last twenty years:

<PAGE>

COMPARISON OF ANNUAL RETURNS OF UTILITIES, INDUSTRIALS AND BONDS

Moody's Electric Standard & Poor's Long-Term
Utility Average 500 Index Corporate Bonds
--------------- --------------- ---------------

1974 -24.40% -26.39% -3.06%
1975 47.30% 37.16% 14.64%
1976 28.40% 23.57% 18.65%
1977 11.20% -7.41% 1.71%
1978 -3.90% 6.39% -0.07%
1979 4.80% 18.20% -4.18%
1980 8.10% 32.27% -2.62%
1981 19.70% -5.01% -0.96%
1982 34.90% 21.44% 43.79%
1983 14.50% 22.56% 4.70%
1984 22.70% 6.10% 16.39%
1985 28.10% 31.57% 30.90%
1986 29.90% 18.76% 19.85%
1987 -9.10% 5.10% -0.27%
1988 16.60% 16.33% 10.70%
1989 30.60% 31.47% 16.23%
1990 3.20% -3.27% 6.78%
1991 30.00% 30.41% 19.89%
1992 4.00% 7.67% 9.39%
1993 10.40% 9.97% 13.19%
1994 -16.36% 1.30% -5.76%
1/1/95 to 16.72% 19.98% 16.14%
6/30/95

__________________________
Sources: The Moody's Electric Utility Average represents a market
capitalization weighted average of 24 selected domestic public utility stocks,
published since 1929 by Moody's Investors Service. The S&P 500 Index is
composed of 500 selected common stocks, most of which are listed on the New York
Stock Exchange. It contains a variety of companies with diverse capitalization,
market-value weighted to represent the overall market. Data on long-term
corporate bonds are compiled by Ibbotson Associates, based primarily on the
Salomon Brothers Long-Term High-Grade Corporate Bond Index, which includes
nearly all Aaa- and Aa rated bonds.

<PAGE>

The returns shown in the chart above represent changes in security prices
during each year plus income distributed, divided by the price on the first day
of the year. The average annualized returns for 1972 through 6/30/95 were
15.14% for the Moody's Electric Utility Average, 15.10% for the Standard &
Poor's 500 Index and 11.18% for Ibbotson Associates' corporate bond composite.
For example, $1,000 invested on January 1, 1975 in Moody's Electric utility
average would have been worth $17,992.34 by June 30, 1995; $1,000 invested in
the Standard & Poor's 500 Index would have been worth $17,852.36; $1,000 in long
term corporate bonds would have been worth $8,774.50, by the end of this period.
These represent compounded returns, assuming income distributed during each year
was reinvested on the first day of the succeeding year. They do not reflect any
deduction for commissions or taxes. These figures represent past performance,
and are no guarantee of future results. Of course, an investor in a Fund may
experience somewhat lower returns because of sales charges, commissions and Fund
expenses, as well as the fact that any Fund may hold many stocks different from
the Moody's Electric Utility Average and may not be fully invested at all times.

The Telecommunications Industry

The telecommunications industry is subject to varying degrees of competitive
regulatory, political and economic risk which may affect the price of the stocks
of companies involved in such industry. Such risks depend on a number of factors
including the country in which a company is located. Telecommunications
companies in both developed and emerging countries are undergoing significant
change due to varying and evolving levels of governmental regulation or
deregulation and technological advances as well as other factors. As a result,
competitive pressures are intense and the securities of such companies may be
subject to rapid price volatility. In addition, companies offering telephone
services are experiencing increasing competition from each other and alternate
service providers. The cellular telephone industry also faces increased
competition as the Federal Communications Commission ("FCC") has sold additional
spectrum to personal communications service providers, doubling the competitors
in a service area. All telecommunications companies in both developed and
emerging countries are subject to the additional risk that technological
innovations will make their products and services obsolete.

United States. A Portfolio may be concentrated in stocks of companies that
are engaged in providing local, long-distance and cellular services, in the
manufacture of telecommunications products and in a wide range of other
activities including directory publishing, information systems and the operation
of voice, data and video telecommunications networks. Technological innovations
in fiber optics, cellular products and services, voice messaging, call waiting
and automatic dialing offer additional potential for significant expansion.
Advances like formation of a national cellular grid may also contribute to the
growth of this industry. A Fund may contain securities of the Regional Bell
Holding Companies ("RBHCs") which were spun off from AT&T in 1984 pursuant to
approval of the U.S. District Court for the District of Columbia (the "Court").
The RBHCs include Ameritech Corporation, Bell Atlantic Corporation, BellSouth
Corporation, NYNEX Corporation, Pacific Telesis Group, SBC Communicationsand
U.S. West Communications. These companies provide near monopoly local and
intrastate telephone service as well as cellular and other generally unregulated
services. A Fund may contain the securities of certain independent telephone
companies which are subject to regulation by the FCC and state utility
commissions and of certain long-distance telecommunications carriers, certain
telecommunications equipment manufacturers and certain non-U.S. companies which
provide telecommunications services or equipment mainly outside the United
States. International communications facilities in the United States are also
subject to the jurisdiction of the FCC, and the provision of service to foreign
countries is subject to the approval of the FCC and the appropriate foreign
governmental agencies.

<PAGE>
The Telecommunications Act of 1996. The Telecommunications Act of 1996;
Communication Decency Act of 1996 (the "Communications Act"), which became law
on February 8, 1996, permits greater competition in the local and long distance
telephone and equipment manufacturing markets. In addition, it changes the
regulatory structure governing the Regional Bell Holding Companies ("RBHCs")
from one based on rate of return to one based on price. Prior to passage of the
Communications Act, the RBHCs provided local telephone service, including
exchange access for long-distance companies, directory advertising and new
customer equipment. Many RBHCs, pursuant to waivers, could also engage in a
broad range of businesses including foreign consulting, servicing computers and
marketing or leasing office equipment. The Communications Act replaces the 1984
consent decree. The RBHCs will be allowed to provide long distance services,
video services and manufacturing. AT&T, which since the consent decree of 1984
has provided interexchange long distance service in competition with numerous
other providers, will be allowed to also provide local telephone service and
video services. AT&T also provides certain other products, services and
customer equipment.

The independent telephone companies, like the RBHCS, provide local
telecommunications service, but operate in more rural areas. These companies
were not subject to the consent decree and therefore could provide the full
range of telecommunications services including local exchange and long distance
services, the installation of business systems, telephone consulting, the
manufacture of telecommunications equipment, operation of voice and data
networks and directory publishing. Cellular service is providing an increasing
component of the revenues of the RBHCs and independent telephone companies. Both
the RBHCs and independents are subject to regulation by the FCC and state
regulatory authorities. Long-distance companies which provide long-distance
telecommunications services are subject to regulation by the FCC. The
long-distance industry is consolidating into larger carriers and will experience
increased competition as local telphone companies and cable television operators
enter the long distance market. Conversely, local exchange carriers, be they
RBHC's or independents will also face competition in their local markets form
long distance providers and cable television operators.

Business conditions of the telecommunications industry may affect the ability
of the issuers of the Securities in the Fund to meet their obligations. The FCC
and certain state utility regulators have introduced certain incentive plans
such as price-cap regulation. Price-cap regulation offers local exchange
carriers an opportunity to share in higher earnings provided they become more
efficient. These new approaches to regulation by the FCC and various state or
other regulatory agencies result in increased competition, and could lead to
greater risks as well as greater rewards for operating telephone companies.
Technology has tended to offset the effects of inflation and is expected to
continue to do so. Under traditional regulation, continuing cost increases, to
the extent not offset by improved productivity and revenues from increased
volume of business, would result in a decreasing rate of return and a continuing
need for rate increases. The long-distance industry has been increasingly opened
to competition over the last number of years. As a result, the major
long-distance companies compete actively for market share. Indeed, to meet
increasing competition, telephone companies will have to commit substantial
capital, technological and marketing resources. Many telecommunications
companies are currently considering partnerships with utilities, positioning
themselves to provide high-speed, two-way video services and high quality
telephony.

Cellular and cable companies provide wireless services including paging,
dispatch and cellular services throughout the U.S. Most of the RBHCS,
independents as well as long distance companies, are seeking to increase their
share of the cellular market in view of perceived future growth prospects. It is
unclear what effect, if any, increased competition between wireless and
traditional services will have on the telecommunications industry. Other
potential competition for local service has also developed. The deregulated
cellular telephone industry has a limited operating history and there is
significant uncertainty regarding its future, particularly with regard to
increased competition, the continued growth in the number

<PAGE>
of customers, the usage and pricing of cellular services, and the cost of
providing cellular services, including the cost of attracting new customers,
developing new technology and the ability to obtain licenses to provide cellular
services. Recent industry developments may provide increased competition and
reduced revenues from cellular service for RBHCs and independent telephone
companies. The uncertain outcomes of future labor agreements and employee and
retiree benefit costs may also have a negative impact on profitability.
Telephone usage, and therefore revenues, could also be adversely affected by any
sustained economic recession. Each of these problems would adversely affect the
profitability of the telecommunications issuers of the Securities in the Fund
and their ability to meet their obligations.

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

In addition, the Portfolio may contain securities issued by telephone
companies which provide telecommunications services or equipment outside the
United States; these companies are subject to regulation by foreign governments
or governmental authorities which have broad authority regulating the provision
of telecommunications services and the use of certain telecommunication
equipment. Consequently, certain Securities in the Fund may be affected by the
rules and regulations adopted by regulatory agencies in other countries from
time to time.

Foreign Telecommunications Issues. Many European, Latin American and Asian
telephone systems appear to have significant growth potential. The international
sector in the Portfolio consists predominantly of former government-owned
telecommunications systems that have been privatized in stages. Most are similar
to AT&T before 1984 in their dominance of local, long-distance and international
service within their country. As governments privatize their systems by selling
stock to the public, telephone service is likely to expand and, as a result of
greater efficiency, potentially become more profitable. On the other hand, the
countries are allowing more companies to compete with the recently privatized
companies. Many of these companies have expanded into other countries. The
Sponsors believe there is significant potential for expansion of telephone
services in foreign countries. Of course, there can be no assurance of whether
or when telephone service in these countries will expand or its effects on the
non-U.S. companies represented in any Portfolio.

Foreign Issuers

If certain of the Securities in a Portfolio are Securities of foreign
issuers, an investment in the Fund involves certain risks that are different
from the risks of a fund that invests entirely in securities of domestic
issuers. These investment risks include future foreign political and economic
developments, the possible establishment of exchange controls or other
governmental laws or restrictions which might adversely affect the payment or
receipt of payment of dividends on the relevant Securities and currency risk.
With respect to certain countries, there is the possibility of expropriation of
assets, confiscatory taxation, economic, political or social instability or
diplomatic developments which could affect the value of investments in those
countries. In selecting the non-U.S. Securities in the Portfolio, the Sponsors
have attempted to minimize this country risk. In addition, for the foreign
issuers that are not subject to the reporting requirements of the Securities
Exchange Act of 1934, there may be less publicly available

<PAGE>
information than is available from a domestic issuer. Also, foreign issuers are
not necessarily subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
issuers. However, the Sponsors anticipate that adequate information will be
available to allow the Sponsors to supervise the Portfolio.

In addition, earnings and dividends for foreign companies are in non-U.S.
currencies. Therefore, the U.S. dollar value of the stock and dividends of these
companies will vary with fluctuations in the U.S. dollar foreign exchange rates
for the relevant currencies. Most foreign currencies have fluctuated widely in
value against the United States dollar for many reasons, including supply and
demand of the respective currency, the soundness of the world economy and the
strength of the respective economy as compared to the economies of the United
States and other countries. Therefore, for any securities of issuers whose
earnings are stated in foreign currencies, or which pay dividends in foreign
currencies or which are traded in foreign currencies, there is a risk that their
United States dollar value will vary with fluctuations in the United States
dollar foreign exchange rates for the relevant currencies.

On the basis of the best information available to the Sponsors at the present
time none of the Securities in subject to exchange control restrictions under
existing law which would materially interfere with payment to the Fund of
dividends due on, or proceeds from the sale of, the Securities either because
the particular jurisdictions have not adopted any currency regulations of this
type or because the issues qualify for an exemption, or the Fund, as an
extraterritorial investor, has qualified its purchase of the Securities as
exempt by following applicable "validation" or similar regulatory or exemptive
procedures. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payments to the Fund.

In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of international
securities in the Portfolio and on the ability of the Fund to satisfy its
obligation to redeem Units tendered to the Trustee for redemption.

American Depositary Shares and Receipts. Many Securities of foreign issuers
are purchased in ADR form in the United States. ADRs evidence American
Depository Shares which represent common stock deposited with a custodian in a
depositary. American Depositary Shares ("ADSs"), and receipts therefor
("ADRs"), are issued by an American bank or trust company to evidence ownership
of underlying securities issued by a foreign corporation. These instruments may
not necessarily be denominated in the same currency as the securities into which
they may be converted. Generally, ADSs and ADRs are designed for use in the
United States securities markets. For purposes of this Prospectus, the term ADR
generally includes ADSs.

ADRs represent common stock deposited with a custodian in a depositary. ADRs
may be sponsored or unsponsored. In an unsponsored facility, the depositary
initiates and arranges the facility at the request of market makers and acts as
agent for the ADR holder, while the company itself is not involved in the
transaction. In a sponsored facility, the issuing company initiates the
facility and agrees to pay certain administrative and shareholder-related
expenses. Sponsored facilities use a single depositary and entail a contractual
relationship between the issuer, the shareholder and the depositary; unsponsored
facilities involve several depositaries with no contractual relationship to the
company. The terms and conditions of depositary facilities may result in less
liquidity or lower market prices for ADRs then for the underlying shares.

For those Securities that are ADRs, currency fluctuations will also affect
the U.S. dollar equivalent of the local currency price of the underlying
domestic share and, as a result, are likely to affect the value of the ADRs and
consequently the value of the Securities. The depositary bank that issues an ADR

<PAGE>
generally charges a fee, based on the price of the ADR, upon issuance and
cancellation of the ADR. This fee would be in addition to the brokerage
commissions paid upon the acquisition or surrender of the security. In
addition, the depositary bank incurs expenses in connection with the conversion
of dividends or other cash distributions paid in local currency into U.S.
dollars and such expenses are deducted from the amount of the dividend or
distribution paid to holders, resulting in a lower payout per underlying share
represented by the ADR than would be the case if the underlying share were held
directly. Furthermore, foreign investment laws in certain countries may
restrict ownership by foreign nationals of certain classes of underlying shares.
Accordingly, the ADR representing a class of securities may not possess voting
rights, if any, equivalent to those in respect of the underlying shares.
Certain tax considerations, including tax rate differentials, arising from
applications of the tax laws of one nation to the nationals of another and from
certain practices in the ADR market may also exist with respect to certain ADRs.
In varying degrees, any or all of these factors may affect the value of the ADR
compared with the value of the underlying shares in the local market. ADRs are
registered securities pursuant to the Securities Act of 1933 and may be subject
to the reporting requirements of the Securities Exchange Act of 1934.

The Real Estate Industry

Certain Portfolios are considered to be concentrated in common stocks of
companies engaged in real estate asset management, development, leasing,
property sales and other related activities. Investment in securities issued by
these real estate companies should be made with an understanding of the many
factors which may have an adverse impact on the credit quality of the particular
company or industry. Generally, these include economic recession, the cyclical
nature of real estate markets, competitive overbuilding, unusually adverse
weather conditions, changing demographics, changes in governmental regulations
(including tax laws and environmental, building, zoning and sales regulations),
increases in real estate taxes or costs of material and labor, the inability to
secure performance guarantees or insurance as required, the unavailability of
investment capital and the inability to obtain construction financing or
mortgage loans at rates acceptable to builders and purchasers of real estate.
Additional risks include an inability to reduce expenditures associated with a
property (such as mortgage payments and property taxes) when rental revenue
declines, and possible loss upon foreclosure of mortgaged properties if mortgage
payments are not paid when due.

Hong Kong. Recently, in the wake of Chinese economic development and
reform, certain Hong Kong real estate companies and other investors began
purchasing and developing real estate in southern China, including Beijing, the
Chinese capital. By 1992, however, southern China began to experience a rise in
real estate prices, increases in construction costs and a tightening of credit
markets. Any worsening of these conditions could affect the profitability and
financial condition of Hong Kong real estate companies and could have a
materially adverse effect on the value of a Hong Kong Portfolio.

Real Estate Investment Trusts. REITs are financial vehicles that have as
their objective the pooling of capital from a number of investors in order to
participate directly in real estate ownership or financing. REIT's are
generally fully integrated operating companies that have interests in income-
producing real estate. REITs are differentiated by the types of real estate
properties held and the actual geographic location of properties and fall into
two major categories: equity REITs emphasize direct property investment, holding
their invested assets primarily in the ownership of real estate or other equity
interests, while mortgage REITs concentrate on real estate financing, holding
their assets primarily in mortgages secured by real estate. REITS obtain
capital funds for investment in underlying real estate assets by selling debt or
equity securities on the public or institutional capital markets or by bank
borrowings. Thus, the returns on common equities of the REITs in which the Fund
invests will be significantly affected by changes in costs of capital and,
particularly in the case of highly "leveraged" REIT's, i.e. those with large
amounts of borrowings outstanding, by changes in the level of interest rates.

<PAGE>
The objective of an equity REIT is to purchase income-producing real estate
properties in order to generate high levels of cash flow from rental income and
a gradual asset appreciation, and they typically invest in properties such as
office, retail, industrial, hotel and apartment buildings and health care
facilities.

Overbuilding of commercial real estate projects in the 1980's often resulted
in increased vacancy rates, intense competition for tenants, declining rents and
deteriorating physical conditions. Coupled with the depressed real estate
market, it became more difficult to obtain financing from traditional sources.
Various REITs have acquired substantial established properties at depressed
prices and have renovated existing properties to enhance their potential.
Factory outlets, a new type of retail property, attract shoppers by offering
name-brand merchandise at steep discounts, which can result in higher occupancy
and eventually, higher rents. Expanding store size and diversification, a trend
of the 1990's, has been enhanced by REIT investments, which have supported the
recovering real estate market.

Investment in a Fund consisting of REITs should be made with an understanding
of the many factors that may have an adverse impact on the performance of a
particular REIT, its cash available for distribution, the credit quality of a
particular REIT or the real estate industry generally (described above.)
Additional risks include the financial health of tenants, e.g., consolidation
and increased competition in the retail industry, dependency on the management
skill of both the officers of the REITs and the managers of the underlying
properties, variations in rental income and space availability and vacancy rates
in terms of supply and demand. Potential conflicts of interest often exist with
a founding developer or outside manager.

Performance by individual REIT's is dependent on the types of real estate
investments held. For example, the effect of interest rate fluctuations will be
less on equity REITs than on mortgage REITs and the nature of the underlying
assets of an equity REIT may be considered more tangible than that of a mortgage
REIT. In addition, equity REITs may be affected by changes in the value of the
underlying property it owns.

REIT investment managers may concentrate investments in specific geographic
areas, depending on their proximity to and knowledge of local real estate
conditions; the impact of economic conditions on REITs can also be expected to
vary with geographic location. Investors should also be aware that REITs may not
be diversified and are subject to the risks of financing projects. REITs are
also subject to defaults by borrowers, self-liquidation, the maker's perception
of the REIT industry generally, and the possibility of failing to qualify for
tax-free pass-through of income under the Internal Revenue Code of 1986, as
amended (the "Code"), and to maintain exemption from the Investment Company Act
of 1940. In the event of a default by a borrower or lessee, the REIT may
experience delays in enforcing its rights as a mortgagee or lessor and may incur
substantial costs associated with protecting its investments.

REIT Taxation. Each REIT will generally state its intention to operate in
such manner as to qualify for taxation as a "real estate investment trust" under
Sections 856-860 of the Code, although, of course, no assurance can be given
that each REIT will at all times so qualify.

The REIT provisions of the Code contain three gross income requirements:

1. At least 75% of the REIT gross income must be derived directly or
indirectly from statutorily specified investments in real property or mortgages
on real property.

2. At least 95% of the REIT gross income must be of the type meeting the 75%
requirements or must be derived from dividends, interest, or gains from the sale
or disposition of stock or securities.

<PAGE>
3. Short-term gains from the disposition of stock or securities, gains from
the disposition of property where the property was held primarily for sale to
customers in the ordinary course of business, and gains from the disposition of
real property held for less then 4 years must total less than 30% of the REIT's
gross income.

At the close of each quarter of a REIT's taxable year, it also must satisfy
three tests relating to the nature if its assets. First, at least 75% of the
value of its total assets must be represented by real estate assets, cash, cash
items, and government securities. In addition, not more than 25% of this total
assets may be represented by securities (other than those includible in the 75%
asset class.) Also, of the investments included in the 25% asset class, the
value of any one issuer's securities owned may not exceed 5% of the value of its
total assets, nor can it own more than 10% of any one issuer's outstanding
voting securities.

So long as an issuer qualifies as a REIT, it will, in general, be subject to
Federal income tax only on income than is not distributed to stockholders. In
order to qualify as a REIT for any taxable year, a REIT must, among other
things, distribute to its stockholders an amount at least equal to the sum of
95% of its taxable income.

Failure to qualify for taxation as a REIT in any taxable year will subject an
issuer to tax on its taxable income at regulate corporate rates. Distributions
to stockholders in any year in which an issuer fails to qualify as a REIT will
not be deductible by the issuer. Unless entitled to relief under specific
statutory provisions, the issuer would not qualify for taxation as a REIT for
the next four taxable years after failing to qualify in any year.

Each REIT may also be subject to state, local or other taxation in various
state, local or other jurisdictions.

Banks and Thrifts

A Trust is concentrated in Securities of issuers in the banking and thrift
industry and, as a result, the value of the Units of the Trust will be
susceptible to the risk of such concentration and to factors affecting the
banking and thrift industry ("Banking Industry"). While the factors affecting
the U.S. banks, bank holding companies and thrifts are varied and complex, the
risks of Investment in such Securities outlined below should be noted.

The activities of U.S. banks and thrifts, and their holding companies, are
subject to comprehensive federal and state regulation., which regulation is
expected to continue to change over the life of the Trust. The enactment of any
new legislation or regulations, or any change in interpretation or enforcement
of existing laws or regulations, may affect the profitability of participants in
the Banking Industry.

Significant developments in the Banking Industry in the 1980s included:
dramatic increases in unregulated interest rates, followed by the deregulation
of deposit interest rates, widespread insolvencies in the thrift industry, the
relaxation of thrift financial reporting requirements, and expansion of the
permissible activities of thrifts; regional bank holding company expansion; the
subsequent tightening of regulations when the thrifts did not recover; extensive
downgrades of banks and bank holding companies due primarily to deterioration in
asset quality and the attendant impact on earnings and capital; and finally the
enactment of significant federal legislation to strengthen regulation of banks,
savings banks and thrifts, to recapitalize the insolvent Savings Association
Insurance Fund (SAIF, formerly, the Federal Savings and Loan Insurance
Corporation) and the weakened Bank Insurance Fund (BIF, formerly the Permanent
Insurance Fund of the Federal Deposit Insurance Corporation) and to restructure
the Industry.

<PAGE>
That legislation resulted in the seizure of many failed thrifts (and a
significant shrinkage of the thrift industry in the early 1990s).
Simultaneously, annual failures of federally insured banks peaked, according to
the Federal Deposit Insurance Corporation, at 168 in 1990 (the total assets of
such failed banks peaked in 1991 at $64.3 billion). Additional federal
legislation in 1991 mandated early and aggressive regulatory intervention for
problem institutions and tightened the regulation of foreign banks. Thereafter
the number of insured bank failures diminished to a 1995 total of 6 (with total
assets of less than $0.9 billion), the lowest level in 14 years and a very low
number for the period following the deregulation of interest rates. It is
impossible to predict whether, or if so when and how severely, this trend will
reverse.
The Banking Industry is particularly susceptible to certain economic factors,
such as interest rate changes, economic conditions both nationally and in
particular regions or industries serviced by these institutions, adverse
developments in markets in which particular banks or thrifts have concentrations
of exposure, or volatility in political conditions, or the fiscal or monetary
policies of governmental entities.

The operations of banks and thrifts are highly interest rate sensitive.
Loose or tight credit policies (potentially leading to inflationary or
deflationary economies, respectively) imposed by the Federal Reserve could
adversely affect the banking and thrift industry. Investors should note that
monetary policies of the Federal Reserve are subject to significant
fluctuations. Banks may be at disproportionately high risk in a protracted
recession.

Certain banks and thrifts the securities of which may be included in a
Portfolio may have loan portfolios concentrated in highly leveraged
transactions, real estate loans, agricultural loans, or loans to less developed
countries, which transactions and loans bank regulators consider risky.

Some large banks have developed substantial off-balance sheet positions that
may significantly affect earnings. For example, some banks create, market and
act as the counterparty to derivative contracts that enable other banks (which
also may be included in a Portfolio) and corporate customers to isolate and
manage various forms of financial risk, e.g., interest-rate risk through swap
contracts. Although regulators address such exposures through various capital,
reporting, disclosure and internal risk-control requirements, in an electronic
banking environment these risk controls can fail and result in substantial
losses that are incurred too quickly for effective remedy short of receivership.

Federal regulators require banks and thrifts to maintain minimum capital
requirements. To the extent additional equity is issued to meet those
requirements, outstanding equity holdings will be diluted. No assurance can be
given that any bank or thrift will maintain access to the public credit markets
on affordable terms to meet its capital or short term cash needs. A Trust may
invest in banks and thrifts that are not members of the Federal Reserve System
or whose deposits are not insured by the FDIC. Units of a Trust are not
deposits or obligations of, or guaranteed or endorsed by, any bank or other
insured depository institution and are not insured by the FDIC, the Federal
Reserve Board or any other governmental agency.

Banks and thrifts are subject to substantial competition from other banking
and thrift institutions and from other financial service institutions for
deposits, nondeposit funding, corporate customers and retail customers. The
latter competitors, which are subject to less government regulation than banks
and thrifts, provide a broad range of financial products, and include foreign
banks, insurance companies, brokerage and securities firms, mutual funds,
investment banks and diversified financial service companies. As a result of
such competition worldwide, depository flows have become highly liquid, and
subject to dramatic shifts among different forms of financial instruments.

<PAGE>
Congress has been considering legislation that would equalize the deposit
insurance assessments to support the BIF and SAIF, which have become widely
disparate recently to the competitive disadvantage on SAIF-insured entities.
Such legislation might eventually lead to a merger of the two funds. No
assurance can be given as to what form such legislation would take, if enacted,
or what effects any new legislation or regulation would have on the banking and
thrift industry.

To the extent banks and thrifts are unable to pass deposit insurance premiums
on to customers because of competitive pressures (e.g., from money market mutual
funds), such premiums must be absorbed. Any premium increase may lead to
insolvency of some problem banks and thrifts. No assurance can be given that
statutory provisions for insuring all deposits up to $100,000 (which may apply
to multiple accounts held by the same depositor in certain different rights and
capacities, including through pension plans and similar entities) will not be
further restricted. Such restrictions could adversely affect depositor
confidence generally, which could lead to deposit runs. Investors should note
that deposit insurance does not cover equity issued by banks and thrifts and
therefore is no guarantee of the market value of such securities.

A substantial consolidation is underway in the Banking Industry. Congress
has enacted legislation permitting nationwide bank holding company expansion
starting in 1995 and nationwide bank branching starting in 1997, and federal
thrifts have been free to branch nationwide since 1992. Banks and thrifts that
seek economies of scale and risk diversification through geographic growth may
encounter increased risks from increased costs and breakdown of internal
controls. The Sponsors are unable to predict the impact or the likelihood of
any consolidation with respect to the particular Securities in any Portfolio.

To the extent a bank's or thrift's portfolio is concentrated in assets
related to a particular industry or geographic region, the bank's or thrift's
operating results will be subject to additional risks associated with such
industry or region. A significant downgrading of a credit rating could
jeopardize the affected bank's or thrift's access to public credit markets.
Deposits from foreign corporations, individuals and governments constitute a
substantial share (frequently a majority) of total deposits of money center
banks, including their foreign branches. The level of such deposits is
generally subject to the risks of foreign currency exchange rates, comparative
interest rate changes and capital flight restrictions.

Congress has been considering legislation to repeal the Glass-Steagall Act
and replace it with legislation under which bank holding companies could
significantly expand their securities activities. If enacted, such laws could
lead to more failures as a result of increased competition and risk, and could
come at the cost of new limitations on the insurance activities of banks, which
might deprive them of earning opportunities. Failure to enact such legislation,
on the other hand, may lead to declining earnings and an inability to compete
with unregulated financial institutions, while permitting expansion into the
insurance business with its attendant risks.

Standard & Poor's Indexes

The S&P 500 Index. The S&P 500 Index is composed of 500 selected common
stocks, most of which are listed in the New York Stock Exchange. This well-known
index, originally consisting of 233 stocks in 1923, was expanded to 500 stocks
in 1957 and was restructured in 1976 to a composite consisting of industrial,
financial and transportation market sectors. It contains a variety of companies
with diverse capitalization, market-value weighted to represent the overall
market. The Index represents approximately 69% of U.S. stock market
capitalization. At present, the mean market capitalization of the companies in
the S&P 500 Index is approximately $3.346 billion.

The following table shows the performance of the S&P 500 Index for 1960
through 1995. Stock prices fluctuated widely during the period and were higher
at the end than at the beginning. The results

<PAGE>
shown should not be considered as a representation of the income yield or
capital gain or loss which may be generated by the S&P 500 Index in the future.

Year-End
Index
Year-End Value
Change in Average Dividends
Year-End Index Value Index Yield Reinvested
Year Index Value* 1960=100 For Year For Year* 1960=100**
- ---- ----------- -------- -------- -------- --------
1960 . . . . . . . 58.11 100.0 --27.25% 3.47% 100.0
1961 . . . . . . . 71.55 123.13 23.13 2.98 126.79
1962 . . . . . . . 63.10 108.59 --11.81 3.37 115.71
1963 . . . . . . . 75.02 129.10 18.89 3.17 141.93
1964 . . . . . . . 84.75 145.84 12.97 3.01 165.09
1964 . . . . . . . 92.43 159.06 9.06 3.00 185.48
1966 . . . . . . . 80.33 138.24 --13.09 3.40 165.11
1967 . . . . . . . 96.47 166.01 20.09 3.20 204.54
1968 . . . . . . . 103.86 178.73 7.66 3.07 227.00
1969 . . . . . . . 92.06 158.42 --11.36 3.24 207.89
1970 . . . . . . . 92.15 158.58 0.10 3.83 216.06
1971 . . . . . . . 102.09 175.68 10.79 3.14 247.52
1972 . . . . . . . 118.05 203.15 15.63 2.84 294.30
1973 . . . . . . . 97.55 167.87 --17.37 3.06 250.83
1974 . . . . . . . 68.56 117.98 --29.72 4.47 184.64
1975 . . . . . . . 90.19 155.21 31.55 4.31 253.25
1976 . . . . . . . 107.46 184.93 19.15 3.77 312.94
1977 . . . . . . . 95.10 163.66 --11.50 4.62 289.72
1978 . . . . . . . 96.11 165.39 1.06 5.28 308.20
1979 . . . . . . . 107.94 185.75 12.31 5.47 364.29
1980 . . . . . . . 135.76 233.63 25.77 5.26 481.86
1981 . . . . . . . 122.55 210.89 --9.73 5.20 457.72
1982 . . . . . . . 140.64 242.02 14.76 5.81 555.84
1983 . . . . . . . 164.93 283.82 17.27 4.40 680.24
1984 . . . . . . . 167.24 287.80 1.40 4.64 721.73
1985 . . . . . . . 211.28 363.59 26.33 4.25 949.59
1986 . . . . . . . 242.17 416.75 14.62 3.49 1,125.83
1987 . . . . . . . 247.08 425.19 2.03 3.08 1,183.25
1988 . . . . . . . 277.27 477.92 12.40 3.64 1,379.78
1989 . . . . . . . 353.40 608.15 27.25 3.13 1,617.04
1990 . . . . . . . 330.22 568.27 --6.56 3.61 1,760.71
1991 . . . . . . . 417.09 717.78 26.31 3.70 2,297.20
1992 . . . . . . . 435.71 749.79 4.46 2.97 2,472.25
1993 . . . . . . . 466.45 802.70 7.06 2.78 2,721.45
1995 . . . . . . . 459.27 790.53 --1.54 2.42 2,757.25

- --------------------
Source: Standard & Poor's Corporation. Yields are
obtained by dividing the aggregate cash dividends by the
aggregate market value of the stocks in the Index at the
beginning of the period, assuming no reinvestment of
dividends.

Assumes that cash distributions on the securities which
comprise the S&P 500 Index are treated as reinvested in the
S&P 500 Index as of the end of each month following the
payment of the dividend. Because the Fund is sold to the
public at net asset value plus the applicable sales charge
and the expenses of the Fund are deducted before making
distributions to Holders, investment in the Fund would have
resulted in investment performance to Holders somewhat
reduced from that reflected in the above table. In addition
certain Holders may not elect to participate in the
Reinvestment Plan and to that extent cash distributions
representing dividends on the Index Stocks may not be
reinvested in other Index Stocks.

30
<PAGE>
The S&P MidCap Index. The S&P MidCap Index is composed of 400 selected
common stocks of which, as of the Evaluation Date, 279 were listed on the New
York Stock Exchange, 9 were listed on the American Stock Exchange and 112 were
quoted on the Nasdaq National Market. The MidCap Index Stocks were chosen for
market size, liquidity and industry group representation. As of December 31,
1994, industrial stocks accounted for approximately 69.5% of S&P MidCap Index
market capitalization utilities approximately 14.1%, financial stocks
approximately 14.1%, financial stocks approximately 14.6% and transportation
stocks approximately 1.8%. The capitalizations of individual companies ranged
from about $49 million to over $10,066 million: the mean market capitalization
of the companies in the S&P MidCap Index was approximately $1,156 billion. The
S&P MidCap Index was created June 5, 1991 and would have had a total return,
with monthly reinvested dividends, of 50.10% for the year if the Index had been
in existence for the entire year. The total return for 1994 was--3.57%

The S&P Index Trusts. Since the objective of the Fund is to provide
investment results that duplicate substantially the price and yield performance
(in other words, the total return) of the S&P 500 Index, in the case of the S&P
500 Trust, and the S&P MidCap Index, in the case of the S&P MidCap Trust, the
Portfolio of each Trust will at any time consist of as many of the Index Stocks
as is feasible. Each Trust will at all times be invested in no less than 95% of
the Index Stocks. Although, at any time, a Trust may fail to own certain of the
Index Stocks, each Trust will be substantially totally invested in Index Stocks
and the Sponsors expect to maintain a theoretical correlation of between .97 and
.99 between the investment performance of the relevant Index and that derived
from ownership of Units. Adjustments will be made in accordance with computer
program output to bring the weightings of the Securities more closely into line
with their weightings in the relevant Index as each Trust invests in new
Securities in connection with the creation of new Units, as companies are
dropped from or added to either Index or as Securities are sold to meet
redemptions. These adjustments will be made on the business day following the
relevant transaction in accordance with computer program output showing which
Securities are under- or over-represented in each Portfolio. Adjustments may
also be made at other times to bring either Portfolio into line with the
applicable Index. The proceeds from any such sale will be invested in those
Index Stocks which the computer program output indicates are most under-
represented.

The Sponsors anticipate that the selection of any additional Index Stocks
deposited or purchased in connection with the creation of additional Units of a
Trust will be those stocks which are most under-represented in the Portfolio
based upon the computer program output and the applicable Index as of the date
prior to the date of such subsequent deposit or purchase. Securities sold in
order to meet redemptions will be those stocks which are most over-represented
in the Portfolio based upon the computer program output and the applicable Index
as of the date prior to the date of such sale.

Finally, from time to time adjustments may be made in either Portfolio
because of changes in the composition of the applicable Index. Based on past
history, it is anticipated that most such changes will occur as a result of
merger or acquisition activity. In such cases, the Fund, as shareholder of a
company which is the object of such merger or acquisition activity, will
presumably receive various offers from would-be acquisors of the company. The
Trustees will not be permitted to accept any such offers until such time as the
company has been deleted from the applicable Index. Since, in most cases, a
company is removed from an Index only after the consummation of a merger or
acquisition of the company, it is anticipated that the Fund will generally
acquire, in exchange for the stock of the deleted company, whatever
consideration is being offered to shareholders of that company who have not
tendered their shares prior to such time. Any cash received in such
transactions will be reinvested in the most under-represented Index Stocks. Any
securities received as a part of the consideration which are not included in the
relevant Index will be sold as soon as practicable and reinvested in the most
under-represented Index Stocks.

<PAGE>
In attempting to duplicate the proportionate relationships represented by the
S&P 500 Index and the S&P MidCap Index the Sponsors do not anticipate purchasing
or selling shares in quantities of less than round lots. In addition, certain
Index Stocks may at times not be available in the quantities in which the
computer program specifies that they be purchased. For these reasons, among
others, precise duplication of this proportionate relationship may not ever be
possible but nevertheless will continue to be the goal in connection with all
acquisitions or dispositions of Securities. As the holder of the Securities,
the Trustees will have the right to vote all of the voting stocks in the
Portfolio and will vote such stocks in accordance with the instructions of the
Sponsors except that, if the Trustee holds any of the common stocks of Merrill
Lynch & Co., Inc., Prudential Insurance Company of America (the parent of
Prudential Securities Incorporated) or The Travelers Inc. (as long as it remains
the parent of Smith Barney Inc.) or any other common stock of companies which
are affiliates of the Sponsors, the Trustee will vote such stock in the same
proportionate relationship as all other shares of such companies are voted.

ROLLOVER - (Income Growth Fund, Select Ten Series and Select Growth Portfolios)

It is expected that a special redemption and liquidation will be made of all
Units of a Portfolio held by any investor who affirmatively notifies the Trustee
in writing by the applicable notification date specified in the Portfolio's
prospectus that he elects to participate. It should also be noted that rollover
investors may realize taxable capital gains on the rollover but generally will
not be entitled to a deduction for certain capital losses and no cash would be
distributed at that time to pay any taxes.

All Units of rollover investors will be redeemed in kind on the first day of
the rollover period and the underlying securities will be distributed to a
distribution agent on behalf of the rollover investors. During the rollover
period, the distribution agent will be required to sell all of the underlying
securities on behalf of rollover investors. The sale proceeds will be net of
brokerage fees, governmental charges or any expenses involved in the sales.

Rollover investors may purchase units of a new portfolio of the same series,
if available, subject only to the Deferred Sales Charge; provided that rollover
investors who no longer hold their Units in an account maintained with one of
the Sponsors at the time of the rollover may not be eligible to participate in
the direct reinvestment in the new portfolio.

If an investor so specifies by the applicable notification date, his Units
will be redeemed in kind and the securities disposed of during the rollover
period. As long as the investor confirms his interest in purchasing units of a
new portfolio and units are available, the proceeds of the sales (net of
brokerage commissions, stamp taxes, governmental charges and any other selling
expenses or if applicable, costs associated with foreign trading) will be
invested in units of the next portfolio at daily prices over the rollover period
based on the asset value of units of the next portfolio plus the applicable
sales charge. The Sponsors are under no obligation to create a new portfolio,
however, and may modify the terms of the rollover upon notice to investors at
any time.

Depending on the volume of proceeds to be invested in the next portfolio
through the rollover and the volume of other orders for units in the next
portfolio, the Sponsors may purchase large volumes of the securities for the
next portfolio in a short period of time. This concentrated buying may tend to
raise the market prices of these securities. The actual market impact of the
Sponsors' purchases, however, is currently unpredictable because the actual
volume of securities to be purchased and the supply and price of those
securities are unknown. A similar problem may occur in connection with the
Sponsors' sales of securities during the rollover period. Depending on the
volume of sales required, and the prices of and demand for securities, sales by
the Sponsors may tend to depress the market prices and the value of Units, and
thus reduce the proceeds to be credited to rollover investors for investment in
the next portfolio.

<PAGE>
The distribution agent will engage the Sponsors as its agents to sell the
distributed securities. The Sponsors will attempt to sell the securities as
quickly as is practicable during the rollover period without in their judgment
materially adversely affecting the market price of the securities, but all of
the securities will in any event be disposed of by the end of the rollover
period. The Sponsors do not anticipate that the period will be longer than 12
business days, although it could be shorter or longer given the varying
liquidity of the Securities. The liquidity of any security depends on the daily
trading volume of the security and the amount that the Sponsors have available
for sale on any particular day.

It is expected (but not required) that the Sponsors will generally follow the
following guidelines in selling the securities: for highly liquid securities,
the Sponsors will generally sell securities on the first day of the rollover
period; for less liquid securities, on each of the first two days of the
rollover period, the Sponsors will generally sell any amount of any underlying
securities at a price no less than 1/2 of one point under the closing sale price
of those securities on the preceding day. Thereafter, the Sponsors intend to
sell without any price restrictions at least a portion of the remaining
underlying securities, the numerator of which is one and the denominator of
which is the total number of days remaining (including that day) in the rollover
period.

Section 17(a) of the Investment Company Act of 1940 restricts purchases and
sales between affiliates of registered investment companies and those companies.
Pursuant to a recent exemptive order, certain Portfolios (and the distribution
agent on behalf of rollover investors) can now sell securities to the next
portfolio if those securities continue to meet the applicable objective or
Strategy. The exemption will enable these portfolios to eliminate commission
costs on these transactions. The price for those securities will be the closing
sale price on the sale date on the exchange where the securities are principally
traded, as certified by the Agent for the Sponsors and confirmed by the Trustee
of a Portfolio.

The Sponsors intend to create new units of Portfolios as quickly as possible,
depending upon the availability and reasonably favorable price of the securities
included in the new Portfolio, and it is intended that rollover investors will
be given first priority to purchase new units of the new Portfolio. There can
be no assurance, however, as to the exact timing of the creation of units of new
Portfolios or the aggregate number of new units of new Portfolios which the
Sponsors will create. The Sponsors may, in their sole discretion, stop creating
units (whether permanently or temporarily) at any time they choose, regardless
of whether all proceeds of the rollover have been invested on behalf of rollover
investors. Cash which has not been invested on behalf of the rollover investors
in new Portfolios will be distributed at the end of the rollover period.
However, since the Sponsors can create units by depositing cash (or bank letter
of credit) with instructions to buy securities, the Sponsors anticipate that
sufficient units can be created, although moneys in the new Portfolio may not be
fully invested on the next business day.

Any rollover investor may thus be redeemed out of a Portfolio and become a
holder of an entirely different trust with a different portfolio of securities.
The rollover investor's Units will be redeemed in kind and the distributed
securities shall be sold during the rollover period. In accordance with the
rollover investors' offers to purchase units of new Portfolios, the proceeds of
the sales (and any other cash distributed upon redemption), less the amount of
any deferred sales charge still unpaid, will be invested in new units of the
next Portfolio, at the Public Offering Price, including the applicable sales
charge per unit.

This process of redemption, liquidation, and investment in a new trust is
intended to allow for the fact that the portfolios selected by the Sponsors are
chosen on the basis of a strategy for a period of one year, at which point a new
portfolio is chosen. It is contemplated that a similar process of redemption,
liquidation and investment in a new fund will be available for each subsequent
Portfolio, approximately a year after the creation of the prior series.

<PAGE>
The Sponsors believe that the gradual redemption, liquidation and investment
in the new Portfolio will help mitigate any negative market price consequences
stemming from the trading of large volumes of securities and of the underlying
securities in the new Portfolio in a short, publicized period of time. The
above procedures may, however, be insufficient or unsuccessful in avoiding such
price consequences. There can be no assurance that the procedures will
effectively mitigate any adverse price consequences of heavy volume trading or
that the procedures will produce a better price for investors than might be
obtained on any given day during the rollover period. In fact, market price
trends may make it advantageous to sell or buy more quickly or more slowly than
permitted by these procedures. Rollover investors could then receive a less
favorable average unit price than if they bought all their units of the new
Portfolio on any given day of the period. Historically, the prices of
securities selected by the Sponsors as good investments have generally risen
over the first few days following the announcement.

It should also be noted that rollover investors may realize taxable capital
gains on the rollover but generally will not be entitled to a deduction for
certain capital losses and, due to the procedures for investing in new
Portfolios, no cash would be distributed at that time to pay any taxes.

In addition, during this period an investor will be at risk to the extent
that securities are not sold and will not have the benefit of any stock
appreciation to the extent that monies have not been invested; for this reason,
the Sponsors will be inclined to sell and purchase the securities in as short a
period as they can without materially adversely affecting the price of the
securities.

Investors who do not inform the Trustee that they wish to have their Units so
redeemed and liquidated will continue to hold Units of a Portfolio until that
Portfolio is terminated. These remaining investors will not realize capital
gains or losses due to the rollover and will not be charged any additional sales
charge. If a large percentage of investors become rollover investors, the
aggregate size of a Portfolio will be sharply reduced. As a consequence,
expenses, if any, in excess of the amount to be borne by the Trustee would
constitute a higher percentage amount per Unit than prior to the rollover in the
new Portfolio. Also, because of the lesser number of Units in a Portfolio, and
possibly also due to a value reduction, however temporary, in Units caused by
the Sponsors' sales of securities, a Portfolio might also reduce to the minimum
value that would allow the Sponsors to choose to liquidate that Portfolio
without the consent of the remaining investors. The securities remaining in a
Portfolio after the rollover will be sold by the Sponsors as quickly as possible
without, in their judgment, materially adversely affecting the market price of
the securities.