EQUITY INCOME FUND SEL TEN PORT 1997 INTL SR 1 UK HK & J DAF, 497, 1997-02-26

EQUITY INCOME FUND SEL TEN PORT 1997 INTL SR 1 UK HK & J DAF
497, 1997-02-26

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DEFINED ASSET FUNDSSM
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EQUITY INCOME FUND The objective of these Defined Portfolios is total
SELECT TEN PORTFOLIO return through a combination of capital
1997 INTERNATIONAL appreciation and current dividend income.
SERIES 1 The common stocks in the United Kingdom Portfolio
UNITED KINGDOM, were selected by following a strategy that invests
HONG KONG 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 Hong Kong Portfolio were
HIGHEST DIVIDEND YIELDING selected by following a strategy that invests for
INDEX STOCKS a period of about one year in the ten common
/ / DIVIDEND INCOME stocks in the Hang Seng Index having the highest
dividend yields two business days prior to the
date of this Prospectus.
The common stocks in the Japan Portfolio were
selected by following a strategy that invests for
a period of about one year in the ten common
stocks in the Nikkei 225 Index having the highest
dividend yields four business days prior to the
date of this Prospectus.
The Portfolios, especially the Hong Kong and Japan
Portfolios, may be considered speculative and
therefore they may be appropriate only for those
investors able and 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 with
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,
Hong Kong dollars or Japanese yen, as applicable,
on February 24, 1997.

An investor may invest in Units of one or more
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
HAS THE COMMISSION OR ANY STATE SECURITIES
SPONSORS: COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Merrill Lynch, OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Pierce, Fenner & Smith CONTRARY IS A CRIMINAL OFFENSE.
Incorporated Inquiries should be directed to the Trustees at
Smith Barney Inc. the telephone numbers shown on the back cover of
PaineWebber Incorporated this prospectus.

Prudential Securities Prospectus dated February 24, 1997.
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 $115 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 bond portfolios
o Corporate bond portfolios
o Government bond portfolios
o Equity portfolios
o International bond and equity 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.
- ---------------------------------------------------
Defining the Strategy
- ---------------------------------------------------

The Select Ten Portfolios follow a simple, time-tested Strategy: buy
approximately equal amounts of the ten highest dividend-yielding common stocks
(Strategy Stocks) of the Financial Times Industrial Ordinary Share Index, Hang
Seng 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. As of two business days prior to the
initial date of deposit, Select Ten Portfolios hold approximately $1.3 billion
of the International Strategy Stocks. 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 three to five years. So long as the Sponsors continue to
offer new portfolios, investors will have the option to reinvest into a new
portfolio each year 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.
- ---------------------------------------------------
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.

Hong Kong is scheduled to revert to the sovereignty of The People's Republic of
China ('China') on July 1, 1997. Investors should note that the Portfolio will
not terminate until about nine months after that date. The Sponsors are unable
to predict the level of market liquidity or volatility which may prevail in
anticipation of and subsequent to the takeover. While China has committed to
preserve for 50 years the economic and social freedoms currently enjoyed in Hong
Kong, there can be no assurance that China will abide by its commitment.
Reinvestment into the next Series of the Portfolio expected to be offered in
February 1998 may enable investors to maintain their investment in Hong Kong
through any short term market volatility during the transition.

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. Investors should note
that the composition of the related Indexes, in particular the Hang Seng Index,
may change with greater frequency than comparable United States stock indexes
and that a Strategy Stock which is deleted from the related Index or delisted
from the related stock exchange may suffer a significant decrease in liquidity
or price deterioration. The Hang Seng Strategy Stocks and the Select Ten Hong
Kong Portfolios have underperformed the Hang Seng Index since 1993 and there can
be no assurance that this underperformance will not continue, that any Portfolio
will outperform the Index over its one-year life, or that the Strategy will not
lose money over consecutive annual periods.

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.

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

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

The Public Offering Price as of February 24, 1997 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, 3:30 a.m. New York Time for the Hong Kong 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 May 1, 1997 and thereafter on the 1st of
each month through February 1, 1998.

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 hold your Units with one of the Sponsors and
notify your financial adviser by February 27, 1998, your units will be redeemed
and your proceeds will be reinvested in units of a new United Kingdom, Hong Kong
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.

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, for U.S. tax purposes, 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 (or deemed to be received) by the
Portfolio, even though the dividend payments may be subject to withholding taxes
or may be used to pay expenses of the Portfolio and regardless of whether you
reinvest your dividends in the Portfolio. (See U.S. Taxation in Part B.)

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 U.S. Taxation in Part B.)
TERMINATION DATE

The Portfolios will terminate by March 27, 1998. 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).
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------

SALES CHARGES

First-time investors pay a maximum sales charge of 2.75% of the offering price,
of which $17.50 per 1,000 units is deferred. For example, on a $1,000
investment, 2.75% less $17.50 (or about 1%) is deducted when they buy and the
remaining $990 is invested in the Strategy Stocks. The initial sales charge is
reduced on purchases of $50,000 or more, as described in Part B. 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
Offering Amount per
Price 1,000 Units
----------- -----------
Initial Sales Charge 1.000% $ 10.00
Deferred Sales Charge
per Year 1.750% 17.50
----------- -----------
Maximum Sales Charge 2.750% $ 27.50
----------- -----------
----------- -----------
Sales Charge Imposed
Per Year on
Reinvested Dividends
United Kingdom and
Hong Kong
Portfolio 1.575% $ 15.75
Japan Portfolio 0.175% $ 1.75

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

REDEEMING OR 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 February 24, 1997 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
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- ---------------------------------------------------
Defining Your United Kingdom Portfolio
- ---------------------------------------------------

Based upon the principal business of each issuer and current market values, the
following industries are represented in the Portfolio:

APPROXIMATE
PORTFOLIO PERCENTAGE

/ / Chemicals 20%
/ / Automotive 10
/ / Conglomerate 10
/ / Insurance 10
/ / Sugar 10
/ / Telecommunications 10
/ / Transportation/Marine 10
/ / Utilities/Gas 10
/ / Wines/Spirits 10

The United Kingdom Portfolio is not considered to be concentrated in any
particular industry, and 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. company. The U.K Inland Revenue have approved a
special procedure under which the Trustee may claim a refund of a portion of
such U.K. taxes under the U.S.-U.K. Treaty on behalf of investors. (See United
Kingdom Taxation in Part B.)

ESTIMATED ANNUAL OPERATING EXPENSES

AS A % OF AMOUNT PER
NET ASSETS 1,000 UNITS
----------- -----------
Trustee's Fee .085% $ 0.84
Portfolio Supervision,
Bookkeeping and
Administrative Fees .046% $ 0.45
Organizational Expenses .219% $ 2.17
Other Operating
Expenses .120% $ 1.19
----------- -----------
TOTAL .470% $ 4.65

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 $79 $129 $265

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.

SEMI-ANNUAL DISTRIBUTIONS

You will receive distributions of any dividend income, net of expenses, on the
25th of July, 1997 and January, 1998, if you own units on the 10th of those
months.

A-5
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Defined United Kingdom Portfolio
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Equity Income Fund
Select Ten Portfolio 1997 International Series 1 February 24, 1997
United Kingdom Portfolio

PRICE
PER SHARE COST
PERCENTAGE CURRENT TO PORTFOLIO TO FUND
OF PORTFOLIO DIVIDEND YIELD IN IN U.S.
NAME OF ISSUER (1) (2) U.S. DOLLARS DOLLARS (3)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. BTR PLC 9.89% 5.88% $ 3.929 $ 31,039.48
2. Allied Domecq PLC 9.91 5.33 7.229 31,085.23
3. Peninsular & Oriental Steam
Navigation Company 10.18 4.52 11.019 31,955.99
4. British Telecommunications PLC 9.95 4.41 7.098 31,233.08
5. Courtaulds PLC 9.87 4.32 6.069 30,952.90
6. BG PLC 10.13 4.20 2.916 31,786.08
7. Imperial Chemical Industries PLC 9.91 4.20 12.441 31,101.56
8. Tate & Lyle PLC 9.81 3.79 7.327 30,774.01
9. Royal & Sun Alliance Insurance
Group PLC 9.91 3.66 7.972 31,092.58
10. Lucas Variety PLC 10.44 3.46 3.308 32,751.60
-------------- --------------
100.00% $ 313,772.51
-------------- --------------
-------------- --------------
</TABLE>

- ----------------------------
(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
February 24, 1997.
(3) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on February 24, 1997, the initial date of deposit, converted
into U.S. dollars on the offer side of the exchange rate at the evaluation
time on that date. The value of the Securities on any subsequent business
day will vary. Loss to the Sponsors on deposit of the Securities was
$2,200.50.

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

The securities were acquired on February 24, 1997 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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Hypothetical Performance Information--FT Strategy
- --------------------------------------------------------------------------------

Select Ten United Kingdom Portfolios are based on a strategy of investing equal
amounts in the 10 highest dividend-yielding stocks ('Strategy Stocks') in the FT
Index each year. Although the Strategy Stocks underperformed the FT Index in
five of the last 20 years (seven years if Portfolio sales charges and expenses
were deducted from Strategy Stock performance), their total return over the
entire period outperformed the FT Index. This is why the Sponsors recommend
following the Strategy for at least three to five years. The results below are
hypothetical for the following reasons: None of these figures reflects
reinvestment of dividends or any sales charges, expenses or brokerage
commissions which investors in the Portfolio bear. Portfolio performance will
also differ from the hypothetical performance of Strategy Stocks because the
Select Ten United Kingdom Portfolios are established at various times during a
year, Portfolios may not be fully invested at all times or equally weighted in
all 10 stocks, and their stocks are normally purchased or sold at prices and
currency exchange rates different from the closing prices and currency exchange
rates used in buying and selling Portfolio units. Past performance is no
guaranty of future results of the Strategy or any Select Ten United Kingdom
Portfolio.

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*
---------------------------------------------------------- ----------------------------------------------------------
ACTUAL DIVIDEND TOTAL ACTUAL DIVIDEND TOTAL
YEAR APPRECIATION(2) YIELD(3) RETURN(4) APPRECIATION(2) YIELD(3) RETURN(4)
- ---- -------------- ---------------------- -------------- -------------- ---------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1977 73.41% 13.86% 87.27% 53.46% 8.46% 61.92%
1978 7.22 10.51 17.73 3.57 6.35 9.92
1979 -5.75 10.51 4.76 -3.94 7.53 3.59
1980 16.49 13.66 30.15 22.57 9.20 31.77
1981 -14.02 7.76 -6.26 -10.36 5.06 -5.30
1982 34.04 9.99 44.03 -4.41 4.83 0.42
1983 34.17 7.89 42.06 16.60 5.34 21.94
1984 -0.85 6.35 5.50 -2.26 4.41 2.15
1985 69.36 9.28 78.64 48.25 6.49 54.74
1986 26.35 6.53 32.88 19.14 5.22 24.36
1987 40.49 7.61 48.10 32.97 6.02 38.99
1988 5.19 6.19 11.38 1.62 5.12 6.74
1989 22.08 6.63 28.71 17.57 5.23 22.80
1990 1.91 7.35 9.26 4.31 5.98 10.29
1991 8.70 7.87 16.57 9.36 5.29 14.65
1992 -1.41 5.68 4.27 -6.33 4.00 -2.33
1993 31.55 6.14 37.69 14.24 4.16 18.40
1994 0.42 5.04 5.46 -2.43 4.32 1.89
1995 5.20 5.63 10.83 13.07 4.56 17.63
1996 6.30 7.99 14.29 15.33 4.72 20.05

</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 1.85% 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.
Individual year Total Returns do not take into consideration any
reinvestment of dividend income.

A-7
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- ---------------------------------------------------
Defining Your Hong Kong Portfolio
- ---------------------------------------------------

Based upon the principal business of each issuer and current market values, the
following industries are represented in the Portfolio:
APPROXIMATE
PORTFOLIO PERCENTAGE

/ / Real Estate/Properties 50%
/ / Utilities 20
/ / Airline 10
/ / Telecommunications 10
/ / Transportation 10
The Hong Kong Portfolio is concentrated in real estate and property issuers and
all of the stocks represent Hong Kong issuers. Investors should note that Hong
Kong will revert to Chinese sovereignty on July 1, 1977, which may adversely
affect real estate or property values or the market value of Hong Kong stocks
generally. (See Risk Factors in Part B.)

ESTIMATED ANNUAL OPERATING EXPENSES

AS A % OF AMOUNT PER
NET ASSETS 1,000 UNITS
----------- -----------
Trustee's Fee .083% $ 0.82
Portfolio Supervision,
Bookkeeping and
Administrative Fees .045% $ 0.45
Organizational
Expenses .186% $ 1.84
Other Operating Ex-
penses .130% $ 1.29
----------- -----------
TOTAL .444% $ 4.40

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 $127 $262

SEMI-ANNUAL DISTRIBUTIONS

You will receive a distribution of any dividend income, net of expenses, on the
25th of July, 1997 and January, 1998, if you own units on the 10th of those
months.

A-8
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- --------------------------------------------------------------------------------
Defined Hong Kong Portfolio
- --------------------------------------------------------------------------------

Equity Income Fund
Select Ten Portfolio 1997 International Series 1 February 24, 1997
Hong Kong Portfolio

PRICE
PER SHARE COST
PERCENTAGE CURRENT TO PORTFOLIO TO FUND
OF PORTFOLIO DIVIDEND YIELD IN IN U.S.
NAME OF ISSUER (1) (2) U.S. DOLLARS DOLLARS (3)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Shun Tak Holdings Ltd. 10.26% 5.96% $ 0.704 $ 28,150.83
2. Hong Kong Telecommunications
Ltd. 10.05 5.36 1.724 27,582.64
3. Henderson Investment Ltd. 10.05 4.61 1.149 27,582.64
4. Amoy Properties Ltd. 9.94 4.53 1.240 27,272.73
5. Hang Lung Development Co. 9.54 4.46 2.014 26,188.02
6. Henderson Land Development Co.,
Ltd. 9.81 4.36 8.975 26,924.07
7. Hong Kong Electric Holdings Ltd. 10.13 4.29 3.474 27,789.26
8. China Light & Power Company Ltd. 9.77 4.10 4.468 26,807.85
9. Cathay Pacific Airways 10.17 4.04 1.550 27,892.56
10. Hysan Development Co., Ltd. 10.28 3.96 3.525 28,202.48
-------------- --------------
100.00% $ 274,393.08
-------------- --------------
-------------- --------------
</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 February 24, 1997.
(3) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on February 24, 1997, the initial date of deposit, converted
into U.S. dollars on the offer side of the exchange rate at the evaluation
time on that date. The value of the Securities on any subsequent business
day will vary. Loss to the Sponsors on deposit of the Securities was
$1,408.43.

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

A-9
<PAGE>
- --------------------------------------------------------------------------------
Hypothetical Performance Information--Hang Seng Strategy
- --------------------------------------------------------------------------------

Select Ten Hong Kong Portfolios are based on a strategy of investing equal
amounts in the 10 highest dividend-yielding stocks ('Strategy Stocks') in the
Hang Seng Index each year. Although the Strategy Stocks underperformed the Hang
Seng Index in 9 of the last 19 years (10 years if Portfolio sales charges and
expenses were deducted from Strategy Stock performance), their total return over
the entire period outperformed the Hang Seng Index. This is why the Sponsors
recommend following the Strategy for at least three to five years The results
below are hypothetical for the following reasons: None of these figures reflects
reinvestment of dividends or any sales charges, expenses or brokerage
commissions which investors in the Portfolio bear. Portfolio performance will
also differ from the hypothetical performance of Strategy Stocks because the
Select Ten Hong Kong Portfolios are established at various times during a year,
Portfolios may not be fully invested at all times or equally weighted in all 10
stocks, and their stocks are normally purchased or sold at prices and currency
exchange rates different from the closing prices and currency exchange rates
used in buying and selling Portfolio units. Past performance is no guaranty of
future results of the Strategy or any Select Ten Hong Kong Portfolio. In
addition, the Hang Seng Index is weighted by market capitalization while the
Portfolio stocks are more or less equally weighted. While the Hong Kong dollar
exchange rate has been pegged to the U.S. dollar since 1983, there can no
assurance that this arrangement will continue in the future.

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)

HANG SENG STRATEGY STOCKS(1) HANG SENG INDEX*
---------------------------------------------------------- ----------------------------------------------------------
ACTUAL DIVIDEND TOTAL ACTUAL DIVIDEND TOTAL
YEAR APPRECIATION(2) YIELD(3) RETURN(4) APPRECIATION(2) YIELD(3) RETURN(4)
- ---- -------------- ---------------------- -------------- -------------- ---------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1978 19.82% 8.22% 28.04% 17.83% 5.68% 23.51%
1979 72.63 9.65 82.28 72.27 6.06 78.33
1980 34.03 7.37 41.40 61.60 4.23 65.83
1981 -10.94 7.08 -3.86 -13.75 2.68 -11.07
1982 -46.13 7.16 -38.97 -51.24 3.45 -47.79
1983 -15.40 7.92 -7.48 -6.92 6.03 -0.89
1984 53.82 11.50 65.32 36.45 6.09 42.54
1985 40.25 7.27 47.52 46.33 4.77 51.10
1986 54.50 5.99 60.49 46.90 4.26 51.16
1987 -2.15 5.18 3.03 -10.06 3.33 -6.73
1988 28.02 6.02 34.04 16.07 4.53 20.60
1989 2.66 6.75 9.41 5.55 4.64 10.19
1990 -1.93 8.04 6.11 6.71 5.28 11.99
1991 40.07 8.44 48.51 42.41 5.84 48.25
1992 32.08 6.86 38.94 28.87 4.76 33.63
1993 100.80 6.19 106.99 116.14 4.97 121.11
1994 -34.93 3.48 -31.45 -31.22 2.39 -28.83
1995 10.25 5.86 16.11 23.03 3.92 26.95
1996 23.19 4.63 27.82 33.52 4.21 37.73

</TABLE>

(1) The Hang Seng Strategy Stocks for any given year were selected by ranking
the dividend yields for each of the stocks in the Hang Seng 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 Hong
Kong Stock Exchange.

(2) Appreciation for the Hang Seng 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 Hang Seng Index
is calculated by subtracting the opening value of the Hang Seng Index on the
first trading day in each year from the closing value of the Hang Seng Index
on the last trading day in that year, and dividing the result by the opening
value of the Hang Seng Index on the first trading day in that year.

(3) Actual Dividend Yield for the Hang Seng 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 Hang Seng Index is calculated by
taking the total dividends credited to the Hang Seng Index and dividing the
result by the opening value of the Hang Seng Index on the first trading day
of the year.

(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Individual year Total Returns do not take into consideration any
reinvestment of dividend income.

A-10
<PAGE>
- ---------------------------------------------------
Defining Your Japan Portfolio
- ---------------------------------------------------

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%
/ / Oil/Gas 20
/ / Engineering & Construction 20
/ / Distributor/Wholesale 10
/ / Transportation 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 .085% $ 0.84
Portfolio Supervision,
Bookkeeping and
Administrative Fees .045% $ 0.45
Organizational
Expenses .218% $ 2.16
Other Operating Ex-
penses .157% $ 1.55
----------- -----------
TOTAL .505% $ 5.00

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 $130 $268

ANNUAL DISTRIBUTION

You will receive a distribution of any dividend income, net of expenses, on the
25th of January, 1998, if you own units on the 10th of that month.

A-11
<PAGE>
- --------------------------------------------------------------------------------
Defined Japan Portfolio
- --------------------------------------------------------------------------------

Equity Income Fund
Select Ten Portfolio 1997 International Series 1 February 24, 1997
Japan Portfolio

PRICE
PER SHARE COST
PERCENTAGE CURRENT TO PORTFOLIO TO FUND
OF PORTFOLIO DIVIDEND YIELD IN IN U.S.
NAME OF ISSUER (1) (2) U.S. DOLLARS DOLLARS (3)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Tonen Corporation 9.74% 2.24% $ 10.189 $ 40,756.44
2. Fujita Corporation 10.15 2.03 1.932 42,500.82
3. Chubu Electric Power Co., Inc. 10.17 1.91 17.036 42,590.48
4. Kansai Electric Power Company,
Inc. 9.91 1.89 17.281 41,473.75
5. Tokyo Electric Power Co. Inc. 9.99 1.79 18.177 41,807.96
6. Japan Energy Corporation 9.57 1.38 2.356 40,047.28
7. Hazama Corporation 10.76 1.37 2.372 45,068.47
8. Tomen Corporation 9.70 1.37 2.388 40,601.57
9. Osaka Gas Co. Ltd. 9.90 1.34 2.437 41,433.00
10. Sankyu Inc. 10.11 1.29 3.024 42,337.79
-------------- --------------
100.00% $ 418,617.56
-------------- --------------
-------------- --------------
</TABLE>

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

A-12
<PAGE>
- --------------------------------------------------------------------------------
Hypothetical Performance Information--Nikkei 225 Strategy
- --------------------------------------------------------------------------------

Select Ten Japan Portfolios are based on a strategy of investing equal amounts
in the 10 highest dividend-yielding stocks ('Strategy Stocks') in the Nikkei 225
Index each year. Although the Strategy Stocks underperformed the Nikkei 225
Index in seven of the last 20 years (eight years if Portfolio sales charges and
expenses were deducted from Strategy Stock performance), their total return over
the entire period outperformed the Nikkei 225 Index. This is why the Sponsors
recommend following the Strategy for at least three to five years. The results
below are hypothetical for the following reasons: None of these figures reflects
reinvestment of dividends or any sales charges, expenses or brokerage
commissions which investors in the Portfolio bear. Portfolio performance will
also differ from the hypothetical performance of Strategy Stocks because the
Select Ten Japan Portfolios are established at various times during a year,
Portfolios may not be fully invested at all times or equally weighted in all 10
stocks, and their stocks are normally purchased or sold at prices and currency
exchange rates different from the closing prices and currency exchange rates
used in buying and selling Portfolio units. Past performance is no guaranty of
future results of the Strategy or any Select Ten Japan Portfolio.

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*
---------------------------------------------------------- ----------------------------------------------------------
ACTUAL DIVIDEND TOTAL ACTUAL DIVIDEND TOTAL
YEAR APPRECIATION(2) YIELD(3) RETURN(4) APPRECIATION(2) YIELD(3) RETURN(4)
- ---- -------------- ---------------------- -------------- -------------- ---------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1977 49.39% 4.89% 54.28% 19.14% 2.41% 21.55%
1978 69.05 3.05 72.10 52.35 2.97 55.32
1979 -3.31 2.42 -0.89 -11.49 1.49 -10.00
1980 34.72 4.21 38.93 27.20 2.27 29.47
1981 14.89 3.55 18.44 0.49 1.71 2.20
1982 -5.61 3.07 -2.54 -2.26 1.49 -0.77
1983 27.00 4.04 31.04 25.01 2.07 27.08
1984 -0.05 3.16 3.11 7.43 1.49 8.92
1985 49.46 3.55 53.01 42.41 1.78 44.19
1986 75.32 2.51 77.83 81.97 1.81 83.78
1987 91.23 2.44 93.67 49.58 1.13 50.71
1988 61.43 1.61 63.04 35.60 0.97 36.57
1989 21.99 0.97 22.96 12.21 0.59 12.80
1990 -41.87 0.88 -40.99 -35.08 0.29 -34.79
1991 5.35 1.55 6.90 4.74 0.82 5.56
1992 -17.66 1.49 -16.17 -26.33 0.57 -25.76
1993 19.55 1.97 21.52 14.87 1.07 15.94
1994 26.11 1.88 27.99 27.16 1.14 28.30
1995 -6.31 1.33 -4.98 -2.99 0.69 -2.30
1996 -18.29 1.51 -16.78 -13.00 0.57 -12.43

</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 4.82% 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 Tokyo
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 Tokyo 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.
Individual year Total Returns do not take into consideration any
reinvestment of dividend income.

A-13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustees and Holders of Defined Asset Funds Equity Income Fund,
Select Ten Portfolio 1997 International Series 1 (United Kingdom, Hong Kong 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 February 24, 1997. These
financial statements are the responsibility of the Trustees. 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 Trustees. An
audit also includes assessing the accounting principles used and significant
estimates made by the Trustees, 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 February 24,
1997 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, N.Y.
February 24, 1997

STATEMENTS OF CONDITION AS OF FEBRUARY 24, 1997
<TABLE><CAPTION>

TRUST PROPERTY

UNITED KINGDOM HONG KONG JAPAN
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- -------------------- --------------------
<S> <C> <C> <C>

Investments--Contracts to purchase Securities(1).........$ 313,772.51 $ 274,393.08 $ 418,617.56
Organizational Costs(2).................................. 108,500.00 138,000.00 64,800.00
-------------------- -------------------- --------------------
Total............................................$ 422,272.51 $ 412,393.08 $ 483,417.56
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
LIABILITY AND INTEREST OF HOLDERS
Accrued Liability(2) $ 108,500.00 $ 138,000.00 $ 64,800.00
-------------------- -------------------- --------------------
Subtotal $ 108,500.00 $ 138,000.00 $ 64,800.00
-------------------- -------------------- --------------------
Interest of Holders of fractional undivided interest
outstanding
(United Kingdom Portfolio--316,941 units; Hong Kong
Portfolio-- 277,164 units; Japan Portfolio--422,846
units)(3):
Cost to investors(4)...................................$ 316,941.00 $ 277,164.00 $ 422,846.00
Gross underwriting commissions(5)...................... (3,168.49) (2,770.92) (4,228.44)
-------------------- -------------------- --------------------
Subtotal $ 313,772.51 $ 274,393.08 $ 418,617.56
-------------------- -------------------- --------------------
Total $ 422,272.51 $ 412,393.08 $ 483,417.56
-------------------- -------------------- --------------------
-------------------- -------------------- --------------------
</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 Trustees at the evaluation time on February 24,
1997. The contracts to purchase securities are collateralized by irrevocable
letters of credit which have been issued by HypoBank, New York Branch, in the
amount of $1,011,438.65 and deposited with the Trustees. The amount of the
letters of credit includes $1,006,783.15 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 $155 million. To the
extent the Fund is larger or smaller, the estimates may vary.
(3) 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 only for that day. The Public Offering Price on
any subsequent business day will vary.
(4) 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 February 24, 1997.
(5) Assumes the initial maximum sales charge per 1,000 units of 1.00% of
the Public Offering Price. A deferred sales charge of $1.75 per 1,000 Units per
month is payable on May 1, 1997 and thereafter on the 1st day of each month
through February 1, 1998. Distributions will be made to accounts maintained by
the Trustees from which the deferred sales charge obligation of the investors to
the Sponsors will be satisfied. If units are redeemed prior to February 1, 1998,
the remaining portion of the distribution applicable to such units will be
transferred to such account on the redemption date.

A-14
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INCOME FUND SELECT TEN PORTFOLIOS--INTERNATIONAL SERIES
UNITED KINGDOM, HONG KONG 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............................... 5
How to Buy Units........................... 10
How to Redeem or Sell Units................ 11
Income, Distributions and Reinvestment..... 13
Portfolio Expenses......................... 13
PAGE
----
Taxes...................................... 14
Records and Reports........................ 18
Trust Indenture............................ 19
Miscellaneous.............................. 19
Exchange Option............................ 21
Supplemental Information................... 21

FUND DESCRIPTION

THE STRATEGY

Simple strategies can sometimes be the most effective. The United Kingdom,
Hong Kong and Japan Portfolios seek total return by acquiring the ten highest
yielding stocks in the Financial Times Industrial Ordinary Share Index (FT
Index), the Hang Seng 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. 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 offers greater diversification. 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 United Kingdom Portfolio was chosen on the basis of the
application of the Strategy to those stocks that comprised the FT Index as of
February 21, 1997. Those stocks are:

1
<PAGE>

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

The Hang Seng Index. The Hang Seng Index, first published in 1969, is a
recognized indicator of stock market performance in Hong Kong. It is computed on
an arithmetic basis, weighted by market capitalization, and represents
approximately 70% of the total market capitalization of stocks listed on the
Hong Kong Exchange. The companies represented are among the most highly
capitalized in Hong Kong. Index stocks include companies intended to represent
four major market sectors; commerce and industry, finance, properties and
utilities. The following are the stocks currently represented in the Hang Seng
Index.

Amoy Properties Ltd.
The Bank of East Asia Ltd.
Cathay Pacific Airways Ltd.
Cheung Kong (Holdings) Ltd.
The China Light & Power
Company Ltd.
Citic Pacific Ltd.
First Pacific Company Ltd.
Great Eagle Holdings Ltd.
Guangdong Investment Ltd.
Hang Lung Development
Company Ltd.
Hang Seng Bank Ltd.
Henderson Investment Ltd.
Hendersen Land Development
Company Ltd.
Hongkong Electric Holdings Ltd.
The Hong Kong and China Gas
Company Ltd.
The Hong Kong and Shanghai
Hotels Ltd.
Hong Kong Telecommunications
Ltd.
Hopewell Holdings Ltd.
HSBC Holdings PLC
Hutchison Whampoa Ltd.
Hysan Development Company Ltd.
Johnson Electric Holdings Ltd.
New World Development
Company Ltd.
Oriental Press Group Ltd.
Shangri-La Asia Ltd.
Shun Tak Holdings Limited
Sino Land Company Ltd.
South China Morning Post
(Holdings) Ltd.
Sun Hung Kai Properties Ltd.
Swire Pacific Ltd. (A)
Television Broadcasts Ltd.
The Wharf (Holdings) Ltd.
Wheelock and Company Ltd.

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.
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

- -------------------
* As of February 21, 1997, this stock was included in the FT Index.

2
<PAGE>
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.
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.
Sanwa Bank
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

3
<PAGE>
PORTFOLIO SELECTION

The Fund consists of three separate portfolios, the United Kingdom
Portfolio, Hong Kong Portfolio and the Japan Portfolio, which contain common
stocks in the FT Index, the Hang Seng 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 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, Hong Kong 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

4
<PAGE>
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 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, between the economy of Hong Kong and the value
of any Securities held by the Hong Kong 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 chemical industry, the food and beverage
industry, the transportation industry, telecommunications 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.

HONG KONG PORTFOLIO RISK FACTORS

Hong Kong. The Portfolio contains common stocks of companies trading on the
Hong Kong Exchange. Hong Kong, which has been a colony of Great Britain since
the 1840's, will revert to the sovereignty of The People's Republic of China
('China') on July 1, 1997. Investors should note that this is prior to the
termination date for the Portfolio. Under British rule, the Hong Kong government
has generally followed a laissez-faire policy towards industry, and over the ten
year period between 1983 and 1993, Real Gross Domestic Product increased at an
average annual rate of approximately 6%. There are no major import, export or
foreign exchange restrictions, and regulation of business is generally minimal
with certain exceptions, including regulated entry into certain sectors of the
economy.

5
<PAGE>
In 1984, pursuant to a Joint Declaration with China, the United Kingdom
agreed to surrender sovereignty over Hong Kong to China in 1997. On July 1,
1997, Hong Kong will become a special administrative region ('SAR') directly
under the authority of the central government of China. The political slogan
accompanying the 1984 treaty was 'one country, two systems.' Hong Kong's new
constitution will be the Basic Law (promulgated by China in 1990), which will
take effect upon the resumption of Chinese sovereignty on July 1, 1997. The
Basic Law will bind executive, legislative and judicial branches of the SAR
government and provide a framework in which the present legal system can
continue.

In December 1996, a specially constituted selection committee elected Tung
Chee-Hwa, a leading Hong Kong businessman, to be the first Chief Executive of
the Hong Kong SAR.

The Basic Law provides, among other things, that the Hong Kong SAR will
exercise a high degree of autonomy, except in foreign and defense affairs, and
enjoy executive, legislative and independent judicial power. The Basic Law also
provides that the socialist system and policies shall not be practiced in the
Hong Kong SAR, and that the previous capitalist system and way of life shall
remain unchanged for 50 years. In addition, the Basic Law provides that the laws
previously in force in Hong Kong shall be maintained, except for any laws that
contravene the Basic Law, and subject to any amendment by the legislature of the
Hong Kong SAR, and that the Government of the Hong Kong SAR shall provide an
appropriate economic and legal environment for the maintenance of the status of
Hong Kong as an international financial center. However, the implementation of
the Basic Law is subject to China's interpretation and no assurance can be given
as to the effect of the resumption of Chinese sovereignty on Hong Kong or the
Hong Kong stock market.

Political disagreements have arisen over certain aspects of the transition
from British to Chinese sovereignty over Hong Kong. A constitutional reform
package intended to broaden the basis of popular representation in the
Legislative Council was enacted in June 1994. Under the reforms, the Legislative
Council which was elected in September 1995 and took office in October 1995
consists of 20 directly elected members, 30 members elected by social and
professional groups known as 'fuctional constituencies' and 10 members appointed
by a 346-member directly elected district board. China has questioned the
legality of the June 1994 constitutional reform package. On March 24, 1996, the
Preparatory Committee appointed by China to oversee the transition to Chinese
sovereignty voted to disband the Legislative Council that was elected in
September 1995 immediately following the resumption of Chinese sovereignty and
to replace it with an appointed provisional legislature, which was selected in
December 1996. The British government takes the position that the appointment of
the provisional legislature is contrary to the Joint Declaration and has
threatened to take its challenge to the International Court of Justice in The
Hague. In addition, certain local political leaders have also questioned the
legality of the provisional legislature and have threatened to challenge its
actions in the Hong Kong courts. In January 1997, the Preparatory Committee's
legal sub-group proposed the modification or repeal of approximately 25 laws,
including portions of the Bill of Rights, which it claimed were contrary to the
Basic Law. It is possible that other statements and actions by various parties
involved in the transition to Chinese sovereignty, including statements relating
to the scope of the Bill of Rights and other political rights, will damage
public confidence or increase market volatility. In addition, the government of
China has no procedures for the orderly succession of its leadership. The
Sponsors cannot predict what effect the death of certain members of the current
leadership, who are very aged, may have on the prices of the stocks in the Hong
Kong Portfolio.

Hong Kong Exchange. The Stock Exchange of Hong Kong Ltd. (the 'Hong Kong
Exchange'), with a total market capitalization as of February 29, 1996 of
approximately US$345.6 billion, is the second largest stock market in Asia,
measured by market capitalization, behind that of Japan. As of that date, 545
companies and 1,038 securities (including ordinary shares, warrants and other
derivative instruments) were listed on the Hong Kong Exchange. The Securities
and Futures Commission exercises supervision of the securities, financial
investment and commodities futures industry.

The Hang Seng Index is subject to change, and delisting of shares of any
issuers may have an adverse impact on the performance of the Portfolio, although
delisting would not necessarily result in the disposal of the stock of these
companies, nor would it prevent the Portfolio from purchasing such Securities in
connection with the issuance of additional Units or the purchase of additional
Hong Kong Securities. Jardine Matheson Holdings Ltd. and Jardine Strategic
Holdings Ltd. delisted from the Hong Kong Stock Exchange as of November 30, 1994
and three other Jardine affiliates delisted as of February 28, 1995. The five
Jardine companies represented almost 10% of total capitalization of the Hang
Seng Index.

6
<PAGE>
Hong Kong Real Estate and Property Companies. The Portfolio is considered to
be concentrated in common stocks of companies engaged in real estate asset
management, development, leasing, property sales and other related activities.
Many factors may have an adverse impact on the credit quality of companies in
this industry, including 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.

Additionally, certain Hong Kong real estate companies are now involved in
the purchase and development of real estate in southern China, which has
recently experienced a rise in real estate prices and construction costs, a
growing supply of real estate and a tightening of credit markets.

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. While the economy has recently shown
signs of recovery, it is unclear whether the recovery is sustainable and to what
extent such recovery will continue without continued fiscal stimulus by the
Japanese government. 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 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, 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.

7
<PAGE>
VOLATILITY

Foreign stock prices may be more volatile than U.S. stock prices. The
following table demonstrates the volatility of the Nikkei 225 Index, the Hang
Seng Index and the FT Index in comparison to that of the Dow Jones Industrial
Average by showing for each index the number of trading days during the period
from January 1, 1989 through December 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.

NUMBER OF TRADING DAYS WITH GAINS OR LOSSES SHOWN
PERCENTAGE GAINS ----------------------------------------------------------------------------- NIKKEI DOW JONES
OR LOSSES HANG SENG 225 FT INDUSTRIAL
IN VALUE OF INDEX INDEX INDEX INDEX AVERAGE
- ----------------- ----------- -------- ----- --------------
<S> <C> <C> <C> <C>
1%............... 687 688 409 310
2%............... 236 248 42 40
3%............... 84 97 12 11

</TABLE>

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

In 1989, the Hang Seng Index rose to 3,310 in May from its previous year-end
level of 2,687 but fell to 2,094 in early June following the events at Tiananmen
Square. The Hang Seng Index gradually climbed in subsequent months but fell by
181 points on October 13, 1989 (approximately 6.5%) following a substantial fall
in the U.S. stock markets, and at the year end closed at a level of 2,837. Also,
during 1994 the Hang Seng Index lost approximately 31% of its value. 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. 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. If the Hong Kong dollar ceased to be pegged to the U.S.
dollar there could be an adverse effect on the value of the Hong Kong Portfolio.
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,
Hong Kong dollar and Japanese yen relative to the U.S. dollar in the past 20
years.

CHANGES IN FOREIGN CURRENCY EXCHANGE RATES

RANGE OF
FLUCTUATIONS
U.S. CHANGE IN RANGE OF CHANGE IN RANGE OF
DOLLAR/ U.K. POUND FLUCTUATIONS HONG KONG FLUCTUATIONS CHANGE IN
U.K. POUND STERLING/ HONG KONG DOLLAR/ DOLLAR/ JAPANESE YEN/ JAPANESE YEN/
PERIOD STERLING* U.S. DOLLAR** U.S. DOLLAR* U.S. DOLLAR** U.S. DOLLAR* U.S. DOLLAR**
- ----- ----------- ------------- -------------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1977 1.908-1.700 10.68 4.717-4.618 1.24% 292.91-285.95 18.03
1978 2.095-1.807 6.32 4.840-4.601 -4.07 242.54-177.39 18.92
1979 2.332-1.979 8.52 5.243-4.739 -3.02 250.75-193.75 -23.18
1980 2.452-2.134 6.75 5.211-4.784 -3.68 259.47-202.30 15.31
1981 2.427-1.763 -25.00 6.155-5.125 -10.62 245.39-199.05 -8.33
1982 1.933-1.593 -18.18 6.940-5.662 -14.45 278.16-218.75 -6.87
1983 1.623-1.415 -11.30 8.750-6.472 -19.78 247.58-226.75 1.19
1984 1.492-1.158 -25.43 7.990-7.775 -0.55 251.25-222.70 -8.14
1985 1.494-1.044 19.94 7.860-7.722 0.15 263.43-200.25 20.15
1986 1.555-1.377 2.03 7.825-7.766 0.20 202.70-152.00 20.65
1987 1.886-1.468 21.21 7.814-7.750 0.58 159.40-121.25 23.95
1988 1.896-1.663 -3.48 7.824-7.768 -0.81 136.52-121.10 -3.29
1989 1.823-1.500 -12.04 7.816-7.773 0.10 149.62-123.60 -15.01
1990 1.976-1.595 16.37 7.817-7.754 0.09 159.90-125.05 5.53
1991 1.999-1.602 -3.24 7.875-7.711 0.27 141.90-124.90 8.10
1992 2.004-1.505 -23.44 7.777-7.723 0.44 134.53-119.35 -0.02
1993 1.590-1.417 -2.36 7.766-7.723 0.25 126.10-101.10 10.58
1994 1.637-1.461 5.46 7.753-7.730 -0.18 113.10- 96.77 10.76
1995 1.641-1.530 -0.77 7.768-7.730 0.04 104.29- 81.09 -3.85
1996 1.714-1.493 9.32 7.742-7.724 -0.01 116.21-103.45 -12.01
</TABLE>

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

8
<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.

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HOW TO BUY UNITS

Units are available from any of the Sponsors 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
OFFERING AMOUNT
AMOUNT PURCHASED PRICE 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 to $2,499,999... 1.75 1.750
$2,500,000 or more....... 1.00 1.000

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
Hong Kong Portfolio 'business day' shall also exclude the following Hong Kong
holidays in 1997: Lunar New Year's Day and the following day, the third day of
the Lunar New Year, Ching Ming Festival, Easter Monday, Queen's Birthday and the
following Monday, the first and second days of July, Tuen Ng Festival,
Sino-Japanese War Victory Day (18th August), National Day (1st October) and the
second day of October, the day following Chinese Mid-Autumn Festival, Chung
Yeung Festival, the first weekday following Christmas Day and, if Christmas Day
is a Sunday, the second weekday following Christmas Day; and 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.

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<PAGE>
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.

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 REDEEM OR SELL UNITS

You can redeem your Units at any time for net asset value. In addition, the
Sponsors have maintained an uninterrupted secondary market for Units for over 20
years and will ordinarily buy back Units at net asset value. The following
describes these two methods to redeem or sell Units in greater detail.

REDEEMING UNITS

You can always redeem your Units for net asset value. This can be done by
contacting your broker, dealer or financial institution that holds your Units in
street name. In certain instances, additional documents may be required such as
a trust instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian.

Within seven days after the receipt of your request (and any necessary
documents), a check will be mailed to you in an amount equal to the net asset
value of your Units. Because of the sales charge, market movements or changes in
the Portfolio, net asset value at the time you redeem your Units may be greater
or less than the original cost of your Units. Net asset value is calculated each
Business Day by adding the value of the Securities, declared but unpaid
dividends on the Securities, cash and the value of any other Fund assets;
deducting unpaid taxes or other governmental charges, accrued but unpaid Fund
expenses and any remaining Deferred Sales Charges, unreimbursed Trustee
advances, cash held to redeem Units or for distribution to investors and the
value of any other Fund liabilities; and dividing the result by the number of
outstanding Units. After the initial offering period, net asset value will be
reduced to reflect the cost to the Fund of liquidating Securities to pay the
redemption price.

As long as the Sponsors are maintaining a secondary market for Units (as
described below), the Trustee will not actually redeem your Units but will sell
them to the Sponsors for net asset value. If the Sponsors are not maintaining a
secondary market, the Trustee will redeem your Units for net asset value or will
sell your Units in the over-the-counter market if the Trustee believes it will
obtain a higher net price for your Units. If the Trustee is able to sell the
Units for a net price higher than net asset value, you will receive the net
proceeds of the sale.

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 based on market and credit factors determined to be in the best
interest of the Fund. These sales are often made at times when the Securities
would not otherwise be sold and may result in lower prices than might be
realized otherwise and may also reduce the size and diversity of the Fund. If
Securities sales are made during a time when additional Units are being created
by the purchase of additional Securities (as described under Portfolio
Selection), Securities will be sold in a manner designed to maintain, to the
extent practicable, the proportionate relationship among the number of shares of
each Security in the Portfolio.

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.

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

SPONSORS' SECONDARY MARKET FOR UNITS

The Sponsors, while not obligated to do so, will buy back Units at net asset
value without any other fee or charge as long as they are maintaining a
secondary market for Units. Because of the sales charge, market movements or
changes in the portfolio, net asset value at the time you sell your Units may be
greater or less than the original cost of your Units. The Sponsors may resell
the Units to other buyers or redeem the Units by tendering them to the Trustee.
You should consult your financial professional for current market prices to
determine if other broker-dealers or banks are offering higher prices for Units.

The Sponsors may discontinue the secondary market for Units without prior
notice if the supply of Units exceeds demand or for other business reasons.
Regardless of whether the Sponsors maintain a secondary market, you have the
right to redeem your Units for net asset value with the Trustee at any time, as
described above.

ROLLOVER

In lieu of redeeming their Units or receiving liquidation proceeds upon the
termination of the Fund, investors who hold their Units with one of the Sponsors
may elect, by contacting their financial adviser 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, Hong Kong or Japan Portfolio of the Select Ten Portfolio 1998
International Series (the 'New 1998 International Portfolios') (if available).
The New 1998 International Portfolios will invest in the ten highest yielding
stocks in the FT, Hang Seng and Nikkei 225 Indexes, respectively, as of that
time and it is expected that the terms of the New 1998 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 1998 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 1998 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 1998 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 1998 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 1998 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 realized on the rollover 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 1998 International Portfolio or to
modify the terms of the rollover. Prior notice of any decision would be provided
to investors.

12
<PAGE>
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.

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 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 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. Trustee fees shown in
Part A of this Prospectus assume that the Portfolios will reach a size estimated
by the Sponsors and are based on a sliding fee scale that reduces the per 1,000
units Trustee's fee as the size of a Portfolio increases. 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 currently estimated at
$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

13
<PAGE>
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), 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, Hong Kong 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) but 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 and any exchange
gain or loss resulting from the conversion into U.S. dollars of any such
dividends paid in foreign currency when such dividends are received or
converted by the Portfolio, regardless of whether such dividends are subject
to withholding taxes or used to pay a portion of the Portfolio's expenses or
whether they are automatically reinvested (see Reinvestment Plan).

Dividends considered to have been received by a U.S. Investor will not
qualify for the dividends-received deduction for corporate investors because
generally the dividend-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. 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.
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.

14
<PAGE>
An individual U.S. Investor who itemizes deductions will be entitled to
deduct his pro rata share of Portfolio expenses 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 U.S. Investor will generally recognize capital gain or loss when the
U.S. Investor disposes of his Units (by sale, redemption or otherwise) or
when the Trustee disposes of the Securities from the Portfolio. However,
deductions will be disallowed for such losses realized by U.S. Investors who
invest in New 1998 International Portfolios within 30 days after incurring
such losses to the extent that the securities in that series are
substantially identical to the old Securities. Furthermore, a U.S. Investor
will generally not recognize gain or loss upon the distribution of a pro
rata amount of each of the Securities by the Trustee to a U.S. Investor (or
to his agent) in redemption of Units, except to the extent of cash received
in lieu of fractional shares. The redeeming U.S. Investor's basis for such
Securities will be equal to his basis for the same Securities (previously
represented by his Units) prior to such redemption, and his holding period
for such Securities will include the period during which he held his Units.

Net capital gain (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 individuals and other 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.

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 the Portfolios hold only 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 a Portfolio, 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.

UNITED KINGDOM TAXATION

The following discussion addresses the U.K. tax consequences of Units of the
United Kingdom Portfolio held by certain 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.

15
<PAGE>
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 the 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. Accordingly, 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. 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 a 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 tax payable in the U.S., 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.

* * * *

As mentioned in 'United Kingdom -- Taxation of Dividends' above, for a U.S.
Investor to be able to claim Treaty Payments it would be necessary to agree a
special procedure with the Inland Revenue in advance. The Inland Revenue operate
a special procedure under which trustees of funds like the Fund may claim Treaty
Payments on behalf of Investors. The Inland Revenue have agreed to such
procedure in respect of the Fund, under the terms of which the Trustee may claim
Trearty Payments on behalf of U.S. Investors in the United Kingdom Portfolio.
The amount of any Treaty Payment obtained by the Trustee with respect to a
dividend will be reflected in the net asset value of the Portfolio and will be
distributed to investors on the first Distribution Date after the Treaty Payment
is received by the Portfolio.

HONG KONG TAXATION

The following discussion addresses only the Hong Kong tax consequences to
investors of Units in the Hong Kong Portfolio. The taxation of non-U.S.
investors in their own countries of residence as a result of their ownership,
sale,

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exchange or other disposition of Units in the Hong Kong Portfolio will be
governed by the internal tax laws of the countries of residence of the non-U.S.
investors. Accordingly, non-U.S. investors should consult their tax advisors in
this regard.

The Sponsors have been advised by Johnson Stokes & Master, the Sponsors'
special Hong Kong counsel, that the following summary accurately describes the
Hong Kong tax consequences under existing law to all investors of Units of the
Hong Kong Portfolio. This discussion is for general purposes only and assumes
that the investor is not carrying on a trade, profession or business in Hong
Kong and has no profits arising in or derived from Hong Kong in respect of the
carrying on of such trade, profession or business. Investors should consult
their tax advisors as to the Hong Kong tax consequences of ownership of the
Units of the Hong Kong Portfolio applicable to their particular circumstances.

Taxation of Dividends. Amounts in respect of dividends paid to investors of
Units of the Hong Kong Portfolio are not taxable in Hong Kong and therefore will
not be subject to the deduction of any withholding tax in Hong Kong.

Profits Tax. An investor of Units of the Hong Kong Portfolio (other than a
person carrying on a trade, profession or business in Hong Kong) will not be
subject to Hong Kong profits tax on any gain or profits made on the realization
or other disposal of his units.

Hong Kong Estate Duty. Units of the Hong Kong Portfolio will not give rise
to a liability to Hong Kong estate duty, except possibly in the case of the
death of an individual investor.

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 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. 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 national tax authority of Japan
takes the position that the Trustee may not file the required application on
behalf of the investors. Accordingly, 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

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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 ($4,000, 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 ($4,000 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 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.

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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 Trustees 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.

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.

TRUSTEES

The Trustees and their addresses are stated on the back cover of the
Prospectus. The Trustees are subject to supervision by the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve System and
the State of New York Banking Department.