SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED JANUARY 7, 1997
DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------
EQUITY INCOME FUND The objective of this Defined Fund is total return
SELECT S&P INDUSTRIAL through a combination of capital appreciation and
PORTFOLIO current dividend income. The strategy is to invest
1997 SERIES A for a period of about one year in a portfolio of
(A UNIT INVESTMENT 15 stocks, selected from a pre-screened subset of
TRUST) the Standard & Poor's Industrial Index (the
- ------------------------------'Index'), with the highest dividend yields two
business days prior to the date of this
Prospectus.
The value of units will fluctuate with the value
of the common stocks in the Portfolio and no
assurance can be given that dividends will be paid
or that the units will appreciate in value.
Minimum purchase: $250.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
SPONSORS: OF THIS
Merrill Lynch, DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
Pierce, Fenner & Smith CRIMINAL
Incorporated OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-221-7771.
Prudential Securities Prospectus dated , 1997.
Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Dean Witter Reynolds Inc. AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
- --------------------------------------------------------------------------------
Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored over 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 S&P Industrial Portfolio follows a simple strategy; buy approximately
equal amounts of the 15 highest dividend-yielding common stocks (Strategy
Stocks) in a pre-screened subset of the Standard & Poor's Industrial Index (the
Index Subset) and hold them for about one year. At the end of the year, the
Portfolio will be liquidated and the Strategy reapplied to select a new
portfolio. Each Select S&P Industrial Portfolio is designed to be part of a
longer term strategy and the Sponsors believe that more consistent results are
likely if the strategy is followed 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, however, not to offer new portfolios.
The 15 common stocks in the Portfolio were selected through the following
four-step process. Beginning with the stocks in the Standard & Poor's Industrial
Index, any stock also included in the Dow Jones Industrial Average (DJIA) is
eliminated from the list of stocks. Defined Funds eliminates the DJIA stocks to
avoid overlap with our Select Ten Portfolios which hold the ten highest
dividend-yielding stocks in the DJIA. Second, any stock not rated either A or A+
by Standard & Poor's Earnings and Dividend Rankings for Common Stocks ('Common
Stock Rankings') is also removed. Next, the remaining stocks are ranked by
market capitalization from highest to lowest and the top 75 percent are
selected. From that list, the 15 stocks with the highest dividend yields were
selected for the Portfolio. (See Portfolio Selection in Part B.)
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 the Portfolio will remain
unchanged over its one-year life despite any adverse developments concerning an
issuer, an industry or the economy or stock market generally.
- ---------------------------------------------------
Defining Your Portfolio
- ---------------------------------------------------
Based upon the principal business of each issuer and current market values, the
following industries are represented in the Portfolio:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ /
/ /
/ /
/ /
/ /
/ /
/ /
/ /
- ---------------------------------------------------
Defining Your Risks
- ---------------------------------------------------
The Strategy Stocks, as the 15 highest yielding stocks in the Index Subset,
generally share attributes that have caused them to have lower prices or higher
yields relative to the other stocks in the Index Subset. 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 Portfolio does not reflect any investment
recommendations of the Sponsors and one or more of the stocks in the Portfolio
may, from time to time, be subject to sell recommendations from one or more of
the Sponsors.
The Portfolio is not an appropriate investment for those who are not comfortable
with the Strategy or for those who are unable or unwilling to assume the risk
involved generally with an equity investment. It may not be appropriate for
investors seeking either preservation of capital or high current income.
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 the Portfolio, or that the Strategy
Stocks will continue to be included in the Index Subset.
A-2
<PAGE>
Unit price fluctuates with the value of the Portfolio, and the value of the
Portfolio could be affected by changes in the financial condition of the
issuers, changes in the various industries represented in the Portfolio,
movements in stock prices generally, the impact of purchase and sale of
securities for the Portfolio (especially during the primary offering period of
units and during the rollover period) and other factors. Additionally, equity
markets are at historically high levels and no assurance can be given that these
levels will continue. There is no guarantee that the objective of the Portfolio
will be achieved. Also, the return on an investment in the 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 a mutual fund, the Portfolio is not actively managed and the Sponsors
receive no management fee. Therefore, any adverse financial condition of an
issuer or any market movement in the price of a security will not require the
sale of securities from the Portfolio. Although the Sponsors may instruct the
Trustee to sell securities under certain limited circumstances, given the
investment philosophy of the Portfolio, the Sponsors are not likely to do so.
The Portfolio 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 Index Subset.
In addition, the Portfolio is considered to be 'concentrated' in stocks of
companies deriving a substantial portion of their income from the industry.
Investment in this industry may pose additional risks including (see Risk
Factors).
- ---------------------------------------------------
Defining Your Investment
- ---------------------------------------------------
PUBLIC OFFERING PRICE PER 1,000 UNITS $1,000.00
The Public Offering Price as of , 1997, the business day prior to the
initial date of deposit is based on the aggregate value of the underlying
securities ($ ) 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 the basis of their closing
sale prices at 4:00 p.m. Eastern time on every business day.
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 the Portfolio monthly beginning and thereafter on the 1st
of each month through 1, 1997.
ROLLOVER OPTION
When this Select S&P Industrial Portfolio is 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 , 199 , your units will be redeemed and your proceeds will
be reinvested in units of a new Select S&P Industrial Portfolio 1998 Series. 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.
DISTRIBUTIONS
You will receive distributions of any dividend income, net of expenses, on the
25th of , , 199 , if you own units on the 10th of those months.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into additional units
of the Portfolio subject only to the deferred sales charge remaining at the time
of reinvestment. Reinvesting helps to compound your income for a greater total
return.
TAXES
In the opinion of counsel, you will be considered to have received all the
dividends paid on your pro rata portion of each security in the Portfolio when
those dividends are received by the Portfolio, even though a portion of the
dividend payments may be used to pay expenses of the Portfolio and regardless of
whether you reinvest your dividends in the Portfolio.
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.
TERMINATION DATE
The Portfolio will terminate by , 1998. The final distribution will
be made within a reasonable time afterward. The 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 Portfolio will include the receipt of
applicable sales charges, fluctuations in the Public Offering Price or secondary
market price of units, a loss of $ on the initial deposit of the securities
and a gain or loss on subsequent deposits of securities (see Sponsors' and
Underwriters' Portfolio in Part B).
A-3
<PAGE>
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
SALES CHARGE
First-time investors pay a 1% sales charge when they buy. For example, on a
$1,000 investment, $990 is invested in the Strategy Stocks. In addition, a
deferred sales charge of $1.75 per 1,000 units will be deducted from the
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
----------- -----------
Maximum Initial Sales
Charge 1.00% $ 10.00
Deferred Sales Charge
per Year 1.75% 17.50
----------- -----------
2.75% $ 27.50
----------- -----------
----------- -----------
Maximum Sales Charge
Imposed per Year on
Reinvested Dividends% $
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Net Amount per
Assets 1,000 Units
----------- -----------
Trustee's Fee% $
Portfolio Supervision,
Bookkeeping and
Administrative Fees% $
Organizational Expenses% $
Other Operating
Expenses% $
----------- -----------
TOTAL% $
These estimates do not include the costs of purchasing and selling the
underlying Strategy Stocks.
This 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.
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
$ $ $ $
Although each Series 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.
The 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.
Reductions to the repurchase and cash redemption prices in the secondary market
to recoup the costs of liquidating securities to meet redemption (described
below) have not been reflected. 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.
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time prior to the termination of the
Portfolio. Your price will be based on the then current net asset value. The
redemption and secondary market repurchase price as of , 1997 was
$ per 1,000 units ($ 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 the 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. After the initial offering
period, the repurchase and cash redemption prices for units will be reduced to
reflect the estimated costs of liquidating securities to meet the redemption,
currently estimated at $ per 1,000 units. If you reinvest in the new Series,
you will pay your share of any brokerage commissions on the sale of underlying
securities when your units are liquidated during the rollover.
A-4
<PAGE>
- --------------------------------------------------------------------------------
Defined Portfolio
- --------------------------------------------------------------------------------
Equity Income Fund
Select S&P Industrial Portfolio 1997 Series A , 1997
Defined Asset Funds
<TABLE><CAPTION>
CURRENT PRICE
TICKER PERCENTAGE DIVIDEND YIELD PER SHARE COST
NAME OF ISSUER SYMBOL OF FUND (1) (2) TO FUND TO FUND (3)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
-------------- --------------
-------------- --------------
-------------- --------------
</TABLE>
- ----------------------------
(1) Based on Cost to Fund.
(2) Current Dividend Yield for each security was calculated by annualizing the
last quarterly or semi-annual ordinary dividend received on the security and
dividing the result by its market value as of the close of trading on ,
1997.
(3) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on , 1997, the business day prior to the initial
date of deposit. The value of the Securities on any subsequent business day
will vary.
----------------------------
The securities were acquired on , 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-5
<PAGE>
- --------------------------------------------------------------------------------
Performance Information
- --------------------------------------------------------------------------------
The following table compares the actual performance of the S&P Industrial Index
(the Index) and the hypothetical performance of approximately equal amounts
invested in each of the Strategy Stocks (but not any Select S&P Industrial
Portfolio) at the beginning of each year and reinvesting the proceeds annually
for the past 20 years, as of December 31 in each of these years. These results
represent past performance of the Strategy Stocks, and may not be indicative of
future results of the Strategy or the Portfolio. The Strategy Stocks
underperformed the Index in certain years. Also, an investment in the Portfolio
will not realize as high a total return as a direct investment in the Strategy
Stocks, since the Portfolio has sales charges and expenses and may not be fully
invested at all times. Actual performance of a Portfolio will also differ from
quoted performance of the Strategy Stocks and the Index because the quoted
performance figures are annual figures based on closing sales prices on December
31, while the Portfolios are established and liquidated at various times during
the year. Performance variances may also result because stocks are normally
purchased or sold at prices different from the closing price used to determine
the Portfolio's net asset value and not all stocks may be weighted equally at
all times.
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
(FIGURES DO NOT REFLECT SALES CHARGES, COMMISSIONS, FUND EXPENSES OR TAXES)
<TABLE><CAPTION>
STRATEGY STOCKS(1) S&P INDUSTRIAL INDEX (THE 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 -10.70% 4.49% -6.21% -12.34% 4.14% -8.20%
1978 1.75 5.65 7.40 2.38 5.12 7.50
1979 18.81 6.42 25.23 12.88 5.52 18.40
1980 11.92 6.63 18.55 27.62 5.36 32.98
1981 3.60 6.74 10.34 -11.22 4.53 -6.69
1982 23.89 6.97 30.86 14.95 5.19 20.14
1983 17.17 6.88 24.05 18.15 4.64 22.79
1984 8.67 5.93 14.60 0.06 4.03 4.09
1985 24.97 6.06 31.03 25.86 4.22 30.08
1986 26.40 4.96 31.36 15.07 3.47 18.54
1987 -1.76 3.88 2.12 5.90 3.23 9.13
1988 39.75 4.26 44.01 12.38 3.42 15.80
1989 31.93 4.84 36.78 25.59 3.71 29.30
1990 -1.11 3.89 2.78 -3.98 3.14 -0.84
1991 30.35 4.06 34.41 27.17 3.22 30.39
1992 11.64 3.32 14.96 2.99 2.64 5.63
1993 0.24 3.49 3.73 6.44 2.46 8.90
1994 9.48 3.87 13.35 1.35 2.40 3.75
1995 32.32 4.07 36.39 31.72 2.54 34.26
1996 9.64 3.23 12.87 20.62 2.08 22.70
</TABLE>
- ----------------------------
(1) The Strategy Stocks for any given year were selected by ranking the dividend
yields for each of the stocks in the Index as of the beginning of that year,
based upon an annualization of the last quarterly or semi-annual regular
dividend distribution (which would have been declared in the preceding year)
divided by that stock's market value on the first trading day that year on
the New York 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
New York 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 opeining value
on the first trading day in that year. Appreciation for the Index is
calculated by subtracting the opening value of the Index on the first
trading day in each year from the closing value of the Index on the last
trading day in that year, and dividing the result by the opening value of
the Index on the first trading day in that year.
(3) Actual Dividend Yield for the 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 Index is calculated by taking the total
dividends credited to the Index and dividing the result by the opening value
of the Index on the first trading day of the year.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Return does not take into consideration any reinvestment of dividend
income.
A-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Equity Income Fund, Select S&P Industrial
Portfolio 1997 Series A, Defined Asset Funds (the 'Fund'):
We have audited the accompanying statement of condition and the related defined
portfolio included in the prospectus of the Fund as of , 1997. This
financial statement is the responsibility of the Trustee. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of an irrevocable letter of credit deposited for the purchase of
securities, as described in the statement of condition, with the Trustee. An
audit also includes assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Fund as of ,
1997 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
, 1997
STATEMENT OF CONDITION AS OF , 1997
TRUST PROPERTY
Investments--Contracts to purchase Securities(1).........$
Organizational Costs(2)..................................
--------------------
Total............................................$
--------------------
--------------------
LIABILITY AND INTEREST OF HOLDERS
Accrued Liability(2).................................$
--------------------
Subtotal
--------------------
Interest of Holders of Units of fractional
undivided interest outstanding:(3)
Cost to investors(4)...................................$
Gross underwriting commissions(5)...................... ()
--------------------
Subtotal
--------------------
Total............................................$
--------------------
--------------------
- ------------
(1) Aggregate cost to the Fund of the securities listed under Defined
Portfolio determined by the Trustee at 4:00 p.m., Eastern time on ,
1997. The contracts to purchase securities are collateralized by an irrevocable
letter of credit which has been issued by , in
the amount of $ and deposited with the Trustee. The amount of the
letter of credit includes $ 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 $ . To the
extent the Fund is larger or smaller, the estimate 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 this statement of
condition, the number of Units offered on 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 value
of the underlying securities at 4:00 p.m., Eastern time on , 1997.
(5) Assumes the maximum initial 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 , 1997 and thereafter on the 1st day of each month
through , 1997. Distributions will be made to an account maintained by
the Trustee from which the deferred sales charge obligation of the investors to
the Sponsors will be satisfied. If units are redeemed prior to , 1997,
the remaining portion of the distribution applicable to such units will be
transferred to such account on the redemption date.
A-7
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INCOME FUND SELECT S&P INDUSTRIAL PORTFOLIO
FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS OF 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............................... 3
How to Buy Units........................... 4
How to Redeem or Sell Units................ 5
Income, Distributions and Reinvestment..... 7
Portfolio Expenses......................... 7
Taxes...................................... 8
PAGE
----
Records and Reports........................ 10
Trust Indenture............................ 10
Miscellaneous.............................. 11
Exchange Option............................ 13
Supplemental Information................... 13
Appendix A--The S&P Earnings and Dividend
Rankings for Common Stocks............... a-1
FUND DESCRIPTION
THE STRATEGY
Simple strategies can sometimes be the most effective. The Fund seeks total
return by acquiring the 15 highest dividend yielding stocks in a pre-screened
subset of the Standard & Poor's Industrial Index* as of the date indicated in
Part A, 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. Because issuers of the
Index Subset stocks tend to be highly capitalized, established companies, they
are generally able to survive adverse developments. An investment in the Fund
can be cost-efficient, avoiding the odd-lot costs of buying small quantities of
securities directly. Purchasing a portfolio of these stocks as opposed to one or
two provides a more diversified holding. There is only one investment decision
instead of 15, four quarterly dividends instead of 60. Investments in a number
of companies with high dividends relative to their stock prices is designed to
increase the Fund's potential for higher returns. Investing in these stocks of
the Index Subset may be effective as well as conservative because regular
dividends are common for established companies and dividends have accounted for
a substantial portion of the total return on stocks of the Index Subset as a
group. The Fund's return will consist of a combination of capital appreciation
and current dividend income. The Fund 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 Standard & Poor's Industrial Index is a capitalization-weighted index of
all stocks designed to measure the performance of the industrial sector of the
Standard & Poor's 500 Index. The Index was developed with a base level of 10 for
the 1941-43 base period.
- --------------
* 'Standard & Poor's R', 'S&PR' and 'S&P 500R' are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use by the Agent for the
Sponsors. The Fund is not sponsored, managed, sold or promoted by Standard &
Poor's. Standard & Poor's is not affiliated with any of the Sponsors.
1
<PAGE>
PORTFOLIO SELECTION
The Portfolio contains 15 common stocks selected through the following
four-step process. Beginning with the stocks in the Standard & Poor's Industrial
Index, any stock also included in the Dow Jones Industrial Average (DJIA) is
eliminated from the list of stocks. Second, any stock not rated either A or A+
by Standard & Poor's Common Stock Rankings is also removed (see a description of
the Common Stock Rankings in Appendix A). Next, the remaining stocks are ranked
by market capitalization from highest to lowest and the top 75 percent are
selected. The remaining stocks, which then comprise the Index Subset, are ranked
by dividend yield and the 15 highest-yielding stocks are selected for the
Portfolio. 'Highest dividend yield' is calculated for each Security by
annualizing the last quarterly or semi-annual ordinary dividend distributed on
the Security and dividing the result by its closing sales price. This yield 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 does the
Portfolio 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
Index Subset, industry or the economy generally. The application of the Strategy
may cause the Portfolio to own a stock that the Sponsors or Standard & Poor's do
not recommend for purchase and, in fact, the Sponsors or Standard & Poor's may
have sell recommendations on a number of the stocks in the 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 15 highest yielding stocks in the
Index Subset 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 and international economic developments; or
the market may be anticipating a reduction in or the elimination of the issuer'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 relatively high dividends.
Investors should be aware that the Fund may not be able to buy each Security
at the same time because of availability of the Security, any restrictions
applicable to the Fund relating to the purchase of the Security by reason of the
federal securities laws or otherwise. Any monies allocated to the purchase of a
Security will generally be held for the purchase of the Security.
The deposit of the Securities in the Fund on the initial date of deposit
established a proportionate relationship among the number of shares of each
Security. 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 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, the Portfolio will try to
purchase Securities as close to the Evaluation Time or at prices as close to the
evaluated prices as possible. The Portfolio may also enter into program trades
with unaffiliated broker/dealers, which will have the effect of increasing
brokerage commissions while reducing market risk. Portfolio investors may
benefit from reduced commissions and institutional prices available to the
Portfolio.
Because each Defined Asset Fund is a preselected portfolio, you know the
securities before you invest. Of course, the Portfolio will change somewhat over
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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
The 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 the 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 the Fund to dispose of a Security or cease
buying it. Furthermore, the Portfolio will likely continue to hold a Security
and purchase additional shares notwithstanding its ceasing to be included among
the 15 highest dividend yielding stocks in the Index Subset or even its deletion
from the Index.
RISK FACTORS
An investment in the Fund 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 stock
market worsens. The rights of holders of common stocks to receive payments from
the issuer are generally inferior to the rights of creditors of, or holders of
debt obligations or preferred stocks issued by, the issuer. Moreover, because
common stocks do not represent an obligation of the issuer they do not offer any
assurance of income or provide the degree of protection of capital provided by
debt securities. Common stocks in general are susceptible to general stock
market movements and to volatile increases and decreases in value as market
confidence in and perceptions of the issuers change. Equity markets can be
affected by 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. Additionally, equity markets are at historically high levels and no
assurance can be given that these levels will continue. There can be no
assurance that the Portfolio will be effective in achieving its objective over
the one-year life of the Fund or that future portfolios selected through this
process during consecutive one-year periods will meet their objectives. The
Portfolio is not designed to be a complete investment program.
The Portfolio may be concentrated in one or more of types of issuers.
Concentration may involve additional risk because of the decreased
diversification of economic, financial and market risks. Additional information
is contained in the Information Supplement which is available from the Trustee
at no charge to the investor.
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
the Fund, although pending litigation may have a material adverse effect on the
value of Securities in the Fund. 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 the Portfolio or the issuers of the
Securities. Changing approaches to regulation, particularly with respect to the
environment or with respect to the petroleum or tobacco industry, may have a
negative impact on certain companies represented in the Portfolio. There can be
no assurance that future litigation, legislation, regulation or deregulation
will not have a material adverse effect on the Portfolio or will not impair the
ability of the issuers of the Securities to achieve their business goals. From
time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. This type of legislation, if enacted into law,
would adversely affect the after-tax return to investors who can take advantage
of the deduction. See Taxes.
LIFE OF THE FUND; FUND TERMINATION
The size and composition of the 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. The Portfolio will be terminated no later than the
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mandatory termination date specified in Part A of the Prospectus. It will
terminate earlier upon the disposition of the last Security or upon the consent
of investors holding 51% of the Units. The 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 the Portfolio early, which will likely be made following the
rollover, will be based on factors such as the size of the Portfolio 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 the 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.
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:
<TABLE><CAPTION>
APPLICABLE SALES CHARGE
(GROSS UNDERWRITING PROFIT)
---------------------------
AS % OF
PUBLIC AS % OF NET
OFFERING AMOUNT
AMOUNT PURCHASED PRICE INVESTED
- -------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
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 $999,999...................................................... 1.75 1.750
$1,000,000 or more........................................................ 1.00 1.000
</TABLE>
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. If the Securities are
listed on a national securities exchange or the Nasdaq National Market,
evaluations are generally based on closing sales prices on that exchange or that
system (unless the Trustee deems these prices inappropriate) or, if closing
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sales prices are not available, at the mean between the closing bid and offer
prices. If the Securities are not listed or if listed but the principal market
is elsewhere, the evaluation is generally determined based on sales prices of
the Securities on the over-the-counter market or, if sales prices in that
market are not available, on the basis of the mean between current bid and
offer prices for the Securities or for comparable securities or by appraisal
or by any combination of these methods. Neither the Sponsors nor the Trustee
guarantee the enforceability, marketability or price of any Securities.
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 are being sold 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 Securities with a value of at least
$500,000 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. Generally, 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 on sales of Securities in connection with
in-kind redemptions will be borne by the redeeming investors. The in-kind
redemption option is subject to all applicable legal restrictions and may be
terminated by the Sponsors at any time upon prior notice to investors.
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
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<PAGE>
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 assets of the Fund toward the purchase of units of a
new Select S&P Industrial Portfolio 1998 Series (if available). The 1998 Series
will invest in the 15 highest yielding stocks in the S&P Industrial Index Subset
as of that time and it is expected that the terms of the 1998 Series, including
this rollover feature, will be substantially the same as those of the Fund.
A rollover of an investor's units is accomplished by the in-kind redemption
of his Units of the Fund 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 the 1998 Series 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 the
1998 Series 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 1998 Series 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 might 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 the 1998 Series,
those moneys may be uninvested for up to several days. For those Securities in
the Portfolio that will also be in the portfolio of the 1998 Series, 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
Fund; however, depending upon the extent of participation in the rollover, the
aggregate size of the Fund 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 Series or to modify the terms of
the rollover. Prior notice of any decision would be provided to investors.
The Division of Investment Management of the SEC is of the view that the
rollover option constitutes an 'exchange offer', for the purposes of Section
11(c) of the Investment Company Act of 1940, and would therefore be prohibited
6
<PAGE>
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 income per Unit, after deducting estimated annual Fund expenses
per Unit, will depend primarily upon the amount of dividends declared and paid
by the issuers of the Securities and changes in the expenses of the Fund 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 receives an equal share of distributions of dividend income 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 and other receipts to a Capital Account. A Reserve Account may
be created by withdrawing from the Income and Capital Accounts amounts
considered appropriate by the Trustee to reserve for any material amount that
may be payable out of the Fund. 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 Fund.
REINVESTMENT
Income and principal distributions on Units may be reinvested by
participating in the Fund's 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 the Fund. 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 Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
estimated expenses do not include the brokerage commissions payable by the Fund
in purchasing and selling Securities. S&P receives a minimal annual fee from the
Fund to cover the license by Standard & Poor's to the Agent for the Sponsors of
the use of the trademarks and trade names 'Standard & Poor's', 'S&P' and other
trademarks and trade names as well as the license by Standard & Poor's to the
Agent for the Sponsors of the S&P Industrial Index and Common Stock Rankings in
connection with selection of Strategy Stocks. The Trustee's Fee shown in Part A
of this Prospectus assumes that the Portfolio will reach a size estimated by the
Sponsors and is based on a sliding fee scale that reduces the per 1,000 Units
Trustee's fee as the size of the Portfolio increases. The Trustee's annual fee
is payable in monthly installments. The Trustee also benefits when it holds cash
for the Fund in non-interest bearing accounts. Possible additional charges
7
<PAGE>
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 Fund 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 to the Fund. While the fee may exceed their costs of
providing these services to the Fund, the total supervision fees from all Series
of Equity Income Fund will not exceed their costs for these services to all of
those Series during any calendar year. The Sponsors may also be reimbursed for
their costs of providing bookkeeping and administrative services to the Fund,
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 Fund, including the cost of the
initial preparation of documents relating to the Fund, Federal and State
registration fees, the initial fees and expenses of the Trustee, legal expenses
and any other out-of-pocket expenses will be paid by the Fund and amortized over
the life of the Fund. Advertising and selling expenses will be paid from the
Underwriting Account at no charge to the Fund. Defined Asset Funds can be a
cost-effective way to purchase and hold investments. Annual operating expenses
are generally lower than for managed funds. Because Defined Asset Funds have no
management fees, limited transaction costs and no ongoing marketing expenses,
operating expenses are generally less than 0.25% a year. When compounded
annually, small differences in expense ratios can make a big difference in your
investment results.
TAXES
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Fund is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered the owner of a pro
rata portion of each Security in the Fund under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Code'). Each investor will be considered to have received all of the
dividends paid on his pro rata portion of each Security when such dividends
are received by the Fund, regardless of whether such dividends are used to
pay a portion of the current ongoing expenses or whether they are
automatically reinvested (see Reinvestment Plan).
Dividends considered to have been received by an investor from domestic
corporations which constitute dividends for federal income tax purposes will
generally qualify for the dividends-received deduction, which is currently
70%, for corporate investors. Depending upon the particular corporate
investor's circumstances, limitations on the availability of the
dividends-received deduction may be applicable. Further, Congress from time
to time considers proposals that would adversely affect the after-tax return
to investors that can take advantage of the deduction. Investors are urged
to consult their own tax advisers.
An individual investor who itemizes deductions will be entitled to deduct
his pro rata share of current ongoing expenses paid by the Fund only to the
extent that this amount together with the investor's other miscellaneous
deductions exceeds 2% of his adjusted gross income.
The 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 an 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 investors will be based upon the amounts paid to
them, net of the Deferred Sales Charge and the charge for organizational
expenses. Accordingly, investors should not increase their basis in their
Units by the Deferred Sales Charge amount or any amount used to pay
organizational expenses.
A distribution of Securities by the Trustee to an investor (or to his
agent) upon redemption of Units will not be a taxable event to the investor
or to other investors. The redeeming 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. An
investor will have a taxable gain or loss, which will be a capital gain or
loss, when the investor (or his agent) sells the Securities so received in
redemption for cash, when a redeeming investor receives cash in lieu of
fractional shares, when the investor sells his Units for cash or when the
Trustee sells the Securities from the Fund. However, deductions will be
disallowed for such losses realized by investors who invest in a new 1998
Series ('rollover investor') within 30 days after incurring such losses to
the extent that the securities in that series are substantially identical
to the old Securities.
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<PAGE>
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 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
investors who, as of the Mandatory Termination Date (or earlier termination
of the Fund), have held their units for less than a year and a day.
Similarly, with respect to noncorporate rollover investors, this lower rate
will be unavailable if, as of the beginning of the rollover period, those
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 Fund is
not an association taxable as a corporation and the income of the Fund will
be treated as the income of the 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. Investors may be subject to taxation in New York or in
other jurisdictions and should consult their own tax advisors in this
regard. Investors that are not U.S. citizens or residents ('foreign
investors') should be aware that dividend distributions will generally be
subject to a withholding tax of 30%, or a lower treaty rate, such as 15%,
depending on their country of residence. Foreign investors should consult
their tax advisors on their eligibility for the withholding rate under
applicable treaties.
* * * *
At the termination of the Fund, the Trustee will furnish to each investor an
annual statement containing information relating to the dividends received by
the Fund on the Securities, the gross proceeds received by the Fund from the
disposition of any Security (resulting from redemption or the sale by the Fund
of any Security), and the fees and expenses paid by the Fund. The Trustee will
also furnish annual information returns to each investor and to the Internal
Revenue Service.
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. Holders of Units in IRAs,
Keogh plans and other tax-deferred retirement plans should consult their plan
custodian as to the appropriate disposition of distributions. Investors
considering participation in any of these plans should review specific tax laws
related thereto and should consult their attorneys or tax 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 of the Fund may
be purchased by retirement plans established for self-employed individuals,
partnerships or unincorporated companies ('Keogh plans'). The assets of a Keogh
plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Keogh plan participants may also establish separate
IRAs (see below) to which they may contribute up to an additional $2,000 per
year ($2,250, and for tax years beginning after December 31, 1996, $4,000, in a
spousal account).
Individual Retirement Account--IRA. Any individual can make use of a
qualified IRA arrangement for the purchase of Units of the Fund. Any individual
(including one covered by an employer retirement plan) can make a contribution
in an IRA equal to the lesser of $2,000 ($2,250, and for tax years beginning
after December 31, 1996, $4,000, in a spousal account) or 100% of earned income;
such investment must be made in cash. However, the deductible amount an
individual may contribute will be reduced if the individual's adjusted gross
income exceeds $25,000 (in the case of a single individual), $40,000 (in the
case of married individuals filing a joint return) or $200 (in 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
9
<PAGE>
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
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the 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
the Fund, the Trustee sends each investor of record a statement summarizing
transactions in the Fund'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 Fund, among
other matters. Fund 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
The Fund 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 Indenture, but each statement is qualified in its entirety by
reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without consent
by investors to cure ambiguities or to correct or supplement any defective or
inconsistent provision, to make any amendment required by the SEC or other
governmental agency or to make any other change not materially adverse to the
interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified of the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The resignation or removal becomes effective upon acceptance of
appointment by a successor; in this case, the Sponsors will use their best
efforts to appoint a successor promptly; however, if upon resignation no
successor has accepted appointment within 30 days after notification, the
resigning Trustee may apply to a court of competent jurisdiction to appoint a
successor.
Any Sponsor may resign so long as one Sponsor with a net worth of $2,000,000
remains. A new Sponsor may be appointed by the remaining Sponsors and the
Trustee to assume the duties of the resigning Sponsor. If there is only one
Sponsor and it fails to perform its duties or becomes incapable of acting or
bankrupt or its affairs are taken over by public authorities, the Trustee may
appoint a successor Sponsor at reasonable rates of compensation, terminate the
Indenture and liquidate the Fund or continue to act as Trustee without a
Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated has been appointed
as Agent for the Sponsors by the other Sponsors.
The Sponsors and the Trustee are not liable to investors or any other party
for any act or omission in the conduct of their responsibilities absent bad
faith, willful misfeasance, negligence (gross negligence in the case of a
Sponsor) or reckless disregard of duty. The Indenture contains customary
provisions limiting the liability of the Trustee.
10
<PAGE>
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the Sponsors.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and the New
York State banking authorities.
SPONSORS
The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; PaineWebber Incorporated, a wholly-owned
subsidiary of PaineWebber Group Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America,
and Dean Witter Reynolds, Inc., a principal operating subsidiary of Dean Witter
Discover & Co. Each Sponsor, or one of its predecessor corporations, has acted
as Sponsor of a number of series of unit investment trusts. Each Sponsor has
acted as principal underwriter and managing underwriter of other investment
companies. The Sponsors, in addition to participating as members of various
selling groups or as agents of other investment companies, execute orders on
behalf of investment companies for the purchase and sale of securities of these
companies and sell securities to these companies in their capacities as brokers
or dealers in securities.
CODE OF ETHICS
The Agent for the Sponsors has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its personnel
who have access to information on Defined Asset Funds portfolio transactions.
The code is intended to prevent any act, practice or course of conduct which
would operate as a fraud or deceit on any Fund and to provide guidance to these
persons regarding standards of conduct consistent with the Agent's
responsibilities to the Funds.
PUBLIC DISTRIBUTION
During the initial offering period and thereafter to the extent additional
Units continue to be offered for sale to the public by means of this Prospectus,
Units will be distributed directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above or to selected
dealers who are members of the National Association of Securities Dealers, Inc.
at a concession not in excess of the maximum sales charge. The Sponsors intend
to qualify Units for sale in all states in which qualification is deemed
necessary through the Underwriting Account and by dealers who are members of the
National Association of Securities Dealers, Inc.. The Sponsors do not intend to
qualify Units for sale in any foreign countries and this Prospectus does not
constitute an offer to sell Units in any country where Units cannot lawfully be
sold.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters will be entitled to receive sales
charges; each Underwriters' interest in the Underwriting Account will depend on
the number of Units acquired through the issuance of additional Units. The
Sponsors also realize a profit or loss on deposit of the Securities equal to the
difference between the cost of the Securities to the Fund (based on the
aggregate value of the Securities on their date of deposit) and the purchase
price of the Securities to the Sponsors plus commissions payable by the
Sponsors. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Securities it deposits in the Fund which were acquired from
underwriting syndicates of which it was a member. During the initial offering
period, the Underwriting Account also may realize profits
11
<PAGE>
or sustain losses as a result of fluctuations after the initial date of deposit
in the Public Offering Price of the Units. In maintaining a secondary market for
Units, the Sponsors will also realize profits or sustain losses in the amount of
any difference between the prices at which they buy Units and the prices at
which they resell these Units (which include the sales charge) or the prices at
which they redeem the Units. Cash, if any, made available by buyers of Units to
the Sponsors prior to a settlement date for the purchase of Units may be used in
the Sponsors' businesses to the extent permitted by Rule 15c3-3 under the
Securities Exchange Act of 1934 and may be of benefit to the Sponsors.
PERFORMANCE INFORMATION
Total returns, average annualized returns or cumulative returns for various
periods of the Strategy Stocks, the related index or the current Select S&P
Industrial Portfolio may be included from time to time in advertisements, sales
literature and reports to current or prospective investors. Total return shows
changes in Unit price during the period plus reinvestment of dividends and
capital gains, divided by the maximum public offering price. Average annualized
returns show the average return for stated periods of longer than a year. Sales
material may also include an illustration of the cumulative results of like
annual investments in Strategy Stocks during an accumulation period and like
annual withdrawals during a distribution period. Figures for actual Portfolios
(but not Strategy Stocks or the related index) reflect deduction of all
Portfolio expenses and unless otherwise stated the maximum sales charge. No
provision is made for any income taxes payable. Returns of Strategy Stocks may
also be shown in comparison to other indexes, to which may be added by year
various national and international political and economic events, milestones in
price and market indicators, and offerings of Defined Asset Funds. This
performance may also be compared for various periods with investments in
short-term U.S. Treasury securities. Investors should bear in mind that this
represents past performance and is no assurance of future results of the current
or any future Portfolio. Advertisements and other material distributed to
prospective investors may include the average annual compounded rate of return
on selected types of assets for periods of at least 10 years, as compiled by
Ibbotson Associates, compared to the rate of inflation over the same period.
The following chart shows the average annual compounded rate of return of
selected asset classes over the 10-year and 20-year periods ending September 30,
1996, compared to the rate of inflation over the same periods. Of course, this
chart represents past performance of these investments and is no guarantee of
future results, either of these categories or of any Defined Fund. Defined Funds
also have sales charges and expenses which are not reflected in the chart.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stocks (S&P 500)
20 yr 14.27%
10 yr 14.96%
Small-company stocks
20 yr 18.42%
10 yr 12.68%
Long-term corporate bonds
20 yr 9.88%
10 yr 9.59%
U.S. Treasury bills (short-term)
20 yr 7.28%
10 yr 5.46%
Consumer Price Index
20 yr 5.16%
10 yr 3.64%
0 2 4 6 8 10 12 14 16 18 20
</TABLE>
Source: Ibbotson Associates. Used with permission. All rights reserved.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio is relatively fixed) and 'hold with confidence'
(because the portfolio is professionally
12
<PAGE>
selected and regularly reviewed). Defined Asset Funds offers an array of simple
and convenient investment choices, suited to fit a wide variety of personal
financial goals--a buy and hold strategy for capital accumulation, such as for
children's education or retirement or regular current income consistent with the
preservation of principal. Unit investment trusts are particularly suited for
investors who prefer to seek long-term profits by purchasing and holding
investments, rather than through active trading. Few individuals have the
knowledge, resources or capital to buy and hold a diversified portfolio on their
own; it would generally take a considerable sum of money to obtain the breadth
and diversity that Defined Asset Funds offer. Your investment objectives may
call for a combination of Defined Asset Funds.
Defined Asset Funds reflect a buy and hold strategy that the Sponsors
believe can be more effective and less expensive than active management. This
strategy is premised on selection criteria and procedures, diversification and
regular monitoring by investment professionals. Various advertisements and sales
literature may summarize the results of economic studies concerning how stock
movement has tended to be concentrated and how longer-term investments can tend
to reduce risk.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Defined equity
funds offer growth potential and some protection against inflation.
EXCHANGE OPTION
You may exchange Fund Units for units of other Select Portfolios subject
only to the remaining deferred sales charge on the units received. You may
exchange your units of any Select Portfolio, of any other Defined Asset Fund
with a regular maximum sales charge of at least 3.50%, or of any unaffiliated
unit trust with a regular maximum sales charge of at least 2.70%, for Units of
this Fund at their relative net asset values, subject only to a reduced sales
charge, or to any remaining Deferred Sales Charge, as applicable. Any number of
units can be exchanged.
To make an exchange, you should contact your financial professional to find
out what suitable exchange funds are available and to obtain a prospectus. You
may acquire units of only those exchange funds in which the Sponsors are
maintaining a secondary market and which are lawfully for sale in the state
where you reside. Except for the reduced sales charge, an exchange is a taxable
event normally requiring recognition of any gain or loss on the units exchanged.
However, the Internal Revenue Service may seek to disallow a loss if the
portfolio of the units acquired is not materially different from the portfolio
of the units exchanged; you should consult your own tax advisor. If the proceeds
of units exchanged are insufficient to acquire a whole number of exchange fund
units, you may pay the difference in cash (not exceeding the price of a single
unit acquired).
As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.
SUPPLEMENTAL INFORMATION
Upon writing or calling the Trustee shown on the back cover of this
Prospectus, investors will receive without charge supplemental information about
the Fund, which has been filed with the SEC. The supplemental information
includes more detailed risk factor disclosure about the types of securities that
may be part of the Portfolio and general information about the structure and
operation of the Fund.
13
<PAGE>
APPENDIX A
THE STANDARD & POOR'S EARNINGS AND DIVIDEND RANKINGS FOR COMMON STOCKS
(AS DESCRIBED BY STANDARD & POOR'S ITSELF)
The investment process involves assessment of various factors--such as products
and industry position, corporate resources and financial policy--with results
that make some common stocks more highly esteemed than others. In this
assessment, Standard & Poor's believes that earnings and dividend performance is
the end result of the interplay of these factors and that, over the long run,
the record of this performance has a considerable bearing on relative quality.
The rankings, however, do not pretend to reflect all of the factors, tangible or
intangible, that bear on stock quality.
Relative quality of bonds or other debt, that is, degrees of protection for
principal and interest, called credit worthiness, cannot be applied to common
stocks, and therefore rankings are not to be confused with bond quality ratings
which are arrived at by a necessarily different approach.
Growth and stability of earnings and dividends are deemed key elements in
establishing Standard & Poor's earnings and dividend rankings for common stocks,
which are designed to capsulize the nature of this record in a single symbol. It
should be noted, however, that the process also takes into consideration certain
adjustments and modifications deemed desirable in establishing such rankings.
The point of departure in arriving at these rankings is a computerized scoring
system based on per-share earnings and dividend records of the most recent ten
years--a period deemed long enough to measure significant time segments of
secular growth, to capture indications of basic change in trend as they develop,
and to encompass the full peak-to-peak range of the business cycle. Basic scores
are computed for earnings and dividends, then adjusted as indicated by a set of
predetermined modifiers for growth, stability within long-term trend, and
cyclicality. Adjusted scores for earnings and dividends are then combined to
yield a final score.
Further, the ranking system makes allowance for the fact that, in general,
corporate size imparts certain recognized advantages from an investment
standpoint. Conversely, minimum size limits (in terms of corporate sales volume)
are set for the various rankings, but the system provides for making exceptions
where the score reflects an outstanding earnings-dividend record.
The final score for each stock is measures against a scoring matrix determined
by analysis of the scores of a large and representative sample of stocks. The
range of scores in the array of this sample has been aligned with the following
ladder of rankings:
A - ABOVE
A + HIGHESTAVERAGE B - LOWER
A HIGH B + AVERAGE C LOWEST
B BELOW D IN
AVERAGE REORGANIZATION
NR signifies no ranking because of insufficient data or because the stock is not
amenable to the ranking process.
The positions as determined above may be modified in some instances by special
considerations, such as natural disasters, massive strikes, and non-recurring
accounting adjustments.
A ranking is not a forecast of future market price performance, but is basically
an appraisal of past performance of earnings and dividends, and relative current
standing. A high-score stock may at times be so overpriced as to justify its
sale, while a low-score stock may be attractively priced for purchase. Rankings
based upon earnings and dividend records are no substitute for complete
analysis. They cannot take into account potential effects on management changes,
internal company policies not yet fully reflected in the earnings and dividend
record, public relations standing, recent competitive shifts, and a host of
other factors that may be relevant to investment status and decision.
THESE RANKINGS MUST NOT BE USED AS MARKET RECOMMENDATIONS.
Rankings are published by Standard & Poor's Equity Investor Services Group,
which is independent of, and has no access to information obtained by Standard &
Poor's Rating Services. Standard & Poor's Rating Services may from time to time
obtain information of a confidential nature.
a-1
<PAGE>
DEFINED
ASSET FUNDSSM
SPONSORS: EQUITY INCOME FUND
Merrill Lynch, SELECT S&P INDUSTRIAL PORTFOLIO
Pierce, Fenner & Smith Incorporated1997 SERIES A
Defined Asset Funds
P.O. Box 9051
Princeton, NJ 08543-9051 This Prospectus does not contain all of the
(609) 282-8500 information with respect to the investment
Smith Barney Inc. company set forth in its registration
Unit Trust Department statement and exhibits relating thereto which
388 Greenwich Street--23rd Floor have been filed with the Securities and
New York, NY 10013 Exchange Commission, Washington, D.C. under
(212) 816-4000 the Securities Act of 1933 and the Investment
PaineWebber Incorporated Company Act of 1940, and to which reference
1200 Harbor Boulevard is hereby made. Copies of filed material can
Weehawken, NJ 07087 be obtained from the Public Reference Section
(201) 902-3000 of the Commission, 450 Fifth Street, N.W.,
Prudential Securities Incorporated Washington, D.C. 20549 at prescribed rates.
One New York Plaza The Commission also maintains a Web site that
New York, NY 10292 contains information statements and other
(212) 778-6164 information regarding registrants such as
Dean Witter Reynolds Inc. Defined Asset Funds that file electronically
Two World Trade Center--59th Floor with the Commission at http://www.sec.gov.
New York, NY 10048 ------------------------
(212) 392-2222 No person is authorized to give any
TRUSTEE: information or to make any representations
The Bank of New York with respect to this investment company not
Unit Investment Trust Department contained in its registration statement and
Box 974 related exhibits; and any information or
Wall Street Station representation not contained therein must not
New York, NY 10268-0974 be relied upon as having been authorized.
1-800-221-7771 ------------------------
When Units of this Fund are no longer
available, or for investors who will reinvest
into subsequent series of Select S&P
Industrial Portfolios, this Prospectus may be
used as a preliminary prospectus for a future
series; in which case investors should note
the following:
Information contained herein is subject to
amendment. A registration statement relating
to securities of a future series has been
filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer
solicitation or sale would be unlawful prior
to registration or qualification under the
securities laws of any such State.
--1/97
