<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1997
REGISTRATION NO. 333-05685
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
AMENDMENT NO. 3
TO
FORM S-6
---------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
---------------------------------
A. EXACT NAME OF TRUST:
EQUITY INVESTOR FUND
EQUITY PARTICIPATION SERIES--LOW FIVE PORTFOLIO
(FORMERLY EQUITY PARTICIPATION TRUST--LOW FIVE SERIES)
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
PAINEWEBBER INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, PAINEWEBBER INCORPORATED
FENNER & SMITH 1285 AVENUE OF THE
INCORPORATED AMERICAS
DEFINED ASSET FUNDS NEW YORK, NY 10019
P.O. BOX 9051
PRINCETON, NJ 08543-9051
PRUDENTIAL SECURITIES
INCORPORATED
ONE NEW YORK PLAZA
NEW YORK, NY 10292 DEAN WITTER REYNOLDS INC.
TWO WORLD TRADE
CENTER--59TH FLOOR
NEW YORK, NY 10048
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ.
P.O. BOX 9051
PRINCETON, NJ 08543-9051 ROBERT E. HOLLEY
1285 AVENUE OF THE
AMERICAS
NEW YORK, NY 10019
COPIES TO:
LEE B. SPENCER, JR. PIERRE DE SAINT PHALLE, DOUGLAS LOWE, ESQ.
ONE NEW YORK PLAZA ESQ. 130 LIBERTY STREET--29TH
NEW YORK, NY 10292 450 LEXINGTON AVENUE FLOOR
NEW YORK, NY 10017 NEW YORK, NY 10006
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED: Indefinite
G. AMOUNT OF FILING FEE: not applicable
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED JUNE 30, 1997
DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------
The objectives of this Defined Fund are to provide
EQUITY PARTICIPATION SERIES capital appreciation together with protection
LOW FIVE PORTFOLIO against a loss of capital for investors who hold
(A UNIT INVESTMENT their investment until the termination of the
TRUST) Trust. The Trust will invest in a portfolio
- ------------------------------consisting of call options on a basket of the five
lowest dollar price per share common stocks of the
ten highest dividend yielding common stocks in the
Dow Jones Industrial Average (DJIA) and U.S.
Treasury zero coupon bonds. The Trust will not
receive any dividend income on stocks underlying
the call options and is designed for those
investors who are willing to commit to an
approximately 5 1/2 year investment.
The value of units will fluctuate with the value
of the securities in the Trust's portfolio and no
assurance can be given that the units will
appreciate in value.
Minimum purchase: One Unit.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
SPONSORS: COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Merrill Lynch, OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Pierce, Fenner & Smith CONTRARY IS A CRIMINAL OFFENSE.
Incorporated Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-323-1508.
Prudential Securities Prospectus dated July , 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>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored 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.
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
- ---------------------------------------------------
Defining the Equity Participation Low Five Strategy
- ---------------------------------------------------
This Trust combines options on a basket of the common stocks comprising the Low
Five Strategy (as contrasted with separate options on each common stock) with
principal protection provided by U.S. Treasury zero coupon bonds. The Low Five
Strategy invests in the five lowest dollar price per share common stocks (Low
Five Stocks) of the 10 highest dividend-yielding stocks of the 30 stocks in the
DJIA* as of business days prior to the date of this prospectus, and annually
reapplies the strategy to select a new portfolio of Low Five Stocks. The call
options initially relate to the Low Five Stocks identified under Defined
Portfolio. The Low Five Stocks underlying the call options will be adjusted
annually on or about July , 1998, 1999, 2000, 2001 and 2002.
The call options held by the Trust will provide each unit at least % of the
price appreciation (exclusive of dividends) on an investment of $1,000 in the
Low Five Stocks for a period of approximately 5 1/2 years from the initial date
of deposit. The U.S. Treasury zero coupon bonds will return to investors who
hold their units until the termination of the Trust not less than $1,000 per
unit.
The Equity Participation Low Five Strategy provides a disciplined approach to
investing without active management. For investors who hold their units until
termination of the Trust, the Trust can provide safety of capital if a market
correction were to occur yet still allow investors to profit if market levels
continue to rise.
- ---------------------------------------------------
Defining Your Portfolio
- ---------------------------------------------------
Approximately % of the initial value of the Trust's portfolio consists of call
options. The call options will expire on February , 2003; however, it is
anticipated that the Sponsors will direct the Trustee to sell the call options
approximately days prior to their expiration. Each of the call options is an
obligation of, or guaranteed by, a financial institution whose long-term debt or
financial strength and claims-paying ability are rated in the category AA or
better by Standard & Poor's Ratings Group and in the category Aa or better by
Moody's Investors Service Inc.
On the initial date of deposit, the Low Five Stocks underlying the call options
represented the following industries:
APPROXIMATE
BASKET PERCENTAGE
/ / Oil/Gas-International %
/ / Forest Products and Paper %
/ / Tobacco/Food Processing %
/ / Utility/Telecommunications %
/ / Auto Manufacturing %
The balance of the Trust's Portfolio consists of U.S. Treasury zero coupon bonds
maturing on or shortly before the expiration of the call options plus cash in an
amount sufficient to pay estimated annual expenses of the Trust. A zero coupon
bond is purchased at a discount from its face amount while the Trust will
receive the bond's face value at maturity. The Sponsors anticipate that these
bonds will appreciate by the expiration of the call options to an amount equal
in value to not less than $1,000 per unit.
- ---------------------------------------------------
Defining Your Risks
- ---------------------------------------------------
The value of your units will fluctuate with the value of the call options and
U.S. Treasury zero coupon bonds held in the Trust's portfolio. The value of the
call options could be affected by changes in the financial condition of the
issuers of the options and of the issuers of the Low Five Stocks themselves. The
obligations of the issuers or guarantors of the call options are not
collateralized or otherwise secured. However, if any of their ratings should be
downgraded to less than investment grade, collateral will be required for that
issuer's obligation to the Trust.
The Low Five Stocks generally have lower prices and therefore higher yields
relative to the other stocks in the DJIA because they 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. Investing in these stocks is considered
contrarian in nature. The Low Five Stocks do not reflect any investment
- ----------------------------
* The name 'Dow Jones Industrial Average' is the property of Dow Jones &
Company, Inc., which is not affiliated with the Sponsors, has not participated
in any way in the creation of the Portfolio or in the selection of stocks
included in the Portfolio and has not reviewed or approved any information
included in this Prospectus.
A-2
<PAGE>
recommendations of the Sponsors and one or more of the Low Five Stocks may, from
time to time, be subject to sell recommendations from one or more of the
Sponsors.
There can be no assurance that the market factors that caused the relatively low
prices and high yields of the Low Five Stocks will change, that any negative
conditions adversely affecting the stock price will not deteriorate, that share
prices will not decline further during the life of the Trust or that the Low
Five Stocks will continue to be included in the DJIA.
The value of the U.S. Treasury zero coupon bonds could be affected by movements
in bond prices and interest rates generally. However, the bonds' face amount at
maturity is backed by the full faith and credit of the U.S. Government.
The value of the call options will be affected by the price movements of the Low
Five Stocks, the level of interest rates generally and the time to expiration.
The value of a call option does not increase or decrease at the same rate as the
underlying Stocks (although they move in the same direction). However, as an
option approaches its expiration, its value increasingly corresponds with the
price of the Low Five Stocks.
The Trust is designed for those investors who desire protection from a market
correction with upside participation (exclusive of any dividends) if the
domestic equity markets continue to increase in price. The Trust is not an
appropriate investment for those who are not comfortable with or are unable or
unwilling to assume the risk involved with the Equity Participation Low Five
Strategy nor for investors who are unwilling to commit to an approximately 5 1/2
year investment. Because the Trust is designed to return to investors $1,000 per
Unit at its termination, if you redeem or sell prior to termination of the
Trust, you may receive less.
While the call options relate to the five lowest dollar price per share common
stocks of the 10 highest-yielding stocks in the DJIA, the call options do not
pass through any dividends payable on the Low Five Stocks and the Trust will not
receive any dividend income. The Trust is therefore not appropriate for
investors seeking any current income.
Unlike a mutual fund, the Trust is not actively managed and the Sponsors receive
no management fee. Therefore, any adverse financial condition of an issuer of a
Low Five Stock or any market movement in the price of a call option or a Low
Five Stock will not require the sale of a call option or any other change in the
Trust's portfolio.
- ---------------------------------------------------
Defining Your Investment
- ---------------------------------------------------
PUBLIC OFFERING PRICE PER UNIT $
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 call
options and zero coupon bonds ($ ) plus cash (including any cash held
to purchase securities), divided by the number of units outstanding ( ),
plus the sales charge. The Public Offering Price on any subsequent date will
vary. The call options and zero coupon bonds are valued by the Evaluator at 4:00
p.m. Eastern time on every business day.
DISTRIBUTIONS
The Trust will pay no distributions until a reasonable time after the maturity
of the U.S. Treasury bonds and the settlement date of the call options.
TAXES
Investors will be required to include original issue discount with respect to
the zero coupon bonds in income as its accrues, prior to the Trust's receipt of
cash payments on the zero coupon bonds. Gain or loss recognized by an investor
on a sale of Units, or on the Trust's sale of zero coupon bonds or an interest
in the call option, will be capital gain or loss. Counsel is of the opinion
that, although the issue is not entirely free from doubt, gain or loss
recognized by an investor on the cash settlement of the call option will be
capital gain or loss.
TAX BASIS REPORTING
The proceeds received when you sell this investment will reflect the deduction
of 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 charge for organizational expenses). Accordingly,
you should not increase your basis in your units by the charge for
organizational expenses.
TERMINATION DATE
The Trust will terminate by , 2003. The Trust may be terminated earlier
if its value is less than 40% of the value of the securities when deposited
regardless of whether the 40% level is reached through the operation of market
movement or through sale of securities to meet redemption of units.
SPONSORS' PROFIT OR LOSS
The Sponsors' profit or loss from the Trust will include the receipt of
applicable sales charges, fluctuations in the Public Offering Price or secondary
market price of units and a gain or a loss of $ on the initial deposit of
the securities (see Sponsors' and Underwriters' Profits in Part B).
A-3
<PAGE>
- ---------------------------------------------------
Defining Your Costs
- ---------------------------------------------------
SALES CHARGES
This table shows the maximum costs and expenses you would pay, directly or
indirectly, if you invested in this Trust.
As a %
of Net Amount
Amount per
Invested Unit
--------- --------
Maximum Sales Charge 3.50% $ 35.00
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
As a %
of Net Amount per
Assets Unit
----------- -----------
Trustee's Fee% $
Portfolio Supervision,
Bookkeeping and
Administrative Fees% $
Evaluator's Fee% $
Organizational Expenses% $
Other Operating
Expenses% $
----------- -----------
TOTAL% $
These estimates do not include the costs of purchasing and selling the call
options or the bonds.
This Trust (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 Trust--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
$ $ $
This information is presented to permit a comparison of fees. The example uses a
5% annual rate of return as mandated by SEC regulations applicable to mutual
funds.
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 your units or sell your units at any time prior to the
termination of the Trust. Your price will be based on the then current net asset
value (generally based on the lower, bid side evaluation of the call options and
zero coupon bonds, as determined by an independent evaluator) plus principal
cash. The bid side redemption and secondary market repurchase price as of
, 1997 was $ per unit ($ per unit less than the Public Offering
Price). After the initial offering period, the repurchase and cash redemption
prices for units will be reduced to reflect the estimated costs of liquidating
call options and zero coupon bonds to meet the redemption, currently estimated
at $2.50 per unit.
A-4
<PAGE>
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Defined Portfolio
- --------------------------------------------------------------------------------
Equity Investor Fund
Equity Participation Series--Low Five Portfolio , 1997
Defined Asset Funds
The Portfolio consists of the following:
Call Options:
<TABLE><CAPTION>
RATINGS OF ISSUER(1)
---------------------- PERCENTAGE
STANDARD EXERCISE OF COST TO
NAME OF ISSUER & POOR'S MOODY'S DATE(2) TRUST(3) TRUST(4)
- -------------------------------------- --------- ------- -------- ---------- --------------
<S> <C> <C> <C> <C> <C>
1.% $
2.
3.
Zero Coupon Bonds:
MATURITY DATE FACE AMOUNT
- ------------------------------------------------------- ----------------
1.
2.
---------- --------------
Total% $
---------- --------------
---------- --------------
</TABLE>
----------------------------
The call options initially cover the following Stocks:
<TABLE>
<CAPTION>
NUMBER OF SHARES
TICKER UNDERLYING EACH
NAME OF ISSUER(5) SYMBOL OPTION
- --------------------------------------------------------------------- ------- -------------------
<S> <C> <C>
1.
2.
3.
4.
5.
</TABLE>
- ----------------------------
(1) Ratings are ratings of the long-term debt of the issuers or their
guarantors, unless followed by '+', which indicates a rating of the
financial strength and claims-paying ability of the issuer or guarantor.
(2) The Trustee will seek to sell the call options to third party purchasers at
least five business days before their respective exercise dates.
(3) Based on Cost to Trust.
(4) Valuation by the Evaluator at the evaluation time on , 1997.
(5) Any of the Sponsors may have acted as underwriters, managers or co-managers
of a public offering of Low Five Stocks during the last three years.
Affiliates of the Sponsors may serve as specialists in Low Five Stocks 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
Low Five Stocks. 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>
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Hypothetical Strategy Performance Information
- --------------------------------------------------------------------------------
The following table compares the actual price appreciation of the Dow Jones
Industrial Average for 5-year periods with the hypothetical price appreciation
for the same periods of investing approximately equal amounts in each of the Low
Five Stocks (but not the Trust) at the beginning of the period and reinvesting
the proceeds in the same manner on the first trading day of each following year
in the period. The Low Five Stocks would have underperformed the DJIA in three
of these 16 periods (in four periods if Portfolio sales charges and expenses
were deducted from Low Five Stock performance). The results below are
hypothetical for the following reasons: An investment in the Trust will not
realize as high a total return as a direct investment in the Low Five Stocks,
since the Trust has sales charges and expenses and will not receive any dividend
income. Performance of the Trust will also differ from quoted performance of the
Low Five Stocks and the DJIA because the quoted performance figures are based on
closing sales prices on December 31, while the call options provide for annual
readjustment on or about July of each year and the Trust will terminate no later
than , 2003. The periods shown are 5 years, while the Trust will last for
approximately 5 1/2 years. The table does not reflect any fees and expenses
associated with the option issuers. Past performance is no guaranty of future
results of the Low Five Stocks or the Trust.
COMPARISON OF PRICE APPRECIATION(1)
(FIGURES DO NOT REFLECT DIVIDENDS, SALES CHARGES, COMMISSIONS, TRUST EXPENSES OR
TAXES)
<TABLE><CAPTION>
DOW JONES INDUSTRIAL AVERAGE LOW FIVE STOCKS(2)
-------------------------------- --------------------------------
AVERAGE AVERAGE
PERIOD TOTAL ANNUALIZED TOTAL ANNUALIZED
- ------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
1977-81 -12.91% -2.73% 35.44% 6.26%
1978-82 25.91 4.72 83.01 12.85
1979-83 56.36 9.35 119.94 17.07
1980-84 44.46 7.63 124.18 17.52
1981-85 60.46 9.92 121.39 17.23
1982-86 116.69 16.73 187.40 23.51
1983-87 85.26 13.12 126.84 17.80
1984-88 72.29 11.49 96.50 14.47
1985-89 127.24 17.84 99.82 14.85
1986-90 70.28 11.23 21.83 4.03
1987-91 67.14 10.82 53.51 8.95
1988-92 70.26 11.23 71.18 11.35
1989-93 73.11 11.60 101.48 15.04
1990-94 39.27 6.85 100.58 14.94
1991-95 94.28 14.21 221.51 26.31
1992-96 103.47 15.27 152.79 20.38
</TABLE>
- ----------------------------
(1) Appreciation for the Low Five 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 the period from the market value of those stocks
at the closing value on the last trading day in that period, and dividing
the result by the market value of the stocks at the opening value on the
first trading day in that period. Appreciation for the DJIA is calculated by
subtracting the opening value of the DJIA on the first trading day in the
period from the closing value of the DJIA on the last trading day in that
period, and dividing the result by the opening value of the DJIA on the
first trading day in that period.
(2) Each year new Low Five Stocks were selected by ranking the dividend yields
for each of the stocks in the DJIA as of the beginning of the year, based
upon annualization of the last quarterly or semi-annual regular dividend
distributions (which would have been declared in the preceding year) divided
by that stock's market value on the first trading day in that year on the
New York Stock Exchange, eliminating the 20 stocks with the lowest dividend
yields and selecting from among those remaining stocks, the five stocks with
the lowest prices per share.
A-6
<PAGE>
- --------------------------------------------------------------------------------
Estimated Maturity Values of the Low Five Portfolio
- --------------------------------------------------------------------------------
The following table shows the estimated dollar amount payable to investors
at the termination of the Portfolio per Unit at various intervals depending on
the value of the basket of Low Five Stocks ('Strategy Value'). Because the
purchase price per Unit includes a sales charge, it is likely to exceed $1,000.
These estimates are based on the $1,000 maturity value of the U.S. Treasury
bonds in the Portfolio plus the price appreciation of the call options. Price
appreciation of the call options is designed to equal the price changes of the
Low Five Stocks, assuming a beginning value of 1,000, which will be set on the
initial date of deposit. Because the call options will be sold shortly before
they expire, the proceeds may be more or less than the estimate included in the
Estimated Maturity Value.
HYPOTHETICAL PERCENTAGE
ENDING CHANGE OVER TRUST
STRATEGY THE INITIAL ESTIMATED
VALUE STRATEGY VALUE MATURITY VALUE
- ------------- -------------- --------------
500 -50% $
600 -40
700 -30
800 -20
900 -10
1,000 0
1,100 10
1,200 20
1,300 30
1,400 40
1,500 50
1,600 60
1,700 70
1,800 80
1,900 90
2,000 100
A-7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Equity Investor Fund, Equity Participation
Series--Low Five Portfolio, Defined Asset Funds (the 'Trust'):
We have audited the accompanying statement of condition and the related defined
portfolio included in the prospectus of the Trust 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 Trust 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).........$
Cash.....................................................
Organizational Costs(2)..................................
--------------------
Total............................................$
--------------------
--------------------
LIABILITY AND INTEREST OF HOLDERS
Accrued Liability(2).................................$
--------------------
Subtotal
--------------------
Interest of Holders of Units of fractional
undivided interest outstanding:
Cost to investors(3)...................................$
Gross underwriting commissions(4)...................... ()
--------------------
Subtotal
--------------------
Total............................................$
--------------------
--------------------
- ------------
(1) Aggregate cost to the Trust of the securities listed under Defined
Portfolio determined by the Evaluator 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 Trust's organizational costs which
will be deferred and amortized over a one-year period. Organizational costs have
been estimated based on projected total assets of $ million. To the extent the
Trust is larger or smaller, the estimate may vary.
(3) Aggregate public offering price computed on the basis of the value
of the underlying securities at 4:00 p.m., Eastern time on , 1997.
(4) Assumes the maximum sales charge per unit of 3.50% of the net amount
invested.
A-8
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY PARTICIPATION SERIES -- LOW FIVE PORTFOLIO
FURTHER INFORMATION REGARDING THE TRUST 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
----
Trust Description.......................... 1
Risk Factors............................... 3
How to Buy Units........................... 4
How to Redeem or Sell Units................ 5
Income and Distributions................... 6
Trust Expenses............................. 6
PAGE
----
Taxes...................................... 7
Records and Reports........................ 8
Trust Indenture............................ 8
Miscellaneous.............................. 9
Supplemental Information................... 11
TRUST DESCRIPTION
The Trust seeks to provide both capital appreciation and protection against
a loss of capital over a five year period through an investment in call options
on a basket of common stocks and in zero coupon bonds.
THE EQUITY PARTICIPATION LOW FIVE STRATEGY. The Trust seeks capital
appreciation by following a simple strategy: investing annually in the five
lowest dollar price per share common stocks of the ten highest dividend yielding
stocks in the Dow Jones Industrial Average. The Trust applies this strategy over
a five year period by investing in call options on a basket of the Low Five
Stocks and by adjusting the common stocks underlying the call options to reflect
the annual change in the composition of the Low Five Stocks. In addition, the
Equity Participation Low Five Strategy provides protection from a loss of
capital through investment in zero coupon bonds which appreciate in value over
the life of the Trust.
THE DOW JONES INDUSTRIAL AVERAGE. First published in The Wall Street Journal
in 1896, the Dow Jones Industrial Average includes some of the most well-known,
widely followed and highly capitalized companies in America. These companies are
major factors in their industries. These companies file information with the SEC
which is available free of charge upon request from the Trustee.
1
<PAGE>
LIST AS OF OCTOBER 1, 1928 CURRENT LIST
- ----------------------------------------------------------------------
Allied Chemical Allied Signal
American Can Aluminum Co. of America
American Smelting American Express
American Sugar AT&T
American Tobbaco Boeing
Atlantic Refining Caterpillar
Bethlehem Steel Chevron
Chrysler Coca-Cola
General Electric Du Pont
General Motors Eastman Kodak
General Railway Signal Exxon
Goodrich General Electric
International Harvester General Motors
International Nickel Goodyear
Mack Trucks Hewlett-Packard
Nash Motors IBM
North American International Paper
Paramount Publix Johnson & Johnson
Postum, Inc. J.P. Morgan & Co.
Radio Corporation of America (RCA) McDonald's
Sears Roebuck Merck
Standard Oil of New Jersey Minnesota Mining & Manufacturing
Texas Corporation Philip Morris
Texas Gulf Sulphur Procter & Gamble
Union Carbide Sears Roebuck
United States Steel Travelers Group
Victor Talking Machine Union Carbide
Westinghouse Electric United Technologies
Woolworth Wal-Mart Stores
Wright Aeronautical Walt Disney
THE CALL OPTIONS. The Trust seeks capital appreciation through the
acquisition of call options on a basket of the Low Five Stocks. The call options
have been issued or guaranteed by financial institutions whose long-term debt
obligations or financial strength and claims-paying ability are rated in the
category AA or better by Standard & Poor's Ratings Group and in the category Aa
or better by Moody's Investors Service Inc. The call options will expire
approximately days after the Trust's termination. The Sponsors anticipate that
they will direct the Trustee to sell the call options prior to the maturity of
the call options. The call options do not pass through any dividends payable on
the Low Five Stocks. As a result, the options are priced lower than comparable
investments that account for dividends.
THE ZERO COUPON BONDS. The zero coupon bonds are designed to ensure that
unit holders will always receive at the termination of the Trust not less than
$1,000 per unit. The bonds were purchased at a discount and do not make any
payments of interest before their maturity. The Trust only has the right to
receive a fixed payment at the bonds' maturity.
THE LOW FIVE STOCKS
The call options provide capital appreciation on the five lowest dollar
price per share common stocks of the ten common stocks in the DJIA having the
highest dividend yields as of the dates indicated in Part A. 'Highest dividend
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yield' is calculated by annualizing the last quarterly or semi-annual ordinary
dividend distributed on the DJIA Stocks and dividing the result by its closing
sales price. Since the Trust does not hold the actual stocks, it will not
receive, nor will the value of the call options reflect, any dividends paid by
the underlying stocks.
The Low Five Strategy selection process is a straightforward, objective,
mathematical application that ignores any subjective factors concerning an
issuer in the DJIA, an industry or the economy generally. The options may relate
to a stock that the Sponsors do not recommend for purchase and, in fact, any
Sponsor may have sell recommendations on a number of the Low Five Stocks subject
to the options from time to time. Various theories attempt to explain why a
common stock is among the ten highest yielding stocks in the DJIA 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.
The deposit of the call options and the zero coupon bonds (together, the
'Securities') in the Fund on the initial date of deposit established a
proportionate relationship based on the face amount of the bonds and the number
of shares of each Strategy Stock underlying the call options. 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 their
proportionate relationship at the end of the initial 90-day period. The ability
to acquire each Security at the same time will generally depend upon its
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 investment because of price fluctuations in the Securities between the
time of the cash deposit and the actual purchase of the additional Securities
and because any associated brokerage fees will be an expense of the Portfolio.
To minimize the risk of price fluctuations 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.
Because each Defined Asset Fund is a preselected portfolio, you know the
securities before you invest. Of course, the Trust's portfolio will change
somewhat over time as Securities are purchased upon creation of additional
Units, as Securities are sold to meet Unit redemptions or in other limited
circumstances.
PORTFOLIO SUPERVISION
The Trust 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 Trust's portfolio is regularly reviewed, because
of the Low Five Strategy, the Trust is unlikely to sell any of the call options
or zero coupon bonds other than to satisfy redemptions of Units. More
specifically, except for an adverse development affecting the issuer of a call
option, adverse developments concerning a decline in the value of the option,
adverse developments concerning a bond, or adverse developments concerning a Low
Five Stock including the adverse financial condition of the issuer of a Low Five
Stock, 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 call options or zero coupon bonds detrimental to the interest
of investors, will generally not cause the Trust to dispose of a call option or
bond. Furthermore, other than the annual adjustment, the Low Five Stocks
underlying the options do not change even if a Low Five Stock ceases to be
ranked among the five lowest dollar price per share stocks of the ten
highest-dividend yielding stocks in the DJIA or is deleted from the DJIA.
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RISK FACTORS
An investment in the Trust entails certain risks, including the risk that
the value of your investment will decline if the value of the call options
decrease due to the impaired financial condition of the issuers of the call
options or the Low Five Stocks or a decline in the general condition of the
stock market. The obligations of the issuers of the call options are not
collateralized or otherwise secured. However, if any rating of an issuer's (or
guarantor's) long-term debt or financial strength and claims-paying ability is
reduced to below investment grade, collateral will be required for that issuer's
(or guarantor's) obligation to the Trust. Common stocks in general may be
especially susceptible to general stock market movements and to volatile
increases and decreases in value as market confidence in and perceptions of the
issuers change. 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. Equity markets have been
at historically high levels and no assurance can be given that these levels will
continue.
The trading prices of the call options will be directly affected by the
trading prices of the Low Five Stocks as well as by the time to maturity of the
call options and the level of interest rates generally. The market for the call
options is likely to influence and be influenced by the market for Low Five
Stocks. For example, the prices of Low Five Stocks could be depressed by
investors' anticipation of the potential distribution into the market of
substantial amounts of Low Five Stocks on the termination date and by hedging or
arbitrage activity that may develop involving the call options and the Low Five
Stocks. The Sponsors believe that there should be a readily available market
among institutional investors for the call options in the event it is necessary
to sell the options to meet redemptions of units.
The Trust seeks to provide protection against a loss of capital by investing
in the zero coupon bonds. The zero coupon bonds pay no income until maturity.
The sale of units before the zero coupon bonds' maturity at a time when interest
rates have increased would involve greater market risk than investment in a fund
holding comparable debt obligations which pay interest currently. Because the
Trust is designed to return to investors $1,000 per Unit at its termination, if
you redeem or sell your Units prior to termination of the Trust, you may receive
less.
The Low Five Stocks 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. Set forth below is a
brief description of certain risks associated with the Low Five Stocks.
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 the Low Five Stocks and, consequently, the call options. 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 call options or
zero coupon bonds in the Trust's portfolio, the issuers of the call options or
the issuers of the Low Five Stocks. 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 Low Five Stocks. There can be no assurance that future litigation,
legislation, regulation or deregulation will not have a material adverse effect
on the Trust or will not impair the ability of the issuers of the Low Five
Stocks or the call options to achieve their business goals.
LIFE OF THE TRUST; TERMINATION
The Trust will be terminated no later than the 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
Trust 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 Trust early will be based on factors such as
the size of the Trust's portfolio relative to its original size, the ratio of
Trust expenses to income, and the cost of maintaining a current prospectus.
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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 dispose of any Securities remaining in the Trust's portfolio. 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 Trust's portfolio and other assets and liabilities of the Trust.
PUBLIC OFFERING PRICE
The maximum sales charge is equal to 3.50% of the net amount invested or,
for quantity purchases of units 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 net amount invested:
APPLICABLE SALES
CHARGE
(GROSS UNDERWRITING
PROFIT)
AS % OF NET AMOUNT
AMOUNT PURCHASED INVESTED
- --------------------------- ----------------------
Less than $250,000......... 3.50%
$250,000 to $499,999....... 3.25
$500,000 to $749,999....... 3.00
$750,000 to $999,999....... 2.75
$1,000,000 or more......... 2.50
The dealer concession is 70% of the effective sales charge.
EVALUATIONS
Evaluations are determined by an independent Evaluator 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 and the following
federal holidays: Martin Luther King's birthday, Columbus Day and Veterans Day.
Neither the Sponsors, the Trustee nor the Evaluator guarantee the
enforceability, marketability or price of any Securities or will be liable for
errors in the Evaluator's judgment. The value of the call options, which have no
readily ascertainable market value, will be determined in good faith. The fees
of the Evaluator will be borne by the Trust.
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,
while not obligated to do so, 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 (any any necessary
documents), a check will be mailed to you in an amount equal to the net asset
value of your Units. Because of any sales charges, market movements or changes
in
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the Trust's 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, cash and the
value of any other Trust assets; deducting any unpaid taxes or other
governmental charges, accrued but unpaid Trust expenses, unreimbursed Trustee
advances, cash held to redeem Units or for distribution to investors and the
value of any other Trust liabilities; and dividing the result by the number of
outstanding Units. Net asset value will be reduced after the initial offering
period to reflect the cost to the Trust 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.
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 Trust.
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 Trust. If Securities are being sold
during a time when additional Units are being created by the purchase of
additional Securities (as described above), Securities will be sold in a manner
designed to maintain, to the extent practicable, the proportionate relationship
among the Securities in the Portfolio.
Any investor owning Units representing Securities with a value of at least
$250,000 who redeems those Units 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, subject to applicable
federal and state laws governing the transfer of restricted securities and all
other applicable legal restrictions, a portion of each Security will be paid
over to a distribution agent and either held for the account of the investor or
disposed of in accordance 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 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 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
As long as the Sponsors are maintaining a secondary market for Units they
will buy back Units at net asset value (generally based on the lower, bid side
evaluation of the call options and zero coupon bonds, as determined by an
independent evaluator) less the estimated costs of liquidating Securities to
meet redemptions. Because of the sales charge, market movements or changes in
the Trust's 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.
INCOME AND DISTRIBUTIONS
INCOME AND DISTRIBUTIONS
The Trust has no current income, thus it pays no distributions until a
reasonable time following the maturity of the zero coupon bonds and the
settlement date of the call options.
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TRUST EXPENSES
Estimated annual Trust expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Trust. The
estimated expenses do not include the brokerage commissions, if any, payable by
the Trust in purchasing and selling Securities. The Trustee's annual fee is
payable on a monthly basis. The Trustee also benefits when it holds cash for the
Trust in non-interest bearing accounts. Possible additional charges include
Trustee fees and expenses for extraordinary services, costs of indemnifying the
Trustee and the Sponsors, costs of action taken to protect the Trust and other
legal fees and expenses, Trust termination expenses and any governmental
charges. The Trustee has a lien on Trust 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 Unit to
reimburse them for the cost of providing portfolio supervisory services to the
Trust. While the fee may exceed their costs of providing these services to the
Trust, the total supervision fees from all Series of Equity Investor 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 Defined Asset Funds, currently
estimated at $0.10 per Unit. The Trustee's, Sponsors' and Evaluator's fees may
be adjusted for inflation without investors' approval.
Expenses incurred in establishing the Trust, including the cost of the
initial preparation of documents relating to the Trust, 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 Trust and amortized
over a one-year period. Advertising and selling expenses will be paid from the
Underwriting Account at no charge to the Trust. 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 certain tax consequences of an investment
in Units that are held as capital assets and does not address the tax
consequences of an investment in Units by dealers, financial institutions,
insurance companies or other persons subject to special tax rules.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Trust is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered to be the owner of a
pro rata portion of each asset in the Trust under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Code').
The zero coupon bonds will be considered to have been issued at an
original issue discount for federal income tax purposes. As a result,
investors will be required to include original issue discount in respect of
the zero coupon bonds in income as it accrues, in accordance with a constant
yield method based on a compounding of interest, before the Trust's receipt
of cash payments attributable to such income. Under the constant yield
method, investors generally will be required to include in income
increasingly greater amounts of original issue discount in successive
accrual periods. The tax basis of an investor's pro rata share of zero
coupon bonds will be increased by the amount of original issue discount that
the investor includes in income.
An investor will recognize gain or loss (if any) when he sells or redeems
all or some of his Units for cash; when the Trust sells zero coupon bonds or
an interest in the call option; and at maturity of the zero coupon bonds.
The gain or loss will be capital gain or loss. An investor will also
recognize gain or loss (if any) upon exercise of the call option by the
Trust. Counsel is of the opinion that, while the issue is not entirely free
from doubt, gain or loss arising from the Trust's exercise of the call
option will be capital gain or loss.
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 the asset is held
for one year or less. The lower net capital gain tax rate will be
unavailable to those noncorporate investors who have held their Units for
less than a year and a
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day at the time they sell or redeem their Units for cash or on the mandatory
termination date. The deduction of capital losses is subject to limitations.
An investor's basis in his Units will equal the cost of his Units,
including the sales charge, plus the amount of original issue discount and
acquisition discount in respect of the zero coupon bonds that the investor
includes in income. The proceeds received by an investor upon the
termination of the Trust or the redemption of Units will reflect 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 charge for organizational expenses. Accordingly, investors
should not increase their basis in their Units by any amount used to pay
organizational expenses.
An individual investor who itemizes deductions will be entitled to deduct
his pro rata share of current ongoing expenses paid by the Trust only to the
extent that this amount, together with the investor's other miscellaneous
deductions, exceeds 2% of his adjusted gross income. In addition, the Code
further restricts the ability of an individual investor with an adjusted
gross income in excess of a specified amount (for 1997, $121,200 or $60,600
for a married person filing a separate return) to deduct his pro rata share
of Trust expenses.
Under the income tax laws of the State and City of New York, the Trust is
not an association taxable as a corporation and the income of the Trust will
be treated as the income of the investors in the same manner as for federal
income tax purposes.
The foregoing discussion summarizes only certain U.S. federal and New
York State and City income tax consequences of an investment in Units by
investors who are U.S. persons, as defined in the Code. Investors may be
subject to taxation in New York or in other jurisdictions and should consult
their own tax advisors in this regard.
* * * *
The Trustee will furnish information returns to each investor and to the
Internal Revenue Service.
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 Trust,
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.
The Trustee sends each investor of record an annual report summarizing
transactions in the Trust's accounts, including amounts distributed from them,
any portfolio securities purchased or sold, listing securities held and the
number of Units outstanding and the Redemption Price per Unit at year end, and
the fees and expenses paid by the Trust, among other matters. Trust accounts are
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 Trust is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors, the Trustee and the Evaluator. 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 Trust
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
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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 Evaluator may resign or be removed by the Sponsor and Trustee
without the investors' consent. The resignation or removal of either 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 or Evaluator 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 Trust 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, the Trustee and the Evaluator 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.
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.; 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 Morgan
Stanley, 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 Trust and to provide guidance to these
persons regarding standards of conduct consistent with the Agent's
responsibilities to Defined Asset Funds.
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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 Trust (based on the
aggregate value of the Securities on their date of deposit) and the purchase
price of the Securities to the Sponsors plus commissions payable by the
Sponsors. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Securities it deposits in the Fund which were acquired from
underwriting syndicates of which it was a member. During the initial offering
period, the Underwriting Account also may realize profits or sustain losses as a
result of fluctuations after the initial date of deposit in the Public Offering
Price of the Units. In maintaining a secondary market for Units, the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units and the prices at which they resell
these Units (which include any 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
The following chart shows the average annual compounded rate of return of
selected asset classes over the 10-year and 20-year periods ending December 31,
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.
Stocks (S&P 500)
20 yr 14.55%
10 yr 15.28%
Small-company stocks
20 yr 17.84%
10 yr 12.98%
Long-term corporate bonds
20 yr 9.71%
10 yr 9.48%
U.S. Treasury bills (short-term)
20 yr 7.28%
10 yr 5.46%
Consumer Price Index
20 yr 5.15%
10 yr 3.70%
Source: Ibbotson Associates. Used with permission. All rights
reserved.
10
<PAGE>
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio is relatively fixed) and 'hold with confidence'
(because the portfolio is professionally selected and regularly reviewed).
Defined Asset Funds offers an array of simple and convenient investment choices,
suited to fit a wide variety of personal financial goals--a buy and hold
strategy for capital accumulation, such as for children's education or
retirement or regular current income consistent with the preservation of
principal. Unit investment trusts are particularly suited for investors who
prefer to seek long-term profits by purchasing and holding investments, rather
than through active trading. Few individuals have the knowledge, resources or
capital to buy and hold a diversified portfolio on their own; it would generally
take a considerable sum of money to obtain the breadth and diversity that
Defined Asset Funds offer. Your investment objectives may call for a combination
of Defined Asset Funds.
Defined Asset Funds reflect a buy and hold strategy that the Sponsors
believe can be more effective and less expensive than active management. This
strategy is premised on selection criteria and procedures, diversification and
regular monitoring by investment professionals. Various advertisements and sales
literature may summarize the results of economic studies concerning how stock
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.
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 Trust, 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 Trust.
11
<PAGE>
Defined
Asset FundsSM
SPONSORS:
Merrill Lynch, EQUITY PARTICIPATION SERIES--
Pierce, Fenner & Smith IncorporatedLOW FIVE PORTFOLIO
Defined Asset Funds
P.O. Box 9051 This Prospectus does not contain all of the
Princeton, NJ 08543-9051 information with respect to the investment
(609) 282-8500 company set forth in its registration
PaineWebber Incorporated statement and exhibits relating thereto which
1200 Harbor Boulevard have been filed with the Securities and
Weehawken, NJ 07087 Exchange Commission, Washington, D.C. under
(201) 902-3000 the Securities Act of 1933 and the Investment
Prudential Securities Incorporated Company Act of 1940, and to which reference
One New York Plaza is hereby made. Copies of filed material can
New York, NY 10292 be obtained from the Public Reference Section
(212) 778-6164 of the Commission, 450 Fifth Street, N.W.,
Dean Witter Reynolds Inc. Washington, D.C. 20549 at prescribed rates.
Two World Trade Center--59th Floor The Commission also maintains a Web site that
New York, NY 10048 contains information statements and other
(212) 392-2222 information regarding registrants such as
EVALUATOR: Defined Asset Funds that file electronically
Interactive Data Services, Inc. with the Commission at http://www.sec.gov.
14 Wall Street--11th Floor ------------------------
New York, NY 10005 No person is authorized to give any
(212) 306-6551 information or to make any representations
TRUSTEE: with respect to this investment company not
The Chase Manhattan Bank contained in its registration statement and
Customer Service Retail Department related exhibits; and any information or
Bowling Green Station representation not contained therein must not
P.O. Box 5187 be relied upon as having been authorized.
New York, NY 10274-5187 ------------------------
1-800-323-1508 When Units of this Trust are no longer
available, 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.
-- /97
12
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositors is incorporated by
reference to the SEC filings indicated and made a part of
this Registration Statement.
I. Bonding arrangements of each of the Depositors are incorporated by reference
to Item A of Part II to the Registration Statement on Form S-6 under the
Securities Act of 1933 for Municipal Investment Trust Fund, Monthly Payment
Series--573 Defined Asset Funds (Reg. No. 333-08241).
II. The date of organization of each of the Depositors is set forth in Item B
of Part II to the Registration Statement on Form S-6 under the Securities Act of
1933 for Municipal Investment Trust Fund, Monthly Payment Series--573 Defined
Asset Funds (Reg. No. 333-08241) and is herein incorporated by reference
thereto.
III. The Charter and By-Laws of each of the Depositors are incorporated herein
by reference to Exhibits 1.3 through 1.12 to the Registration Statement on Form
S-6 under the Securities Act of 1933 for Municipal Investment Trust Fund,
Monthly Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).
IV. Information as to Officers and Directors of the Depositors has been filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934 and is incorporated by reference to the SEC
filings indicated and made a part of this Registration Statement:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 8-7221
Smith Barney Inc. ................................ 8-8177
PaineWebber Incorporated.......................... 8-16267
Prudential Securities Incorporated................ 8-27154
Dean Witter Reynolds Inc. ........................ 8-14172
----------------------------
B. The Internal Revenue Service Employer Identification Numbers of the
Sponsors and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 13-5674085
Smith Barney Inc. ................................ 13-1912900
Prudential Securities Incorporated................ 22-2347336
Dean Witter Reynolds Inc. ........................ 94-0899825
PaineWebber Incorporated ......................... 13-2638166
The Chase Manhattan Bank, Trustee................. 13-4994650
UNDERTAKING
The Sponsors undertake that they will not make any amendment to the Supplement
to this Registration Statement which includes material changes without
submitting the amendment for Staff review prior to distribution.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
The Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference from the
Cross-Reference Sheet of the Registration Statement of Defined Asset Funds
Municipal Insured Series, 1933 Act File No. 33-54565).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The following exhibits:
*1.1 --Form of Trust Indenture.
1.1.1 --Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement under the Securities Act
of 1933 of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
*3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the headings
'Taxes' and 'Miscellaneous--Legal Opinion' in the Prospectus.
*5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Equity Income Fund, Select Ten
Portfolio, 1996 International Series B (United Kingdom and Japan
Portfolios), 1933 Act File No. 333-00593).
- ----------------------------
* To be filed by amendment.
R-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS
DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 27TH DAY OF
JUNE, 1997.
SIGNATURES APPEAR ON PAGE R-3, R-4, R-5 AND R-6.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Prudential
Securities Incorporated has signed this Registration Statement or Amendment to
the Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.
A majority of the members of the Board of Directors of Dean Witter Reynolds
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 33-43466
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By DANIEL C. TYLER
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board the following 1933 Act File
of Directors Number: 33-55073
of PaineWebber Incorporated:
DONALD B. MARRON
JOSEPH J. GRANO, JR.
By
ROBERT E. HOLLEY
(As authorized signatory for PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-4
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Prudential Securities have been filed
Incorporated: under Form SE and
the following 1933
Act File Numbers:
33-41631 and
333-15919
ROBERT C. GOLDEN
ALAN D. HOGAN
A. LAURENCE NORTON, JR.
LELAND B. PATON
VINCENT T. PICA II
MARTIN PFINSGRAFF
HARDWICK SIMMONS
LEE B. SPENCER, JR.
BRIAN M. STORMS
By RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)
R-5
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Numbers: 33-17085 and
Reynolds Inc.: 333-13039
RICHARD M. DeMARTINI
ROBERT J. DWYER
CHRISTINE A. EDWARDS
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
MITCHELL M. MERIN
STEPHEN R. MILLER
RICHARD F. POWERS III
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-6
