AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 2000
REGISTRATION NO. 333-05685
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-6
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FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
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A. EXACT NAME OF TRUST:
EQUITY PARTICIPATION SERIES
LOW FIVE PORTFOLIO
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
PRUDENTIAL SECURITIES INCORPORATED
PAINEWEBBER INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
<TABLE>
<S> <C>
MERRILL LYNCH, PIERCE, PAINEWEBBER INCORPORATED
FENNER & SMITH 1285 AVENUE OF THE
INCORPORATED AMERICAS
DEFINED ASSET FUNDS NEW YORK, NY 10019
POST OFFICE BOX 9051
PRINCETON, NJ 08543-9051
PRUDENTIAL SECURITIES DEAN WITTER REYNOLDS INC.
INCORPORATED TWO WORLD TRADE
ONE NEW YORK PLAZA CENTER--59TH FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10048
</TABLE>
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
<TABLE>
<S> <C> <C>
TERESA KONCICK, ESQ.
P.O. BOX 9051
PRINCETON, NJ 08543-9051 ROBERT E. HOLLEY
1200 HARBOR BLVD.
WEEHAWKEN, NJ 07087
COPIES TO: DOUGLAS LOWE, ESQ.
PIERRE DE SAINT PHALLE, DEAN WITTER REYNOLDS INC.
LEE B. SPENCER, JR. ESQ. TWO WORLD TRADE
ONE NEW YORK PLAZA 450 LEXINGTON AVENUE CENTER--59TH FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10017 NEW YORK, NY 10048
</TABLE>
The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and will file the Rule 24f-2 Notice for the most
recent fiscal year in March, 2000.
Check box if it is proposed that this filing will become effective on March 17,
2000 pursuant to paragraph (b) of Rule 485. /X/
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<PAGE>
DEFINED ASSET FUNDS--REGISTERED TRADEMARK--
------------------------------
----------------------
EQUITY PARTICIPATION SERIES
LOW FIVE PORTFOLIO
(A UNIT INVESTMENT TRUST)
- DESIGNED FOR CAPITAL APPRECIATION
SPONSORS:
MERRILL LYNCH,
PIERCE, FENNER & SMITH -----------------------------------------------------
INCORPORATED The Securities and Exchange Commission has not
PRUDENTIAL SECURITIES approved or disapproved these Securities or passed
INCORPORATED upon the adequacy of this prospectus. Any
PAINEWEBBER INCORPORATED representation to the contrary is a criminal offense.
DEAN WITTER REYNOLDS INC. Prospectus dated March 17, 2000.
<PAGE>
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Defined Asset Funds--Registered Trademark--
Defined Asset Funds-Registered Trademark- is America's oldest and largest family
of unit investment trusts, with over $160 billion sponsored over the last 28
years. Defined Asset Funds has been a leader in unit investment trust research
and product innovation. Our family of Funds helps investors work toward their
financial goals with a full range of quality investments, including municipal,
corporate and government bond portfolios, as well as domestic and international
equity portfolios.
Defined Asset Funds offer a number of advantages:
- A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
- Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
- Defined Portfolios: We choose the stocks or bonds in advance, so you know
what you're investing in.
- Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
- Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, risk tolerance or time horizon, there's
probably a Defined Asset Fund that suits your investment style. Your financial
professional can help you select a Defined Asset Fund that works best for your
investment portfolio.
THE FINANCIAL INFORMATION ON THIS PROSPECTUS IS AS OF THE EVALUATION DATE,
NOVEMBER 30, 1999.
<TABLE>
<S> <C>
CONTENTS
PAGE
---
Risk/Return Summary.................. 3
What You Can Expect From Your
Investment......................... 5
Records and Reports................ 5
The Risks You Face................... 5
Concentration Risk................. 5
Litigation and Legislation Risks... 5
Selling or Exchanging Units.......... 6
Sponsors' Secondary Market......... 6
Selling Units to the Trustee....... 6
How The Fund Works................... 7
Pricing............................ 7
Evaluations........................ 7
Expenses........................... 8
Portfolio Changes.................. 8
Portfolio Termination.............. 8
No Certificates.................... 8
Trust Indenture.................... 8
Legal Opinion...................... 9
Auditors........................... 9
Sponsors........................... 9
Trustee............................ 10
Underwriters' and Sponsors'
Profits.......................... 10
Public Distribution................ 10
Code of Ethics..................... 10
Year 2000 Issues................... 10
Taxes................................ 10
Supplemental Information............. 11
Financial Statements................. D-1
</TABLE>
2
<PAGE>
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RISK/RETURN SUMMARY
<TABLE>
<C> <S>
1. WHAT IS THE PORTFOLIO'S OBJECTIVE?
- The objective of this Defined Fund is
capital appreciation by investing for a
period of about three years in a
portfolio consisting of call options on a
basket of the five lowest dollar price
per share common stocks in the Dow Jones
Industrial Average, and U.S. Treasury
zero coupon bonds.
- The Portfolio will not receive any
income.
2. WHAT IS THE PORTFOLIO'S INVESTMENT
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.
- Approximately 76% of the value of the
Portfolio consists of U.S. Treasury zero
coupon bonds, and 24% consists of the
call options.
- The Low Five Stocks underlying the call
options will adjust annually each August,
2000-2002, to continue to reflect the Low
Five Strategy. Currently the following
issuers are covered by the call options:
Philip Morris Companies, Inc., Sears,
Roebuck & Co., Goodyear Tire and Rubber
Co., Caterpillar, Inc., and General
Motors Corp.
- The call options held by the Trust will
provide each unit 100% of the price
appreciation (exclusive of dividends) on
an investment of $1,000 in the Low Five
Stocks for about three years from the
date of this prospectus.
- The U.S. Treasury zero coupon bonds are
designed to return $1,000 per unit to you
if you hold your units until the
termination of the Trust.
- Each call option is an obligation of, or
guaranteed by, a financial institution
whose long-term debt or financial
strength and claims-paying ability on the
intial date of deposit rated AA or better
by Standard & Poor's and Aa or better by
Moody's. The call options will expire on
February 28, 2003.
3. WHAT INDUSTRY SECTORS ARE REPRESENTED IN
THE PORTFOLIO?
Based upon the principal business of each
issuer and current market values, the Low
Five Stocks underlying the call options
represent the following industry groups:
</TABLE>
<TABLE>
- Oil/Gas-International 20%
<C> <S>
- Machinery/Construction & Mining 20
- Forest Products & Papers 20
- Tobacco/Food Processing 20
- Utility/Telecommunications 20
</TABLE>
<TABLE>
<C> <S>
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE
PORTFOLIO. THIS CAN HAPPEN FOR VARIOUS
REASONS, INCLUDING:
- If you redeem or sell your units prior to
termination of the Trust, the amount you
will receive will be affected by the
values at that time of the U.S. Treasury
zero coupon bonds and of the options.
- You will be required to include original
issue discount relating to the zero
coupon bonds in income every year as it
accrues, even prior to receiving any cash
payments on the bonds.
- The value of the call options could be
adversely affected by changes in the
financial condition of the issuers of the
options and of the issuers of the Low
Five Stocks themselves.
- The value of the call options will also
be adversely affected by decreases in the
value and dividend rates of the Low Five
Stocks, an increase in interest rates, a
reduction in the perceived volatility of
the stock market and the remaining 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 moves with the price
of the Low Five Stocks.
- The value of the U.S. Treasury zero
coupon bonds will be adversely affected
by decreases in bond prices and increases
in interest rates.
- Stock prices can be volatile.
- The Low Five Stocks generally have
attributes that have caused them to have
lower prices or higher dividend yields
than the other DJIA stocks.
</TABLE>
3
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<TABLE>
<C> <S>
For example:
-- the issuers may be having financial
problems:
-- the stocks may be out of favor with
the market because of weak performance,
poor earnings forecasts, negative
publicity or litigation/legislation;
and
-- the stock may be reacting to general
market cycles.
- The market factors that caused the
relatively low prices and high dividend
yields of the stocks may change.
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want capital appreciation and
protection from a market correction with
upside participation if domestic equity
markets increase in price.
The Portfolio is NOT appropriate for you
if you are unwilling to take the risk
involved with an equity investment or are
unwilling to commit to a three-year
investment. It is not appropriate for you
if you are seeking current income or if
you are not comfortable with the Low Five
Strategy.
6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses
you may pay, directly or indirectly, when
you invest in the Portfolio.
ESTIMATED ANNUAL OPERATING EXPENSES
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
PER
UNIT
------
<C> <S> <C>
$0.74
Trustee's Fee
$0.70
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
expenses)
$0.54
Evaluator's Fee
$0.20
Organization Expense
$0.48
Other Operating Expenses
----
$2.66
TOTAL
</TABLE>
<TABLE>
<C> <S>
The Sponsors historically paid updating
expenses.
INVESTOR FEES
You will pay an up-front sales fee of
approximately 3.50%, reduced as follows for
quantity purchases:
The maximum sales fees are as follows:
</TABLE>
<TABLE>
<CAPTION>
YOUR
MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
-------------- ---------
<C> <S> <C>
Less than 250 3.50%
250 to 749 3.00%
750 to 999 2.75%
1,000 or more 2.50%
</TABLE>
<TABLE>
<C> <S>
7. IS THE PORTFOLIO MANAGED?
Unlike a mutual fund, the Portfolio is
not managed and securities are not sold
because of market changes. The Sponsors
monitor the portfolio and may instruct
the Trustee to sell securities under
certain limited circumstances. However,
given the investment philosophy of the
Portfolio, the Sponsors are not likely to
do so.
8. HOW DO I BUY UNITS?
The minimum investment is one unit.
You can buy units from the Sponsors.
UNIT PRICE PER UNIT $1,125.48
(as of November 30, 1999)
Unit price is based on the net asset
value of the Portfolio plus the sales
fee.
The Portfolio securities are valued by
the Trustee on the basis of their closing
prices at 4:00 p.m. Eastern time every
business day. Unit price changes every
day with changes in the prices of the
securities.
9. HOW DO I SELL UNITS?
You may sell your units at any time to
the Sponsors or the Trustee for the net
asset value determined at the close of
business on the date of sale, less the
costs of liquidating securities to meet
the redemption.
10. HOW ARE DISTRIBUTIONS MADE AND TAXED?
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.
You will be required to include original
issue discount relating to the zero
coupon bonds in income every year as it
accrues, prior to the Trust's receipt of
cash payments on the zero coupon bonds.
Gain or loss recognized by you 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 gain or
loss recognized by you on the cash
settlement of the call option will be
capital gain or loss.
</TABLE>
4
<PAGE>
WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
RECORDS AND REPORTS
You will receive:
- - a notice from the Trustee if new equity securities are deposited in exchange
or substitution for equity securities originally deposited;
- - annual reports on Portfolio activity; and
- - annual tax information. THIS WILL ALSO BE SENT TO THE IRS. YOU MUST REPORT THE
AMOUNT OF INCOME RECEIVED DURING THE YEAR. PLEASE CONTACT YOUR TAX ADVISOR IN
THIS REGARD.
You may inspect records of Portfolio transactions at the Trustee's office during
regular business hours.
THE RISKS YOU FACE
CONCENTRATION RISK
When stocks in a particular industry make up 25% or more of the Portfolio, it is
said to be "concentrated" in that industry, which makes the Portfolio less
diversified. The Trust is not concentrated in any particular industry.
LITIGATION AND LEGISLATION RISKS
Philip Morris Companies common stock represents approximately 20% of the Low
Five Stocks underlying the call options in the Portfolio. Pending or threatened
legal proceedings against Philip Morris cover a wide range of matters including
product liability and consumer protection. Damages claimed in many of the
smoking and health cases alleging personal injury (both individual and class
actions), and in health cost recovery cases brought by governments, unions and
similar entities (the most recent suit was filed by the Justice Department on
September 22, 1999) seeking reimbursement for healthcare expenditures, aggregate
many billions of dollars.
On November 23, 1998, Philip Morris entered into a Master Settlement Agreement
with 46 state governments to settle the asserted and unasserted healthcare cost
recovery and certain other claims against them. The Agreement is subject to
final judicial approval in each of the settling states. As part of the
Agreement, Philip Morris and the three other major domestic tobacco
manufacturers have agreed to participate in the establishment of a $5.15 billion
trust fund. The trust is to be funded over 12 years beginning in 1999. PM Inc.
has agreed to pay $300 million into the trust in 1999. Philip Morris charged
approximately $3.1 billion as a pretax expense in 1998 as a result of the
settlement, and as of December 31, 1998, had accrued costs of its obligations
under the settlement and to tobacco growers aggregating $1.4 billion, payable
principally before the end of the year 2000. Philip Morris believes the
agreement will likely materially adversely affect the business, volume, cash
flows and/or operating income and financial position of the company in future
years. The degree of the adverse impact will depend, among other things, on the
rates of decline in United States cigarette sales in the premium and discount
segments, the company's share of the domestic premium and discount cigarette
segments, and the effect of any resulting cost advantage of manufacturers not
subject to the agreement.
The Sponsors cannot predict the outcome of the litigation pending against Philip
Morris or how the current uncertainty concerning
5
<PAGE>
the settlement will ultimately be resolved. The Sponsors cannot predict whether
these and other possible developments will have a material effect on the price
of Philip Morris stock over the term of the Portfolio, which could in turn
adversely affect Unit prices.
Other than as described above we do not know of any pending litigation that
might have a material adverse effect upon the Portfolio.
SELLING OR EXCHANGING UNITS
You can sell your units at any time for a price based on their net asset value.
Your net asset value is calculated each business day by:
- ADDING the value of the Portfolio Securities, cash and any other Portfolio
assets;
- SUBTRACTING accrued but unpaid Portfolio expenses, unreimbursed Trustee
advances, cash held to buy back units or for distribution to investors, and
any other Portfolio liabilities; and
- DIVIDING the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the Portfolio.
If you sell your units before the final deferred sales fee installment, the
amount of any remaining payments will be deducted from your proceeds.
SPONSORS' SECONDARY MARKET
While we are not obligated to do so, we will buy back units at net asset value
less any remaining deferred sales fee and the cost of liquidating securities to
meet the redemption. We may resell the units to other buyers or to the Trustee.
We have maintained a secondary market continuously for more than 25 years, but
we could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by contacting your broker, dealer or financial
institution that holds your units in street name. Sometimes, additional
documents are needed such as a trust document, certificate of corporate
authority, certificate of death or appointment as executor, administrator or
guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee will sell your units in the over-the-counter market if it
believes it can obtain a higher price. In that case, you will receive the net
proceeds of the sale.
If the Portfolio does not have cash available to pay you for the units you are
selling we will select securities to be sold. These sales could be made at times
when the securities would not otherwise be sold and may result in your receiving
less than you paid for your unit and also reduce the size and diversity of the
Portfolio.
If you sell units with a value of at least $250,000, you may choose to receive
your distribution "in kind." If you so choose, you
6
<PAGE>
will receive securities and cash with a total value equal to the price of your
units. The Trustee will try to distribute securities in the portfolio pro rata,
but it reserves the right to distribute only one or a few securities. The
Trustee will act as your agent in an in-kind distribution and will either hold
the securities for your account or transfer them as you instruct. You must pay
any transaction costs as well as transfer and ongoing custodial fees on sales of
securities distributed in-kind.
There could be a delay in paying you for your units:
- if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
securities not reasonably practicable; and
- for any other period permitted by SEC order.
HOW THE FUND WORKS
PRICING
Units are charged an initial sales fee.
In addition, a portion of the price of a unit also consists of cash to pay all
or some of the costs of organizing the Portfolio including:
- cost of initial preparation of legal documents;
- federal and state registration fees;
- initial fees and expenses of the Trustee;
- initial audit; and
- legal expenses and other out-of-pocket expenses.
EVALUATIONS
The Trustee values the securities on each business day (i.e., any day other than
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas;
and the following federal holidays: Columbus Day and Veterans Day). 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 or, if closing sales prices are not available, at the mean
between the closing bid and offer prices.
EXPENSES
The Trustee is paid a fee monthly. It also benefits when it holds cash for the
Portfolio in non-interest bearing accounts. The Trustee may also receive
additional amounts:
- for extraordinary services and costs of indemnifying the Trustee and the
Sponsor;
- costs of actions taken to protect the Portfolio and other legal fees and
expenses;
- expenses for keeping the Portfolio's registration statement current; and
- Portfolio termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 70 CENTS per 1,000 units annually
for providing portfolio supervisory, bookkeeping and administrative services and
for any other expenses properly chargeable to the Trust. Legal, typesetting,
electronic filing and regulatory filing fees and expenses
7
<PAGE>
associated with updating the Trust's registration statement yearly are also now
chargeable to the Trust. While this fee may exceed the amount of these costs and
expenses attributable to this Trust, the total of these fees for all Series of
Defined Asset Funds will not exceed the aggregate amount attributable to all of
these Series for any calendar year. Certain of these expenses were previously
paid for by the Sponsors.
The Trustee's, Evaluator's and Sponsors' fees may be adjusted for inflation
without investors' approval.
The Sponsors will pay advertising and selling expenses at no charge to the
Portfolio. If Portfolio expenses exceed initial estimates, the Portfolio will
owe the excess. The Trustee has a lien on Portfolio assets to secure
reimbursement of Portfolio expenses and may sell securities if cash is not
available.
PORTFOLIO CHANGES
If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which may affect the
composition of the portfolio.
We decide whether to offer units for sale that we acquire in the secondary
market after reviewing:
- diversity of the Portfolio;
- size of the Portfolio relative to its original size;
- ratio of Portfolio expenses to income; and
- cost of maintaining a current prospectus.
PORTFOLIO TERMINATION
When the Portfolio is about to terminate you will receive a notice, and you will
be unable to sell your units after that time. Unless you choose to receive an
in-kind distribution of securities, we will sell any remaining securities, and
you will receive your final distribution in cash.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling securities. This may reduce the amount you receive as
your final distribution.
NO CERTIFICATES
All investors are required to hold their Units in uncertificated form and in
"street name" by their broker, dealer or financial institution at the Depository
Trust Company.
TRUST INDENTURE
The Portfolio is a "unit investment trust" governed by a Trust Indenture, a
contract among the Sponsors, the Evaluator and the Trustee, which sets forth
their duties and obligations and your rights. A copy of the Indenture is
available to you on request to the Trustee. The following summarizes certain
provisions of the Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
- to cure ambiguities;
- to correct or supplement any defective or inconsistent provision;
- to make any amendment required by any governmental agency; or
- to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).
8
<PAGE>
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Portfolio without your written consent.
The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
- it fails to perform its duties;
- it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities; or
- the Sponsors determines that its replacement is in your best interest.
Investors holding 51% of the units may remove the Trustee. The Evaluator may
resign or be removed by the Sponsors without your consent. The resignation or
removal of the Trustee or Evaluator becomes effective when a successor accepts
appointment. The Sponsors will try to appoint a successor promptly; however, if
no successor has accepted within 30 days after notice of resignation, the
resigning Trustee or Evaluator may petition a court to appoint a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
- remove it and appoint a replacement Sponsor;
- liquidate the Fund; or
- continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee, the Sponsors and the Evaluator.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
special counsel for the Sponsor, has given an opinion that the units are validly
issued.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statement of Condition included in this
prospectus.
SPONSORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PRUDENTIAL SECURITIES INCORPORATED (an indirect wholly-owned subsidiary of the
Prudential Insurance Company of America)
One New York Plaza,
New York, NY 10292
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment
9
<PAGE>
companies) and participates as an underwriter in various selling groups.
TRUSTEE
The Chase Manhattan Bank, Unit Trust Department, 4 New York Plaza--6th Floor,
New York, New York 10004, is the Trustee. It is supervised by the Federal
Deposit Insurance Corporation, the Board of Governors of the Federal Reserve
System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. Any cash made available
by you to the Sponsors before the settlement date for those units may be used in
the Sponsors' businesses to the extent permitted by federal law and may benefit
the Sponsors.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
The Agent for the Sponsors has adopted a code of ethics requiring reporting of
personal securities transactions by its employees with access to information on
portfolio transactions. The goal of the code is to prevent fraud, deception or
misconduct against the Portfolio and to provide reasonable standards of conduct.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the "Year
2000 Problem"). We do not expect that the computer system changes necessary to
prepare for the Year 2000 will cause any major operational difficulties for the
Portfolio. The Sponsors are unable to predict what impact, if any, the Year 2000
problem will have on issuers of the Securities in the Portfolio.
TAXES
The following summarizes the material income tax consequences of holding Units.
It assumes that you are not a dealer, financial institution, insurance company
or other investor with special circumstances or subject to special rules. You
should consult your own tax adviser about your particular circumstances.
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Trust will not be taxed as a corporation for federal income tax purposes,
and you will be considered to own directly your share of each asset in the
Trust.
ORIGINAL ISSUE DISCOUNT
The zero coupon bonds will be considered to have been issued at an "original
issue discount" for federal income tax purposes. As a result, you will be
required to include original issue discount in respect of the zero coupon bonds
as it accrues, in accordance with a constant yield method based on a
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<PAGE>
compounding of interest, before the Trust receives cash payments attributable to
these income inclusions. Under the constant yield method, you generally will be
required to include in income increasingly greater amounts of original issue
discount in successive accrual periods. The tax basis of your pro rata share of
zero coupon bonds will be increased by the amount of original issue discount
that you include in income. However, to the extent that your basis in a zero
coupon bond when you purchase a Unit is greater than the bond's original issue
price increased by original issue discount that has already accrued on the bond,
you will have "acquisition premium," and your original issue discount inclusions
will be reduced by the acquisition premium. You should consult your tax advisor
in this regard.
GAIN OR LOSS UPON DISPOSITION
When you sell all or part of your Units, or when the Trust sells zero coupon
bonds or an interest in the call options, you will generally recognize capital
gain or loss. Your gain, however, will generally be ordinary income to the
extent of any accrued "market discount." Generally you will have market discount
to the extent that your basis in a zero coupon bond when you purchase a Unit is
less than its issue price increased by original issue discount that has already
accrued on the bond. You should consult your tax adviser in this regard. You
will also recognize gain or loss (if any) upon exercise of the call options by
the Trust, which, in the opinion of our counsel, will be capital gain or loss.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain or loss is long-term if you are considered to have held your
investment for more than one year and short-term otherwise. Because the
deductibility of capital losses is subject to limitations, you may not be able
to deduct all of your capital losses. You should consult your tax adviser in
this regard.
YOUR BASIS IN THE SECURITIES
Your aggregate basis in your pro rata portion of the assets of the Trust will be
equal to the cost of your Units, including any sales charge and organizational
expenses, adjusted to reflect any accruals of original issue discount and
acquisition premium. You should consult your tax adviser in this regard.
EXPENSES
If you are an individual who itemizes deductions, you may deduct your share of
Trust expenses, but only to the extent that such amount, together with your
other miscellaneous deductions, exceeds 2% of your adjusted gross income. Your
ability to deduct Trust expenses will be limited further if your adjusted gross
income exceeds a specified amount, currently $128,950 ($64,475 for a married
person filing separately).
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Portfolio by
calling the Trustee. The supplemental information includes more detailed risk
disclosure and general information about the structure and operation of the
Portfolio. The supplemental information is also available from the SEC.
11
<PAGE>
EQUITY PARTICIPATION SERIES - LOW FIVE PORTFOLIO
DEFINED ASSET FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Equity Participation Series - Low Five
Portfolio Defined Asset Funds:
We have audited the accompanying statement of condition of Equity Participation
Series - Low Five Portfolio, Defined Asset Funds including the portfolio, as of
November 30, 1999 and the related statements of operations and of changes in net
assets for the periods January 1, 1999 to November 30, 1999, August 1, 1998 to
December 31, 1998 and August 26, 1997 to July 31, 1998. These financial
statements are the responsibility of the Trustee. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Securities owned at
November 30, 1999 as shown in such portfolio, were confirmed to us by The Chase
Manhattan Bank, the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Trustee, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Equity Participation Series -
Low Five Portfolio, Defined Asset Funds at November 30, 1999 and the results of
its operations and changes in its net assets for the above-stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP February 4, 2000 New York, N.Y.
D-1
<PAGE>
EQUITY PARTICIPATION SERIES - LOW FIVE PORTFOLIO
DEFINED ASSET FUNDS
STATEMENT OF CONDITION
AS OF NOVEMBER 30, 1999
<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
cost $11,962,794 (Note 1).................................... $11,892,675
Cash........................................................... 95,256
-----------
Total trust property.................................. 11,987,931
LESS LIABILITIES:
Accrued expenses............................................... $ 21,792
Other liabilities (Note 3)..................................... 8,280 30,072
----------- -----------
ASSETS, REPRESENTED BY:
10,950 units of fractional undivided
interest outstanding (Note 3)................................ 10,784,101
Undistributed net investment income............................ 1,173,758 $11,957,859
----------- ===========
UNIT VALUE ($11,957,859/10,950 units)............................ $1,092.04
=========
</TABLE>
See Notes to Financial Statements.
D-2
<PAGE>
EQUITY PARTICIPATION SERIES - LOW FIVE PORTFOLIO
DEFINED ASSET FUNDS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
January 1, August 1, August 26,
1999 to 1998 to 1997 to
November 30, December 31, July 31,
1999 1998 1998
<S> <C> <C> <C>
INVESTMENT INCOME:
Accretion income.....................................$ 601,877 $ 323,770 $ 821,127
Trustee's fees and expenses.......................... (21,058) (10,419) (24,645)
Sponsors' fees....................................... (6,768) (3,317) (7,576)
----------- ---------- ----------
Net investment income................................ 574,051 310,034 788,906
----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on securities sold or redeemed......... 615,699 125,284 240,043
Unrealized appreciation (depreciation) of
investments........................................ (2,498,656) 1,083,960 1,344,577
----------- ---------- ----------
Net realized and unrealized gain (loss) on
investments........................................ (1,882,957) 1,209,244 1,584,620
----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS......................................$(1,308,906) $1,519,278 $2,373,526
=========== ========== ==========
</TABLE>
See Notes to Financial Statements.
D-3
<PAGE>
EQUITY PARTICIPATION SERIES - LOW FIVE PORTFOLIO
DEFINED ASSET FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
January 1, August 1, August 26,
1999 to 1998 to 1997 to
November 30, December 31, July 31,
1999 1998 1998
<S> <C> <C> <C>
OPERATIONS:
Net investment income............................ $ 574,051 $ 310,034 $ 788,906
Realized gain on securities sold or redeemed..... 615,699 125,284 240,043
Unrealized appreciation (depreciation) of
investments.................................... (2,498,656) 1,083,960 1,344,577
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations........................ (1,308,906) 1,519,278 2,373,526
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Creation of 20,000 units......................... 19,926,000
Redemptions of 4,825, 1,400 and 3,075
units, respectively............................ (5,808,810) (1,587,959) (3,396,990)
Deferred organization cost....................... (552) (7,728)
----------- ----------- -----------
NET CAPITAL SHARE TRANSACTIONS..................... (5,808,810) (1,588,511) 16,521,282
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS.............. (7,117,716) (69,233) 18,894,808
NET ASSETS AT BEGINNING OF PERIOD.................. 19,075,575 19,144,808 250,000
----------- ----------- -----------
NET ASSETS AT END OF PERIOD........................ $11,957,859 $19,075,575 $19,144,808
=========== =========== ===========
PER UNIT:
Net asset value at end of period....................$1,092.04 $1,209.23 $1,114.69
========= ========= =========
TRUST UNITS OUTSTANDING AT END OF PERIOD.................10,950 15,775 17,175
====== ====== ======
</TABLE>
See Notes to Financial Statements.
D-4
<PAGE>
EQUITY PARTICIPATION SERIES - LOW FIVE PORTFOLIO
DEFINED ASSET FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
(a) Evaluations are determined by an Evaluator on each business day.
Neither the Sponsors, the Trustee nor the Evaluator guarantee the
enforceability, marketability or price of any securities nor will they
be liable for errors in the Evaluator's judgement. The value of the
call options, which have no readily ascertainable market value, have
been determined in good faith.
(b) The fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
(c) Accretion income is calculated on a constant yield basis and is shown
on the Statements of Operations.
2. NET CAPITAL
Cost of 10,950 units, at Dates of Deposit................. $11,291,835
Less: sales charge........................................ 381,849
-----------
Net amount applicable to Holders.......................... 10,909,986
Redemption of units - net cost of
9,300 units, redeemed less redemption amounts........... (954,729)
Realized gain on securities sold or redeemed.............. 981,026
Transfer from principal (cover expenses).................. (73,783)
Deferred organization cost (Note 3)....................... (8,280)
Net unrealized depreciation of investments................ (70,119)
-----------
Net capital applicable to Holders......................... $10,784,101
===========
3. DEFERRED ORGANIZATION COSTS
Deferred organization costs were amortized over the first year of the Fund.
Included in "Other liabilities", in the accompanying Statement of Condition
is $8,280 payable to the Trustee at November 30, 1999 for reimbursement of
costs related to the organization of the Trust.
4. INCOME TAXES
As of November 30, 1999, net unrealized depreciation of investments, based
on cost for Federal income tax purpose, aggregated $70,119 of which $51,645
related to appreciated securities and $121,764 related to depreciated
securities. The cost of investment securities for Federal income tax
purposes was $11,962,794 at November 30, 1999.
D-5
<PAGE>
EQUITY PARTICIPATION SERIES - LOW FIVE PORTFOLIO
DEFINED ASSET FUNDS
PORTFOLIO
AS OF NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Port. Exercise
No. Name of Issuer Shares Date Cost Value(1)
------ ---- ---- --------
<S> <C> <C> <C> <C>
Call Options:
- ------------
1 SwissBank Corp. London 1,752 2/20/03 $ 477,805 $ 458,323
Branch
2 Swiss Re Financial Products 9,198 2/20/03
Corp. 2,508,479 2,406,197
----------- -----------
Sub total 2,986,284 2,864,520
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Zero Coupon Bond:
- ----------------
Face Maturity
Amount Date
<S> <C> <C> <C> <C>
3 U.S. Treasury Notes $10,950,000 2/15/03 8,976,510 9,028,155
----------- -----------
Total $11,962,794 $11,892,675
=========== ===========
</TABLE>
(1) See footnote 1(a) to the financial statements.
D-6
<PAGE>
DEFINED ASSET FUNDS-SM-
<TABLE>
<S> <C>
HAVE QUESTIONS ? EQUITY PARTICIPATION SERIES
Request the most LOW FIVE PORTFOLIO
recent free Information (A Unit Investment Trust)
Supplement that gives more ---------------------------------------
details about the Fund, This Prospectus does not contain
by calling: complete information about the
The Chase Manhattan Bank investment company filed with the
1-800-323-1508 Securities and Exchange Commission in
Washington, D.C. under the:
- Securities Act of 1933 (file no.
333-05685) and
- Investment Company Act of 1940 (file
no. 811-3044).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
UNITS OF ANY FUTURE SERIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
UNTIL THAT SERIES HAS BECOME EFFECTIVE
WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO UNITS CAN BE SOLD IN ANY
STATE WHERE A SALE WOULD BE ILLEGAL.
11300--3/00
</TABLE>
<PAGE>
EQUITY INVESTOR FUND
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to 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 to the Cross-Reference
Sheet to the Registration Statement of Defined Asset Funds Municipal Insured
Series, 1933 Act File No. 33-54565).
The Prospectus.
The Signatures.
The following exhibits:
1.1.1-- Form of Standard Terms and Conditions of Trust Effective 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).
1.11.1-- Merrill Lynch Code of Ethics
1.11.2-- Equity Investor Fund Code of Ethics
5.1-- Consent of independent accountants.
9.1-- Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Equity Investor Fund, Select Ten
Portfolio 1999 International Series A (United Kingdom Portfolio),
1933 Act File No. 333-70593).
R-1
<PAGE>
EQUITY PARTICIPATION SERIES
LOW FIVE PORTFOLIO
DEFINED ASSET FUNDS
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
EQUITY PARTICIPATION SERIES, LOW FIVE PORTFOLIO, DEFINED ASSET FUNDS CERTIFIES
THAT IT MEETS ALL OF THE REQUIREMENTS FOR EFFECTIVENESS OF THIS REGISTRATION
STATEMENT PURSUANT TO RULE 485(B) UNDER THE SECURITIES ACT OF 1933 AND 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 8TH DAY OF MARCH, 2000.
SIGNATURES APPEAR ON PAGES 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 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 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 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
<TABLE>
<S> <C>
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: 333-70593
</TABLE>
GEORGE A. SCHIEREN
JOHN L. STEFFENS
J. DAVID MEGLEN
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
<TABLE>
<S> <C>
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
</TABLE>
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-4
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
<TABLE>
<S> <C>
By the following persons, who constitute Powers of Attorney have been filed
the Board of Directors of PaineWebber under
Incorporated: the following 1933 Act File
Number: 33-55073
</TABLE>
MARGO N. ALEXANDER
TERRY L. ATKINSON
BRIAN M. BAREFOOT
STEVEN P. BAUM
MICHAEL CULP
REGINA A. DOLAN
JOSEPH J. GRANO, JR.
EDWARD M. KERSCHNER
JAMES P. MacGILVRAY
DONALD B. MARRON
ROBERT H. SILVER
MARK B. SUTTON
By ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-5
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
<TABLE>
<S> <C>
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,
Reynolds Inc.: 333-13039, 333-47553 and 333-89045
</TABLE>
BRUCE F. ALONSO
RICHARD M. DeMARTINI
RAYMOND J. DROP
JAMES F. HIGGINS
JOHN J. MACK
MITCHELL M. MERIN
STEPHEN R. MILLER
PHILIP J. PURCELL
JOHN H. SCHAEFER
THOMAS C. SCHNEIDER
ALAN A. SCHRODER
ROBERT G. SCOTT
By MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-6
Exhibit 1.11.1
CONFIDENTIAL AS OF [March 1, 2000]
MERRILL LYNCH
DEFINED ASSET FUNDS
CODE OF ETHICS
Section 1 - Purpose of the Code of Ethics
This Code of Ethics ("Code") is intended to provide guidance to the
management and employees of the Defined Asset Funds unit ("DF") of Merrill
Lynch, Pierce, Fenner & Smith, Incorporated ("Firm") as to the minimum standards
of conduct in personal securities transactions that are consistent with the
Firm's responsibilities to its clients and the unitholders in the unit
investment trusts or advisory accounts ("Trusts") sponsored or advised by the
Firm, and to provide assurance that those persons are in a position to act in
the best interests of clients and the unitholders of the Trusts. The Code is
administered by DF Legal.
The management and employees of DF have a duty to put the interests of the
Trusts' unitholders first, ahead of any personal interests in investing and
trading in securities. This Code is intended to ensure that personal trading be
conducted consistent with the Code and in such a manner as to avoid any actual
or potential conflicts of interest. Management and employees of DF have a
fundamental duty not to take inappropriate advantage of their positions of trust
and responsibility. Accordingly, all personal securities transactions of
management and employees of DF must comply with the requirements of this Code,
or risk the imposition of sanctions as set forth in Section 12 below.
Furthermore, all personal trading should avoid even the appearance of a conflict
of interest with the Firm's clients or the Trusts' unitholders.
This Code is not intended to discourage personal securities investments or
sound personal investment programs on the part of persons who are subject to the
Code. The purpose of the Code is to provide guidance to ensure that personal
investing is consistent with the interests of our unitholders. The Code must be
read in conjunction with all of the Firm's policies relating to business
conduct, including prohibitions against trading on inside information generally,
<PAGE>
communicating inside information to others (including by e-mail) and as set
forth in the Merrill Lynch Defined Asset Funds Ethical Wall Policy.
As more fully described below, this Code contains two general prohibitions
of personal securities transactions:
(a) Trading in a security during a period when DF is considering a
recommendation or making a decision to purchase or sell any of that
security for the account of a Trust and for a period of time after
the Trust's purchase. Your trading at this time could take advantage
of, avoid possible short-run market effects of, or have a negative
effect on, the Trust's securities transactions and be inconsistent
with Firm policy.
(b) Trading on the basis of material nonpublic information, or
communicating this information to others who trade on the basis of
such information ("tipping"). These trading or tipping practices are
abusive of the securities markets, violates Federal and State law,
and is a serious concern to market regulators and enforcement
authorities. This activity is in direct contravention of Firm policy.
A person covered by the requirements of this Code violates the Code if
they engage in these prohibited transactions directly or indirectly, such as
through a partnership, personal holding company or trust account over which such
person has investment control or in which the person holds a beneficial
interest, or if any member of the person's immediate family sharing the same
residence engages in the described transactions. This Code also applies to
transactions in derivative securities, such as options or futures, and unit
investment trusts and mutual funds sponsored by the Firm as well.
Employees are required to have a reasonable understanding of and comply
with the policies of the Firm that are designed to ensure compliance with
applicable Federal and state laws, and rules of the Securities and Exchange
Commission and various self-regulatory organizations which may govern employees'
activities. Any person encountering evidence of activity that may violate
applicable statutes or regulations or provisions of this Code should
2
<PAGE>
promptly report such evidence to the DF Compliance Director. Each person should
be sensitive not only to actual conflicts but also to the appearance of
conflicts. Conduct that violates this Code can harm not only the person
involved, but also the Firm's clients and the reputation of the Firm. Violations
of the Code may result in sanctions, including dismissal, and could involve
personal civil or criminal liability.
Each employee and management person of DF will be given a copy of the Code
when he or she commences employment and annually thereafter, and each time will
be asked to sign a statement that he or she has received and read the Code, and
that he or she agrees to report all personal securities transactions as may be
required in this Code and as may be required by Firm policies. Any employee who
has any questions regarding any aspect of this Code or, whether a proposed act
or transaction involves a conflict of interest or material nonpublic
information, should speak to the Compliance Director. In addition, employees may
report any unethical behavior on a confidential basis through the HOTLINE
established by the Firm's General Counsel's Office. The hotline number is (800)
338-8954 . In New York State or outside the United States, the hotline can be
reached at (212) 449-9590.
Section 2 - Federal Securities Law Standards
Rule 17j-1 under the Investment Company Act of 1940 ("Investment Company
Act") makes it unlawful for any affiliated person of any Trust sponsored by the
Firm (or any other registered investment company) or of any principal
underwriter for any such Trust in connection with that person's purchase or
sale, directly or indirectly, of securities that are "held or to be acquired"
(as defined in Section 3(i)) by any Trust:
(a) To employ any device, scheme, or artifice to defraud any Trust;
(b) To make to any Trust any untrue statement of a material fact or omit
to state to any Trust such a material fact necessary in order to
make the statements made, in light of the circumstances under which
they are made, not misleading;
3
<PAGE>
(c) To engage in any act, practice or course of business that operates
or would operate as a fraud or deceit on any Trust; or
(d) To engage in any manipulative practices with respect to any Trust.
The Rule requires that the Trusts and each sponsor of the Trusts (i) adopt a
written code of ethics containing provisions reasonably necessary to prevent
certain persons (known as "Access Persons" -- defined in Section 3(a), below)
from engaging in any of the unlawful activities described above, and (ii) use
reasonable diligence and institute procedures necessary to prevent violations of
such code.
Section 3 - Definitions
(a) Any person described in (1) or (2), below, must comply with all
provisions of this Code that apply to "Access Persons." Any person
described in (1) also must comply with all provisions in this Code
that apply to "Investment Personnel" (formerly "Decision Making
Access Persons"). DF Legal will notify each person who is considered
to be an Access Person or an Investment Person.
(1) The term "Investment Person" (or "Investment Personnel")
includes: (i) any employee of DF or of any company controlling
DF who, in connection with his or her regular functions or
duties, makes or participates in making recommendations
regarding the purchase, sale or holding of a security by or
for the account of any Trust or any accumulation account for
any Trust, and (ii) any natural person who controls DF and who
obtains information concerning recommendations made to any
Trust regarding the purchase, sale or holding of a security by
or for the account of any Trust or any accumulation account
for any Trust.
4
<PAGE>
(2) The term "Access Person" includes any person who falls within
the definition of an "Investment Person" in paragraph (1),
above, and also (i) any employee of DF or of any company
controlling DF who, in connection with his or her regular
functions or duties, makes, participates in or obtains
information regarding the purchase or sale of a security by
any Trust or any accumulation account for any Trust, or whose
functions or duties related to the making of any
recommendations with respect to the purchases or sales and
(ii) any natural person who controls DF who obtains
information concerning recommendations made to any Trust
regarding the purchase, sale or holding of a security by or
for the account of any Trust or any accumulation account for
any Trust.
(b) A security is "being considered for purchase, sale or holding" when
a recommendation to purchase, sell or hold a security has been made
or communicated and, with respect to the person making the
recommendation, when that person seriously considers making such a
recommendation.
(c) "Beneficial ownership" of, or "beneficial interest" in, a security
shall be interpreted in the same manner as it would be in
determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, except that it shall apply to all securities
which an Access Person has or acquires. This means that an Access
Person should consider himself or herself to be the beneficial owner
of any securities in which he or she has a direct or indirect
pecuniary interest. In addition, an Access Person should consider
himself or herself the beneficial owner of securities held by his or
her spouse, minor children, any relative living in the same
household, or any other person by reason of any contract,
arrangement, or understanding that provides him or her with sole or
shared voting or investment power.
5
<PAGE>
(d) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act. Section 2(a)(9) provides that
"control" "means the power to exercise a controlling influence over
the management or policies of a company, unless such power is solely
the result of an official position with such company." Ownership by
any person other than a natural person of 25% or more of a company's
voting securities is presumed to give the holder of those securities
control of the company. A person who owns less than 25% of the
voting securities of a company is presumed not to control the
company. Either of these two presumptions may be overcome by the
facts and circumstances of the particular situation. For purposes of
this definition, control of a company includes control of (1) a
corporation, partnership, association, joint-stock company, trust,
fund, any organized group of persons, whether incorporated or not;
(2) a receiver, trustee in a case under title 11 of the United
States Code or similar official, or any liquidating agent for any of
the foregoing, in his capacity as such; or (3) an account that
invests in securities.
(e) "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933 (other than securities issued by an
open-end management company or units issued by a unit investment
trust registered under the Investment Company Act of 1940), the
issuer of which, immediately before the registration, was not
subject to the reporting requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934.
(f) "Private Placement" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to Section
4(2) or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506
under the Securities Act of 1933.
(g) "Purchase" or "sale" of a security includes, among other things, (i)
the buying or writing of an option to purchase or sell a security,
or (ii) an indirect purchase or sale by a person through a
partnership, personal holding company or trust account
6
<PAGE>
over which such person has investment control or holds a beneficial
interest, or by any member of the person's immediate family sharing
the same residence.
(h) "Security" shall have the meaning set forth in Section 2(a)(36) of
the Investment Company Act, except that (i) it shall also include
any instrument commonly known as a derivative (including, but not
limited to, any forward contract, future, swap, or option), and (ii)
other than for purposes of pre-clearing securities issued in an
Initial Public Offering or a Private Placement, it shall not include
securities that are direct obligations of the U.S. Government,
bankers' acceptances, bank certificates of deposit, commercial
paper, high quality short-term debt instruments and shares of
open-end investment companies.
(i) "Security Held or to be Acquired" means (i) any security which,
within the most recent 15 days, (A) is or has been held by a Trust
or (B) is being or has been considered for purchase on behalf of a
Trust, and (ii) any option to purchase or sell, and any security
convertible into or exchangeable for, a security which, within the
most recent 15 days, (A) is or has been held by a Trust or (B) is
being or has been considered for purchase on behalf of a Trust.
(j) "Trusts" means the unit investment trusts sponsored or underwritten
by Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Section 4 - Exempted Transactions
The requirements of Section 5 of this Code, except for the requirement to
pre-clear securities issued in an Initial Public Offering or a Private
Placement, shall not apply to:
(a) A purchase or sale of securities effected in any account over which
the Access Person has no direct or indirect influence, control, or
beneficial interest.
7
<PAGE>
(b) A purchase or sale of securities which are not eligible for purchase
or sale by any of the Trusts.
(c) A purchase or sale of securities which is non-volitional on the part
of the Access Person (for example, a purchase or sale effected by an
investment manager for a pension or retirement plan, other than an
individual retirement account, in which an Access Person is a
beneficiary)(d) A purchase of securities which is made through an
automatic dividend reinvestment plan.
(e) Purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent
those rights were acquired from such issuer, and sales of such
rights so acquired.
(f) A purchase or sale of securities issued by an open-end mutual fund.
(g) A purchase or sale of securities issued by any Defined Government
Securities Income Funds.
(h) A purchase or sale of securities that are direct obligations of the
U.S. government.
(i) A purchase or sale of bankers' acceptances, bank certificates of
deposit, commercial paper, high quality short-term debt instruments.
(j) A purchase or sale of securities issued by any unit investment trust
with 50 or more securities as of the initial date of deposit,
including the S&P 500, Midcap and Defined Technology Series.
(k) Transactions occurring in the process of rolling over a Select
Series Trust into the successor Series, resulting in a sale and a
related purchase of Trust units.
8
<PAGE>
(l) Crossover (e.g. Dow to International) and regular (e.g. Dow to Dow)
rollover transactions in the Select Series.
(m) Subsequent reinvestments in an AIPS account; initial investment is
not exempt.
(n) A purchase or sale of a security issued by any unit investment
trust, including all RIC and grantor trusts, in which the underlying
securities are traded on a national securities exchange, unless the
Trust is a "Hot Issue". A "Hot Issue" is defined as a newly issued
stock that is in great public demand. Hot Issues typically increase
rapidly in price during their initial offering, since the demand
exceeds the supply of shares.
Section 5 - Procedures Relating to Securities Transactions
(a) All officers and employees of DF are reminded that it is the Firm's
policy that their securities accounts must generally be maintained
at the Firm. See --- Policy Manual Section 2.01.4.
(b) The following procedures apply to every Access Person, including
every Investment Person.
(1) Every Access Person must pre-clear each personal securities
transaction, including any acquisition of securities issued in
an Initial Public Offering or a Private Placement, by
contacting the Compliance Director by telephone, electronic
mail, in person, or by other means. Preclearance is valid only
on the day it is given. If an Access Person obtains
preclearance of a transaction, but waits until the next day to
trade, the Access Person must pre-clear the trade again. As
described in Section 6(a), below, after an Access Person has
effected a trade, the Access Person must file the Transactions
Required To Be Reported Under The Code Of Ethics
9
<PAGE>
("Transaction Form") form with the Compliance Director
describing the transaction. A copy of the Transaction Form is
attached.
(2) Every Access Person who owns, directly or indirectly,
securities obtained in a Private Placement must notify the
Compliance Director in writing prior to participating in a
Trust's subsequent consideration of an investment in that
issuer. The Trust's decision to invest in that issuer will be
subject to an independent review by DF investment persons who
do not have any personal interest in the issuer.
(3) No Access Person may purchase any security (i) seven calendar
days prior to and seven calendar days after the purchase of
the same security for initial deposit in any Trust or (ii) at
a time when he or she knows that the same security is being
considered for purchase by any Trust or any accumulation
account for any Trust.
(4) No Access Person may sell any security (i) seven calendar days
prior to and seven calendar days after the sale of the same
security as a result of a 22 Meeting and the termination or
rollover of any Trust, or (ii) at a time when he or she knows
that the same security is being considered for sale by any
Trust or any accumulation account for any Trust.
(5) For accounts that are not maintained at the Firm, every Access
Person must instruct his or her broker to send to the
Compliance Director (i) duplicate copies of confirmations of
that Access Person's personal securities transactions and (ii)
copies of all periodic account statements relating to that
Access Person's securities accounts within ten days of the end
of each calendar quarter.(1)
- ----------
(1) The Compliance Director receives daily reports of activity in employee
accounts maintained at the Firm. The Compliance Director also receives copies of
monthly account statements for employee accounts maintained at the Firm.
10
<PAGE>
(c) Investment Personnel must observe the following procedures, in
addition to the procedures described, above, in Section 5(b):
(1) An Investment Person must notify the Compliance Director in
writing of any intended purchase by any Trust or any
accumulation account for any Trust of a security which that
Investment Person beneficially owns.
(2) After a Trust has purchased a security for initial deposit
that an Investment Person also beneficially owns, the
Investment Person may not sell that security until seven
calendar days after the Trust's purchase of that security,
unless the Investment Person demonstrates to the satisfaction
of the Compliance Director a bona fide reason why such seven
calendar day period should be waived. Examples of such bona
fide reasons would be unexpected personal hardship occasioning
a need for funds or special year-end tax considerations. A
change in the Investment Person's investment objectives or
special new investment opportunities do not constitute
acceptable reasons for a waiver.
(3) After a Trust has sold a security as a result of a 22 Meeting
or the Trust's termination or rollover that a Investment
Personnel also beneficially owns, the Investment Person may
not purchase that security within seven calendar days unless
such Investment Person obtains preclearance approval by
notifying the Compliance Director in writing of his or her
intended purchase.
Section 6 - Reporting and Monitoring
11
<PAGE>
(a) Access Person Transaction Reports. Every Access Person shall report
to the Compliance Director the information described in Section
6(d)(1) of this Code, below, in the Transaction Form attached to
this Code, relating to transactions in any security of which that
Access Person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership in the security. Transaction
Forms are not required for those exempted transactions, as described
above in Section 4. The Compliance Director will retain a copy of
each Transaction Form. In addition, for each approval granted to an
Investment Person to acquire securities issued in an Initial Public
Offering or a Private Placement, the compliance Director will make
and retain a written record of the reasons for granting the
approval.
(b) Initial and Annual Reports.
(1) Non-Access Person Employees. Each non-Access Person employee
shall complete, at the time they commence employment with DF
and at least once annually thereafter, the Employee Personal
Securities Accounts Report, as attached, concerning their
securities holdings and provide this information to the
Compliance Director.
(2) DF Access Persons. Each Access Person shall complete and
submit to the Compliance Director, within 10 days of becoming
an Access Person and by each January 30 thereafter, the Access
Person Personal Securities Holdings Report, which must include
the following information:
(i) The title, number of shares and principal amount of each
security in which the Access Person has any direct or
indirect beneficial interest;
12
<PAGE>
(ii) The name of any broker, dealer or bank with whom the
Access Person maintains an account in which any
securities are held for the direct or indirect benefit
of the Access Person; and
(iii) The date the report is submitted by the Access Person.
In lieu of providing the required details about securities
holdings, Access Persons may confirm in writing the accuracy
of information maintained by the Compliance Director, as
explained more fully on the Access Person Personal Securities
Holdings Report.
(c) Access Person Quarterly Transaction Reports. In addition to
preclearing securities transactions and submitting initial and
annual holdings reports, each Access Person must also file with the
Compliance Director on a quarterly basis a report describing every
securities transaction that occurred during the quarter in any
account that is not maintained with the Firm and in which the Access
Person had any direct or indirect beneficial ownership. Each report
must be filed within ten days after March 31, June 30, September 30
and December 31 of each year.
(1) Securities Transactions. Each report must contain the
following information with respect to each securities
transactions during the quarter:
(i) The date of the transaction, the title, the interest
rate and maturity date (if applicable), the number of
shares or units, or the principal amount of each
security involved;
(ii) The nature of the transaction (e.g., purchase, sale or
any other type of acquisition or disposition);
(iii) The price at which the transaction was effected; and
13
<PAGE>
(iv) The name of the broker, dealer or bank with or through
whom the transaction was effected.
Alternatively, this requirement can be satisfied by providing
DF Legal with quarterly statements of any account that is not
maintained with the Firm, if provided within the required 10
day period.
(2) Brokerage Accounts. Each report must also disclose, for any
securities account established by the Access Person during the
quarter, the name of the broker, dealer or bank with whom the
Access Person established the account and the date the account
was established.
(3) Date of Submission. All quarterly transaction reports must
state the date submitted to DF Legal.
(e) Identification of Access Persons. DF Legal must identify all Access
Persons who are under a duty to make reports and inform them of such
duty.
(f) Review of Initial, Quarterly and Annual Reports. The Compliance
Director or a designated person is responsible for reviewing each
initial, quarterly and annual Access Person report.
Section 7 - Gifts
All officers and employees of DF are reminded that they are subject to the
Firm's policies regarding the acceptance of gratuities. See Policy Manual
Section 2.01.9.
Section 8 - Service on Boards of Directors
14
<PAGE>
All officers and employees are reminded that they are subject to the
Firm's policies regarding service as a director of a company. See Policy Manual
Section 2.01.8.
Section 9 - Insider Trading
No Access Person or employee of DF shall purchase or sell, directly or
indirectly, either personally or on behalf of others, any security while in
possession of material nonpublic information relating to that security or the
issuer of that security, or communicate material nonpublic information to others
in violation of the law. This prohibition extends to activities within and
outside such person's duties at DF.
(a) Information is generally considered material when there is a
substantial likelihood that a reasonable investor would consider it
important in making his or her investment decisions, or when it is
reasonably certain to have a substantial effect on the price of a
company's securities. Examples of this type of information include,
but are not limited to, dividend changes, earnings estimates,
changes in previously released earnings estimates, significant
merger or acquisition proposals or agreements, major litigation,
liquidation problems and extraordinary management developments.
Material information need not relate to a company's business, but
can include knowledge of a forthcoming report or recommendation
concerning an issuer's securities that will have a significant
market effect.
(b) Information is generally considered nonpublic until it has been
effectively communicated to the market-place. One must be able to
point to some fact to show that the information is generally public.
Examples would include information found in a report filed with the
Securities and Exchange Commission, appearing on the Dow Jones broad
tape, or available through any electronic publication service or in
publications of general circulation.
15
<PAGE>
(c) It is unlawful not only to use inside information by trading while
in possession of it but also to communicate (tip) such information
to others who then trade on the basis of the information.
(d) Access Persons and employees of DF should consult with the
Compliance Director if they have any questions about whether
information in their possession is material nonpublic information
subject to the prohibition against insider trading.
Section 10 - Exceptions
The Compliance Director may, upon a written demonstration of hardship or
other significant factors, permit exceptions on a case-by-case basis, which
shall be in writing, to any of the prohibitions contained in this Code except
for the prohibition against insider trading described in Section 9, above. An
exception shall only be valid when provided in writing by the Compliance
Director.
Section 11 - Other Restrictions
Certain transactions may be prohibited because of considerations relating
to the Firm's and DF's restricted lists. Securities are routinely placed on the
Firm's and DF's restricted lists for a variety of reasons. When a security
appears on the list, employees generally are not permitted to transact in that
security. The DF Ethical Wall Policy also describes instances where restrictions
are placed on employee trading.
Section 12 - Sanctions
Upon discovering a violation of this Code, DF shall report such violation
to the Firm's Compliance Department which may take such steps as it deems
appropriate, including, among
16
<PAGE>
other things, the issuance of a letter of censure or suspension or
recommendation of termination of the employment of the violator, or may refer
the matter to the appropriate regulatory or governmental authority.
Section 13 - Review of Code
The Compliance Director of DF shall prepare an annual report relating to
this Code for submission to the Firm's Office of General Counsel. This report
shall summarize existing procedures concerning personal investing and any
changes in the procedures made during the past year; identify any violations
requiring significant remedial action during the past year; and identify any
recommended changes in the existing restrictions or procedures based upon DF's
experience under the Code, evolving industry practices or developments in
applicable laws or regulations.
Section 14 - Retention of Records
The Compliance Director shall be responsible for maintaining the following
records in accordance with the requirements of Rule 17j-1 of the Investment
Company Act:
(a) A copy of the Code currently in effect and any versions of the Code
in effect at any time within the past five years, as well as a copy
of all codes of ethics for any Trust sponsored or co-sponsored by DF
and any version of the codes in effect within the past five years,
maintained in an easily accessible place;
(b) A record of any violations of the Code, and of any action taken as a
result of the violation, maintained in an easily accessible place
for at least five years after the end of the fiscal year in which
the violation occurs;
17
<PAGE>
(c) A copy of each (1) Non Access Person Securities Accounts Report, (2)
Access Person Securities Holdings Report and (3) quarterly
transaction report made by an Access Person, including any
information provided in lieu of these reports, maintained for at
least five years after the end of the fiscal year in which the
report is made or the information is provided, the first two years
in an easily accessible place;
(d) A record of all persons, currently or within the past five years,
who are or were required to submit Access Person Securities Holdings
Reports or quarterly transaction reports, or who are or were
responsible for reviewing these reports, maintained in an easily
accessible place;
(e) A record of any decision, and the reasons supporting the decision,
to approve the acquisition of securities issued in an Initial Public
Offering or Private Placement by an Investment Person, maintained
for at least five years after the end of the fiscal year in which
the approval is granted; and
(f) A copy of each Transaction Form, maintained for at least five years
after the end of the fiscal year in which the approval is granted.
Section 15 - Compliance Director
For purposes of this Code the Compliance Director shall be Teresa A.
Koncick or any other individual designated by the Compliance Director.
* * * * *
All questions concerning any requirements contained in this Code should be
directed to Ms. Koncick at 282-8717 or Debra Campanella at 282-8589.
18
<PAGE>
NON-ACCESS PERSON
SECURITIES ACCOUNTS REPORT
NAME: ___________________________ DEPT/GROUP: _____________________
TITLE: ___________________________ TELEPHONE: _____________________
1. Do you maintain securities accounts with Merrill Lynch, Pierce, Fenner &
Smith?
YES NO
If yes, provide the following information for all accounts maintained with
Merrill Lynch, Pierce, Fenner & Smith:
Type of Account Office(s) Where
Account(s) Number(s) Maintained
- ---------- --------- ----------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2. Do you maintain securities accounts outside Merrill Lynch?
YES NO
If yes, provide the following information for all accounts maintained
outside Merrill Lynch:
Type of Account Office(s) Where
Account(s) Number(s) Maintained
- ---------- --------- ----------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
The DF Division Compliance Director must be informed if you establish additional
accounts with either Merrill Lynch or with outside firms.
Return this report to the DF Legal Department
Signature: ________________________________
Date: ________________________________
19
<PAGE>
ACCESS PERSON
SECURITIES HOLDINGS REPORT
NAME: ___________________________ DEPT/GROUP: _____________________
TITLE: ___________________________ TELEPHONE: _____________________
1. Personal Securities Holdings. Do you have any direct or indirect
beneficial interest in any securities (as defined in Section 3(h) of the
Code)?
YES NO
If yes, you must provide information called for on page 2 of this report.
2. Merrill Lynch Accounts. Do you maintain securities accounts with Merrill
Lynch, Pierce, Fenner & Smith in which any securities are held for your
direct or indirect benefit?
YES NO
If yes, provide the following information for all accounts maintained with
Merrill Lynch:
Type of Account Office(s) Where
Account(s) Number(s) Maintained
- ---------- --------- ----------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
3. Outside Accounts. Do you maintain securities accounts outside Merrill
Lynch?
YES NO
If yes, provide the following information for all accounts maintained
outside Merrill Lynch:
Name of Broker, Date Account Account
Dealer or Bank Established Number
- -------------- ----------- ------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Reminder: The DF Division Compliance Director must be informed if you
established additional accounts with either Merrill Lynch or with outside firms.
In addition, if you establish an account with an outside firm, you must make
arrangements to have duplicate account statements sent to us within 10 days of
the end of each calendar quarter.
(Continue to page 2)
20
<PAGE>
Page 2
ACCESS PERSON
SECURITIES HOLDINGS REPORT
LIST OF BENEFICIALLY OWNED SECURITIES
Please Circle One
1. I have listed below all securities in which I have any direct or indirect
beneficial ownership (as defined in Section 3(c) of the Code).
2. I have attached a copy of my most recent account statement for each
account which contains securities in which I have any direct or indirect
beneficial ownership. Any beneficially-owned security that does not appear
on my account statement(s) is listed below.
3. I have received from the Compliance Director the attached Merrill Lynch
monthly report(s) which contain(s) information about securities in which I
have a direct or indirect beneficial ownership. Any beneficially-owned
security that does not appear on my monthly report(s) is either included
on the attached account statement(s) or listed below.
Title or Number of Principal
Name Shares Amount
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
o Please check here if additional pages listing your beneficially owned
securities are attached and indicate the number of additional pages:
_____.
o Please check here if copies of account statements are attached and
indicate the number of pages: _____.
My signature on this page certifies that the information about my personal
securities holdings listed on this report and any attached pages, if any, is
accurate, discloses all securities in which I have a direct or indirect
beneficial ownership, and is current as of the date I became an access person or
[December 31] of this past year, as applicable.
Signature: ________________________________
Date: ________________________________
Please return this report to the DF Legal Department
21
Exhibit 1.11.2
Code of Ethics for the
Equity Investor Fund
A. Introduction
This Code of Ethics ("Code") has been prepared for the Equity Investor
Fund, (the "UIT"), as required by Rule 17j-1 under the Investment Company Act of
1940 (the "1940 Act"). A unit investment trust, by its nature, does not have any
directors, officers or employees. This Code therefore applies by reference to
individuals associated with each of the UIT's sponsors (each, a "Sponsor"). The
Code establishes the minimum standards to which each Sponsor's directors,
officers and employees must abide. It is the responsibility of each Sponsor to
(1) approve this Code and (2) adopt its own code of ethics incorporating these
minimum standards, as well as any other provisions necessary, taking into
consideration the nature of the Sponsor's particular business operations, to
prevent employees from engaging in fraudulent or manipulative conduct.
B. Definitions
For purposes of this Code:
1. Access Person means:
(a) Any director, officer, general partner or Advisory Person
of any of the UIT's Sponsors.
Note: If a Sponsor is primarily engaged in a business or
businesses other than Sponsoring the UIT or advising
other advisory clients, the term Access Person means any
director, officer, general partner or Advisory Person of
the Sponsor who, with respect to the UIT, makes any
recommendation, participates in the determination of
which recommendation will be made, or whose principal
function or duties relate to the determination of which
recommendation will be made, or who, in connection with
his or her duties, obtains any information concerning
recommendations on Covered Securities being made to the
UIT.
A Sponsor is "primarily engaged in a business or
businesses other than Sponsoring UITs or advising other
advisory clients" if, for each of its most recent three
fiscal years or for the period of time since its
<PAGE>
organization, whichever is less, the Sponsor derived, on
an unconsolidated basis, more than 50 percent of its
total sales and revenues and more than 50 percent of its
income (or loss), before income taxes and extraordinary
items, from the other business or businesses.
2. Advisory Person means:
(a) Any employee of the UIT Sponsor (or of any company in a
control relationship to the UIT Sponsor) who, in connection
with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase
or sale of Covered Securities by the UIT, or whose functions
relate to the making of any recommendations with respect to
the purchases or sales; and
(b) Any natural person in a control relationship to the UIT
Sponsor who obtains information concerning recommendations
made with regard to the purchase or sale of Covered Securities
by the UIT.
3. Beneficial Ownership. For purposes of the Code, beneficial ownership is
interpreted in the same manner as it would be under Rule 16a_1(a)(2) under
the Securities Exchange Act of 1934 ("Exchange Act") in determining
whether a person is the beneficial owner of a security for purposes of
Section 16 of the Exchange Act and the rules and regulations thereunder.
4. Control has the same meaning as in Section 2(a)(9) of the 1940 Act.
5. Covered Security means a security as defined in Section 2(a)(36) of the
1940 Act, except that it does not include:
(a) Direct obligations of the Government of the United States;
(b) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and
(c) Shares issued by open-end funds.
2
<PAGE>
6. Fund means any investment company registered under the 1940 Act.
7. An Initial Public Offering means an offering of securities registered
under the Securities Act of 1933 (the "Securities Act") (other than
securities issued by an open-end management company or units issued by a
unit investment trust registered under the Investment Company Act of
1940), the issuer of which, immediately before the registration, was not
subject to the reporting requirements of Sections 13 or 15(d) of the
Exchange Act.
8. Investment Personnel of a UIT Sponsor means:
(a) Any employee of the UIT Sponsor (or of any company in a
control relationship to the UIT Sponsor) who, in connection
with his or her regular functions or duties, makes or
participates in making recommendations regarding the purchase
or sale of securities by the UIT.
(b) Any natural person who controls the UIT Sponsor and who
obtains information concerning recommendations made regarding
the purchase or sale of securities by the UIT.
9. A Limited Offering means an offering that is exempt from registration
under the Securities Act pursuant to Section 4(2) or Section 4(6) or
pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act.
10. Purchase or sale of a Covered Security includes, among other things,
the writing of an option to purchase or sell a Covered Security.
11. Security Held or to be Acquired by a UIT means:
(a) Any Covered Security which, within the most recent 15 days:
(1) Is or has been held by the UIT; or
(2) Is being or has been considered by the UIT or its Sponsor
for purchase by the UIT; and
(b) Any option to purchase or sell, and any security convertible
into or exchangeable for, a Covered Security described above in
Section B.11.(a) of the Code.
3
<PAGE>
C. Unlawful Actions - Generally
It is unlawful for any affiliated person of any UIT Sponsor, in connection
with the purchase or sale, directly or indirectly, by the person of a Security
Held or to be Acquired by the UIT:
1. To employ any device, scheme or artifice to defraud the UIT;
2. To make any untrue statement of a material fact to the UIT or omit to
state a material fact necessary in order to make the statements made to
the UIT, in light of the circumstances under which they are made, not
misleading;
3. To engage in any act, practice or course of business that operates or
would operate as a fraud or deceit on the UIT; or
4. To engage in any manipulative practice with respect to the UIT.
D. Requirements
1. Code of Ethics Adoption and Approval.
(a) Each UIT Sponsor must adopt a written code of ethics containing
the provisions set forth in this Code, as well as any other
provisions reasonably necessary to prevent its Access Persons from
engaging in any conduct prohibited by Section C of this Code.
(b) Each UIT Sponsor must approve its own code of ethics and any
material change to that code of ethics within six months of the
material change.
(c) Each UIT Sponsor must approve this Code. Each UIT Sponsor must
also approve any material change to this Code no later than six
months after the incorporation of the material change.
2. Administration of Code of Ethics. Each Sponsor must use reasonable diligence
and institute procedures reasonably necessary to prevent violations of this Code
and its own code of ethics.
4
<PAGE>
E. Reporting Requirements of Access Persons
1. Reports Required. Unless excepted by Section E.2. of this Code, every
Access Person of a UIT Sponsor, must report to that Sponsor:
(a) Initial Holdings Reports. No later than 10 days after the person
becomes an Access Person, the following information:
(i) The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership when the person became an Access
Person;
(ii) The name of any broker, dealer or bank with whom the
Access Person maintained an account in which any securities
were held for the direct or indirect benefit of the Access
Person as of the date the person became an Access Person; and
(iii) The date that the report is submitted by the Access
Person.
(b) Quarterly Transaction Reports. No later than 10 days after the
end of every calendar quarter, the following information:
(i) With respect to any transaction during the quarter in a
Covered Security in which the Access Person had any direct or
indirect beneficial ownership:
(1) The date of the transaction, the title, the interest
rate and maturity date (if applicable), the number of
shares and the principal amount of each Covered Security
involved;
(2) The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(3) The price of the Covered Security at which the
transaction was effected;
(4) The name of the broker, dealer or bank with or
through which the transaction was effected; and
5
<PAGE>
(5) The date that the report is submitted by the Access
Person.
(ii) With respect to any account established by the Access
Person in which any securities were held during the quarter
for the direct or indirect benefit of the Access Person:
(1) The name of the broker, dealer or bank with whom the
Access Person established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the Access
Person.
(c) Annual Holdings Reports. Annually, the following
information (which information must be current as of a date no
more than 30 days before the report is submitted):
(i) The title, number of shares and principal amount of
each Covered Security in which the Access Person had any
direct or indirect beneficial ownership;
(ii) The name of any broker, dealer or bank with whom
the Access Person maintains an account in which any
securities are held for the direct or indirect benefit
of the Access Person; and
(iii) The date that the report is submitted by the
Access Person.
2. Exceptions from Reporting Requirements
(a) An Access Person to a UIT Sponsor need not make a report
under Section E.1 of this Code with respect to transactions
effected for, and Covered Securities held in, any account over
which the Access Person has no direct or indirect influence or
control.
(b) An Access Person to a UIT Sponsor need not make a
quarterly transaction report to the Sponsor under Section
E.1.(b) of this Code if all the information in the report
6
<PAGE>
would duplicate information required to be recorded under Rule
204_2(a)(12) or Rule 204_2(a)(13) under the Investment
Advisers Act of 1940.
(c) An Access Person to a UIT Sponsor need not make a
quarterly transaction report under paragraph E.1.(b) of this
section if the report would duplicate information contained in
broker trade confirmations or account statements received by
the Sponsor with respect to the Access Person in the time
period required by Section E.1.(b), if all of the information
required by that provision is contained in the broker trade
confirmations or account statements, or in the records of the
Sponsor.
3. Review of Reports. Each UIT Sponsor to which reports are required
to be made by Section E.1. of this Code must institute procedures by
which appropriate management or compliance personnel review these
reports.
4. Notification of Reporting Obligation. Each UIT Sponsor to which
reports are required to be made by Section E.1. of this Code must
identify all Access Persons who are required to make these reports
and must inform those Access Persons of their reporting obligation.
5. Disclaimer of Beneficial Ownership. Any report required by
Section E.1 of this Code may contain a statement that the report
will not be construed as an admission that the person making the
report has any direct or indirect beneficial ownership in the
Covered Security to which the report relates.
6. Pre-approval of Investments in IPOs and Limited Offerings.
Investment Personnel of each UIT Sponsor must obtain approval from
their respective Sponsor before directly or indirectly acquiring
beneficial ownership in any securities issued in any Initial Public
Offering or Limited Offering.
F. Recordkeeping Requirements
Each UIT Sponsor must, at its principal place of business, maintain
records in the manner and to the extent set out in this Section F of the Code,
and must make these records available for examination by the SEC:
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1. The Code. A copy of each code of ethics for the Sponsor that is in
effect, or at any time within the past five years was in effect, as well
as a copy of this code and any version of this code in effect within the
past five years, must be maintained in an easily accessible place;
2. Code Violations. A record of any violation of the Sponsor's code of
ethics, and of any action taken as a result of the violation, must be
maintained in an easily accessible place for at least five years after the
end of the fiscal year in which the violation occurs;
3. Access Person Reports. A copy of each report made by an Access Person
as required by Section E.1. of the Code, including any information
provided in lieu of the reports under Section E.2.(c) of the Code, must be
maintained for at least five years after the end of the fiscal year in
which the report is made or the information is provided, the first two
years in an easily accessible place;
4. Reporting Persons and Reviewers. A record of all persons, currently or
within the past five years, who are or were required to make reports under
Section E.1. of the Code, or who are or were responsible for reviewing
these reports, must be maintained in an easily accessible place; and
5. Transaction Approvals. A record of any decision, and the reasons
supporting the decision, to approve the acquisition by investment
personnel of any securities issued in an Initial Public Offering or a
Limited Offering, must be maintained for at least five years after the end
of the fiscal year in which the approval is granted.
8
Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of Equity Participation Series,
Low Five Portfolio, Defined Asset Funds
We consent to the use in this Post-Effective Amendment No. 2 to Registration
Statement No. 333-05685 of our opinion dated February 4, 2000 appearing in the
Prospectus, which is part of such Registration Statement, and to the reference
to us under the heading "Miscellaneous--Auditors" in such Prospectus.
DELOITTE & TOUCHE LLP
New York, N.Y.
March 8, 2000
