AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 8, 1998
REGISTRATION NO. 333-32181
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
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 INVESTOR FUND
SELECT SERIES
PRINCIPLED VALUES PORTFOLIO
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITOR:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, NJ 08543-9051
D. NAMES AND COMPLETE ADDRESSES OF AGENT FOR SERVICE:
TERESA KONCICK, ESQ.
P.O. BOX 9051
PRINCETON, NJ 08543-9051 COPIES TO:
PIERRE DE SAINT PHALLE,
ESQ.
450 LEXINGTON AVENUE
NEW YORK, NY 10017
E. TITLE OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
THIS REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
DEFINED ASSET FUNDSSM
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EQUITY INVESTOR FUND The objective of this Defined Fund is capital
SELECT SERIES appreciation by investing for a period of about
PRINCIPLED VALUES PORTFOLIO one year in a socially responsible portfolio of
(A UNIT INVESTMENT common stocks. Dividend income is not an objective
TRUST) of the Portfolio.
- ------------------------------The Portfolio is not an appropriate investment for
investors seeking preservation of capital or a
high level of current income.
The value of units will fluctuate with the value
of the common stocks in the Portfolio and there
can be no assurance that the stocks or the units
will appreciate in value.
Minimum purchase: $250.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Inquiries should be directed to the Trustee at
SPONSOR: 1-800-221-7771.
Merrill Lynch, Prospectus dated January 8, 1998.
Pierce, Fenner & Smith INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Incorporated AND RETAIN IT FOR FUTURE REFERENCE.
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
Municipal bond portfolios
Corporate bond portfolios
Government bond portfolios
Equity portfolios
International bond and equity portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.
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Defined Principled Values Portfolio
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The Portfolio contains 25 common stocks selected by the Sponsor for capital
appreciation from among companies that are considered to have socially
responsible policies and positive diversity records. This Select Series permits
investors to buy and hold the Portfolio for approximately one year. Each Select
Portfolio is designed to be part of a longer term strategy and the Sponsor
believes that more consistent results are likely if the strategy is followed for
at least three to five years.
The Sponsor selected the Securities through a multi-step screening process. The
starting point was the Domini 400 Social IndexSM, which monitors the financial
performance of 400 companies that have been screened on a broad range of social
issues such as product safety and the environment and that derive no revenue
from the manufacture of tobacco or alcohol, derive no revenue from gambling
activities, have no ownership in nuclear power, and derive no more than 2% of
their revenues from military contracting. Next, Kinder, Lydenberg, Domini & Co.
(KLD), the Portfolio Consultant, selected companies from the Index that have a
positive record of diversity. KLD's screening process identified these companies
on the basis of characteristics including: chief executive officers who are
women or members of a minority group; boards of directors that include a
significant percentage of women, minorities or the disabled; significant
progress in promoting women and minorities; employee programs focusing on family
concerns; records of subcontracting with women-or minority-owned businesses, and
innovative hiring or other programs for the disabled.
Finally, to the list of companies provided by the Portfolio Consultant, the
Sponsor applied a proprietary screening process that focuses on various
quantitative factors such as recent price performance, price to earnings ratios
and dividend yield, to produce the final list of 25 stocks. These stocks are
approximately equally weighted in the Portfolio.
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Defining Your Portfolio
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The Portfolio is diversified among various industry groups.
Based upon the principal business of each issuer and current market values, the
following industry groups are represented in the Portfolio:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Financial Services/Banks 16%
/ / Telecommunications 16
/ / Manufacturing 15
/ / Medical--Drugs/Instruments 13
/ / Food Processing 8
/ / Information Services 8
/ / Airlines 4
/ / Nursing Homes 4
/ / Restaurants 4
/ / Retail--Apparel/Shoe 4
/ / Insurance 4
/ / Office Supplies 4
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Defining Your Risks
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Unlike many funds, this Portfolio consists of stocks that were selected, in
part, for non-economic reasons, and no assurances can be given that this
Portfolio will perform as well as funds that include stocks of issuers that
would not be selected by the Portfolio Consultant (see Risk Factors in Part B).
The Portfolio is not considered to be concentrated in any particular industry.
The Portfolio is not appropriate for investors who are unable or unwilling to
assume the risk involved generally with an equity investment and who are seeking
preservation of capital or high current income. There can be no assurance that
the Portfolio will meet its objective over its one-year life.
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsor
receives no management fee. Therefore, the adverse financial condition of an
issuer, changes in the Sponsor's or the Portfolio Consultant's opinions or any
market movement in the
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<PAGE>
price of a security will not require the sale of securities from the Portfolio
or mean that the Sponsor will not continue to purchase the security in order to
create additional Units; however, the Sponsor may instruct the Trustee to sell
securities under certain limited circumstances. (See Portfolio Supervision in
Part B.)
Unit price fluctuates with the value of the Portfolio, which could be affected
by changes in the financial condition of the issuers, the impact of the
Sponsor's purchase and sale of securities for the Portfolio, movements in stock
prices generally and other factors. Additionally, equity markets have been at
historically high levels and no assurance can be given that these levels will
continue. (See Risk Factors in Part B.)
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Defining Your Investment
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PUBLIC OFFERING PRICE PER 1,000 UNITS $1,000.00
The Public Offering Price as of January 7, 1998, the business day prior to the
initial date of deposit, is based on the aggregate value of the underlying
securities ($295,900) and any cash held to purchase securities, divided by the
number of units outstanding (298,888) times 1,000, plus the initial sales
charge. Units offered on the Initial Date of Deposit will also be priced at
$1,000 per 1,000 Units although the aggregate value of the underlying
securities, cash amount and number of Units may vary. The Public Offering Price
on any subsequent date will vary. The underlying securities are valued by the
Trustee on the basis of their closing sale prices at 4:00 p.m. Eastern time on
every business day.
SALES CHARGES
The total sales charge for this investment combines an initial up-front sales
charge and a deferred sales charge that will be deducted from the net asset
value of the Portfolio on March 1, 1998 and thereafter on the first of each
month through December 1, 1998.
EXCHANGE OPTION
You may exchange your units of this Portfolio for units of any other Select or
Focus Series any time prior to termination of this Portfolio. If you continue to
hold your units, when this Portfolio is about to be liquidated you may have the
option to roll your proceeds into the next Principled Values Portfolio, if
available. If you notify your financial professional by January 28, 1999, your
units will be redeemed and certain distributed securities plus the proceeds from
the sale of the remaining distributed securities will be reinvested in units of
the next Portfolio, if available. If you decide not to roll over your proceeds,
you will receive a cash distribution (or, if you so elect, an in-kind
distribution) after termination. Of course you can sell or redeem your Units at
any time prior to termination.
QUARTERLY INCOME DISTRIBUTIONS
You will receive distributions of any dividend income, net of expenses, on the
25th day of March, June, September and November, 1998, if you own Units on the
10th of those months.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into additional units
of the Portfolio subject only to the deferred sales charge remaining at the time
of reinvestment. Reinvesting helps to compound your income for a greater total
return.
TAXES
In the opinion of counsel, you will be considered to have received all the
dividends paid on your pro rata portion of each security in the Portfolio when
those dividends are received by the Portfolio, even though a portion of the
dividend payments may be used to pay expenses of the Portfolio and regardless of
whether you reinvest your dividends in the Portfolio. (See Taxes in Part B.)
TAX BASIS REPORTING
The proceeds received when you sell this investment will reflect the deduction
of the deferred sales charge and the charge for organizational expenses. In
addition, the annual statement and the relevant tax reporting forms you receive
at year-end will be based upon the amount paid to you (net of the deferred sales
charge and the charge for organizational expenses). Accordingly, you should not
increase your basis in your units by the deferred sales charge or the charge for
organizational expenses.
MANDATORY TERMINATION DATE
The Portfolio will terminate by February 19, 1999. The final distribution will
be made within a reasonable time afterward. The Portfolio may be terminated
earlier if its value is less than 40% of the value of the securities when
deposited.
SPONSOR'S PROFIT OR LOSS
The Sponsor's profit or loss from the Portfolio will include the receipt of
applicable sales charges, fluctuations in the Public Offering Price or secondary
market price of units, a loss of $322.50 on the initial deposit of the
securities and a gain or loss on subsequent deposits of securities (see
Sponsor's and Underwriters' Profits in Part B).
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Defining Your Costs
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SALES CHARGE
First-time investors pay a maximum sales charge of 2.75% of the offering price,
of which $17.50 per 1,000 Units is deferred. For example, on a $1,000
investment, 2.75% less $17.50 (or about 1.0%) is deducted when you buy, and the
remaining $990 is invested in the Portfolio.
In addition, a deferred sales charge of $1.75 per 1,000 units will be deducted
from the Portfolio's net asset value each month over the last ten months of the
Portfolio's life ($17.50 total). This deferred method of payment keeps more of
your money invested over a longer period of time.
If you roll the proceeds of your investment into a new portfolio or exchange
units of this Portfolio for units of another Select or Focus Series, you will
not be subject to the 1.0% initial charge, just the $17.50 deferred fee. (See
How To Buy Units--Public Offering Price.)
Although this is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.
As a %
of Initial Amount
Public per
Offering 1,000
Price Units
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Initial Sales Charge 1.00% $ 10.00
Deferred Sales Charge per
Year 1.75% 17.50
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Maximum Sales Charge 2.75% $ 27.50
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Maximum Sales Charge
Imposed per Year on
Reinvested Dividends 1.575% $ 15.75
This Portfolio (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states, and the initial audit of the Portfolio--as is common for mutual
funds.
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a %
of Net Amount per
Assets 1,000 Units
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Trustee's Fee .080% $ 0.79
Portfolio Supervision,
Bookkeeping and
Administrative Fees .046% $ 0.45
Organizational Expenses .114% $ 1.13
Other Operating
Expenses .038% $ 0.38
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TOTAL .278% $ 2.75
The sales charge is reduced on purchases of $50,000 or more as follows:
Sales Charge
(As % of
Public
Offering
Amount Purchased Price)
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Less than $50,000 2.75%
$50,000 to $99,999 2.25
$100,000 to $499,999 1.75
$500,000 to $999,999 1.00
$1,000,000 to $4,999,999 0.75
$5,000,000 or more 0.60
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:
1 Year 3 Years 5 Years 10 Years
$31 $73 $119 $245
Although the Portfolio has a term of only one year and is a unit investment
trust rather than a mutual fund, this information is presented to permit a
comparison of fees, assuming the investment is rolled over into a new portfolio
subject only to the deferred sales charge and fund expenses.
The example assumes reinvestment of any dividends and distributions and uses a
5% annual rate of return as mandated by SEC regulations applicable to mutual
funds. For purposes of the example, the deferred sales charge imposed on
reinvestment of dividends is not reflected until the year following payment of
the dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment.
Reductions to the repurchase and cash redemption prices in the secondary market
to recoup the costs of liquidating securities to meet redemption (described
below) have not been reflected. The example should not be considered a
representation of past or future expenses or annual rates of return; the actual
expenses and annual rates of return may be more or less than the example.
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time prior to the termination of the
Portfolio. Your price will be based on the then current net asset value. The
redemption and secondary market repurchase price as of January 7, 1998 was
$972.50 per 1,000 units ($27.50 per 1,000 units less than the Public Offering
Price). This price reflects deductions of the deferred sales charge which
declines over the life of the Portfolio ($17.50 initially). If you redeem or
sell your units before termination of the Portfolio, you will pay the remaining
balance of the deferred sales charge. After the initial offering period, the
repurchase and cash redemption prices for units may be reduced to reflect the
estimated costs of liquidating securities to meet the redemption, currently
estimated at $0.99 per 1,000 units. If you reinvest in a new portfolio, you will
pay your share of any brokerage commissions on the sale of underlying securities
when your units are liquidated during the rollover.
A-4
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REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders of Equity Investor Fund, Select Series,
Principled Values Portfolio, Defined Asset Funds (the 'Portfolio'):
We have audited the accompanying statement of condition and the defined
portfolio included in the prospectus of the Portfolio as of January 8, 1998.
This financial statement is the responsibility of the Trustee. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of an irrevocable letter of credit deposited for the purchase of
securities, as described in the statement of condition, with the Trustee. An
audit also includes assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Portfolio as of January 8,
1998 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
January 8, 1998
STATEMENT OF CONDITION AS OF JANUARY 8, 1998
TRUST PROPERTY
Investments--Contracts to purchase Securities(1).........$ 295,900.00
Organizational Costs(2).................................. 282,500.00
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Total............................................$ 578,400.00
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LIABILITY AND INTEREST OF HOLDERS
Accrued Liability(2)...................................$ 282,500.00
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Subtotal...............................................$ 282,500.00
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Interest of Holders of 298,888 Units of fractional
undivided interest outstanding(3):
Cost to investors(4)...................................$ 298,888.00
Gross underwriting commissions(5)...................... (2,988.00)
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Subtotal...............................................$ 295,900.00
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Total............................................$ 578,400.00
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(1) Aggregate cost to the Portfolio of the securities listed under
Defined Portfolio determined by the Trustee at 4:00 p.m., Eastern time on
January 7, 1998. The contracts to purchase securities are collateralized by an
irrevocable letter of credit which has been issued by DBS Bank, New York Branch,
in the amount of $296,185.00 and deposited with the Trustee. The amount of the
letter of credit includes $295,900.00 for the purchase of securities.
(2) This represents a portion of the Portfolio's organizational costs,
which will be deferred and amortized over the life of the Portfolio.
Organizational costs have been estimated based on projected total assets of $250
million. To the extent the Portfolio is larger or smaller, the estimate may
vary.
(3) Because the value of securities at the evaluation time on the
Initial Date of Deposit may differ from the amounts shown in this statement of
condition, the number of Units offered on the Initial Date of Deposit will be
adjusted from the initial number of Units to maintain the $1,000 per 1,000 Units
offering price.
(4) Aggregate public offering price computed on the basis of the value
of the underlying securities at 4:00 p.m., Eastern time on January 7, 1998.
(5) Assumes the maximum initial sales charge per 1,000 units of 1.00% of
the Public Offering Price. A deferred sales charge of $1.75 per 1,000 Units per
month is payable on March 1, 1998 and thereafter on the first of each month
through December 1, 1998. Distributions will be made on behalf of investors to
an account maintained by the Trustee from which the deferred sales charge
obligation of the investors to the Sponsors will be satisfied. If units are
redeemed prior to December 1, 1998, the remaining portion of the distribution
applicable to the units will be transferred to the account on the redemption
date.
A-5
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Defined Portfolio
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Equity Investor Fund
Select Series
Principled Values Portfolio January 8, 1998
Defined Asset Funds
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE PRICE
SHARES OF OF PER SHARE COST
TICKER COMMON PORTFOLIO TO TO PORTFOLIO
NAME OF ISSUER SYMBOL STOCK (1) PORTFOLIO (2)
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<S> <C> <C> <C> <C> <C>
1. American Greetings Corporation AGREA 300 3.93% $ 38.8125 $ 11,643.750
2. Ameritech Corporation AIT 150 4.11 81.0625 12,159.375
3. Avery Dennison Corporation AVY 250 3.71 43.8750 10,968.750
4. BellSouth Corporation BLS 200 3.79 56.0625 11,212.500
5. Dow Jones & Company, Inc. DJ 250 4.44 52.5625 13,140.625
6. Fifth Third Bancorp FITB 150 4.10 80.8750 12,131.250
7. First Chicago NBD Corporation FCN 150 3.99 78.6250 11,793.750
8. Frontier Corporation FRO 450 4.10 26.9375 12,121.875
9. Guidant Corporation GDT 200 3.89 57.5000 11,500.000
10. Household International, Inc. HI 100 4.23 125.1250 12,512.500
11. Johnson & Johnson JNJ 200 4.36 64.5625 12,912.500
12. Kellogg Company K 250 4.14 49.0000 12,250.000
13. The Limited, Inc. LTD 450 3.93 25.8750 11,643.750
14. Lincoln National Corporation LNC 150 3.88 76.6250 11,493.750
15. Manor Care, Inc. MNR 350 4.14 35.0000 12,250.000
16. Mattel, Inc. MAT 300 3.68 36.2500 10,875.000
17. Maytag Corporation MYG 300 3.75 37.0000 11,100.000
18. McDonald's Corporation MCD 250 3.99 47.2500 11,812.500
19. McGraw-Hill Companies, Inc. MHP 150 3.80 74.9375 11,240.625
20. PNC Bank Corporation PNC 200 3.64 53.8750 10,775.000
21. Quaker Oats Company OAT 250 4.36 51.6250 12,906.250
22. SBC Communications Inc. SBC 150 3.70 72.9375 10,940.625
23. Schering-Plough Corporation SGP 200 4.31 63.7500 12,750.000
24. Southwest Airlines Company LUV 500 4.30 25.4375 12,718.750
25. The Stanley Works SWK 250 3.73 44.1875 11,046.875
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100.00% $ 295,900.000
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</TABLE>
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(1) Based on Cost to Portfolio.
(2) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on January 7, 1998, the initial date of deposit. The value
of the securities on any subsequent date will vary.
----------------------------
The securities were acquired on January 7, 1998 and are represented entirely by
contracts to purchase the securities. The Sponsor may have acted as underwriter,
manager or comanager of a public offering of the securities in this Portfolio
during the last three years. Affiliates of the Sponsor may serve as specialists
in the securities in this Portfolio on one or more stock exchanges and may have
a long or short position in any of these securities or in options on any of
them, and may be on the opposite side of public orders executed on the floor of
an exchange where the securities are listed. An officer, director or employee of
the Sponsor may be an officer or director of one or more of the issuers of the
securities in the Portfolio. The Sponsor may trade for its own account as an
odd-lot dealer, market maker, block positioner or arbitrageur in any of the
securities or in options on them. The Sponsor, its affiliates, directors,
elected officers and employee benefits programs may have either a long or short
position in any securities or in options on them.
A-6
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DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INVESTOR FUND, SELECT SERIES PRINCIPLED VALUES PORTFOLIO
FURTHER INFORMATION REGARDING THE PORTFOLIO MAY BE OBTAINED
WITHIN FIVE DAYS BY WRITING OR CALLING THE TRUSTEE AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
INDEX
PAGE
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PORTFOLIO DESCRIPTION................................... 1
RISK FACTORS............................................ 2
HOW TO BUY UNITS........................................ 3
HOW TO REDEEM OR SELL UNITS............................. 4
TRUST TERMINATION....................................... 5
ROLLOVER................................................ 6
EXCHANGE OPTION......................................... 7
INCOME, DISTRIBUTIONS AND REINVESTMENT.................. 7
PORTFOLIO EXPENSES...................................... 8
TAXES................................................... 8
RECORDS AND REPORTS..................................... 10
TRUST INDENTURE......................................... 11
MISCELLANEOUS........................................... 11
SUPPLEMENTAL INFORMATION................................ 13
PORTFOLIO DESCRIPTION
THE PRINCIPLED VALUES PORTFOLIO
This Portfolio seeks capital appreciation by acquiring and holding for about
one year certain equity securities of domestic issuers. The starting point in
selecting the Securities was the Domini 400 Social IndexSM*. This Index was
established in 1990 and is a market capitalization-weighted common stock index
consisting of 400 corporations that have passed multiple, broad-based social
screens. The Index is maintained by Kinder, Lydenberg, Domini & Co., Inc. (KLD),
an investment advisory firm specializing in social investment research. The
Domini Social Index is intended to serve as a proxy and benchmark for the
universe of stocks from which social investors might choose. The Sponsor then
applied various screens to the Index, as described in Part A, to select the
Portfolio.
Investors should be aware that the Portfolio may not be able to buy each
Security at the same time because of availability of the Security, any purchase
restrictions applicable to the Portfolio because of the federal securities laws
or otherwise. Any monies allocated to the purchase of a Security will generally
be held for the purchase of the Security.
The deposit of the Securities in the Portfolio on the initial date of
deposit established a proportionate relationship among the number of shares of
each Security. During the 90-day period following the initial date of deposit
the Sponsor may deposit additional Securities in order to create new Units,
maintaining to the extent practicable that original proportionate relationship.
Deposits of additional Securities subsequent to the 90-day period must generally
replicate exactly the proportionate relationship among the number of shares of
each Security in the Portfolio at the end of the initial 90-day period. The
ability to acquire each Security at the same time will generally depend upon the
Security's availability and any restrictions on the purchase of that Security
under the federal securities laws or otherwise.
Additional Units may also be created by the deposit of cash (including a
letter of credit) with instructions to purchase additional Securities. This
practice could cause both existing and new investors to experience a dilution of
their investments and a reduction in their anticipated income because of price
fluctuations in the Securities between the time of the cash deposit and the
actual purchase of the additional Securities and because the associated
brokerage fees will be an expense of the Portfolio. To minimize the risk of
price fluctuations when purchasing Securities, the Portfolio will try to
purchase Securities as close to the evaluation time or at prices as close to the
evaluated prices as possible. The Portfolio may also enter into program trades
with unaffiliated broker/dealers, which may have the effect of increasing
brokerage commissions, while reducing market risk.
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* The Domini 400 Social Index is a service mark of its publisher, Kinder,
Lydenberg, Domini & Co., Inc.
1
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PORTFOLIO SUPERVISION
The Portfolio follows an investment strategy that buys stocks and generally
holds them for one year, in contrast to the frequent portfolio changes of a
managed fund based on economic, financial and market analyses. In the event a
public tender offer is made for a Security or a merger or acquisition is
announced affecting a Security, the Sponsor may instruct the Trustee to tender
or sell the Security in the open market when in its opinion it is in the best
interests of investors to do so. While the Portfolio is not actively managed,
the Portfolio is regularly reviewed and evaluated and a Security may be sold if
the Portfolio Consultant determines that the issuer no longer satisfies the
criteria for selection or in the case of adverse developments including the
adverse financial condition of the issuer, the institution of legal proceedings
against the issuer, or a decline in the price or the occurrence of other market
or credit factors that might make retention of the Security detrimental to the
interest of investors. Securities can also be sold to meet redemption of Units.
RISK FACTORS
Unlike many funds, the stocks in this Portfolio were initially selected for
social reasons and there can be no assurance that the Portfolio will perform
better or worse than stocks selected solely on economic criteria. The chart
below illustrates how one measure of socially responsible investing -- the
Domini 400 Social Index -- has compared to the S&P 500 Index* since the Domini
Index's inception in 1990. This chart is included to address the concern that to
achieve socially responsible investing, you normally must sacrifice some
investment return. Of course, past performance is no guarantee of future
results. And, while the Domini Index is one of several screens used in choosing
securities for the Portfolio, these other screens, as well as Portfolio sales
charges and expenses, would have materially affected results; therefore Index
performance is no indication of future Portfolio results, especially since there
has not been a down year in the market since The Domini Index was established in
1990.
S&P 500
DOMINI 400 SOCIAL INDEX
INDEX TOTAL
TOTAL RETURN RETURN
------------------ -----------
1990 (commencing 5/1) 1.46% 2.37%
1991 37.84 30.55
1992 12.09 7.67
1993 8.52 9.99
1994 0.18 1.31
1995 38.20 37.43
1996 23.70 23.07
1997 38.26 3.36
Average Annualized Total Return 19.90 18.23
- ----------------
Returns represent price changes plus dividends reinvested.
An investment in the Portfolio also entails certain general risks, including
the risk that the value of your investment will decline if the financial
condition of the issuers of the Securities becomes impaired or if the general
condition of the stock market worsens. The rights of holders of common stocks to
receive payments from the issuer are generally inferior to the rights of
creditors of, or holders of debt obligations or preferred stocks issued by, the
issuer. Moreover, because common stocks do not represent an obligation of the
issuer they do not offer any assurance of income or provide the degree of
protection of capital provided by debt securities. Common stocks in general are
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of issuers change.
Equity markets can be affected by unpredictable factors including expectations
regarding government, economic, monetary and fiscal policies, inflation and
interest rates, economic expansion or contraction, and global or regional
political, economic or banking crises.
- ------------
* 'S&P 500' is a service mark of The McGraw-Hill Companies, Inc.
2
<PAGE>
The Sponsor cannot predict the direction or scope of any of these factors.
Additionally, equity markets have been at historically high levels and no
assurance can be given that these levels will continue. There can be no
assurance that the Portfolio will be effective in achieving its objective over
its one-year life. The Portfolio is not designed to be a complete investment
program.
LITIGATION AND LEGISLATION
The Sponsor does not know of any pending litigation as of the initial date
of deposit that might reasonably be expected to have a material adverse effect
on the Portfolio, although pending litigation may have a material adverse effect
on the value of Securities in the Portfolio. In addition, at any time after the
initial date of deposit, litigation may be initiated on a variety of grounds, or
legislation may be enacted, affecting the Securities in the Portfolio or the
issuers of the Securities. Changing approaches to regulation may have a negative
impact on certain companies represented in the Portfolio. There can be no
assurance that future litigation, legislation, regulation or deregulation will
not have a material adverse effect on the Portfolio or will not impair the
ability of the issuers of the Securities to achieve their business goals. From
time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. This type of legislation, if enacted into law,
would adversely affect the after-tax return to investors who can take advantage
of the deduction. See Taxes.
LIFE OF THE PORTFOLIO
The size and composition of the Portfolio will be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units or
participating in an exchange or rollover. The Portfolio will be terminated no
later than the mandatory termination date specified in Part A of the Prospectus.
It will terminate earlier upon the disposition of the last Security or upon the
consent of investors holding 51% of the Units. The Portfolio may also be
terminated earlier by the Sponsor once its total assets have fallen below the
minimum value specified in Part A of the Prospectus. A decision by the Sponsor
to terminate the Portfolio early, which will likely be made following the
rollover, will be based on factors such as the size of the Portfolio relative to
its original size, the ratio of Portfolio expenses to income, and the cost of
maintaining a current prospectus. See Trust Termination.
HOW TO BUY UNITS
Units are available from the Sponsor, Underwriter and other broker-dealers
at the Public Offering Price. The Public Offering Price varies each Business Day
with changes in the value of the Portfolio and other assets and liabilities of
the Portfolio.
PUBLIC OFFERING PRICE
Units are charged a combination of Initial and Deferred Sales Charges equal,
in the aggregate, to a maximum charge of 2.75% of the public offering price or,
for quantity purchases of units of all Select Series by an investor and the
investor's spouse and minor children, or by a single trust estate or fiduciary
account, made on a single day, the following percentages of the public offering
price:
<TABLE>
<CAPTION>
APPLICABLE SALES CHARGE
(GROSS UNDERWRITING PROFIT)
------------------------------- DEALER
AS % OF AS % OF NET CONCESSION
PUBLIC OFFERING AMOUNT AS % OF PUBLIC
AMOUNT PURCHASED PRICE INVESTED OFFERING PRICE
- ---------------------------- --------------- ------------ --------------
<S> <C> <C> <C>
Less than $50,000........... 2.75% 2.778% 2.00%
$50,000 to $99,999.......... 2.25 2.302 1.62
$100,000 to $449,999........ 1.75 1.781 1.25
$500,000 to $999,999........ 1.00 1.003 0.50
$1,000,000 to $4,999,999.... 0.75 0.750 0.375
$5,000,000 or more.......... 0.60 0.599 0.30
</TABLE>
The Deferred Sales Charge is a charge of $17.50 per 1,000 units and is
accrued in ten monthly installments commencing on the date indicated in part A
of this Prospectus. Units redeemed or repurchased prior to the accrual of the
final Deferred Sales Charge installment will have the amount of any remaining
installments deducted from the redemption or repurchase proceeds or deducted in
calculating an in-kind redemption, although this deduction will be waived in the
event of the death or disability (as defined in the Internal Revenue Code) of an
investor.
3
<PAGE>
It is anticipated that Securities will not be sold to pay the Deferred Sales
Charge until after the date of the last installment. Investors will be at risk
for market price fluctuations in the Securities from the several installment
accrual dates to the dates of actual sale of Securities to satisfy this
liability. In selling Securities the Portfolio will attempt to minimize any
current tax liability for current investors.
Selling dealers will be entitled to the concession stated in the above
table. Employees of the Sponsor and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units subject only to the
Deferred Sales Charge.
Commercial banks and their securities broker subsidiaries that have
agreements with the Sponsor may make Units available to their customers as their
agents. A portion of the sales charge (equal to the dealer commission referred
to above) will be retained or remitted to the banks. Under the Glass-Steagall
Act, banks are prohibited from underwriting Units; however, the Glass-Steagall
Act permits banks to act as agents of their customers on a disclosed basis and
federal banking regulators have approved similar arrangements. In addition,
state securities laws on this issue may differ from the interpretations of
federal law expressed above and banks and financial institutions may be required
to register as dealers pursuant to state law.
EVALUATIONS
Evaluations are determined by the Trustee on each Business Day. This
excludes Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas. If the Securities are listed on a national securities exchange or the
Nasdaq National Market, evaluations are generally based on closing sales prices
on that exchange or system (unless the Trustee deems these prices inappropriate)
or, if closing sales prices are not available, at the mean between the closing
bid and offer prices. If the Securities are not listed or if listed but the
principal market is elsewhere, the evaluation is generally determined based on
sales prices of the Securities on the over-the-counter market or, if sales
prices in that market are not available, on the basis of the mean between
current bid and offer prices for the Securities or for comparable securities or
by appraisal or by any combination of these methods. Neither the Sponsor nor the
Trustee guarantees the enforceability, marketability or price of any Securities.
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 ('DTC').
HOW TO REDEEM OR SELL UNITS
You can redeem your Units at any time for net asset value. In addition, the
Sponsor has maintained an uninterrupted secondary market for Units for over 20
years and will ordinarily buy back Units at net asset value. The following
describes these two methods to redeem or sell Units in greater detail.
REDEEMING UNITS WITH THE TRUSTEE
You can always redeem your Units for net asset value. This can be done by
contacting your broker, dealer or financial institution that holds your Units in
street name. In certain instances, additional documents may be required such as
a trust instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian.
Within seven days after the receipt of your request containing any necessary
documents, a check will be mailed to you in an amount equal to the net asset
value of your Units. Because of the sales charge, market movements or changes in
the Portfolio, net asset value at the time you redeem your Units may be greater
or less than the original cost of your Units. Net asset value is calculated each
Business Day by adding the value of the Securities, declared but unpaid
dividends on the Securities, cash and the value of any other Portfolio assets;
deducting unpaid taxes or other governmental charges, accrued but unpaid
Portfolio expenses and any remaining deferred sales charges for the current
period, unreimbursed Trustee advances, cash held to redeem Units or for
distribution to investors and the value of any other Portfolio liabilities; and
dividing the result by the number of outstanding Units. After the initial
offering period, net asset value will be reduced to reflect the cost to the
Portfolio of liquidating Securities to pay the redemption price.
4
<PAGE>
As long as the Sponsor is maintaining a secondary market for Units (as
described below), the Trustee will not actually redeem your Units but will sell
them to the Sponsor for net asset value. If the Sponsor is not maintaining a
secondary market, the Trustee will redeem your Units for net asset value or will
sell your Units in the over-the-counter market if the Trustee believes it will
obtain a higher net price for your Units. If the Trustee is able to sell the
Units for a net price higher than net asset value, you will receive the net
proceeds of the sale.
If cash is not available in the Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Sponsor based on
market and credit factors determined to be in the best interest of the
Portfolio. These sales are often made at times when the Securities would not
otherwise be sold and may result in lower prices than might be realized
otherwise and may also reduce the size and diversity of the Portfolio. If
Securities are being sold during a time when additional Units are being created
by the purchase of additional Securities (as described under Portfolio
Description--The Principled Values Portfolio), Securities will be sold in a
manner designed to maintain, to the extent practicable, the proportionate
relationship among the number of shares of each Security in the Portfolio.
Any investor owning Units representing Securities with a value of at least
$250,000 who redeems those Units prior to the rollover notification date
indicated in Part A of the Prospectus may, in lieu of cash redemption, request
distribution in kind of an amount and value of Securities per Unit equal to the
otherwise applicable Redemption Price per Unit. Generally, whole shares of each
Security together with cash from the Capital Account equal to any fractional
shares to which the investor would be entitled (less any Deferred Sales Charge
payable) will be paid over to a distribution agent and either held for the
account of the investor or disposed of in accordance with instructions of the
investor. Any brokerage commissions on sales of Securities in connection with
in-kind redemptions may be borne by the redeeming investors. The in-kind
redemption option is subject to all applicable legal restrictions and may be
terminated by the Sponsor at any time upon prior notice to investors.
Redemptions may be suspended or payment postponed (i) if the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (ii) if
the SEC determines that trading on the New York Stock Exchange is restricted or
that an emergency exists making disposal or evaluation of the Securities not
reasonably practicable or (iii) for any other period permitted by SEC order.
SPONSOR'S SECONDARY MARKET FOR UNITS
The Sponsor, while not obligated to do so, will buy back Units at net asset
value without any other fee or charge as long as they are maintaining a
secondary market for Units. Because of the sales charge, market movements or
changes in the portfolio, net asset value at the time you sell your Units may be
greater or less than the original cost of your Units. You should consult your
financial professional for current market prices to determine if other
broker-dealers or banks are offering higher prices for Units.
The Sponsor may discontinue the secondary market for Units without prior
notice. Regardless of whether the Sponsor maintains a secondary market, you have
the right to redeem your Units for net asset value, as described above.
TRUST TERMINATION
Notice of impending termination of the Portfolio will be provided to
investors. A proportional share of the expenses associated with termination,
including brokerage costs incurred in disposing of Securities, will be borne by
investors remaining at that time. These expenses will reduce the amount of cash
or Securities those investors are to receive in any final distribution.
Upon termination of the Portfolio, the Trustee will distribute the
Securities and any cash in the Portfolio to a distribution agent that will act
as agent for the investors. Unless an investor elects to receive an in-kind
distribution of Securities, as discussed below, the distribution agent will, as
promptly as practicable, sell the investor's pro rata share of the Securities
and distribute to the investor the proceeds of the sale, less brokerage and
other related expenses, and the investor's pro rata share of any cash from the
Portfolio.
Any investor holding units at the termination of the Portfolio may, by
written notice to the Trustee at least ten business days prior to termination,
elect to received an in kind distribution of the investor's pro rata share of
the Securities remaining in the Portfolio at that time (net of the investor's
share of expenses). Fractional shares of Securities
5
<PAGE>
will be sold by the distribution agent and the net proceeds distributed to
investors. Investors subsequently selling Securities received in kind will incur
brokerage costs at that time which may exceed the value of any tax deferral
obtained through the in-kind distribution. Securities received in an in-kind
termination distribution may not be contributed to acquire units of another
Series.
ROLLOVER
In lieu of redeeming their units or receiving liquidation proceeds in cash
or in kind upon termination of the Portfolio, investors who hold their Units
with one of the Sponsors may elect, by contacting their financial adviser prior
to the rollover notification date indicated in Part A, to exchange their Units
in the Portfolio for units of next year's corresponding Select Ten Portfolio (if
available). No election to roll over may be made prior to 30 days before the
date of the rollover, and any rollover election will be revocable at any time
prior to the date of the rollover. It is expected that the terms of the new
portfolio will be substantially the same as those of the Portfolio.
The rollover of an investor's Units is intended to be effected in a manner
that will not result in the recognition of either gain or loss for U.S. federal
income tax purposes with respect to Securities that are included in the new
portfolio ('Duplicated Securities'). Units held by an investor who elects the
rollover option will be redeemed through an in-kind distribution to a
distribution agent of the investor's pro rata share of Securities. The
distribution agent will then adjust the Securities distributed to the investor
so that its composition matches the investment profile of the new portfolio.
This adjustment will involve the sale of non-Duplicated Securities and,
possibly, of a portion of certain Duplicated Securities in order to rebalance
the portfolio, and the purchase of replacement Securities. Any excess sales
proceeds, net of sales related expenses, will be distributed to the investor.
After this adjustment the distribution agent will make an in-kind contribution
of the adjusted Securities to the new portfolio. Upon receipt of the in-kind
contribution, the trustee of the new portfolio will issue the appropriate number
of units in the new portfolio to the investor.
An investor who elects the rollover option will recognize capital gain or
loss with respect to the Securities, including fractional Securities, sold by
the distribution agent, but will not recognize gain or loss with respect to the
Duplicated Securities that are contributed in kind to the new portfolio. The
Sponsors intend to provide investors with information that will assist them in
determining their tax liability on an eventual sale of the Duplicated
Securities.
The Sponsors intend to cause the distribution agent to sell those Securities
that will not be contributed to the new portfolio, and then to create units of
the new portfolio, in each case as quickly as possible subject to the Sponsors'
sensitivity that the concentrated sale and purchase of large volumes of
securities may affect market prices in a manner adverse to the interest of
investors. Accordingly, the Sponsors may, in their sole discretion, undertake a
more gradual sale of Securities and a more gradual creation of units of the new
portfolio to help mitigate any negative market price consequences caused by this
large volume of securities trades. In order to minimize potential losses caused
by market movement during the rollover period, the Sponsors may enter into
program trades, which may increase brokerage commissions payable by investors.
There can be no assurance, however, that any trading procedures will be
successful or might not result in less advantageous prices. Pending the
investment of rollover proceeds in securities to comprise the new portfolio,
those moneys may be uninvested for several days.
Investors who participate in the rollover will not be entitled to receive a
cash distribution with which to pay any taxes incurred as a result of the
rollover procedure. Investors who do not participate in the rollover or
otherwise redeem their Units will continue to hold their Units until the
termination of the Portfolio; however, depending upon the extent of
participation in the rollover, the aggregate size of the Portfolio will be
reduced which could result in an increase in per Unit expenses.
The Sponsor may, in its sole discretion and without penalty or liability to
investors, decide not to sponsor a new portfolio or to modify the terms of the
rollover. Prior notice of any decision would be provided to investors.
The Division of Investment Management of the SEC is of the view that the
rollover option constitutes an 'exchange offer', for the purposes of Section
11(c) of the Investment Company Act of 1940, and would therefore be prohibited
absent an exemptive order. The Sponsor has received exemptive orders under
Section 11(c) which it believes permit it to offer the rollover, but no
assurance can be given that the SEC will concur with the Sponsor's position and
additional regulatory approvals may be required.
6
<PAGE>
EXCHANGE OPTION
You may exchange Units for units of other Select or Focus Portfolios,
subject only to the Deferred Sales Charge on the units received. Holders of
units of any other Select or Focus Portfolio, of any other Defined Asset Fund
with a regular maximum sales charge of at least 3.50%, or of any unaffiliated
unit trust with a regular maximum sales charge of at least 3.0%, may exchange
those units for Units of this Portfolio at their relative net asset values,
subject only to the Deferred Sales Charge on the Units.
To make an exchange, you should contact your financial professional to find
out what exchange funds are available and to obtain a prospectus. You may
acquire units of only those exchange funds in which the Sponsor is maintaining a
secondary market and which are lawfully for sale in the state where you reside.
An exchange is a taxable event normally requiring recognition of any gain or
loss on the units exchanged. However, the Internal Revenue Service may seek to
disallow a loss if the portfolio of the units acquired is not materially
different from the portfolio of the units exchanged; you should consult your own
tax adviser. If the proceeds of units exchanged are insufficient to acquire a
whole number of exchange fund units, you may pay the difference in cash (not
exceeding the price of a single unit acquired).
As the Sponsor is not obligated to maintain a secondary market in any series
or to offer successor portfolios, there can be no assurance that units of a
desired series will be available for exchange. The Exchange Option may be
amended or terminated at any time without notice.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME AND DISTRIBUTIONS
The annual income per Unit, after deducting estimated annual expenses per
Unit, will depend primarily upon the amount of dividends declared and paid by
the issuers of the Securities and changes in the expenses of the Portfolio and,
to a lesser degree, upon the level of purchases of additional Securities and
sales of Securities. There is no assurance that dividends on the Securities will
continue at their current levels or be declared at all.
Each Unit receives an equal share of distributions of dividend income net of
expenses. Dividends received are credited to an Income Account and other
receipts to a Capital Account. Because dividends on the Securities are not
received at a constant rate throughout the year, any distribution may be more or
less than the amount then credited to the Income Account. A Reserve Account may
be created by withdrawing from the Income and Capital Accounts amounts
considered appropriate by the Trustee to reserve for any material amount that
may be payable out of the Portfolio. Funds held by the Trustee in the various
accounts do not bear interest. In addition, distributions of amounts necessary
to pay the Deferred Sales Charge will be made from the Capital Account to an
account maintained by the Trustee for purposes of satisfying investors' sales
charge obligations. Although the Sponsor may collect the Deferred Sales Charge
during the months stated in Part A, to keep Units more fully invested the
Sponsor currently does not anticipate sales of Securities to pay the Deferred
Sales Charge until after the final Deferred Sales Charge installment. Proceeds
of the disposition of any Securities not used to pay Deferred Sales Charge or to
redeem Units will be held in the Capital Account and distributed following
liquidation of the Portfolio.
REINVESTMENT
Any income and principal distributions on Units may be reinvested by
participating in the Portfolio's reinvestment plan. Under the plan, the Units
acquired for investors will be either Units already held in inventory by the
Sponsor or new Units created by the Sponsor's deposit of additional Securities,
contracts to purchase additional Securities or cash (or a bank letter of credit
in lieu of cash) with instructions to purchase additional Securities. Deposits
or purchases of additional Securities will generally be made so as to maintain
the then existing proportionate relationship among the number of shares of each
Security in the Portfolio. Units acquired by reinvestment will not be subject to
the initial sales charge but will be subject to any remaining installments of
Deferred Sales Charge. The Sponsor reserves the right to amend, modify or
terminate the reinvestment plan at any time without prior notice. Investors
holding Units in 'street name' should contact their broker, dealer or financial
institution if they wish to participate in the reinvestment plan.
7
<PAGE>
PORTFOLIO EXPENSES
Estimated annual expenses are listed in Part A of the Prospectus; if actual
expenses exceed the estimate, the excess will be borne by the Portfolio. To the
extent that expenses exceed the amount available in the Income Account, the
Trustee is authorized to sell Securities and pay the excess expenses from the
Capital Account. The estimated expenses do not include the brokerage commissions
payable by the Portfolio in purchasing and selling Securities. KLD receives a
nominal fee from the Portfolio for its ongoing services as Portfolio Consultant.
The Trustee's Fee shown in Part A of this Prospectus assumes that the Portfolio
will reach a size estimated by the Sponsor and is based on a sliding scale that
reduces the Trustee's fee as the size of the Portfolio increases. The Trustee's
annual fee is payable in monthly installments. The Trustee also benefits when it
holds cash for the Portfolio in non-interest bearing accounts. Possible
additional charges include Trustee fees and expenses for extraordinary services,
costs of indemnifying the Trustee and the Sponsor, costs of action taken to
protect the Portfolio and other legal fees and expenses, Portfolio termination
expenses and any governmental charges. The Trustee has a lien on Portfolio
assets to secure reimbursement of these amounts and may sell Securities for this
purpose if cash is not available. The Sponsor receives an annual fee currently
estimated at $0.35 per 1,000 Units to reimburse it for the cost of providing
Portfolio supervisory services to the Portfolio. While the fee may exceed its
costs of providing these services to the Portfolio, the total supervision fees
from all Series of Equity Investor Fund will not exceed its costs for these
services to all of those Series during any calendar year. The Sponsor may also
be reimbursed for its costs of providing bookkeeping and administrative services
to Defined Asset Portfolios, currently estimated at $0.10 per 1,000 Units. The
Trustee's and Sponsor's fees may be adjusted for inflation without investors'
approval.
All or a portion of expenses incurred in establishing the Portfolio,
including the cost of the initial preparation of documents relating to the
Portfolio, Federal and State registration fees, the initial fees and expenses of
the Trustee, legal expenses and any other out-of-pocket expenses will be paid by
the Portfolio and amortized over the life of the Portfolio. Advertising and
selling expenses will be paid by the Sponsor at no charge to the Portfolio.
Defined Asset Portfolios can be a cost-effective way to purchase and hold
investments. Annual operating expenses are generally lower than for managed
funds. Because Defined Asset Portfolios have no management fees, limited
transaction costs and no ongoing marketing expenses, operating expenses are
generally less than 0.25% a year. When compounded annually, small differences in
expense ratios can make a big difference in your investment results.
TAXES
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Portfolio is not an association taxable as a corporation for federal
income tax purposes. Each investor will be considered the owner of a pro
rata portion of each Security in the Portfolio under the grantor trust rules
of Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
'Code'). Each investor will be considered to have received all of the
dividends paid on his pro rata portion of each Security when such dividends
are received by the Portfolio, regardless of whether such dividends are used
to pay a portion of Portfolio expenses or whether they are automatically
reinvested (see Reinvestment Plan).
Amounts considered to have been received by a corporate investor from
domestic corporations that constitute dividends for federal income tax
purposes will generally qualify for the dividends-received deduction, which
is currently 70%. Depending upon the particular corporate investor's
circumstances, limitations on the availability of the dividends-received
deduction may be applicable. Further, Congress from time to time considers
proposals that would adversely affect the after-tax return to investors that
can take advantage of the deduction. For example, the recently enacted
Taxpayer Relief Act of 1997 requires the holding period for the
dividends-received deduction (during which the investor's position may not
be hedged) to be satisfied immediately proximate to each ex-dividend date.
Investors are urged to consult their own tax advisers in this regard.
An individual investor who itemizes deductions will be entitled to deduct
his pro rata share of current Portfolio expenses only to the extent that
this amount together with the investor's other miscellaneous deductions
exceeds 2% of his adjusted gross income. The Code further restricts the
ability of an individual investor with an adjusted gross income in excess of
a specified amount (for 1997, $121,200 or $60,600 for a married person
filing a separate return) to claim itemized deductions (including his pro
rata share of Portfolio expenses).
8
<PAGE>
The investor's basis in his Units will equal the cost of his Units,
including the initial sales charge. A portion of the sales charge is
deferred until the termination of the Portfolio or the redemption of the
Units. The proceeds received by an investor upon such event will reflect
deduction of the deferred amount (the 'Deferred Sales Charge') and a charge
for organizational expenses. The annual statement and the relevant tax
reporting forms received by investors will be based upon the amounts paid to
them, net of the Deferred Sales Charge and the charge for organizational
expenses. Accordingly, investors should not increase their basis in their
Units by the Deferred Sales Charge amount or any amount used to pay
organizational expenses.
An investor will generally recognize capital gain or loss when the
investor disposes of his Units for cash (by sale or redemption) or when the
Trustee disposes of the Securities from the Portfolio. An investor will not
recognize gain or loss upon the distribution of a pro rata amount of each of
the Securities by the Trustee to an investor (or to his agent) in redemption
of Units or upon termination of the Portfolio, except to the extent of cash
received in lieu of fractional shares. The redeeming investor's basis for
the Securities will be equal to his basis for the same Securities
(previously represented by his Units) prior to the redemption, and his
holding period for the Securities will include the period during which he
held his Units.
An investor who elects to roll over into a new portfolio (a 'rollover
investor') will not recognize gain or loss either upon the distribution of
Securities by the Trustee to the distribution agent or upon the contribution
of Duplicated Securities (as defined under Rollover) to the new portfolio.
The rollover investor will generally recognize capital gain or loss as a
consequence of the distribution agent's sale of Securities. The rollover
investor's basis for the Duplicated Securities that are contributed in kind
to the new portfolio will be equal to his basis for the same Duplicated
Securities prior to the rollover, and his holding period for the contributed
Duplicated Securities will include the period during which he held an
interest in the same Duplicated Securities through an investment in the
Portfolio and in prior years' corresponding Principled Values Portfolios.
Net capital gain (the excess of net long-term capital gains over net
short-term capital losses) may be taxed at lower rates than ordinary income
for certain individual and other noncorporate taxpayers. A capital gain or
loss is long-term if the asset is held for more than one year and short-term
if held for one year or less. The deduction of capital losses is subject to
limitations. The lower net capital gain tax rate will be unavailable to
those noncorporate investors who, as of the mandatory termination date (or
earlier termination of the Portfolio), have held their units for less than a
year and a day. Similarly, with respect to noncorporate rollover investors,
this lower rate will be unavailable if, as of the beginning of the rollover
period, those investors have held their units for less than a year and a
day. Investors will not be entitled under the Taxpayer Relief Act of 1997 to
the new 20% maximum federal tax rate for capital gains derived from the
Portfolio.
Under the income tax laws of the State and City of New York, the
Portfolio is not an association taxable as a corporation and the income of
the Portfolio will be treated as the income of the investors in the same
manner as for federal income tax purposes.
The foregoing discussion summarizes only certain U.S. federal and New
York State and City income tax consequences of an investment in Units by
investors who are U.S. persons, as defined in the Code. Foreign investors
(including nonresident alien individuals and foreign corporations) not
engaged in U.S. trade or business will generally be subject to 30%
withholding tax (or lower applicable treaty rate) on distributions.
Investors may be subject to taxation in New York or in other U.S. or foreign
jurisdictions and should consult their own tax advisers in this regard.
* * * *
At the termination of the Portfolio, the Trustee will furnish to each
investor an annual statement containing information relating to the dividends
received by the Portfolio on the Securities, the cash proceeds received by the
Portfolio from the disposition of any Security (resulting from redemption or the
sale by the Portfolio of any Security), and the fees and expenses paid by the
Portfolio. The Trustee will also furnish annual information returns to each
investor and to the Internal Revenue Service.
9
<PAGE>
RETIREMENT PLANS
This Series of Equity Investor Fund may be well suited for purchase by
Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for special 5 or
10 year averaging (prior to the year 2000) or tax-deferred rollover treatment.
Investors in IRAs, Keogh plans and other tax-deferred retirement plans should
consult their plan custodian as to the appropriate disposition of distributions.
Investors considering participation in any of these plans should review specific
tax laws related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any of these plans. These plans
are offered by brokerage firms, including the Sponsor of this Portfolio, and
other financial institutions. Fees and charges with respect to such plans may
vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units may be purchased
by retirement plans established for self-employed individuals, partnerships or
unincorporated companies ('Keogh plans'). The assets of a Keogh plan must be
held in a qualified trust or other arrangement which meets the requirements of
the Code. Keogh plan participants may also establish separate IRAs (see below)
to which they may contribute up to an additional $2,000 per year ($4,000 in a
spousal account).
Individual Retirement Account--IRA. Any individual can make use of a
qualified IRA arrangement for the purchase of Units. Any individual (including
one covered by an employer retirement plan) can make a contribution in an IRA
equal to the lesser of $2,000 ($4,000 in a spousal account) or 100% of earned
income; such investment must be made in cash. However, the deductible amount of
a contribution by an individual covered by an employer retirement plan will be
reduced if the individual's adjusted gross income exceeds $25,000 (in the case
of a single individual), $40,000 (in the case of a married individual filing a
joint return) or $200 (in the case of a married individual filing a separate
return). Under the Taxpayer Relief Act of 1997, these income threshholds will
gradually be increased by the year 2004 to $50,000 for a single individual and
$80,000 for a married individual filing jointly. Certain transactions which are
prohibited under Section 408 of the Code will cause all or a portion of the
amount in an IRA to be deemed to the distributed and subject to tax at that
time. Unless nondeductible contributions were made in 1987 or a later year, all
distributions from an IRA will be treated as ordinary income but generally are
eligible for tax-deferred rollover treatment. Taxable distributions made before
attainment of age 59 1/2, except in the case of the participant's death or
disability or where the amount distributed is part of a series of substantially
equal periodic (at least annual) payments that are to be made over the life
expectancies of the participant and his or her beneficiary, are generally
subject to a surtax in an amount equal to 10% of the distribution. Under the
Taxpayer Relief Act of 1997 the 10% surtax will be waived for withdrawals for
certain educational and first-time homebuyers expenses. The Taxpayer Relief Act
also provides, subject to certain income limitations, for a special type of IRA
under which contributions would be non-deductible but distributions would be
tax-free if the account were held for at least five years and the account holder
was at least 59 1/2 at the time of distribution.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing plan
for employees of a corporation may purchase Units.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Portfolio,
including a current list of the Securities and a copy of the Indenture, which
may be inspected by investors at reasonable times during business hours.
With each distribution, the Trustee includes a statement of the amounts of
income and any other receipts being distributed. The Trustee sends each investor
of record an annual report summarizing transactions in the Portfolio's accounts
including amounts distributed from them during the year, identifying Securities
sold and purchased and listing Securities held and the number of Units
outstanding and stating the Redemption Price per 1,000 Units at year end, and
the fees and expenses paid by the Portfolio, among other matters. Portfolio
accounts are audited annually by independent accountants selected by the Sponsor
and audited financial statements are available from the Trustee on request.
10
<PAGE>
TRUST INDENTURE
The Portfolio is a 'unit investment trust' created under New York law by a
Trust Indenture between the Sponsor and the Trustee. This Prospectus summarizes
various provisions of the Indenture, but each statement is qualified in its
entirety by reference to the Indenture.
The Indenture may be amended by the Sponsor and the Trustee without consent
by investors to cure ambiguities or to correct or supplement any defective or
inconsistent provision, to make any amendment required by the SEC or other
governmental agency or to make any other change not materially adverse to the
interest of investors (as determined in good faith by the Sponsor). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor without the
investor's consent or reduce the percentage of Units required to consent to any
amendment without unanimous consent of investors. Investors will be notified of
the substance of any amendment.
The Trustee may resign upon notice to the Sponsor. It may be removed by
investors holding 51% of the Units at any time or by the Sponsor without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the Sponsor
determines in good faith that its replacement is in the best interest of the
investors. The resignation or removal becomes effective upon acceptance of
appointment by a successor; in this case, the Sponsor will use its best efforts
to appoint a successor promptly; however, if upon resignation no successor has
accepted appointment within 30 days after notification, the resigning Trustee
may apply to a court of competent jurisdiction to appoint a successor.
If the Sponsor fails to perform its duties or becomes incapable of acting or
bankrupt or its affairs are taken over by public authorities, the Trustee may
appoint a successor Sponsor at reasonable rates of compensation, terminate the
Indenture and liquidate the Portfolio or continue to act as Trustee without a
Sponsor.
The Sponsor and the Trustee are not liable to investors or any other party
for any act or omission in the conduct of their responsibilities absent bad
faith, willful misfeasance, negligence (gross negligence in the case of the
Sponsor) or reckless disregard of duty. The Indenture contains customary
provisions limiting the liability of the Trustee.
MISCELLANEOUS LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the Sponsor.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and New York
State banking authorities.
SPONSOR
The Sponsor is a wholly-owned subsidiary of Merrill Lynch & Co. Inc. The
Sponsor, or one of its predecessor corporations, has acted as Sponsor of a
number of series of unit investment trusts and as principal underwriter and
managing underwriter of other investment companies. The Sponsor, in addition to
participating as a member of various selling groups or as agent of other
investment companies, executes orders on behalf of investment companies for the
purchase and sale of securities of these companies and sells securities to these
companies in its capacities as broker or dealer in securities.
CODE OF ETHICS
The Sponsor has adopted a code of ethics requiring preclearance and
reporting of personal securities transactions by its personnel who have access
to information on Defined Asset portfolio transactions. The code is intended to
prevent any act, practice or course of conduct which would operate as a fraud or
deceit on any portfolio and to provide
11
<PAGE>
guidance to these persons regarding standards of conduct consistent with the
Sponsor's responsibilities to Defined Asset Funds.
PUBLIC DISTRIBUTION
During the initial offering period and thereafter to the extent additional
Units continue to be offered for sale to the public by means of this Prospectus,
Units will be distributed directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above or to selected
dealers who are members of the National Association of Securities Dealers, Inc.
at a concession not in excess of the maximum sales charge. The Sponsor intends
to qualify Units for sale in all states in which qualification is deemed
necessary through the Underwriting Account and by dealers who are members of the
National Association of Securities Dealers, Inc.. The Sponsor does not intend to
qualify Units for sale in any foreign countries and this Prospectus does not
constitute an offer to sell Units in any country where Units cannot lawfully be
sold.
UNDERWRITER'S AND SPONSOR'S PROFITS
Upon sale of the Units, the Sponsor will be entitled to receive sales
charges. The Sponsor also realizes a profit or loss on deposit of the Securities
equal to the difference between the cost of the Securities to the Portfolio
(based on the aggregate value of the Securities on their date of deposit) and
the purchase price of the Securities to the Sponsor plus commissions payable by
the Sponsor. In addition, the Sponsor or Underwriter may realize profits or
sustain losses on Securities it deposits in the Portfolio which were acquired
from underwriting syndicates of which it was a member. During the initial
offering period, the Sponsor also may realize profits or sustain losses as a
result of fluctuations after the initial date of deposit in the Public Offering
Price of the Units. In maintaining a secondary market for Units, the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the prices at which it buys Units and the prices at which it resells
these Units (which include the sales charge) or the prices at which it redeems
the Units. Cash, if any, made available by buyers of Units to the Sponsor prior
to a settlement date for the purchase of Units may be used in the Sponsor's
business to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsor.
PERFORMANCE INFORMATION
Total returns, average annualized returns or cumulative returns for various
periods of the current Portfolio may be included from time to time in
advertisements, sales literature and reports to current and prospective
investors. Total return shows changes in unit price during the period plus
reinvestment of dividends and capital gains, divided by the maximum public
offering price. Average annualized returns show the average return for stated
periods for longer than a year. Figures reflect deduction of all Portfolio
expenses and, unless otherwise stated, the maximum sales charge. No provision is
made for any income taxes payable. Investors should bear in mind that this
represents past performance and is no assurance of the future results of any
current or future Portfolio.
Past performance of any series may not be indicative of results of future
series. Portfolio performance may be compared to the performance of the Domini
400 Social IndexSM, the Dow Jones Industrial Average, the S&P 500 Composite
Price Stock Index, the S&P MidCap 400 Index, the S&P 500/Barra Growth Index, the
average growth mutual fund or performance data from publications such as Lipper
Analytical Services, Inc., Morningstar Publications, Inc., Money Magazine, The
New York Times, U.S. News and World Report, Barron's, Business Week, CDA
Investment Technology, Inc., Forbes Magazine or Fortune Magazine. The foregoing
materials may also state growth in assets invested using social screens.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset
Portfolios' philosophy is to allow investors to 'buy with knowledge' (because,
unlike managed funds, the portfolio is generally fixed) and 'hold with
confidence' (because the portfolio is professionally selected and regularly
reviewed). Defined Asset Portfolios offers an array of simple and convenient
investment choices, suited to fit a wide variety of personal financial goals--a
buy and hold strategy for capital accumulation, such as for children's education
or retirement, or attractive, regular current income consistent with the
preservation of principal. Unit investment trusts are particularly suited for
the many investors who prefer to seek long-term profits by purchasing sound
investments and holding them, rather than through active trading. Few
individuals have the
12
<PAGE>
knowledge, resources or capital to buy and hold a diversified portfolio on their
own; it would generally take a considerable sum of money to obtain the breadth
and diversity that Defined Asset Portfolios offer. Your investment objectives
may call for a combination of Defined Asset Portfolios.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.
Investors may pursue investment growth to meet long-term goals such as
children's education or retirement. But they are faced with decisions of
selecting stock groups, choosing individual stocks, determining when to buy and
sell and how to reinvest sales proceeds. Growth stocks--those whose price is
expected to appreciate above average usually because of superior growth in
earnings per share--can be difficult to select successfully because their prices
tend to be more volatile than more established stocks and, by the time they are
discovered by ordinary investors, their prices may have already increased beyond
attractive levels or may be susceptible to dramatic declines if actual
performance is less than anticipated.
SUPPLEMENTAL INFORMATION
Upon writing or calling the Trustee shown on the back cover of this
Prospectus, investors will receive without charge supplemental information about
the Portfolio, which has been filed with the SEC. The supplemental information
includes more detailed risk factor disclosure about the types of securities that
may be part of the Portfolio and general information about the structure and
operation of the Portfolio.
13
<PAGE>
Defined
Asset FundsSM
SPONSOR: EQUITY INVESTOR FUND
Merrill Lynch, SELECT SERIES
Pierce, Fenner & Smith IncorporatedPRINCIPLED VALUES PORTFOLIO
Defined Asset Funds
P.O. Box 9051
Princeton, NJ 08543-9051
(609) 282-8500 This Prospectus does not contain all of the
TRUSTEE: information with respect to the investment
The Bank of New York company set forth in its registration
Unit Investment Trust Department statement and exhibits relating thereto which
P.O. Box 974 have been filed with the Securities and
Wall Street Division Exchange Commission, Washington, D.C. under
New York, NY 10268-0974 the Securities Act of 1933 and the Investment
1-800-221-7771 Company Act of 1940, and to which reference
is hereby made. Copies of filed material can
be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
The Commission also maintains a Web site that
contains information statements and other
information regarding registrants such as
Defined Asset Funds that file electronically
with the Commission at http://www.sec.gov.
------------------------
No person is authorized to give any
information or to make any representations
with respect to this investment company not
contained in its registration statement and
exhibits relating thereto; and any
information or representation not contained
therein must not be relied upon as having
been authorized.
------------------------
When Units of this Portfolio are no longer
available or for investors who may reinvest
into subsequent Select Series, this
Prospectus may be used as a preliminary
prospectus for a future series, and investors
should note the following:
Information contained herein is subject to
amendment. A registration statement relating
to securities of a future series has been
filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer,
solicitation or sale would be unlawful prior
to qualification under the securities laws of
any such State.
11354--1/98
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositors is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
I. Bonding arrangements of the Depositor are incorporated by reference to Item
A of Part II to the Registration Statement on Form S-6 under the Securities Act
of 1933 for Municipal Investment Trust Fund, Monthly Payment Series--573 Defined
Asset Funds (Reg. No. 333-08241).
II. The date of organization of the Depositor is set forth in Item B of Part II
to the Registration Statement on Form S-6 under the Securities Act of 1933 for
Municipal Investment Trust Fund, Monthly Payment Series--573 Defined Asset Funds
(Reg. No. 333-08241) and is herein incorporated by reference thereto.
III. The Charter and By-Laws of the Depositor are incorporated herein by
reference to Exhibits 1.3 and 1.4 to the Registration Statement on Form S-6
under the Securities Act of 1933 for Municipal Investment Trust Fund, Monthly
Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).
IV. Information as to Officers and Directors of the Depositor has been filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934 and is incorporated by reference to the SEC
filing indicated and made a part of this Registration Statement:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 8-7221
----------------------------
B. The Internal Revenue Service Employer Identification Numbers of the
Sponsor and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 13-5674085
The Bank of New York, Trustee..................... 13-4941102
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference from the
Cross-Reference Sheet of the Registration Statement of Defined Asset Funds
Municipal Insured Series, 1933 Act File No. 33-54565).
The Prospectus.
The Signatures.
The following exhibits:
1.1 --Form of Trust Indenture (incorporated by reference to Exhibit 1.1 to
Amendment No. 2 to the Registration Statement on Form S-6 of Equity
Income Fund, Select Growth Portfolio--1995 Series 2, Defined Asset
Funds, Reg. No. 33-58535).
1.1.1 --Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement under the Securities Act
of 1933 of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the heading
'Miscellaneous--Legal Opinion' in the Prospectus.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Equity Income Fund, Select Ten Portfolio
1996 International Series B (United Kingdom and Japan Portfolios),
1933 Act File No. 33-00593).
R-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 8TH DAY OF
JANUARY, 1998.
SIGNATURES APPEAR ON PAGE R-3.
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.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Numbers: 33-43466 and 33-51607
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By DANIEL C. TYLER
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
JANUARY 8, 1998
EQUITY INVESTOR FUND,
SELECT SERIES PRINCIPLED VALUES PORTFOLIO
DEFINED ASSET FUNDS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, N.J. 08543-9051
(609) 282-8500
Dear Sirs:
We have acted as special counsel for you, as sponsor (the 'Sponsor') of
Equity Investor Fund, Select Series Principled Values Portfolio, Defined Asset
Funds (the 'Fund'), in connection with the issuance of units of fractional
undivided interest in the Fund (the 'Units') in accordance with the Trust
Indenture relating to the Fund (the 'Indenture').
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indenture and the issuance of the Units have been duly
authorized by the Sponsor and (ii) the Units, when duly issued and delivered by
the Sponsor and the Trustee in accordance with the Indenture, will be legally
issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 3.1 to the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the headings 'Taxes' and 'Miscellaneous--Legal
Opinion.'
Very truly yours,
DAVIS POLK & WARDWELL
EXHIBIT 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsor and Trustee of Equity Investor Fund
Select Series Principled Values Portfolio,
Defined Asset Funds
We consent to the use in this Registration Statement No. 333-32181 of our
opinion dated January 8, 1998, relating to the Statement of Condition of Equity
Investor Fund, Select Series Principled Values Portfolio, Defined Asset Funds
and to the reference to us under the heading 'Miscellaneous--Auditors' in the
Prospectus which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
New York, N.Y.
January 8, 1998
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