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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 2, 1999
REGISTRATION NO. 333-83839
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. EXACT NAME OF TRUST:
EQUITY INVESTOR FUND
CONCEPT SERIES
INTERNET PORTFOLIO
(FORMERLY CONCEPT SERIES 38)
DEFINED ASSET FUNDS
B. NAME OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESS OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, PAINEWEBBER INCORPORATED DEAN WITTER REYNOLDS INC.
FENNER & 1285 AVENUE OF THE TWO WORLD TRADE
SMITH INCORPORATED AMERICAS CENTER--59TH FLOOR
UNIT INVESTMENT TRUST NEW YORK, NY 10019 NEW YORK, NY 10048
DIVISION
P.O. BOX 9051
PRINCETON, NJ 08543-9051
SALOMON SMITH BARNEY INC.
388 GREENWICH
STREET--23RD FLOOR
NEW YORK, NY 10013
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. ROBERT E. HOLLEY DOUGLAS LOWE, ESQ.
P.O. BOX 9051 1200 HARBOR BLVD. DEAN WITTER REYNOLDS INC.
PRINCETON, NJ 08543-9051 WEEHAWKEN, NJ 07087 TWO WORLD TRADE
CENTER--59TH FLOOR
NEW YORK, NY 10048
MICHAEL KOCHMANN
388 GREENWICH ST.
NEW YORK, NY 10013
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.
R Check box if it is proposed that this Registration Statement will become
effective upon filing on September 2, 1999, pursuant to Rule 487.
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DEFINED ASSET FUNDSSM
EQUITY INVESTOR FUND
CONCEPT SERIES
INTERNET PORTFOLIO
(A UNIT INVESTMENT TRUST)
CAPITAL APPRECIATION
PROFESSIONAL SELECTION
DIVERSIFICATION WITHIN THE INTERNET INDUSTRY
REINVESTMENT OPTION
OPPORTUNITY TO PARTICIPATE IN THE DYNAMIC
INTERNET INDUSTRY
SPONSORS:
Merrill Lynch, The Securities and Exchange Commission has not
Pierce, Fenner & Smith approved or disapproved these Securities or
Incorporated passed upon the adequacy of this prospectus. Any
Salomon Smith Barney Inc. representation to the contrary is a criminal
PaineWebber Incorporated offense.
Dean Witter Reynolds Inc. Prospectus dated September 2, 1999.
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Defined Asset FundsSM
Defined Asset FundsSM is America's oldest and largest family of unit
investment trusts, with over $160 billion sponsored over the last 28 years.
Defined Asset Funds has been a leader in unit investment trust research and
product innovation. Our family of Funds helps investors work toward their
financial goals with a full range of quality investments, including municipal,
corporate and government bond portfolios, equity portfolios and international
bond and equity portfolios.
Defined Asset Funds offer a number of advantages:
A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
Defined Portfolios: We choose the stocks and bonds in advance, so you know
what you're investing in.
Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, risk tolerance or time horizon, there's
probably a Defined Asset Fund that suits your investment style. Your financial
professional can help you select a Defined Asset Fund that works best for your
investment portfolio.
CONTENTS
PAGE
Risk/Return Summary..................................... 3
What You Can Expect From Your Investment................ 6
Income............................................... 6
Records and Reports.................................. 6
The Risks You Face...................................... 6
Concentration Risk................................... 6
Litigation Risks..................................... 7
Selling or Exchanging Units............................. 7
Sponsors' Secondary Market........................... 7
Selling Units to the Trustee......................... 7
Rollover/Exchange Option............................. 8
How The Fund Works...................................... 8
Pricing.............................................. 8
Evaluations.......................................... 9
Income............................................... 9
Expenses............................................. 9
Portfolio Changes.................................... 10
Portfolio Termination................................ 10
No Certificates...................................... 10
Trust Indenture...................................... 11
Legal Opinion........................................ 11
Auditors............................................. 11
Sponsors............................................. 12
Trustee.............................................. 12
Underwriters' and Sponsors' Profits.................. 12
Public Distribution.................................. 12
Code of Ethics....................................... 13
Year 2000 Issues..................................... 13
Advertising and Sales Literature..................... 13
Taxes................................................... 13
Supplemental Information................................ 14
Statement of Condition.................................. 15
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RISK/RETURN SUMMARY
1. WHAT IS THE PORTFOLIO'S OBJECTIVE?
The Portfolio seeks capital appreciation by investing in a
fixed portfolio of 31 common stocks in the Internet Sector.
You can participate in the Portfolio by purchasing units.
Each unit represents an equal share of the stocks in the
Portfolio and receives an equal share of income and
principal distributions, if any.
2. WHAT IS THE PORTFOLIO'S INVESTMENT STRATEGY?
The Portfolio contains 31 stocks in the Internet sector. The
stocks were selected by analysts from the Defined Funds
Research Group because it is believed that they will benefit
from the dynamic Internet industry.
The Portfolio will consist of four groups within the
Internet sector. These groups include service
providers, e-commerce, equipment/networks and software.
All of the companies in the Portfolio are related to
the Internet and are among the leaders in the industry.
We believe the companies selected help drive the Internet.
They are among the companies that provide the computer
and its peripheral components, the software, the
semicondutor chips, the telecommunications equipment
and the networking devices without which the Internet
would not exist.
All of the companies in the Portfolio are expected to
experience substantial growth related to Internet
activities. Each company reported earnings in 1998 and
is expected to experience strong continued earnings
growth.
Market capitalization of the Portfolio stocks presently
ranges from $350 million to over $100 billion.
The stocks will be held in the Portfolio for about one year.
At the end of the year, we will liquidate the Portfolio and
apply a similar Strategy to select a new portfolio, if
available.
3. WHAT INDUSTRIES ARE REPRESENTED IN THE PORTFOLIO?
Based upon the principal business of each issuer and current
market values, the Portfolio represents the following
sectors of the Internet industry:
APPROXIMATE
PORTFOLIO
PERCENTAGE
Computer Software 18%
Applications Software 17
Internet Software 11
Internet Content 10
Computer Data Security 8
Electronic Components/Semiconductors 7
Retail-Internet 6
Networking Products 5
Telecommunication Equipment 5
Telephone-Long Distance 4
Travel Services 4
Computer Services 3
Computers-Memory Devices 1
Computers-Micro 1
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE PORTFOLIO. THIS CAN
HAPPEN FOR VARIOUS REASONS, INCLUDING:
Stock prices can be volatile generally, and Internet stock
prices can be extremely volatile.
Share prices may decline during the life of the Portfolio.
Because the Portfolio is concentrated in the Internet
industry, adverse developments in this industry may affect
the value of your units. See Concentration Risk.
The Portfolio may continue to purchase or hold the stocks
originally selected even though their market value may have
changed.
The Portfolio does not reflect any investment
recommendations of the Sponsors, and any one or more of the
stocks in the Portfolio may, from time to time, be subject
to sell recommendations from one or more of the Sponsors.
5. IS THIS PORTFOLIO APPROPRIATE FOR YOU?
Yes, if you want capital appreciation and are willing to
invest a portion of your equity portfolio in the Internet
industry. You will benefit from a professionally selected
and supervised portfolio.
The Portfolio is not appropriate for you if you are not
comfortable with the Portfolio or are unwilling to take the
increased risk involved with an aggressive growth equity
investment. It may not be appropriate for you if you are
seeking preservation of capital or current income.
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RISK/RETURN SUMMARY (Continued)
6. WHAT ARE THE PORTFOLIO'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Portfolio.
ESTIMATED ANNUAL OPERATING
EXPENSES
AS A % OF AMOUNT
NET PER 1,000
ASSETS UNITS
.091% $ 0.90
Trustee's Fee
.071% $ 0.70
Portfolio Supervision,
Bookkeeping and
Administrative Fees
.062% $ 0.62
Other Operating Expenses
.224% $ 2.22
TOTAL
ORGANIZATION COSTS per 1,000 units $ 2.81
(deducted from Portfolio assets at
the close of the initial offering
period)
The Sponsors historically paid updating expenses.
INVESTOR FEES
2.75%
Maximum Sales Fee (Load) on new purchases (as
a percentage of $1,000 invested)
You will pay an up-front sales fee of approximately 1.00%.
In addition, ten deferred sales charges of $1.75 per 1,000
units ($17.50 annually) will be deducted from the
Portfolio's net asset value on January 15, 2000, February
1, 2000, February 15, 2000, March 1, 2000, and thereafter
on the first day of each month through September 1, 2000.
The maximum sales fees are as follows:
YOUR MAXIMUM
SALES FEE
IF YOU INVEST: WILL BE:
Less than $50,000 2.75%
$ 50,000 to $99,999 2.50%
$100,000 to $249,999 2.00%
$250,000 to $999,999 1.75%
$1,000,000 or more 1.00%
EXAMPLE
This example may help you compare the cost of investing in
the Portfolio to the cost of investing in other funds.
The example assumes that you invest $10,000 in the
Portfolio for the periods indicated and sell all your units
at the end of those periods. The example also assumes a 5%
return on your investment each year and that the
Portfolio's operating expenses stay the same. Although your
actual costs may be higher or lower, based on these
assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
$328 $804 $1,306 $2,685
7. IS THE PORTFOLIO MANAGED?
Unlike a mutual fund, the Portfolio is not managed and
stocks are not sold because of market changes. The Sponsors
monitor the Portfolio and may instruct the Trustee to sell
securities under certain limited circumstances. However,
given the investment philosophy of the Portfolio, the
Sponsors are not likely to do so.
8. HOW DO I BUY UNITS?
You can buy units from the Sponsors and other
broker-dealers. Some banks may offer units for sale through
special arrangements with the Sponsors, although certain
legal restrictions may apply. Employees of the Sponsors and
Sponsor affiliates and non-employee directors of the
Sponsors may purchase Units at a reduced sales charge.
The minimum investment is $250.
UNIT PRICE PER 1,000 UNITS $999.93
(as of September 1, 1999)
Unit price is based on the net asset value of the Portfolio
plus the up-front sales fee. Unit price also includes the
estimated organization costs shown above, to which no sales
fee has been applied.
The Portfolio stocks are valued by the Trustee on the basis
of their closing prices at 4:00 p.m. Eastern time every
business day. Unit price changes every day with changes in
the prices of the stocks.
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9. HOW DO I SELL UNITS?
You may sell your units at any time to the Sponsors or the
Trustee for the net asset value determined at the close of
business on the date of sale, less any remaining deferred
sales fee and the costs of liquidating securities to meet
the redemption.
10. HOW ARE DISTRIBUTIONS MADE AND TAXED?
Any distributions of dividend income will be made when the
Portfolio terminates. Distributions of ordinary income (together
with related foreign tax withholding amounts) will be dividends
for federal income tax purposes but will not be eligible for
the dividends-received deduction. Distributions to foreign
investors will generally be subject to withholding taxes. You may
be entitled to a credit for the foreign taxes withheld. Because
income of the type recieved by the Portfolio would generally
not be subject to the U.S. withholding taxes if received directly
by foreign investors, an investment in the Portfolio is likely
to be inappropriate for such investors.
11. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT OF PRINCIPAL
If a distribution of any principal is made during the year,
you may choose to reinvest it into additional units of the
Portfolio.
EXCHANGE PRIVILEGES
You may exchange units of this Portfolio for units of
certain other Defined Asset Funds. You may also exchange
into this Portfolio from certain other funds. We charge a
reduced sales fee on designated exchanges.
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WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
INCOME
The Portfolio will pay to you any income it has received at termination. Your
income may vary because of:
changes in the Portfolio because of additional securities purchases or
sales;
a change in the Portfolio's expenses; and
the amount of dividends declared and paid.
There can be no assurance that any dividends will be declared or paid.
RECORDS AND REPORTS
You will receive:
a notice from the Trustee if new equity securities are deposited in exchange
or substitution for equity securities originally deposited;
annual reports on Portfolio activity; and
annual tax information. This will also be sent to the IRS. You must report
the amount of income received during the year. Please contact your tax
advisor in this regard.
You may request audited financial statements of the Portfolio from the
Trustee.
You may inspect records of Portfolio transactions at the Trustee's office
during regular business hours.
THE RISKS YOU FACE
CONCENTRATION RISK
When stocks in a particular industry or country make up 25% or more of the
Portfolio, it is said to be 'concentrated' in that industry, which makes the
Portfolio less diversified.
Here is what you should know about the Portfolio's concentration in Internet
stocks:
Internet stocks tend to be relatively volatile as compared to other types of
investments. These kinds of companies:
are rapidly developing and highly competitive, both domestically and
internationally;
may be smaller and less seasoned companies with limited product lines,
markets or financial resources and limited management or marketing
personnel; and
may be adversely affected by
-- worldwide scientific and technological developments (and resulting
product obsolescence);
-- the need for a continued substantial investment in research and
development;
-- increased government regulaton;
-- the failure of their computer systems or the systems of third parties
to achieve Year 2000 compliance.
Internet companies often experience intense competition from large established
companies and potential competition from small start up companies.
Internet companies are dependent to a substantial degree upon skilled
professional and technical personnel and there is considerable competition for
the services of qualified personnel in the industry.
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LITIGATION RISKS
We do not know of any pending litigation that might have a material adverse
effect upon the Portfolio.
SELLING OR EXCHANGING UNITS
You can sell your units at any time for a price based on their net asset
value. Your net asset value is calculated each business day by:
adding the value of the Portfolio securities, cash and any other Portfolio
assets;
subtracting accrued but unpaid Portfolio expenses, unreimbursed Trustee
advances, cash held to buy back units or for distribution to investors,
and any other Portfolio liabilities; and
dividing the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because
of sales fees, market movements and changes in the Portfolio.
As of the close of the initial offering period, the price you receive will be
reduced to pay the Portfolio's estimated organization costs.
If you sell your units before the final deferred sales fee installment, the
amount of any remaining payments will be deducted from your proceeds.
SPONSORS' SECONDARY MARKET
While we are not obligated to do so, we will buy back units at net asset value
less any remaining deferred sales fee and the cost of liquidating Securities
to meet the redemption. We may resell the units to other buyers or to the
Trustee.
We have maintained a secondary market continuously for more than 28 years, but
we could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units
to the Trustee at any time by contacting your broker, dealer or financial
institution that holds your units in street name. Sometimes, additional
documents are needed such as a trust document, certificate of corporate
authority, certificate of death or appointment as executor, administrator or
guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee will sell your units in the over-the-counter market if it
believes it can obtain a higher price. In that case, you will receive the net
proceeds of the sale.
If the Portfolio does not have cash available to pay you for the units you are
selling, the Sponsors will select securities to be sold. These sales could be
made at times when the securities would not otherwise be sold and may result
in your receiving less than you paid for your unit and also reduce the size
and diversity of the Portfolio.
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If you sell units with a value of at least $500,000, you may choose to receive
your distribution 'in kind.' If you so choose, you will receive securities and
cash with a total value equal to the price of your units. The Trustee will try
to distribute securities in the portfolio pro rata, but it reserves the right
to distribute only one or a few securities. The Trustee will act as your agent
in an in-kind distribution and will either hold the securities for your
account or transfer them as you instruct. You must pay any transaction costs
as well as transfer and ongoing custodial fees on sales of securities
distributed in-kind.
There could be a delay in paying you for your units:
if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
securities not reasonably practicable; and
for any other period permitted by SEC order.
ROLLOVER/EXCHANGE OPTION
When this Portfolio is about to terminate, you may have the option to roll
your proceeds into the next Internet Portfolio if one is available.
If you hold your units with any of the Sponsors and notify your financial
adviser by October 3, 2000, 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 a new Internet
Portfolio. If you decide not to roll over your proceeds, you will receive a
cash distribution after the Portfolio terminates.
The Portfolio will terminate by October 31, 2000.
If you continue to hold your units, you may exchange units of this Portfolio
anytime before this Portfolio terminates for units of certain other Defined
Asset Funds at a reduced sales fee if your investment goals change. In
addition, you may exchange into this Fund from certain other Defined Asset
Funds. To exchange units, you should talk to your financial professional about
what Portfolios are exchangeable, suitable and currently available.
We may amend or terminate the options to exchange your units or roll your
proceeds at any time without notice.
HOW THE FUND WORKS
PRICING
Units are charged a combination of initial and deferred sales fees.
In addition, during the initial offering period, a portion of the price of a
unit also consists of securities to pay all or some of the costs of organizing
the Portfolio including:
cost of initial preparation of legal documents;
federal and state registration fees;
initial fees and expenses of the Trustee;
initial audit; and
legal expenses and other out-of-pocket expenses.
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The estimated organization costs will be deducted from the assets of the
Portfolio as of the close of the initial offering period.
The deferred sales fee is generally a charge of $1.75 per 1,000 units ($17.50
annually) and is accrued in ten installments. Units redeemed or repurchased
prior to the accrual of the final deferred sales fee installment will have the
amount of any remaining installments deducted from the redemption or
repurchase proceeds or deducted in calculating an in-kind distribution,
however, this deduction will be waived in the event of the death or disability
(as defined in the Internal Revenue Code of 1986) of an investor. The initial
sales fee is equal to the aggregate sales fee less the aggregate amount of any
remaining installments of the deferred sales fee.
It is anticipated that securities will not be sold to pay the deferred sales
fee 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.
EVALUATIONS
The Trustee values the securities on each business day (i.e., any day other
than Saturdays, Sundays and the following holidays as observed by the New York
Stock Exchange: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas). If the securities are listed on a national securities exchange or
the Nasdaq National Market, evaluations are generally based on closing sales
prices on that exchange or that system or, if closing sales prices are not
available, at the mean between the closing bid and offer prices.
INCOME
The annual income per unit, after deducting estimated annual Portfolio
expenses per unit, will depend primarily upon the amount of dividends
declared and paid by the issuers of the securities 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
estimated expenses. Because dividends on the securities are not received at
a constant rate throughout the year, any distribution may be more or less
than the amount then credited to the income account. The Trustee credits
dividends received to an Income Account and other receipts to a Capital
Account. The Trustee may establish a reserve account by withdrawing from
these accounts amounts it considers appropriate to pay any material
liability. These accounts do not bear interest.
EXPENSES
The Trustee is paid a fee monthly. It also benefits when it holds cash for the
Portfolio in non-interest bearing accounts. The Trustee may also receive
additional amounts:
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for extraordinary services and costs of indemnifying the Trustee and the
Sponsor;
costs of actions taken to protect the Portfolio and other legal fees and
expenses;
expenses for keeping the Portfolio's registration statement current; and
Portfolio termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 70c per 1,000 units annually for
providing portfolio supervisory, bookkeeping and administrative services and
for any other expenses properly chargeable to the Portfolio. Legal,
typesetting, electronic filing and regulatory filing fees and expenses
associated with updating the Portfolio's registration statement yearly are
also now chargeable to the Portfolio. While this fee may exceed the amount of
these costs and expenses attributable to this Portfolio, the total of these
fees for all Series of Defined Asset Funds will not exceed the aggregate
amount attributable to all of these Series for any calendar year. Certain of
these expenses were previously paid for by the Sponsors.
The Trustee's and Sponsors' fees may be adjusted for inflation without
investors' approval.
The deferred sales fees you owe are paid from the Capital Account. Although we
may collect the deferred sales charge monthly, to keep Units more fully
invested we do not currently plan to pay the deferred sales charge until after
the rollover notification date.
The Sponsors will pay advertising and selling expenses at no charge to the
Portfolio. If Portfolio expenses exceed initial estimates, the Portfolio will
owe the excess. The Trustee has a lien on Portfolio assets to secure
reimbursement of Portfolio expenses and may sell securities if cash is not
available.
PORTFOLIO CHANGES
If we maintain a secondary market in units but are unable to sell the units
that we buy in the secondary market, we will redeem units, which will affect
the size and composition of the portfolio.
We decide whether to offer units for sale that we acquire in the secondary
market after reviewing:
diversity of the Portfolio;
size of the Portfolio relative to its original size;
ratio of Portfolio expenses to income; and
cost of maintaining a current prospectus.
PORTFOLIO TERMINATION
When the Portfolio is about to terminate you will receive a notice, and you
will be unable to sell your units after that time. We will sell any remaining
securities, and you will receive your final distribution in cash.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling securities. This may reduce the amount you receive
as your final distribution.
NO CERTIFICATES
All investors are required to hold their Units in uncertificated form and in
'street name' by their broker, dealer or financial institution at the
Depository Trust Company.
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TRUST INDENTURE
The Portfolio is a 'unit investment trust' governed by a Trust Indenture, a
contract among the Sponsors and the Trustee, which sets forth their duties and
obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
to cure ambiguities;
to correct or supplement any defective or inconsistent provision;
to make any amendment required by any governmental agency; or
to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsor).
Investors holding 51% of the units may amend the Indenture. Every investor
must consent to any amendment that changes the 51% requirement. No amendment
may reduce your interest in the Portfolio without your written consent.
The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
it fails to perform its duties;
it becomes incapable of acting or bankrupt or its affairs are taken over
by public authorities; or
the Sponsors determine that its replacement is in your best interest.
Investors holding 51% of the units may remove the Trustee. The Trustee may
resign or be removed by the Sponsors without the consent of investors. The
resignation or removal of the Trustee becomes effective when a successor
accepts appointment. The Sponsors will try to appoint a successor promptly;
however, if no successor has accepted within 30 days after notice of
resignation, the resigning Trustee may petition a court to appoint a
successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to
perform its duties or becomes bankrupt the Trustee may:
remove it and appoint a replacement Sponsor;
liquidate the Portfolio; or
continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
If there is only one Sponsor and it fails to perform its duties or becomes
bankrupt the Trustee may:
remove it and appoint a replacement Sponsor;
liquidate the Portfolio; or
continue to act as Trustee without a Sponsor.
The Trust Indenture contains customary provisions limiting the liability of
the Trustee and the Sponsors.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
special counsel for the Sponsors, has given an opinion that the units are
validly issued.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
independent accountants, audited the Statement of Condition included in this
prospectus.
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SPONSORS
The Sponsors are:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary
of Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted
as sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
TRUSTEE
The Chase Manhattan Bank, Unit Trust Department, 4 New York Plaza--6th Floor,
New York, NY 10004, is the Trustee. It is supervised by the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve System
and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriter receives sales charges when they sell units. The Sponsors also
realize a profit or loss on deposit of the securities shown under Defined
Portfolio. Any cash made available by you to the Sponsors before the
settlement date for those units may be used in the Sponsors' businesses to the
extent permitted by federal law and may benefit the Sponsors.
A Sponsor or Underwriter may realize profits or sustain losses on stocks in
the Portfolio which were acquired from underwriting syndicates of which it was
a member.
During the initial offering period, the Sponsors may realize profits or
sustain losses on units it holds due to fluctuations in the price per unit.
The Sponsors experienced a loss of $35.00 on the initial deposit of the
Securities. Any profit or loss to the Portfolio will be effected by the
receipt of applicable sales fees and a gain or loss on subsequent deposits of
securities. In maintaining a secondary market, the Sponsors will also realize
profits or sustain losses in the amount of any difference between the prices
at which they buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
During the initial offering period, units will be distributed to the public by
the Sponsors and dealers who are members of the National Association of
Securities Dealers, Inc.
Dealers will be entitled to the concession stated below on Units sold or
redeemed.
DEALER CONCESSION AS
A % OF PUBLIC
AMOUNT PURCHASED OFFERING PRICE
Less than $50,000 2.00%
$50,000 to $99,999 1.80%
$100,000 to $249,999 1.45%
$250,000 to $999,999 1.25%
$1,000,000 and over 0.50%
The Sponsors do not intend to qualify units for sale in any foreign countries.
This
12
<PAGE>
prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics
requiring reporting of personal securities transactions by its employees with
access to information on portfolio transactions. The goal of the code is to
prevent fraud, deception or misconduct against the Portfolio and to provide
reasonable standards of conduct.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the
'Year 2000 Problem'). We do not expect that the computer system changes
necessary to prepare for the Year 2000 will cause any major operational
difficulties for the Portfolio. The Year 2000 Problem may adversely affect the
issuers of the securities contained in the Portfolio, but we cannot predict
whether any impact will be material to the Portfolio as a whole.
ADVERTISING AND SALES LITERATURE
Advertising and sales literature may include brief descriptions of the
principal businesses of the companies represented in the Portfolio.
Sales material may discuss developing a long-term financial plan, working with
your financial professional; the nature and risks of various investment
strategies and Defined Asset Funds that could help you toward your financial
goals and the importance of discipline; how securities are selected for these
funds, how the funds are created and operated, features such as convenience
and costs, and options available for certain types of funds including
automatic reinvestment, rollover, exchanges and redemption. It may also
summarize some similarities and differences with mutual funds and discuss the
philosophy of spending time in the market rather than trying to time the
market, including probabilities of negative returns over various holding
periods.
TAXES
The following summarizes the material income tax consequences of holding
Units. It assumes that you are not a dealer, financial institution, insurance
company or other investor with special circumstances. You should consult your
own tax adviser about your particular circumstances.
In the opinion of our counsel, under existing law:
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Portfolio intends to qualify for special tax treatment as a regulated
investment company so that it will not be subject to federal income tax on the
portion of its taxable income that it distributes to investors in a timely
manner.
DISTRIBUTIONS
Distributions to you of the Portfolio's dividend income and of the Portfolio's
gains from Securities it has held for one year or less will generally be taxed
to you as ordinary income, to the extent of the Portfolio's taxable income not
attributable to the Portfolio's net capital gain. Distributions to you in
excess of the Portfolio's taxable income will be treated as a return of
capital and will reduce your basis in your Units. To the extent such
13
<PAGE>
distributions exceed your basis, they will be treated as gain from the sale of
your Units.
Distributions to you that are treated as ordinary income will constitute
dividends for federal income tax purposes. Corporate investors may be
eligible for the 70% dividends-received deduction with respect to these
distributions. You should consult your tax adviser in this regard.
Distributions to you of the Portfolio's net capital gain will generally be
taxable to you as long-term capital gain, regardless of how long you have held
your Units.
Dividends received by the Portfolio from foreign issuers will in most cases
be subject to withholding taces, although these taxes may be reduced by
treaties between the United States and the relevant country.
GAIN OR LOSS UPON DISPOSITION
You will generally recognize capital gain or loss when you dispose of your
Units. If you receive Securities upon redemption of your Units (including
pursuant to the rollover option), you will generally recognize capital gain or
loss equal to the difference between your basis in your Units and the fair
market value of the Securities received in redemption.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain or loss that you recognize upon disposition of your Units will be
long-term if you have held your Units for more than one year and short-term
otherwise. Because the deductibility of capital losses is subject to
limitations, you may not be able to deduct all of your capital losses. You
should consult your tax adviser in this regard.
YOUR BASIS IN THE SECURITIES
Your aggregate basis in the Units will generally be equal to the cost of your
Units, including the initial sales charge. You should not increase your basis
in your Units by deferred sales charges or organizational expenses.
FOREIGN INVESTORS
If you are a foreign investor and you are not engaged in a U.S. trade or
business, you generally will be subject to 30% withholding tax (or a lower
applicable treaty rate) on distributions. You should consult your tax
adviser about the possible application of federal, state and local,
and foreign taxes.
RETIREMENT PLANS
You may wish to purchase units for an Individual Retirement Account ('IRAs')
or other retirement plan. Generally, capital gains and income received in each
of these plans are exempt from federal taxation. All distributions from these
types of plans are generally treated as ordinary income but may, in some
cases, be eligible for tax-deferred rollover treatment. You should consult
your attorney or tax adviser about the specific tax rules relating to these
plans. These plans are offered by brokerage firms, including the Sponsors of
this Portfolio, and other financial institutions. Fees and charges with
respect to such plans may vary.
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Portfolio by
calling the Trustee. The supplemental information includes more detailed risk
disclosure and general information about the structure and operation of the
Portfolio. The supplemental information is also available from the SEC.
14
<PAGE>
Defined Portfolio
Equity Investor Fund
Concept Series Internet Portfolio
Defined Asset Funds
<TABLE>
<CAPTION>
PRICE
TICKER PERCENTAGE PER SHARE COST
NAME OF ISSUER SYMBOL OF PORTFOLIO (1) TO PORTFOLIO TO PORTFOLIO (2)
<S> <C> <C> <C> <C>
1. 3Com Corporation COMS 0.57% $ 24.75000 $ 2,475.00
2. Adobe Systems, Inc.* ADBE 4.28 98.37500 18,691.25
3. America Online, Inc. AOL 6.24 90.87500 27,262.50
4. Broadcom Corporation (Class A) BRCM 2.94 128.50000 12,850.00
5. BroadVision, Inc. BVSN 3.72 101.50000 16,240.00
6. Check Point Software
Tecnhologies, Ltd. CHKP 3.66 80.00000 16,000.00
7. Cisco Systems, Inc. CSCO 1.58 68.93750 6,893.75
8. Dell Computer Corporation DELL 1.09 47.87500 4,787.50
9. eBay, Inc. EBAY 5.58 121.93750 24,387.50
10. EMC Corporation EMC 1.40 61.37500 6,137.50
11. I2 Technologies, Inc. ITWO 5.81 31.71875 25,375.00
12. Intel Corporation* INTC 1.91 83.43750 8,343.75
13. Lucent Technologies, Inc.* LU 1.47 64.06250 6,406.25
14. Macromedia, Inc. MACR 4.88 42.68750 21,343.75
15. MCI Worldcom, Inc. WCOM 3.48 76.00000 15,200.00
16. Mercury Interactive Corporation MERQ 4.68 51.12500 20,450.00
17. Microsoft Corporation MSFT 2.11 92.37500 9,237.50
18. MindSpring Enterprises, Inc. MSPG 5.17 28.25000 22,600.00
19. Network Appliance, Inc. NTAP 2.95 64.56250 12,912.50
20. Network Solutions, Inc. NSOL 3.99 58.12500 17,437.50
21. Nokia Corporation* NOK 1.88 82.25000 8,225.00
22. Oracle Corporation ORCL 0.86 37.68750 3,768.75
23. Pegasus Systems, Inc. PEGS 4.34 34.50000 18,975.00
24. Rational Software Corporation RATL 3.91 28.50000 17,100.00
25. Security Dynamics Technologies,
Inc. SDTI 3.94 24.62500 17,237.50
26. Siebel Systems, Inc. SEBL 3.82 69.50000 16,680.00
27. Sykes Enterprises, Inc. SYKE 3.22 23.43750 14,062.50
28. Tellabs, Inc. TLAB 1.36 59.25000 5,925.00
29. Texas Instruments, Inc.* TXN 1.87 81.56250 8,156.25
30. Transaction Systems Architects,
Inc. (Class A) TSAI 1.39 30.37500 6,075.00
31. Yahoo! Inc. YHOO 5.90 143.31250 25,796.25
------- ------------
100.00% $ 437,032.50
</TABLE>
(1) Based on Cost to Portfolio.
(2) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on September 1, 1999, the business day prior to the
initial date of deposit. The value of the Securities on any subsequent
business day will vary.
The issuer is a foreign corporation; dividends, if any, will be subject to
withholding taxes.
* Only these stocks currently pay dividends. The current annual dividends per
share for the Securities numbered 2, 12, 13, 21, and 29 are $0.20, $0.12,
$0.08, $0.52, and $0.17, respectively, based on the latest quarterly,
semi-annual or annual declaration. There can be no assurance that future
dividend payments, if any, will be maintained in an amount equal to these
dividends.
The securities were acquired on September 1, 1999 and are represented entirely
by contracts to purchase the securities. Any of the Sponsors may have acted as
underwriter, manager or co-manager of a public offering of the securities in
this Portfolio during the last three years. Affiliates of the Sponsors 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
options on any of them, and may be on the opposite side of public orders
executed on the floor of an exchange where the securities are listed. An
officer, director or employee of any of the Sponsors may be an officer or
director of one or more of the issuers of the securities in the Portfolio.
Each Sponsor may trade for its own account as an odd-lot dealer, market maker,
block positioner and/or arbitrageur in any of the securities or in options on
them. Each 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.
PLEASE NOTE THAT IF THIS PROSPECTUS IS USED AS A
PRELIMINARY PROSPECTUS
FOR A FUTURE FUND IN THIS SERIES, THE PORTFOLIO WILL
CONTAIN DIFFERENT
STOCKS FROM THOSE DESCRIBED ABOVE.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Equity Investor Fund, Concept Series,
Internet Portfolio, Defined Asset Funds (the 'Portfolio'):
We have audited the accompanying statement of condition and the related
defined portfolio included in the prospectus of the Portfolio as of September
2, 1999. 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 September
2, 1999 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
September 2, 1999
STATEMENT OF CONDITION AS OF SEPTEMBER 2, 1999
TRUST PROPERTY
Investments--Contracts to purchase Securities(1).........$ 437,032.50
Total.........................................$ 437,032.50
LIABILITY AND INTEREST OF HOLDERS
Reimbursement of Sponsors for organization
expenses(2).......................................$ 1,240.46
Subtotal 1,240.46
Interest of Holders of 441,446 Units of fractional
undivided interest outstanding:(3)
Cost to investors(4)...................................$ 441,415.10
Gross underwriting commissions and organization
expenses(5)(2)....................................... (5,623.06)
Subtotal 435,792.04
Total.........................................$ 437,032.50
(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
September 1, 1999. The contracts to purchase securities are collateralized by
an irrevocable letter of credit which has been issued by DG Bank, New York
Branch, in the amount of $437,067.50 and deposited with the Trustee. The
amount of the letter of credit includes $437,032.50 for the purchase of
securities.
(2) A portion of the Unit Price consists of securities in an amount
sufficient to pay all or a portion of the costs incurred in establishing the
Portfolio. These costs have been estimated at $2.81 per 1,000 Units. A
distribution will be made as of the close of the initial offering period to an
account maintained by the Trustee from which the organization expenses
obligation of the investors will be satisfied. If the actual organization
costs exceed the estimated aggregate amount shown above, the Sponsors will pay
for this excess amount.
(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 to maintain the $999.93 per 1,000 Units offering price only for that
day. The Unit Price on any subsequent business day will vary.
(4) Aggregate public offering price computed on the basis of the
value of the underlying securities at 4:00 p.m., Eastern time on September 1,
1999.
(5) Assumes the maximum initial sales charge per 1,000 units of
1.00% of the Unit Price. A deferred sales charge of $1.75 per 1,000 Units is
payable on January 15, 2000, February 1, 2000, February 15, 2000, March 1,
2000 and thereafter on the 1st day of each month through September 1, 2000.
Distributions will be made to an account maintained by the Trustee from which
the deferred sales charge obligation of the investors to the Sponsors will be
satisfied.
15
<PAGE>
Defined
Asset FundsSM
HAVE QUESTIONS ? EQUITY INVESTOR FUND
Request the most CONCEPT SERIES
recent free Information INTERNET PORTFOLIO
Supplement that gives more (A Unit Investment Trust)
details about the Fund,
by calling: This Prospectus does not contain
The Chase Manhattan Bank complete information about the
1-800-323-1508 investment company filed with the
Securities and Exchange Commission in
Washington, D.C. under the:
Securities Act of 1933 (file no.
333-83839) and
Investment Company Act of 1940 (file
no. 811-3044).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
Units of any future series may not be
sold nor may offers to buy be accepted
until that series has become effective
with the Securities and Exchange
Commission. No units can be sold in any
State where a sale would be illegal.
100194RR--9/99
