AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
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
SELECT SERIES STANDARD & POOR'S INDUSTRY TURNAROUND PORTFOLIO
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
PAINEWEBBER INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, SMITH BARNEY INC.
FENNER & SMITH 388 GREENWICH STREET
INCORPORATED 23RD FLOOR
DEFINED ASSET FUNDS NEW YORK, NY 10013
P.O. BOX 9051
PRINCETON, NJ 08543-9051
PRUDENTIAL SECURITIES PAINEWEBBER INCORPORATED DEAN WITTER REYNOLDS INC.
INCORPORATED 1285 AVENUE OF THE TWO WORLD TRADE
ONE NEW YORK PLAZA AMERICAS CENTER--59TH FLOOR
NEW YORK, NY 10292 NEW YORK, NY 10019 NEW YORK, NY 10048
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. ROBERT E. HOLLEY LAURIE A. HESSLEIN
P.O. BOX 9051 1285 AVENUE OF THE 388 GREENWICH ST.
PRINCETON, NJ 08543-9051 AMERICAS NEW YORK, NY 10013
NEW YORK, NY 10019
COPIES TO:
LEE B. SPENCER, JR. PIERRE DE SAINT PHALLE, DOUGLAS LOWE, ESQ.
ONE NEW YORK PLAZA ESQ. 130 LIBERTY STREET--29TH
NEW YORK, NY 10292 450 LEXINGTON AVENUE FLOOR
NEW YORK, NY 10017 NEW YORK, NY 10006
E. TITLE 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.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT, THIS REGISTRATION STATEMENT
SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
DEFINED ASSET FUNDSSM
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EQUITY INVESTOR FUND The objective of this Defined Fund is total return
SELECT SERIES through a combination of capital appreciation and
STANDARD & POOR'S current dividend income. The Portfolio follows a
INDUSTRY TURNAROUND strategy of investing for a period of about two
PORTFOLIO years in a portfolio of common stocks representing
(A UNIT INVESTMENT industries that have recently underperformed the
TRUST) S&P 500 Index but have started to turn around.
- ------------------------------The value of units will fluctuate with the value
of the common stocks in the Portfolio and no
assurance can be given that dividends will be paid
or that the units will appreciate in value.
Minimum purchase: $250.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
SPONSORS: HAS THE COMMISSION OR ANY STATE SECURITIES
Merrill Lynch, COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Pierce, Fenner & Smith OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Incorporated CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-323-1508.
Prudential Securities Prospectus dated November , 1997.
Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Dean Witter Reynolds Inc. AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored over the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal bond portfolios
o Corporate bond portfolios
o Government bond portfolios
o Equity portfolios
o International bond and equity portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.
- ---------------------------------------------------
Defining the Strategy
- ---------------------------------------------------
This Select Portfolio follows a simple strategy: buy the common stocks
('Strategy Stocks') that meet the quantitative criteria (described below)
established by Standard & Poor's, the Portfolio Consultant, and hold the
Strategy Stocks for two years. The strategy is intended to identify those
industries that have recently performed poorly compared to the S&P 500 Index but
that, in the opinion of the Sponsors and the Portfolio Consultant, have begun to
rebound. At the end of two years, the Portfolio will be liquidated and the
strategy may be reapplied to select a new Industry Turnaround Portfolio.
Each Select S&P Industry Turnaround Portfolio is designed to be part of a longer
term strategy and the Sponsors believe that more consistent results are likely
if the strategy is followed for at least four to six years. So long as the
Sponsors continue to offer new portfolios, investors will have the option to
reinvest into a new portfolio at a reduced sales charge. The Sponsors reserve
the right, however, not to offer new portfolios.
The common stocks in the Portfolio were selected through the following
four-step process. We begin by comparing the last 12-month performance of each
of the approximately 100 industries within the S&P 500 Index to the performance
of the Index as a whole. Second, we identify those industries which have broken
above their nine-month average of annual returns. Third, of those industries we
select the five most underperforming industries. Fourth, we choose four stocks
in each of the five identified industries. If there are more than four stocks in
an industry, we select those with the highest S&P Common Stock Rankings (see
Appendix A). If there are fewer than four stocks in an identified industry, the
universe is expanded to include stocks from the S&P MidCap 400 Index and the S&P
SmallCap 600 Index. From this group of 1,000 stocks, the remaining portfolio
stocks are selected on the basis of a minimum market capitalization over $500
million and their Common Stock Ratings.
The Strategy provides a disciplined approach to investing, based on a buy and
hold philosophy, which ignores market timing and rejects active management. The
Sponsors anticipate that the Portfolio will remain unchanged over its two-year
life despite any adverse developments concerning an issuer, an industry or the
economy or stock market generally.
- ---------------------------------------------------
Defining Your Portfolio
- ---------------------------------------------------
The following industries, ranked by their relative underperformance, are
approximately equally represented in the Portfolio.
RELATIVE
UNDERPERFORMANCE
/ / %
/ / %
/ / %
/ / %
/ / %
- ---------------------------------------------------
Defining Your Risks
- ---------------------------------------------------
The Portfolio is not concentrated in any particular industry. However, each
industry may be out of favor in the market. The Strategy of selecting stocks in
underperforming industries could be considered contrarian in nature. The
Portfolio does not reflect any investment recommendations of the Sponsors or the
Portfolio Consultant, and one or more of the stocks in the Portfolio may, from
time to time, be subject to sell recommendations from one or more of the
Sponsors or the Portfolio Consultant.
The Portfolio is not an appropriate investment for those who are not comfortable
with the Strategy or for those who are unable or unwilling to assume the risk
involved generally with an equity investment. It may not be appropriate for
investors seeking either preservation of capital or high current income.
There can be no assurance that the underperformance of the industries from which
Strategy Stocks were selected will not continue, that dividends on the Strategy
Stocks will be declared and paid or that the Common Stock Rankings on the
Strategy Stocks will be maintained.
A-2
<PAGE>
Unit price fluctuates with the value of the Portfolio, and the value of the
Portfolio could be affected by changes in the financial condition of the
issuers, changes in the various industries represented in the Portfolio,
movements in stock prices generally, the impact of purchase and sale of
securities for the Portfolio (especially during the primary offering period of
units and during the rollover period) and other factors. Additionally, equity
markets have been at historically high levels and no assurance can be given that
these levels will continue. There is no guarantee that the objective of the
Portfolio will be achieved. Also, the return on an investment in the Portfolio
will be lower than the hypothetical returns on Strategy Stocks because the
Portfolio has sales charges, brokerage commissions and expenses, purchases
Strategy Stocks at different prices and is not fully invested at all times and
because of other factors described under Performance Information.
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsors
receive no management fee. Therefore, any adverse financial condition of an
issuer or any market movement in the price of a security will not require the
sale of securities from the Portfolio. Although the Sponsors may instruct the
Trustee to sell securities under certain limited circumstances, given the
investment philosophy of the Portfolio, the Sponsors are not likely to do so.
The Portfolio may continue to purchase or hold securities originally selected
even though the assessment of their quality may have changed.
- ---------------------------------------------------
Defining Your Investment
- ---------------------------------------------------
PUBLIC OFFERING PRICE PER 1,000 UNITS $1,000.00
The Public Offering Price as of November , 1997, the business day prior to the
initial date of deposit is based on the aggregate value of the underlying
securities ($ ) and any cash held to purchase securities, divided by
the number of units outstanding ( ) times 1,000, plus the initial sales
charge. The Public Offering Price on any subsequent date will vary. The
underlying securities are valued by the Trustee on the basis of their closing
sale prices at 4:00 p.m. Eastern time on every business day.
SALES CHARGES
The total sales charge for this investment combines an initial up-front sales
charge and an annual deferred sales charge that will be deducted from the net
asset value of the Portfolio in seven monthly payments each year of the
Portfolio. If you redeem or exchange your units prior to , 1998, you
will not pay the deferred sales charge for the second year.
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 Select Industry Turnaround Series, if
one is available. If you notify your financial professional by ,
1999, your units will be redeemed and your proceeds 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 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 , , and commencing 25, 199 , if you own
Units on the 10th of those months.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into additional units
of the Portfolio subject only to the deferred sales charge remaining at the time
of reinvestment. Reinvesting helps to compound your income for a greater total
return.
TAXES
In the opinion of counsel, you will be considered to have received all dividends
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. Under the new Taxpayer
Relief Act of 1997, investors who are individuals may be entitled to the new 20%
maximum federal tax rate for capital gains derived from 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 and the charge
for organizational expenses.
TERMINATION DATE
The Portfolio will terminate by , 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.
SPONSORS' PROFIT OR LOSS
The Sponsors' profit or loss from the Portfolio will include the receipt of
applicable sales charges, fluctuations in the Public Offering Price or secondary
market price of units, a loss of $ on the initial deposit of the securities
and a gain or loss on subsequent deposits of securities (see Sponsors' and
Underwriters' Portfolio in Part B).
A-3
<PAGE>
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Defining Your Costs
- ---------------------------------------------------
SALES CHARGE
You will pay an initial sales charge of about 1.0%. In addition, seven monthly
deferred sales charges of $2.50 per 1,000 units ($17.50 annually) will be
deducted from the Portfolio's net asset value each year of the Portfolio's
two-year life ( through , 1998 and , 1998 through , 1999). This
deferred method of payment keeps more of your money invested over a longer
period of time. The sales charge is reduced on purchases of $50,000 or more as
shown in Part B. If you exchange units of this Portfolio for units of another
Select or Focus Series or roll the proceeds of your investment into a new
portfolio, you will not be subject to the 1.0% initial charge. (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. On a
$1,000 investment for 1,000 Units, you will pay the following charges:
As a %
of Initial
Public
Offering
Price
-----------
Initial Sales Charge 1.00%
Deferred Sales Charge per Year 1.75%
Maximum Sales Charge 4.50%
Maximum Sales Charge Imposed per
Year on Reinvested Dividends 1.75%
ESTIMATED ANNUAL PORTFOLIO OPERATING EXPENSES
As a %
of Net Amount per
Assets 1,000 Units
----------- -----------
Trustee's Fee% $
Portfolio Supervision,
Bookkeeping and
Administrative Fees% $
Organizational Expenses% $
Other Operating
Expenses% $
----------- -----------
TOTAL% $
These estimates do not include the costs of purchasing and selling the
underlying Strategy Stocks.
Investors will bear all or a portion of the Portfolio's organizational
costs--including costs of preparing the registration statement, the trust
indenture and other closing documents, registering units with the SEC and the
states and the initial audit of the Portfolio--as is common for mutual funds.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
a 5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:
1 Year 3 Years 5 Years 10 Years
$ $ $ $
Although the Portfolio has a term of only two years 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 Portfolio expenses.
The example assumes reinvestment of all dividends and distributions and uses a
5% annual rate of return as mandated by SEC regulations applicable to mutual
funds. For purposes of the example, the deferred sales charge imposed on
reinvestment of dividends is not reflected until the year following payment of
the dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment.
Reductions to the repurchase and cash redemption prices in the secondary market
to recoup the costs of liquidating securities to meet redemption (described
below) have not been reflected. The example should not be considered a
representation of past or future expenses or annual rates of return; the actual
expenses and annual rates of return may be more or less than the example.
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time prior to the termination of the
Portfolio. Your price will be based on the then current net asset value. The
redemption and secondary market repurchase price as of , 1997 was
$972.50 per 1,000 units ($27.50 per 1,000 units less than the Public Offering
Price). This price reflects deductions of the annual deferred sales charge which
declines over each year of the Portfolio ($17.50 initially). If you sell your
units before , 1998, you will pay only the balance of any deferred
sales charge remaining for the first year. If you redeem or sell your units
after , 1998, you will pay the remaining balance of the deferred sales charge
for the second year. 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 $ 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
<PAGE>
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Defined Portfolio
- --------------------------------------------------------------------------------
Equity Investor Fund
Select Series Standard & Poor's Industry Turnaround Portfolio November , 1997
Defined Asset Funds
<TABLE>
<CAPTION>
PRICE
PER SHARE
TO COST
TICKER NUMBER OF SHARES PERCENTAGE PORTFO- TO PORTFOLIO
NAME OF ISSUER SYMBOL OF COMMON STOCK OF PORTFOLIO (1) LIO (2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
----------------
100.00%
----------------
----------------
</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 November , 1997, the business day prior to the initial
date of deposit. The value of the Securities on any subsequent business day
will vary.
----------------------------
The securities were acquired on November , 1997 and are represented entirely
by contracts to purchase the securities. Any of the Sponsors may have acted as
underwriters, managers or co-managers of a public offering of the securities in
this 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 in
options on any of them, and may be on the opposite side of public orders
executed on the floor of an exchange where the securities are listed. An
officer, director or employee of any of the Sponsors may be an officer or
director of one or more of the issuers of the securities in the Portfolio. A
Sponsor may trade for its own account as an odd-lot dealer, market maker, block
positioner and/or arbitrageur in any of the securities or in options on them.
Any Sponsor, its affiliates, directors, elected officers and employee benefits
programs may have either a long or short position in any securities or in
options on them.
A-5
<PAGE>
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Hypothetical Performance Information
- --------------------------------------------------------------------------------
The following table compares the actual performance of the Standard & Poor's 500
(the Index) with the hypothetical performance of approximately equal amounts
invested in each of the industries selected by applying the screening process
described above at the beginning of each two-year period. These results
represent past performance of the Strategy (but not any Select S&P Industry
Turnaround Portfolio), and may not be indicative of future results of the
Strategy or the Portfolio. An investment in the Portfolio will not realize as
high a total return as a direct investment in the Strategy Stocks, since the
Portfolio has sales charges and expenses. If Portfolio sales charges and
expenses were deducted, the Strategy Stocks would have underperformed the Index
in of the last 13 two-year periods. Actual performance of the Portfolio will
also differ from quoted performance of the Strategy Stocks because the quoted
performance figures are annual figures based on closing sales prices on December
31 (or September 30, for 1997), while Portfolios are established and liquidated
at various times during any year; the Portfolio may not be fully invested at all
times; stocks are normally purchased or sold at prices different from the
closing price used to determine the Portfolio's net asset value and stocks may
not be weighted equally at all times.
COMPARISON OF TWO-YEAR DIVIDENDS, APPRECIATION AND TOTAL RETURN
(FIGURES DO NOT REFLECT SALES CHARGES, COMMISSIONS, FUND EXPENSES OR TAXES)
<TABLE>
<CAPTION>
STRATEGY STOCKS(1) S&P 500 INDEX (THE INDEX)
------------------------------------------------------------ -----------------------------------------
TWO-YEAR ACTUAL DIVIDEND TOTAL ACTUAL DIVIDEND
PERIODS APPRECIATION(2) YIELD(3) RETURN(4) APPRECIATION(2) YIELD(3)
- --------- -------------- ---------------------- -------------- -------------- ----------------------
<S> <C> <C> <C> <C> <C>
1972-73 1.3% 9.6% 10.9% -5.28% 6.34%
1974-75 24.1 7.8 31.9 -7.54 7.46
1976-77 26.8 8.6 35.4 5.44 9.67
1978-79 49.3 9.0 58.3 13.50 11.27
1980-81 48.0 11.6 59.6 13.54 11.85
1982-83 39.1 11.1 50.2 34.58 11.39
1984-85 9.4 9.5 18.9 28.10 9.36
1986-87 17.4 6.7 24.1 16.94 8.09
1988-89 50.6 17.5 68.1 43.03 8.41
1990-91 21.1 9.6 30.7 18.02 6.88
1992-93 37.3 5.5 42.8 11.83 5.98
1994-95 53.4 6.1 59.5 32.05 5.78
1996-97 53.79 4.30
(through 9/30)
<CAPTION>
TWO-YEAR TOTAL
PERIODS RETURN(4)
- --------- --------------
<S> <C>
1972-7 1.06%
1974-7 -0.08
1976-7 15.11
1978-7 24.77
1980-8 25.38
1982-8 45.97
1984-8 37.46
1986-8 25.03
1988-8 51.44
1990-9 24.90
1992-9 17.82
1994-9 37.83
1996-9 58.90
(through
</TABLE>
- ----------------------------
(1) The Strategy Stocks for any given two-year period were selected by applying
the selection criteria described on page A-2.
(2) Appreciation for the Strategy Stocks is calculated by subtracting the market
value of these stocks at the opening value on the first trading day on the
New York Stock Exchange in a given two-year period from the market value of
those stocks at the closing value on the last trading day in the period, and
dividing the result by the market value of the stocks at the opening value
on the first trading day in that two-year period. Appreciation for the Index
is calculated by subtracting the opening value of the Index on the first
trading day in each two-year period from the closing value of the Index on
the last trading day in the period, and dividing the result by the opening
value of the Index on the first trading day in that period.
(3) Actual Dividend Yield for the Strategy Stocks is calculated by adding the
total dividends received on the stocks in the two-year period and dividing
the result by the market value of the stocks on the first trading day in
that period. Actual Dividend Yield for the Index is calculated by taking the
total dividends credited to the Index and dividing the result by the opening
value of the Index on the first trading day of the two-year period.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Returns do not take into consideration any reinvestment of dividend
income.
A-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders of Equity Investor Fund, Select Series,
Standard & Poor's Industry Turnaround 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 November , 1997.
This financial statement is the responsibility of the Trustee. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of an irrevocable letter of credit deposited for the purchase of
securities, as described in the statement of condition, with the Trustee. An
audit also includes assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Portfolio as of November
, 1997 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
November , 1997
STATEMENT OF CONDITION AS OF NOVEMBER , 1997
TRUST PROPERTY
Investments--Contracts to purchase Securities(1).........$
Organizational Costs(2)..................................
--------------------
Total............................................$
--------------------
--------------------
LIABILITY AND INTEREST OF HOLDERS
Accrued Liability(2).................................$
--------------------
Subtotal
--------------------
Interest of Holders of Units of fractional
undivided interest outstanding:(3)
Cost to investors(4)...................................$
Gross underwriting commissions(5)...................... ()
--------------------
Subtotal
--------------------
Total............................................$
--------------------
--------------------
- ------------
(1) Aggregate cost to the Portfolio of the securities listed under
Defined Portfolio determined by the Trustee at 4:00 p.m., Eastern time on
November , 1997. The contracts to purchase securities are collateralized by an
irrevocable letter of credit which has been issued by Bank, New York Branch,
in the amount of $ and deposited with the Trustee. The amount of the
letter of credit includes $ for the purchase of securities.
(2) This represents a portion of the 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 $
million. To the extent the Portfolio is larger or smaller, amounts may vary.
(3) Because the value of securities at the evaluation time on the
Initial Date of Deposit may differ from the amounts shown in this statement of
condition, the number of Units offered on the Initial Date of Deposit will be
adjusted from the initial number of Units to maintain the $1,000 per 1,000 Units
offering price only for that day. The Public Offering Price on any subsequent
business day will vary.
(4) Aggregate public offering price computed on the basis of the value
of the underlying securities at 4:00 p.m., Eastern time on November , 1997.
(5) Assumes the maximum initial sales charge per 1,000 units of 1.00% of
the Public Offering Price. A deferred sales charge of $17.50 per 1,000 Units is
payable each year ($2.50 per 1,000 Units monthly - , 1998 and
- - , 1999). Distributions will be made to an account maintained by the
Trustee from which the deferred sales charge obligation of the investors to the
Sponsors will be satisfied. If units are redeemed prior to , 1998, or
between 1998 and 1999, the remaining portion of the distribution
applicable to such units will be transferred to such account on the redemption
date.
A-7
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INVESTOR FUND SELECT SERIES
STANDARD & POOR'S INDUSTRY TURNAROUND PORTFOLIO
FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS OF WRITING OR CALLING THE TRUSTEE AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
Index
PAGE
----
Portfolio Description...................... 1
Risk Factors............................... 2
How to Buy Units........................... 3
How to Redeem or Sell Units................ 4
Exchange Option............................ 5
Income, Distributions and Reinvestment..... 7
Portfolio Expenses......................... 7
PAGE
----
Taxes...................................... 8
Records and Reports........................ 10
Trust Indenture............................ 10
Miscellaneous.............................. 11
Supplemental Information................... 13
Appendix A--The S&P Earnings and Dividend
Rankings for Common Stocks............... a-1
PORTFOLIO DESCRIPTION
THE STRATEGY
The Portfolio seeks total return by acquiring and holding for about two
years certain common stocks representing industries that have recently
underformed the Standard & Poor's 500 Composite Stock Price Index* ('S&P 500').
This investment strategy is based on three time-tested investment principles:
time in the market is more important than timing the market; an important part
of your return depends on which industries you are investing in; and the
industries to buy are the ones everyone else has been selling. An investment in
the Portfolio can be cost-efficient, avoiding the odd-lot costs of buying small
quantities of securities directly. Purchasing a portfolio of these stocks as
opposed to one or two provides a more diversified holding. There is only one
investment decision instead of , four quarterly dividends instead of . The
Portfolio's return will consist of a combination of any capital appreciation and
current dividend income. The Portfolio will terminate in about two years, when
investors may choose to either receive the distribution in cash or reinvest in
the next Series (if available) at a reduced sales charge. There can be no
assurance that current dividend rates on the Strategy Stocks will be maintained
or that any dividends will be declared or paid in the future on the Securities.
The S&P 500 is composed of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. This well-known index, originally
consisting of 233 stocks in 1923, was expanded to 500 stocks in 1957 and was
restructured in 1976 to a composite consisting of industrial, utility, financial
and transportation market sectors. It contains a variety of companies with
diverse capitalization, market-value weighted to represent the overall market.
The index represents approximately % of U.S. stock market capitalization. At
present, the mean market capitalization of the companies in the S&P 500 is
approximately $ billion. Standard & Poor's, a leading financial information and
investment research company since 1860, offers financial research, benchmarks
and market data.
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* 'Standard & Poor's R', 'S&PR' and 'S&P 500R' are trademarks of The
McGraw-Hill Companies, Inc. and have been licensed for use by the Agent for the
Sponsors. The Fund is not sponsored, managed, sold or promoted by Standard &
Poor's. Standard & Poor's is not affiliated with any of the Sponsors.
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The Portfolio contains common stocks selected through the process
described in Part A. No leverage or borrowing is used nor does the Portfolio
contain other kinds of securities to enhance yield.
The Strategy selection process is a straightforward, objective, mathematical
application which may cause the Portfolio to own a stock that the Sponsors or
Standard & Poor's do not recommend for purchase and, in fact, the Sponsors or
Standard & Poor's may have sell recommendations on a number of the stocks in the
Portfolio at the time the stocks are selected for inclusion in the Portfolio.
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
restrictions applicable to the Portfolio relating to the purchase of the
Security by reason of the federal securities laws or otherwise. Any monies
allocated to the purchase of a Security will generally be held for the purchase
of the Security.
The deposit of the Securities in the 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 Sponsors may deposit additional Securities in order to create new Units,
maintaining to the extent possible that original proportionate relationship.
Deposits of additional Securities subsequent to the 90-day period must generally
replicate exactly the proportionate relationship among the number of shares of
each Security at the end of the initial 90-day period. The ability to acquire
each Security at the same time will generally depend upon the Security's
availability and any restrictions on the purchase of that Security under the
federal securities laws or otherwise.
Additional Units may also be created by the deposit of cash (including a
letter of credit) with instructions to purchase additional Securities. This
practice could cause both existing and new investors to experience a dilution of
their investments and a reduction in their anticipated income because of price
fluctuations in the Securities between the time of the cash deposit and the
actual purchase of the additional Securities and because the associated
brokerage fees will be an expense of the Portfolio. To minimize the risk of
price fluctuations when purchasing Securities, the Portfolio will try to
purchase Securities as close to the Evaluation Time or at prices as close to the
evaluated prices as possible. The Portfolio may also enter into program trades
with unaffiliated broker/dealers, which may have the effect of increasing
brokerage commissions while reducing market risk. Portfolio investors may
benefit from reduced commissions and institutional prices available to the
Portfolio.
Because each Defined Asset Fund is a preselected portfolio, you know the
securities before you invest. Of course, the Portfolio will change somewhat over
time, as Securities are purchased upon creation of additional Units, as
securities are sold to meet Unit redemptions or in other limited circumstances.
PORTFOLIO SUPERVISION
The Portfolio follows a buy and hold investment strategy that buys stocks
and generally holds them for two years, in contrast to the frequent portfolio
changes of a managed fund based on economic, financial and market analyses.
Although the Portfolio is regularly reviewed, because of the Strategy, the
Portfolio is unlikely to sell any of the Securities, other than to satisfy
redemptions of units, or to cease buying additional shares in connection with
the issuance of Additional Units. More specifically, adverse developments
concerning a Security including the adverse financial condition of the issuer, a
failure to maintain a current dividend rate, the institution of legal
proceedings against the issuer, a default under certain documents materially and
adversely affecting the future declaration of dividends, or a decline in the
price or the occurrence of other market or credit factors (including a public
tender offer or a merger or acquisition transaction) that might otherwise make
retention of the Security detrimental to the interest of investors, will
generally not cause the Portfolio to dispose of a Security or cease buying it.
Furthermore, the Portfolio will likely continue to hold a Security and purchase
additional shares notwithstanding its ceasing to represent industries that have
underperformed the S&P 500 or to maintain its Common Stock Ranking.
RISK FACTORS
An investment in the Portfolio entails certain risks, including the risk
that the value of your investment will decline if the financial condition of the
issuers of the Securities becomes impaired or if the general condition of the
stock market worsens. The rights of holders of common stocks to receive payments
from the issuer are generally inferior to the rights of creditors of, or holders
of debt obligations or preferred stocks issued by, the issuer. Moreover, because
common stocks do not represent an obligation of the issuer they do not offer any
assurance of income or provide the degree of protection of capital provided by
debt securities. Common stocks in general are susceptible to general stock
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market movements and to volatile increases and decreases in value as market
confidence in and perceptions of the issuers change. Equity markets can be
affected by unpredictable factors including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic or banking
crises. The Sponsors cannot predict the direction or scope of any of these
factors. Additionally, equity markets 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
the life of the Portfolio or that future portfolios selected through this
process during consecutive two-year periods will meet their objectives. The
Portfolio is not designed to be a complete investment program.
LITIGATION AND LEGISLATION
The Sponsors do not know of any pending litigation as of the initial date of
deposit that might reasonably be expected to have a material adverse effect on
the 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; TERMINATION
The size and composition of the Portfolio will be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units or
participating in a rollover. The Portfolio will be terminated no later than the
mandatory termination date specified in Part A of the Prospectus. It will
terminate earlier upon the disposition of the last Security or upon the consent
of investors holding 51% of the Units. The Portfolio may also be terminated
earlier by the Sponsors once its total assets have fallen below the minimum
value specified in Part A of the Prospectus. A decision by the Sponsors to
terminate the Portfolio early, which will likely be made following the rollover,
will be based on factors such as the size of the Portfolio relative to its
original size, the ratio of Portfolio expenses to income, and the cost of
maintaining a current prospectus.
Notice of impending termination will be provided to investors and thereafter
units will no longer be redeemable. On or shortly before termination, the
Trustee will seek to dispose of any Securities remaining in the Portfolio
although any Security unable to be sold at a reasonable price may continue to be
held by the Trustee in a liquidating trust pending its final disposition. A
proportional share of the expenses associated with termination, including
brokerage costs in disposing of Securities, will be borne by investors remaining
at that time. This may have the effect of reducing the amount of proceeds those
investors are to receive in any final distribution.
HOW TO BUY UNITS
Units are available from any of the Sponsors at the Public Offering Price.
The Public Offering Price varies each Business Day with changes in the value of
the Portfolio and other assets and liabilities of the Portfolio.
PUBLIC OFFERING PRICE
Units are charged a combination of Initial and Deferred Sales Charges which
will aggregate 2.75% of the public offering price for the first year ($17.50
Deferred Sales Charge plus an Initial Sales Charge of about 1.0%, totaling 2.75%
of the public offering price) and approximately 1.75% for the second year.
Because the annual Deferred Sales Charge is $17.50 per 1,000 Units in the second
year regardless of the price you pay, the maximum sales charges expressed as a
percentage of the public offering price will vary with the price you pay. For
example, if you buy 1,000 Units for $1,050 (including an initial sales charge of
$11.38) and hold the Units until termination, you will pay a total sales charge
of $46.38 or 4.42% of the acquisition price on those Units. At an acquisition
price of $950 (including an initial sales charge of $8.63), you would pay a
total sales charge of $43.63 or 4.59% of the acquisition price.
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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 will apply (assuming a
$1,000 public offering price for 1,000 Units):
<TABLE>
<CAPTION>
SALES CHARGES IN FIRST YEAR CUMULATIVE SALES CHARGES
------------------------------- -------------------------------
AS % OF AS % OF NET AS % OF AS % OF NET
PUBLIC OFFERING AMOUNT PUBLIC OFFERING AMOUNT
AMOUNT PURCHASED PRICE INVESTED PRICE INVESTED
- -------------------------------------- --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Less than $50,000..................... 2.75% 2.778% 4.50% 4.712%
$50,000 to $99,999.................... 2.50 2.519 4.25 4.439
$100,000 to $249,999.................. 2.00 2.005 3.75 3.896
$250,000 to $999,999.................. 1.75 1.750 3.50 3.627
$1,000,000 or more.................... 1.00 1.000 2.75 2.828
</TABLE>
The annual Deferred Sales Charge is a charge of $17.50 per 1,000 units and
is accrued in seven monthly installments each year of the Portfolio, in the
months indicated in part A of this Prospectus. Units redeemed or repurchased
prior to the accrual of the final Deferred Sales Charge installment in the first
or second year 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.
It is anticipated that Securities will not be sold to pay the Deferred Sales
Charge until after the date of the last installment in each year of the
Portfolio. 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.
Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of certain of the Sponsors may purchase Units at a reduced sales
charge.
EVALUATIONS
Evaluations are determined by the Trustee on each Business Day. This
excludes Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. If the Securities are
listed on a national securities exchange or the Nasdaq National Market,
evaluations are generally based on closing sales prices on that exchange or that
system (unless the Trustee deems these prices inappropriate) or, if closing
sales prices are not available, at the mean between the closing bid and offer
prices. If the Securities are not listed or if listed but the principal market
is elsewhere, the evaluation is generally determined based on sales prices of
the Securities on the over-the-counter market or, if sales prices in that market
are not available, on the basis of the mean between current bid and offer prices
for the Securities or for comparable securities or by appraisal or by any
combination of these methods. Neither the Sponsors nor the Trustee guarantee the
enforceability, marketability or price of any Securities.
NO CERTIFICATES
All investors are required to hold their Units in uncertifcated form and in
'street name' by their broker, dealer or financial institution at the Depository
Trust Company ('DTC').
HOW TO REDEEM OR SELL UNITS
You can redeem your Units at any time for net asset value. In addition, the
Sponsors have maintained an uninterrupted secondary market for Units for over 20
years and will ordinarily buy back Units at net asset value. The following
describes these two methods to redeem or sell Units in greater detail.
REDEEMING UNITS
You can always redeem your Units for net asset value. This can be done by
contacting your broker, dealer or financial institution that holds your Units in
street name. In certain instances, additional documents may be required such as
a trust instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian.
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<PAGE>
Within seven days after the receipt of your request (and any necessary
documents), a check will be mailed to you in an amount equal to the net asset
value of your Units. Because of the sales charge, market movements or changes in
the Portfolio, net asset value at the time you redeem your Units may be greater
or less than the original cost of your Units. Net asset value is calculated each
Business Day by adding the value of the Securities, declared but unpaid
dividends on the Securities, cash and the value of any other Portfolio assets;
deducting unpaid taxes or other governmental charges, accrued but unpaid
Portfolio expenses and any remaining Deferred Sales Charges, unreimbursed
Trustee advances, cash held to redeem Units or for distribution to investors and
the value of any other 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.
As long as the Sponsors are maintaining a secondary market for Units (as
described below), the Trustee will not actually redeem your Units but will sell
them to the Sponsors for net asset value. If the Sponsors are not maintaining a
secondary market, the Trustee will redeem your Units for net asset value or will
sell your Units in the over-the-counter market if the Trustee believes it will
obtain a higher net price for your Units. If the Trustee is able to sell the
Units for a net price higher than net asset value, you will receive the net
proceeds of the sale.
If cash is not available in the Portfolio's Income and Capital Accounts to
pay redemptions, the Trustee may sell Securities selected by the Agent for the
Sponsors based on market and credit factors determined to be in the best
interest of the 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 Strategy), 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 will be borne by the redeeming investors. The in-kind
redemption option is subject to all applicable legal restrictions and may be
terminated by the Sponsors at any time upon prior notice to investors.
Redemptions may be suspended or payment postponed (i) if the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (ii) if
the SEC determines that trading on the New York Stock Exchange is restricted or
that an emergency exists making disposal or evaluation of the Securities not
reasonably practicable or (iii) for any other period permitted by SEC order.
SPONSORS' SECONDARY MARKET FOR UNITS
The Sponsors, while not obligated to do so, will buy back Units at net asset
value without any other fee or charge as long as they are maintaining a
secondary market for Units. Because of the sales charge, market movements or
changes in the portfolio, net asset value at the time you sell your Units may be
greater or less than the original cost of your Units. The Sponsors may resell
the Units to other buyers or redeem the Units by tendering them to the Trustee.
You should consult your financial professional for current market prices to
determine if other broker-dealers or banks are offering higher prices for Units.
The Sponsors may discontinue the secondary market for Units without prior
notice if the supply of Units exceeds demand or for other business reasons.
Regardless of whether the Sponsors maintain a secondary market, you have the
right to redeem your Units for net asset value with the Trustee at any time, as
described above.
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
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<PAGE>
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 Sponsors are 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 Sponsors are 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.
ROLLOVER
In lieu of redeeming Units or receiving liquidation proceeds upon the
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 apply their proportional interest in
the Securities and other assets of the Portfolio toward the purchase of units of
a new Select or Focus Series (if available). It is expected that the terms of
any new Portfolio, including the exchange and rollover features, will be
substantially the same as those of this Portfolio.
A rollover of your units is accomplished by the in-kind redemption of Units
followed by the sale of the underlying Securities by a distribution agent on
behalf of participating investors and the reinvestment of the sale proceeds (net
of brokerage fees, governmental charges and other sale expenses) in units of the
new portfolio at their net asset value.
The Sponsors intend to sell the distributed Securities, on behalf of the
distribution agent, as quickly as practicable and then to create units of the
new portfolio as quickly as possible, subject in both cases to the Sponsors'
sensitivity that the concentrated sale and purchase of large volumes of
securities may affect market prices in a manner adverse to the interest of
investors. Accordingly, the Sponsors may, in their sole discretion, undertake a
more gradual sale of the distributed Securities and a more gradual creation of
units of the 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 might increase brokerage
commissions payable by investors. There can be no assurance, however, that any
trading procedures will be successful or might not result in less advantageous
prices. Pending the investment of rollover proceeds in the securities to
comprise the new portfolio, those moneys may be uninvested for up to several
days. For any Securities in the Portfolio that will also be in the new
Portfolio, a direct sale of those securities between the two funds is now
permitted pursuant to an SEC exemptive order. These sales will be effected at
the securities' closing sales prices on the exchanges where they are principally
traded, free of any brokerage costs.
By participating in the rollover you may realize taxable capital gain on the
rollover but may not be entitled to a deduction for capital loss recognized on
the rollover and, because of the rollover procedures, you will not receive a
cash distribution with which to pay those taxes. You should consult your own tax
advisers in this regard. Investors who do not participate 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 may
be sharply reduced resulting in a significant increase in per Unit expenses.
The Sponsors may, in their sole discretion and without penalty or liability
to investors, decide not to sponsor a new Series or to modify the terms of the
rollover. Prior notice of any decision would be provided to investors.
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<PAGE>
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 Sponsors have received exemptive orders under
Section 11(c) which they believe permit them to offer the rollover, but no
assurance can be given that the SEC will concur with the Sponsors' position and
additional regulatory approvals may be required.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME AND DISTRIBUTIONS
The annual income per Unit, after deducting estimated annual 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. Dividends received are credited to
an Income Account and other receipts to a Capital Account. A Reserve Account may
be created by withdrawing from the Income and Capital Accounts amounts
considered appropriate by the Trustee to reserve for any material amount that
may be payable out of the 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 Sponsors may collect the Deferred Sales Charge
monthly, to keep Units more fully invested the Sponsors currently do not
anticipate sales of Securities to pay the deferred sales charge until after the
rollover notification date. Proceeds of the disposition of any Securities not
used to pay Deferred Sales Charge or to redeem Units will be held in the Capital
Account and distributed on the final Distribution Day or following liquidation
of the Portfolio.
REINVESTMENT
Income and principal distributions on Units may be reinvested by
participating in the reinvestment plan. Under the plan, the Units acquired for
investors will be either Units already held in inventory by the Sponsors or new
Units created by the Sponsors' deposit of additional Securities, contracts to
purchase additional Securities or cash (or a bank letter of credit in lieu of
cash) with instructions to purchase additional Securities. Deposits or purchases
of additional Securities will generally be made so as to maintain the then
existing proportionate relationship among the number of shares of each Security
in the 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 Sponsors reserve the right to amend, modify or
terminate the reinvestment plan at any time without prior notice. Investors
holding Units in 'street name' should contact their broker, dealer or financial
institution if they wish to participate in the reinvestment plan.
PORTFOLIO EXPENSES
Estimated annual Portfolio expenses are listed in Part A of the Prospectus;
if actual expenses exceed the estimate, the excess will be borne by the
Portfolio. The estimated expenses do not include the brokerage commissions
payable by the Portfolio in purchasing and selling Securities. S&P receives a
minimal annual fee from the Portfolio to cover the license by Standard & Poor's
to the Agent for the Sponsors of the use of the trademarks and trade names
'Standard & Poor's', 'S&P' and other trademarks and trade names as well as the
license by Standard & Poor's to the Agent for the Sponsors of the S&P Common
Stock Rankings in connection with selection of Strategy Stocks. The Trustee's
Fee shown in Part A of this Prospectus assumes that the Portfolio will reach a
size estimated by the Sponsors and is based on a sliding fee scale that reduces
the per 1,000 Units Trustee's fee as the size of the Portfolio increases. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Portfolio in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for extraordinary
services, costs of indemnifying the Trustee and the Sponsors, costs of action
taken to protect the 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
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Sponsors receive an annual fee currently estimated at $0.35 per 1,000 Units to
reimburse them for the cost of providing Portfolio supervisory services to the
Portfolio. While the fee may exceed their costs of providing these services to
the Portfolio, the total supervision fees from all Series of Equity Investor
Fund will not exceed their costs for these services to all of those Series
during any calendar year. The Sponsors may also be reimbursed for their costs of
providing bookkeeping and administrative services to Defined Asset Funds,
currently estimated at $0.10 per 1,000 Units. The Trustee's and Sponsors' fees
may be adjusted for inflation without investors' approval.
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
from the Underwriting Account at no charge to the Portfolio. Defined Asset Funds
can be a cost-effective way to purchase and hold investments. Annual operating
expenses are generally lower than for managed funds. Because Defined Asset Funds
have no management fees, limited transaction costs and no ongoing marketing
expenses, operating expenses are generally less than 0.25% a year. When
compounded annually, small differences in expense ratios can make a big
difference in your investment results.
TAXES
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The 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).
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 (by sale, redemption or otherwise) or when
the Trustee disposes of the Securities from the Portfolio. However,
deductions will be disallowed for such losses realized by investors who
invest in a new S&P Industry Turnaround Portfolio ('rollover investor')
within 30 days after incurring such losses to the extent that the securities
in that series are
8
<PAGE>
substantially identical to the old Securities. Furthermore, an investor will
generally 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, except to the extent of cash received in lieu
of fractional shares. The redeeming investor's basis for such Securities
will be equal to his basis for the same Securities (previously represented
by his Units) prior to such redemption, and his holding period for such
Securities will include the period during which he held his Units.
Net capital gain (the excess of net long-term capital gains over net
short-term capital losses) may be taxed at a lower rate than ordinary income
for certain 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. Under the recently enacted Taxpayer Relief Act of 1997, investors who
are individuals and have held their Units for more than 18 months may be
entitled 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.
* * * *
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.
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.
Holders of Units in IRAs, Keogh plans and other tax-deferred retirement plans
should consult their plan custodian as to the appropriate disposition of
distributions. Investors considering participation in any of these plans should
review specific tax laws related thereto and should consult their attorneys or
tax advisers with respect to the establishment and maintenance of any of these
plans. These plans are generally offered by brokerage firms, including the
Sponsors 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).
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<PAGE>
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 recently enacted 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 homebuyer 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 aged at least 59 1/2 at the time of the 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
Sponsors and audited financial statements are available from the Trustee on
request.
TRUST INDENTURE
The Portfolio is a 'unit investment trust' created under New York law by a
Trust Indenture among the Sponsors and the Trustee. This Prospectus summarizes
various provisions of the Indenture, but each statement is qualified in its
entirety by reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without consent
by investors to cure ambiguities or to correct or supplement any defective or
inconsistent provision, to make any amendment required by the SEC or other
governmental agency or to make any other change not materially adverse to the
interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Portfolio
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified of the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
10
<PAGE>
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The resignation or removal becomes effective upon acceptance of
appointment by a successor; in this case, the Sponsors will use their best
efforts to appoint a successor promptly; however, if upon resignation no
successor has accepted appointment within 30 days after notification, the
resigning Trustee may apply to a court of competent jurisdiction to appoint a
successor.
Any Sponsor may resign so long as one Sponsor with a net worth of $2,000,000
remains. A new Sponsor may be appointed by the remaining Sponsors and the
Trustee to assume the duties of the resigning Sponsor. If there is only one
Sponsor and it fails to perform its duties or becomes incapable of acting or
bankrupt or its affairs are taken over by public authorities, the Trustee may
appoint a successor Sponsor at reasonable rates of compensation, terminate the
Indenture and liquidate the Portfolio or continue to act as Trustee without a
Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated has been appointed
as Agent for the Sponsors by the other Sponsors.
The Sponsors and the Trustee are not liable to investors or any other party
for any act or omission in the conduct of their responsibilities absent bad
faith, willful misfeasance, negligence (gross negligence in the case of a
Sponsor) or reckless disregard of duty. The Indenture contains customary
provisions limiting the liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the Sponsors.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and the New
York State banking authorities.
SPONSORS
The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; PaineWebber Incorporated, a wholly-owned
subsidiary of PaineWebber Group Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America,
and Dean Witter Reynolds, Inc., a principal operating subsidiary of Morgan
Stanley, Dean Witter, Discover & Co. Each Sponsor, or one of its predecessor
corporations, has acted as Sponsor of a number of series of unit investment
trusts. Each Sponsor has acted as principal underwriter and managing underwriter
of other investment companies. The Sponsors, in addition to participating as
members of various selling groups or as agents of other investment companies,
execute orders on behalf of investment companies for the purchase and sale of
securities of these companies and sell securities to these companies in their
capacities as brokers or dealers in securities.
CODE OF ETHICS
The Agent for the Sponsors has adopted a code of ethics requiring
preclearance and reporting of personal securities transactions by its personnel
who have access to information on Defined Asset Funds portfolio transactions.
The code is intended to prevent any act, practice or course of conduct which
would operate as a fraud or deceit on any Portfolio and to provide guidance to
these persons regarding standards of conduct consistent with the Agent's
responsibilities to the Defined Asset Funds.
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<PAGE>
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. The Sponsors
intend to qualify Units for sale in all states in which qualification is deemed
necessary through the Underwriting Account and by dealers who are members of the
National Association of Securities Dealers, Inc.. The Sponsors do not intend to
qualify Units for sale in any foreign countries and this Prospectus does not
constitute an offer to sell Units in any country where Units cannot lawfully be
sold.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters will be entitled to receive sales
charges; each Underwriters' interest in the Underwriting Account will depend on
the number of Units acquired through the issuance of additional Units. The
Sponsors also realize a profit or loss on deposit of the Securities equal to the
difference between the cost of the Securities to the Portfolio (based on the
aggregate value of the Securities on their date of deposit) and the purchase
price of the Securities to the Sponsors plus commissions payable by the
Sponsors. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Securities it deposits in the Portfolio which were acquired from
underwriting syndicates of which it was a member. During the initial offering
period, the Underwriting Account also may realize profits or sustain losses as a
result of fluctuations after the initial date of deposit in the Public Offering
Price of the Units. In maintaining a secondary market for Units, the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units and the prices at which they resell
these Units (which include the sales charge) or the prices at which they redeem
the Units. Cash, if any, made available by buyers of Units to the Sponsors prior
to a settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.
PERFORMANCE INFORMATION
Total returns, average annualized returns or cumulative returns for various
periods of the Strategy Stocks, the related index or the current Select
Portfolio may be included from time to time in advertisements, sales literature
and reports to current or prospective investors. Total return shows changes in
Unit price during the period plus reinvestment of dividends and capital gains,
divided by the maximum public offering price. Average annualized returns show
the average return for stated periods of longer than a year. Sales material may
also include an illustration of the cumulative results of like annual
investments in Strategy Stocks during an accumulation period and like annual
withdrawals during a distribution period. Figures for actual Portfolios (but not
Strategy Stocks) reflect deduction of all Portfolio expenses and unless
otherwise stated the maximum sales charge. No provision is made for any income
taxes payable. Returns of Strategy Stocks may also be shown in comparison to
other indexes, to which may be added by year various national and international
political and economic events, milestones in price and market indicators, and
offerings of Defined Asset Funds. This performance may also be compared for
various periods with investments in short-term U.S. Treasury securities.
Investors should bear in mind that this represents past performance and is no
assurance of future results of the current or any future Portfolio.
Advertisements and other material distributed to prospective investors may
include the average annual compounded rate of return on selected types of assets
for periods of at least 10 years, as compiled by Ibbotson Associates, compared
to the rate of inflation over the same period.
12
<PAGE>
The following chart shows the average annual compounded rate of return of
selected asset classes over the 10-year and 20-year periods ending December 31,
1996, compared to the rate of inflation over the same periods. Of course, this
chart represents past performance of these investments and is no guarantee of
future results, either of these categories or of any Defined Fund. Defined Funds
also have sales charges and expenses which are not reflected in the chart.
Stocks (S&P 500)
20 yr 14.55%
10 yr 15.28%
Small-company stocks
20 yr 17.84%
10 yr 12.98%
Long-term corporate bonds
20 yr 9.71%
10 yr 9.48%
U.S. Treasury bills (short-term)
20 yr 7.28%
10 yr 5.46%
Consumer Price Index
20 yr 5.15%
10 yr 3.70%
0 2 4 6 8 10 12 14 16 18 20
Source: Ibbotson Associates. Used with permission. All rights reserved.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio is relatively fixed) and 'hold with confidence'
(because the portfolio is professionally selected and regularly reviewed).
Defined Asset Funds offers an array of simple and convenient investment choices,
suited to fit a wide variety of personal financial goals--a buy and hold
strategy for capital accumulation, such as for children's education or
retirement or regular current income consistent with the preservation of
principal. Unit investment trusts are particularly suited for investors who
prefer to seek long-term profits by purchasing and holding investments, rather
than through active trading. Few individuals have the knowledge, resources or
capital to buy and hold a diversified portfolio on their own; it would generally
take a considerable sum of money to obtain the breadth and diversity that
Defined Asset Funds offer. Your investment objectives may call for a combination
of Defined Asset Funds.
Defined Asset Funds reflect a buy and hold strategy that the Sponsors
believe can be more effective and less expensive than active management. This
strategy is premised on selection criteria and procedures, diversification and
regular monitoring by investment professionals. Various advertisements and sales
literature may summarize the results of economic studies concerning how stock
movement has tended to be concentrated and how longer-term investments can tend
to reduce risk.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Defined equity
funds offer growth potential and some protection against inflation.
SUPPLEMENTAL INFORMATION
Upon writing or calling the Trustee shown on the back cover of this
Prospectus, investors will receive without charge supplemental information about
the 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.
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<PAGE>
APPENDIX A
THE STANDARD & POOR'S EARNINGS AND DIVIDEND RANKINGS FOR COMMON STOCKS
(AS DESCRIBED BY STANDARD & POOR'S ITSELF)
The investment process involves assessment of various factors--such as products
and industry position, corporate resources and financial policy--with results
that make some common stocks more highly esteemed than others. In this
assessment, Standard & Poor's believes that earnings and dividend performance is
the end result of the interplay of these factors and that, over the long run,
the record of this performance has a considerable bearing on relative quality.
The rankings, however, do not pretend to reflect all of the factors, tangible or
intangible, that bear on stock quality.
Relative quality of bonds or other debt, that is, degrees of protection for
principal and interest, called credit worthiness, cannot be applied to common
stocks, and therefore rankings are not to be confused with bond quality ratings
which are arrived at by a necessarily different approach.
Growth and stability of earnings and dividends are deemed key elements in
establishing Standard & Poor's earnings and dividend rankings for common stocks,
which are designed to capsulize the nature of this record in a single symbol. It
should be noted, however, that the process also takes into consideration certain
adjustments and modifications deemed desirable in establishing such rankings.
The point of departure in arriving at these rankings is a computerized scoring
system based on per-share earnings and dividend records of the most recent ten
years--a period deemed long enough to measure significant time segments of
secular growth, to capture indications of basic change in trend as they develop,
and to encompass the full peak-to-peak range of the business cycle. Basic scores
are computed for earnings and dividends, then adjusted as indicated by a set of
predetermined modifiers for growth, stability within long-term trend, and
cyclicality. Adjusted scores for earnings and dividends are then combined to
yield a final score.
Further, the ranking system makes allowance for the fact that, in general,
corporate size imparts certain recognized advantages from an investment
standpoint. Conversely, minimum size limits (in terms of corporate sales volume)
are set for the various rankings, but the system provides for making exceptions
where the score reflects an outstanding earnings-dividend record.
The final score for each stock is measures against a scoring matrix determined
by analysis of the scores of a large and representative sample of stocks. The
range of scores in the array of this sample has been aligned with the following
ladder of rankings:
A - ABOVE
A + HIGHESTAVERAGE B - LOWER
A HIGH B + AVERAGE C LOWEST
B BELOW D IN
AVERAGE REORGANIZATION
NR signifies no ranking because of insufficient data or because the stock is not
amenable to the ranking process.
The positions as determined above may be modified in some instances by special
considerations, such as natural disasters, massive strikes, and non-recurring
accounting adjustments.
A ranking is not a forecast of future market price performance, but is basically
an appraisal of past performance of earnings and dividends, and relative current
standing. A high-score stock may at times be so overpriced as to justify its
sale, while a low-score stock may be attractively priced for purchase. Rankings
based upon earnings and dividend records are no substitute for complete
analysis. They cannot take into account potential effects on management changes,
internal company policies not yet fully reflected in the earnings and dividend
record, public relations standing, recent competitive shifts, and a host of
other factors that may be relevant to investment status and decision.
THESE RANKINGS MUST NOT BE USED AS MARKET RECOMMENDATIONS.
Rankings are published by Standard & Poor's Equity Investor Services Group,
which is independent of, and has no access to information obtained by Standard &
Poor's Rating Services. Standard & Poor's Rating Services may from time to time
obtain information of a confidential nature.
a-1
<PAGE>
Defined
Asset FundsSM
SPONSORS: EQUITY INVESTOR FUND
Merrill Lynch, SELECT SERIES
Pierce, Fenner & Smith IncorporatedSTANDARD & POOR'S
Defined Asset Funds INDUSTRY TURNAROUND PORTFOLIO
P.O. Box 9051
Princeton, NJ 08543-9051
(609) 282-8500 This Prospectus does not contain all of the
Smith Barney Inc. information with respect to the investment
Unit Trust Department company set forth in its registration
388 Greenwich Street--23rd Floor statement and exhibits relating thereto which
New York, NY 10013 have been filed with the Securities and
(212) 816-4000 Exchange Commission, Washington, D.C. under
PaineWebber Incorporated the Securities Act of 1933 and the Investment
1200 Harbor Boulevard Company Act of 1940, and to which reference
Weehawken, NJ 07087 is hereby made. Copies of filed material can
(201) 902-3000 be obtained from the Public Reference Section
Prudential Securities Incorporated of the Commission, 450 Fifth Street, N.W.,
One New York Plaza Washington, D.C. 20549 at prescribed rates.
New York, NY 10292 The Commission also maintains a Web site that
(212) 778-6164 contains information statements and other
Dean Witter Reynolds Inc. information regarding registrants such as
Two World Trade Center--59th Floor Defined Asset Funds that file electronically
New York, NY 10048 with the Commission at http://www.sec.gov.
(212) 392-2222 ------------------------
TRUSTEE: No person is authorized to give any
The Chase Manhattan Bank information or to make any representations
Customer Service Retail Department with respect to this investment company not
Bowling Green Station contained in its registration statement and
P.O. Box 5187 related exhibits; and any information or
New York, NY 10274-5187 representation not contained therein must not
1-800-323-1508 be relied upon as having been authorized.
------------------------
When Units are no longer available, or for
investors who will reinvest into subsequent
series of Select Portfolios, this Prospectus
may be used as a preliminary prospectus for a
future series; in which case investors should
note the following:
Information contained herein is subject to
amendment. A registration statement relating
to securities of a future series has been
filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer
solicitation or sale would be unlawful prior
to registration or qualification under the
securities laws of any such State.
11 --11/97
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<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositors is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
I. Bonding arrangements of each of the Depositors are incorporated by reference
to Item A of Part II to the Registration Statement on Form S-6 under the
Securities Act of 1933 for Municipal Investment Trust Fund, Monthly Payment
Series--573 Defined Asset Funds (Reg. No. 333-08241).
II. The date of organization of each of the Depositors is set forth in Item B
of Part II to the Registration Statement on Form S-6 under the Securities Act of
1933 for Municipal Investment Trust Fund, Monthly Payment Series--573 Defined
Asset Funds (Reg. No. 333-08241) and is herein incorporated by reference
thereto.
III. The Charter and By-Laws of each of the Depositors are incorporated herein
by reference to Exhibits 1.3 through 1.12 to the Registration Statement on Form
S-6 under the Securities Act of 1933 for Municipal Investment Trust Fund,
Monthly Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).
IV. Information as to Officers and Directors of the Depositors has been filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934 and is incorporated by reference to the SEC
filings indicated and made a part of this Registration Statement:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 8-7221
Smith Barney Inc. ................................ 8-8177
PaineWebber Incorporated.......................... 8-16267
Prudential Securities Incorporated................ 8-27154
Dean Witter Reynolds Inc. ........................ 8-14172
----------------------------
B. The Internal Revenue Service Employer Identification Numbers of the Sponsors
and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 13-5674085
Smith Barney Inc. ................................ 13-1912900
Prudential Securities Incorporated................ 22-2347336
Dean Witter Reynolds Inc. ........................ 94-0899825
PaineWebber Incorporated ......................... 13-2638166
The Chase Manhattan Bank, Trustee................. 13-4994650
UNDERTAKING
The Sponsors undertake that they will not make any amendment to the Supplement
to this Registration Statement which includes material changes without
submitting the amendment for Staff review prior to distribution.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
The Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference from the
Cross-Reference Sheet of the Registration Statement of Defined Asset Funds
Municipal Insured Series, 1933 Act File No. 33-54565).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The following exhibits:
1.1 --Form of Trust Indenture (incorporated by reference to Exhibit 1.1 to
the Registration Statement of Equity Income Fund, Select S&P
Industrial Portfolio 1997 Series A, 1933 Act File No. 333-05683.
1.1.1 --Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement under the Securities Act
of 1933 of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
*3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the headings
'Taxes' and 'Miscellaneous--Legal Opinion' in the Prospectus.
*5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Equity Income Fund, Select Ten
Portfolio, 1996 International Series B (United Kingdom and Japan
Portfolios), 1933 Act File No. 333-00593).
- ----------------------------
*To be filed by amendment.
R-1
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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 30TH DAY OF
OCTOBER, 1997.
SIGNATURES APPEAR ON PAGE R-3, R-4, R-5, R-6 AND R-7.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Smith Barney Inc. has
signed this Registration Statement or Amendment to the Registration Statement
pursuant to Powers of Attorney authorizing the person signing this Registration
Statement or Amendment to the Registration Statement to do so on behalf of such
members.
A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Prudential
Securities Incorporated has signed this Registration Statement or Amendment to
the Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.
A majority of the members of the Board of Directors of Dean Witter Reynolds
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 33-43466
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By DANIEL C. TYLER
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
SMITH BARNEY INC.
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Inc.: have been filed
under the 1933 Act
File Numbers:
33-49753, 33-55073
and 333-10441
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
ROBERT H. LESSIN
WILLIAM J. MILLS, II
MICHAEL B. PANITCH
PAUL UNDERWOOD
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
R-4
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board the following 1933 Act File
of Directors Number: 33-55073
of PaineWebber Incorporated:
DONALD B. MARRON
JOSEPH J. GRANO, JR.
By
ROBERT E. HOLLEY
(As authorized signatory for PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-5
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Prudential Securities have been filed
Incorporated: under Form SE and
the following 1933
Act File Numbers:
33-41631 and
333-15919
ROBERT C. GOLDEN
ALAN D. HOGAN
A. LAURENCE NORTON, JR.
LELAND B. PATON
VINCENT T. PICA II
MARTIN PFINSGRAFF
HARDWICK SIMMONS
LEE B. SPENCER, JR.
BRIAN M. STORMS
By RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)
R-6
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Numbers: 33-17085 and
Reynolds Inc.: 333-13039
RICHARD M. DeMARTINI
ROBERT J. DWYER
CHRISTINE A. EDWARDS
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
MITCHELL M. MERIN
STEPHEN R. MILLER
RICHARD F. POWERS III
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-7
