AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 1998
REGISTRATION NO. 333-46979
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
AMENDMENT NO. 1
TO
FORM S-6
------------------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------------------------
A. EXACT NAME OF TRUST:
EQUITY INVESTOR FUND
FOCUS SERIES
EUROPEAN MONETARY UNION PORTFOLIO
(FORMERLY FOCUS SERIES 3)
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITOR:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, NJ 08543-9051
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
TERESA KONCICK, ESQ.
P.O. BOX 9051
PRINCETON, NJ 08543-9051 COPIES TO:
PIERRE DE SAINT PHALLE,
ESQ.
450 LEXINGTON AVENUE
NEW YORK, NY 10017
E. TITLE OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
/ x / Check box if it is proposed that this Registration Statement shall become
effective upon filing on May 4, 1998 pursuant to Rule 487.
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<PAGE>
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED MAY 4, 1998
DEFINED ASSET FUNDSSM
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EQUITY INVESTOR FUND The objective of this Defined Fund is capital
FOCUS SERIES appreciation by investing for a period of about
EUROPEAN MONETARY UNION two years in a portfolio consisting primarily of
PORTFOLIO common stocks that are expected by analysts in the
(A UNIT INVESTMENT Merrill Lynch Global Research and Economics group
TRUST) to benefit from the establishment of the European
- ------------------------------Monetary Union.
This Portfolio is designed for investors who want
to invest a portion of their assets in
international equities, with the opportunity to
change the focus of their equity investment by
exchanging units of this Portfolio into units of
other equity Defined Funds at a reduced sales
charge if their views on this investment change.
The Portfolio is not an appropriate investment for
investors seeking preservation of capital or a
high level of current income. The Portfolio may be
considered speculative and therefore may be
appropriate only for those investors able and
willing to assume the increased risks of higher
price volatility and currency fluctuations
associated with investments in international
equities. The Portfolio should be considered as a
vehicle for investing a portion of an investor's
assets in foreign securities and not as a complete
equity investment program.
The value of units will fluctuate with the value
of the common stocks in the Portfolio and with the
value of the U.S. dollar relative to the various
foreign currencies represented in the Portfolio,
and there can be no assurance that the Portfolio
will achieve its objective.
Unless otherwise indicated, all amounts are stated
in U.S. dollars computed on the basis of the
exchange rates for the relevant currencies on the
business day prior to the date of this Prospectus.
Minimum purchase: $250.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Inquiries should be directed to the Trustee at
SPONSOR: 1-800-323-1508.
Merrill Lynch, Prospectus dated May , 1998.
Pierce, Fenner & Smith INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Incorporated AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
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.
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Defined Portfolio
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The Portfolio contains common stocks of issuers that are expected by the
Merrill Lynch Global Research and Economics group to benefit from the
establishment of the European Monetary Union. (See Portfolio Description in Part
B.) These stocks were selected by the Sponsor for capital appreciation. At the
end of approximately two years. the Portfolio will be liquidated and a new Focus
Portfolio may be selected. The Sponsor reserves the right, however, not to offer
a new portfolio.
If your view of the sector changes you may exchange Units of this Portfolio for
Units of other Focus or Select Series or certain other selected Equity Investor
Series.
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Defining Your Portfolio
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The Portfolio is concentrated in stocks of foreign issuers although it is
broadly diversified among various European countries and industry groups.
The following EMU countries are represented in the Portfolio:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / %
/ / %
/ / %
/ / %
/ / %
/ / %
Based upon the principal business of each issuer and current market values, the
following industry groups are represented in the Portfolio:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / %
/ / %
/ / %
/ / %
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Defining Your Risks
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The Portfolio is concentrated in common stocks of foreign issuers. Investing in
securities of foreign issuers involves risks that are different from investing
in securities of domestic issuers. (See Risk Factors in Part B.)
There can be no assurance that the Portfolio will meet its objective over its
two-year life or that Merrill Lynch research analysts will continue to recommend
investment in these or similar stocks over the Portfolio's two-year life.
The Portfolio is not appropriate for investors who are unable or unwilling to
assume the increased risks involved generally with an international equity
investment or who are seeking preservation of capital or high current income.
The Portfolio should be considered a vehicle for investing a portion of your
assets in foreign securities and not as a complete equity investment program.
Unit price fluctuates with the value of the Portfolio, which could be affected
by changes in the financial condition of the issuers, changes in the economies
of the various countries represented in the Portfolio, currency exchange rate
fluctuations, movements in stock prices generally, the impact of the Sponsor's
purchase and sale of securities for the Portfolio and other factors.
A-2
<PAGE>
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsor
receives no management fee. Therefore, the adverse financial condition of an
issuer, changes in research analysts' opinions or any market movement in the
price of a security will not require the sale of securities from the Portfolio
or mean that the Sponsor will not continue to purchase the security in order to
create additional Units; however, the Sponsor may instruct the Trustee to sell
securities under certain limited circumstances. (See Portfolio Supervision in
Part B.)
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Defining Your Investment
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PUBLIC OFFERING PRICE PER 1,000 UNITS $1,000.00
The Public Offering Price as of April , 1998, the business day prior to the
initial date of deposit, is based on the aggregate U. S. dollar value of the
underlying securities ($ ) and any cash held to purchase securities,
divided by the number of units outstanding ( ) times 1,000, plus the
initial sales charge. Units offered on the Initial Date of Deposit will also be
priced at $1,000 per 1,000 Units although the aggregate value of the underlying
securities, cash amount and number of Units may vary. The Public Offering Price
on any subsequent date will vary. The underlying securities are valued by the
Trustee on the basis of their closing sale prices at 4:00 p.m. Eastern time on
every business day.
SALES CHARGES
The total sales charge for this investment combines an initial up-front sales
charge and 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 , 199 ,
you will not pay the deferred sales charge for the second year.
ROLLOVER/EXCHANGE OPTION
You may exchange your units of this Portfolio for units of any other Focus or
Select Series, or certain other selected Equity Investor 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 Focus or Select Series, if one is available. If you
notify your financial professional by , 2000, 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.
SEMI-ANNUAL INCOME DISTRIBUTIONS
You will receive distributions of any dividend income, net of expenses, on the
25th day of and
commencing 25, 1998, if you own Units on the 10th of those months.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into additional units
of the Portfolio subject only to the deferred sales charge remaining at the time
of reinvestment. Reinvesting helps to compound your income for a greater total
return.
TAXES
In the opinion of counsel for U.S. federal income tax purposes, you will be
considered to have received all dividends paid on your pro rata portion of each
security in the Portfolio when those dividends are received (or deemed received)
by the Portfolio, even though a portion of the dividend payments may be subject
to withholding taxes or may be used to pay expenses of the Portfolio and
regardless of whether you reinvest your dividends in the Portfolio. Noncorporate
investors 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 or the charge for organizational expenses). Accordingly, you should not
increase your basis in your units by the deferred sales charge or the charge for
organizational expenses.
MANDATORY TERMINATION DATE
The Portfolio will terminate by , 2000. The final distribution will
be made within a reasonable time afterward. The Portfolio may be terminated
earlier if its value is less than 40% of the value of the securities when
deposited.
SPONSOR'S PROFIT OR LOSS
The Sponsor's profit or loss from the Portfolio will include the receipt of
applicable sales charges, fluctuations in the Public Offering Price or secondary
market price of units, a loss of $ on the initial deposit of the
securities and a gain or loss on subsequent deposits of securities (see
Sponsor's and Underwriters' Profits in Part B).
A-3
<PAGE>
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Defining Your Costs
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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 ( , 1998 through , 1999 and , 1999 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 Focus or Select Series or certain other selected Equity Investor Series
or roll the proceeds of your investment into a new portfolio, you will not be
subject to the initial charge otherwise payable upon an investment in the new
portfolio. (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 (2 years) 4.50%
Maximum Sales Charge Imposed on Reinvested
Dividends %
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a % Amount per
of Net Assets 1,000 Units
----------------- --------------
Trustee's Fee % $
Portfolio Supervision,
Bookkeeping and Administrative
Fees % $
Organizational Expenses % $
Other Operating Expenses % $
----------------- --------------
TOTAL % $
This Portfolio (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states, and the initial audit of the Portfolio--as is common for mutual
funds.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:
1 Year 3 Years 5 Years 10 Years
$ $ $ $
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 fund expenses.
The example assumes reinvestment of any dividends and distributions and uses a
5% annual rate of return as mandated by SEC regulations applicable to mutual
funds. For purposes of the example, the deferred sales charge imposed on
reinvestment of dividends is not reflected until the year following payment of
the dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment.
Reductions to the repurchase and cash redemption prices in the secondary market
to recoup the costs of liquidating securities to meet redemption (described
below) have not been reflected. The example should not be considered a
representation of past or future expenses or annual rates of return; the actual
expenses and annual rates of return may be more or less than the example.
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time prior to the termination of the
Portfolio. Your price will be based on the then current net asset value. The
redemption and secondary market repurchase price as of April , 1998 was
$972.50 per 1,000 units ($27.50 per 1,000 units less than the Public Offering
Price). This price reflects deductions of the annual deferred sales charge which
declines over each year of the Portfolio ($17.50 initially). If you redeem or
sell your units before , 199 , you will pay only the balance of any
deferred sales charge remaining for the first year. If you redeem or sell your
units on or after , 199 , 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>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders of Equity Investor Fund, Focus Series, European
Monetary Union Portfolio, Defined Asset Funds (the 'Portfolio'):
We have audited the accompanying statement of condition and the defined
portfolio included in the prospectus of the Portfolio as of May , 1998. This
financial statement is the responsibility of the Trustee. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of an irrevocable letter of credit deposited for the purchase of
securities, as described in the statement of condition, with the Trustee. An
audit also includes assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Portfolio as of May ,
1998 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
May , 1998
STATEMENT OF CONDITION AS OF MAY , 1998
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 based on the U.S. dollar offer side value of the relevant
exchange rate determined by the Trustee at 4:00 p.m., Eastern time on May ,
1998. 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, the estimate may
vary.
(3) Because the value of securities at the evaluation time on the
Initial Date of Deposit may differ from the amounts shown in this statement of
condition, the number of Units offered on the Initial Date of Deposit will be
adjusted from the initial number of Units to maintain the $1,000 per 1,000 Units
offering price.
(4) Aggregate public offering price computed on the basis of the U.S.
dollar value of the underlying securities based on the U.S. dollar offer side
value of the relevant exchange rate at 4:00 p.m., Eastern time on May , 1998.
(5) Assumes the maximum initial sales charge per 1,000 units of 1.00%
of the Public Offering Price. A deferred sales charge of $17.50 per 1,000 Units
is payable each year ($2.50 per 1,000 Units monthly 1998 - 1999 and
1999 - 2000). Distributions will be made on behalf of investors to
an account maintained by the Trustee from which the deferred sales charge
obligation of the investors to the Sponsors will be satisfied.
A-5
<PAGE>
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Defined Portfolio
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Equity Investor Fund
Focus Series
European Monetary Union Portfolio May , 1998
Defined Asset Funds
<TABLE>
<CAPTION>
NUMBER OF PRICE
SHARES OF PERCENTAGE PER SHARE
COMMON OF TO PORTFOLIO
NAME OF ISSUER COUNTRY OF ISSUER STOCK PORTFOLIO (1) IN U.S. DOLLARS
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<S> <C> <C> <C> <C>
1. Belgium % $
2.
3.
4.
5.
Finland
6.
7.
8. France
9.
10.
11. Germany
12.
13.
Ireland
14.
Italy
15.
16.
17.
The Netherlands
18.
19.
20.
Portugal
21.
22.
Spain
23.
24.
25.
<CAPTION>
COST
TO PORTFOLIO
IN U.S. DOLLARS
NAME OF ISSUER (2)
- -------------------------------------------------------
1. $
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
</TABLE>
- ------------------------------------
(1) Based on Cost to Portfolio in U.S. dollars.
(2) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on May , 1998, the initial date of deposit. The value of
the securities on any subsequent date will vary.
* American Depositary Receipts (see Risk Factors--Foreign Issuers in Part B).
The securities were acquired on May , 1998 and are represented entirely by
contracts to purchase the securities. The Sponsor may have acted as underwriter,
manager or comanager of a public offering of the securities in this Portfolio
during the last three years. Affiliates of the Sponsor may serve as specialists
in the securities in this Portfolio on one or more stock exchanges and may have
a long or short position in any of these securities or in options on any of
them, and may be on the opposite side of public orders executed on the floor of
an exchange where the securities are listed. An officer, director or employee of
the Sponsor may be an officer or director of one or more of the issuers of the
securities in the Portfolio. The Sponsor may trade for its own account as an
odd-lot dealer, market maker, block positioner or arbitrageur in any of the
securities or in options on them. The Sponsor, its affiliates, directors,
elected officers and employee benefits programs may have either a long or short
position in any securities or in options on them.
A-6
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INVESTOR FUND, FOCUS SERIES EUROPEAN MONETARY UNION PORTFOLIO
FURTHER INFORMATION REGARDING THE PORTFOLIO MAY BE OBTAINED
WITHIN FIVE DAYS BY WRITING OR CALLING THE TRUSTEE AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
INDEX
PAGE
-----
PORTFOLIO DESCRIPTION............................ 1
RISK FACTORS..................................... 2
HOW TO BUY UNITS................................. 5
HOW TO REDEEM OR SELL UNITS...................... 6
TRUST TERMINATION................................ 7
ROLLOVER......................................... 7
INCOME, DISTRIBUTIONS AND REINVESTMENT........... 8
PORTFOLIO EXPENSES............................... 9
TAXES............................................ 9
RECORDS AND REPORTS.............................. 12
TRUST INDENTURE.................................. 12
MISCELLANEOUS.................................... 13
EXCHANGE OPTION.................................. 15
SUPPLEMENTAL INFORMATION......................... 15
PORTFOLIO DESCRIPTION
THE EUROPEAN MONETARY UNION PORTFOLIO
This Portfolio seeks capital appreciation by acquiring and holding for
about two years certain equity securities of companies that are expected to
benefit from the establishment of the European Monetary Union. The Merrill Lynch
Global Research and Economics group concentrates on specific companies by
industry. The stocks were also reviewed by Defined Asset Funds for liquidity and
market capitalization. Sales literature and advertising materials about the
Portfolio may include opinions of Merrill Lynch research analysts about stocks
in the 'Euro 11' countries (Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, The Netherlands, Portugal and Spain).
Investors should be aware that the Portfolio may not be able to buy each
Security at the same time because of availability of the Security, any purchase
restrictions applicable to the Portfolio 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 practicable that original proportionate relationship.
Deposits of additional Securities subsequent to the 90-day period must generally
replicate exactly the proportionate relationship among the number of shares of
each Security 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
1
<PAGE>
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 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.
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
market movements and to volatile increases and decreases in value as market
confidence in and perceptions of issuers change. Equity markets can be affected
by unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
The Sponsor cannot predict the direction or scope of any of these factors. There
can be no assurance that the Portfolio will be effective in achieving its
objective over its two-year life or that any future portfolios selected through
this process during consecutive periods would meet their objectives. The
Portfolio is not designed to be a complete equity investment program.
FOREIGN EXCHANGE RATES
Because securities of non-U.S. issuers generally pay dividends and trade in
their principal markets in foreign currencies, there is the risk that the U.S.
dollar value of these securities will vary with fluctuations in foreign exchange
rates. Most foreign currencies have fluctuated widely in value against the U.S.
dollar because of changing investor perceptions, currency speculation by
institutional investors, supply and demand of the respective currency, the
soundness of the world economy and the relative strength of the respective
economy, the impact of actual and proposed government policies, interest rate
differentials between currencies and the balance of imports and exports of goods
and services and transfers of income and capital from one country to another.
The Trustee is required to conduct the Portfolio's foreign exchange
conversions either on a spot (i.e., cash) or forward foreign exchange basis,
whichever will synchronize the currency conversions as exactly as practicable
with the settlement dates of the relevant foreign stock or with the dividend
distribution dates of the Portfolio, as the case may be. Foreign currency
exchange conversions are generally conducted on a principal basis and foreign
exchange dealers realize a profit based upon the difference between the price at
which they are willing to buy a particular currency (bid price) and the price at
which they are willing to sell the currency (offer price). The cost to the
Portfolio of engaging in these foreign currency conversions also varies with
such factors as the currency involved, the length of the contract period and the
market conditions then prevailing. Portfolio evaluations include the cost of
buying or selling a forward foreign exchange contract in the relevant currency
to correspond to the settlement period for purchases and redemptions of Units.
FOREIGN ISSUERS
Investing in securities of foreign issuers involves risks that are
different from investing in securities of domestic issuers. These risks may
include future political and economic developments, the possibility of
withholding taxes, exchange controls or other governmental restrictions on the
payment of dividends, less publicly available information
2
<PAGE>
and the absence of uniform accounting, auditing and financial reporting
standards, practices and requirements. The information set forth below has been
extracted from various governmental and private publications, but no
representation can be made as to its accuracy; furthermore, no representation is
made that any correlation exists between the state of the economies of the Euro
11 countries and the value of any Securities held by the Portfolio.
American Depositary Shares and Receipts. Certain of the Securities in the
Portfolio were purchased in ADR form in the United States. ADRs evidence
American Depositary Shares which represent common stock deposited with a
custodian in a depositary. American Depositary Shares (ADSs) and receipts
therefor (ADRs) are issued by an American bank or trust company to evidence
ownership of underlying securities issued by a foreign corporation. These
instruments may not necessarily be denominated in the same currency as the
securities into which they may be converted. Generally, ADSs and ADRs are
designed for use in the United States securities markets. For purposes of this
Prospectus, the term ADR generally includes ADSs. The terms and conditions of
depositary facilities may result in less liquidity or lower market prices for
ADRs than for the underlying shares. For those Securities that are ADRs,
currency fluctuations will also affect the U.S. dollar equivalent of the local
currency price of the underlying domestic share and, as a result, are likely to
affect the value of the ADRs and consequently the value of the Securities.
European Risk Factors
The economies of individual European countries may differ favorably or
unfavorably from the U.S. economy in gross national product, growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
For a number of years, certain European countries have been seeking
economic and political unification which would reduce barriers between
countries, increase competition among companies, reduce government subsidies in
certain industries and reduce or eliminate currency fluctuations among these
European countries. The Maastricht Treaty on economic and monetary union (EMU)
attempts to provide a stable monetary framework. But until the EMU takes effect,
which is intended to occur January 1, 1999, the countries in the European
community will face the need to reinforce monetary cooperation in order to
reduce the risk of a recurrence of tensions between domestic and external policy
objectives. A recent report of the European Monetary Institute, the precursor of
a new, single European central bank, emphasized the need for several prospective
member countries to undergo strenuous cost cutting in the coming years. It also
warned that high rates of unemployment in many European countries could create a
long-term strain on the new currency unless countries change their labor
policies, e.g., rigid work rules and high taxes. No assurances can be given that
the EMU will take effect or that the changes planned for Europe can be
successfully implemented or that these changes will result in higher market
prices for the Securities in the Portfolio.
The risks associated with investing in European Securities may be
heightened in the case of investments in smaller European securities markets
because of risks due to the inexperience of financial intermediaries, the lack
of modern technology, the lack of a sufficient capital base to expand business
operations and the possibility of permanent or temporary termination of trading
and greater spreads between bid and asked prices for securities in those
markets.
LIQUIDITY
Since sales of the Securities by the Fund will generally be effected only
in foreign securities markets, investors should realize that many of the
Securities may be traded in foreign countries where the securities markets are
not as developed or efficient as those of the United States. Foreign securities
markets, although growing in volume, generally have substantially less volume
than United States markets, and securities of many foreign companies are less
liquid and their prices more volatile than securities of comparable U.S.
companies. Fixed brokerage commissions and other transaction costs on foreign
securities exchanges are generally higher than in the United States and there is
generally less government supervision and regulation of exchanges, brokers and
issuers in foreign countries than there is in the United States. To the extent
the liquidity of these foreign facilities markets becomes impaired, the ability
of the Fund to respond to a substantial volume of requests for redemption of
Units received at or about the same time could be adversely affected. This might
occur, for example, as a result of economic or political turmoil in a country in
whose currency the Portfolio had a substantial portion of its assets invested,
or should relations between the United States and such foreign country
deteriorate markedly.
Whether or not the Securities are listed on a national securities exchange,
the principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the Securities
may depend on whether dealers will make a market in the Securities. There can be
no assurance that a market will be
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made for any of the Securities, that any market for the Securities will be
maintained or of the liquidity of the Securities in any markets made. In
addition, the Fund may be restricted under the Investment Company Act of 1940
from selling Securities to the Sponsor. The price at which the Securities may be
sold to meet redemptions and the value of the Portfolio will be adversely
affected if trading markets for the Securities are limited or absent.
EXCHANGE CONTROLS
At the present time the Sponsor does not believe that any of the Securities
is subject to exchange control restrictions that would materially interfere with
payment to the Fund of amounts due on the Securities. There can be no assurance
that exchange control regulations might not be adopted in the future that might
adversely affect payments to the Portfolio. In addition, the adoption of
exchange control regulations and other legal restrictions could have an adverse
impact on the marketability of the Securities and on the ability of the
Portfolio to satisfy redemptions.
LITIGATION AND LEGISLATION
The Sponsor does not know of any pending litigation as of the initial date
of deposit that might reasonably be expected to have a material adverse effect
on the Portfolio, although pending litigation may have a material adverse effect
on the value of Securities in the Portfolio. In addition, at any time after the
initial date of deposit, litigation may be initiated on a variety of grounds, or
legislation may be enacted, affecting the Securities in the Portfolio or the
issuers of the Securities. Changing approaches to regulation may have a negative
impact on certain companies represented in the Portfolio. There can be no
assurance that future litigation, legislation, regulation or deregulation will
not have a material adverse effect on the Portfolio or will not impair the
ability of the issuers of the Securities to achieve their business goals. From
time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. This type of legislation, if enacted into law,
would adversely affect the after-tax return to investors who can take advantage
of the deduction. See Taxes.
LIFE OF THE PORTFOLIO
The size and composition of the Portfolio will be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units or
participating in an exchange or rollover. The Portfolio will be terminated no
later than the mandatory termination date specified in Part A of the Prospectus.
It will terminate earlier upon the disposition of the last Security or upon the
consent of investors holding 51% of the Units. The Portfolio may also be
terminated earlier by the Sponsor once its total assets have fallen below the
minimum value specified in Part A of the Prospectus. A decision by the Sponsor
to terminate the Portfolio early, which will likely be made following the
rollover, will be based on factors such as the size of the Portfolio relative to
its original size, the ratio of Portfolio expenses to income, and the cost of
maintaining a current prospectus. See Trust Termination.
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 the Sponsor, Underwriter and other broker-dealers
at the Public Offering Price. The Public Offering Price varies each Business Day
with changes in the value of the Portfolio and other assets and liabilities of
the Portfolio.
PUBLIC OFFERING PRICE
Units are charged a combination of Initial and Deferred Sales Charges 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
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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.
For quantity purchases of units of all Focus and Select Series, and certain
other selected Equity Investor 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>
INITIAL OFFER PERIOD SALES CHARGES CUMULATIVE SALES CHARGES
---------------------------------------- ----------------------------------------
AS % OF AS % OF NET AS % OF AS % OF NET
AMOUNT PURCHASED PUBLIC OFFERING PRICE AMOUNT INVESTED PUBLIC OFFERING PRICE AMOUNT INVESTED
- --------------------------- --------------------- ----------------- --------------------- -----------------
<S> <C> <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
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 the Sponsor and Sponsor affiliates and non-employee directors
of Merrill Lynch & Co., Inc. may purchase Units subject only to the Deferred
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, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas and, with respect to individual stocks in the Portfolio, various
additional holidays in the relevant country. Evaluations are generally based on
the U.S. dollar equivalent of the last reported closing sales prices or, if
closing sales prices are not available, at the mean between the closing bid and
offer prices. If the Securities are listed on a national securities exchange or
the Nasdaq National Market, evaluations are generally based on closing sales
prices on that exchange or system (unless the Trustee deems these prices
inappropriate) or, if closing sales prices are not available, at the mean
between the closing bid and offer prices. If the Securities are not listed or if
listed but the principal market is elsewhere, the evaluation is generally
determined based on sales prices of the Securities on the over-the-counter
market or, if sales prices in that market are not available, on the basis of the
mean between current bid and offer prices for the Securities or for comparable
securities or by appraisal or by any combination of these methods. Neither the
Sponsor nor the Trustee guarantees the enforceability, marketability or price of
any Securities.
NO CERTIFICATES
All investors are required to hold their Units in uncertificated form and
in 'street name' by their broker, dealer or financial institution at the
Depository Trust Company ('DTC').
HOW TO REDEEM OR SELL UNITS
You can redeem your Units at any time for net asset value. In addition, the
Sponsor has maintained an uninterrupted secondary market for Units for over 20
years and will ordinarily buy back Units at net asset value. The following
describes these two methods to redeem or sell Units in greater detail.
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REDEEMING UNITS WITH THE TRUSTEE
You can always redeem your Units for net asset value. This can be done by
contacting your broker, dealer or financial institution that holds your Units in
street name. In certain instances, additional documents may be required such as
a trust instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian.
Within seven days after the receipt of your request containing any
necessary documents, a check will be mailed to you in an amount equal to the net
asset value of your Units. Because of the sales charge, market movements or
changes in the Portfolio, net asset value at the time you redeem your Units may
be greater or less than the original cost of your Units. Net asset value is
calculated each Business Day by adding the value of the Securities, declared but
unpaid dividends on the Securities, cash and the value of any other Portfolio
assets; deducting unpaid taxes or other governmental charges, accrued but unpaid
Portfolio expenses and any remaining deferred sales charges for the current
period, unreimbursed Trustee advances, cash held to redeem Units or for
distribution to investors and the value of any other Portfolio liabilities; and
dividing the result by the number of outstanding Units. After the initial
offering period, net asset value will be reduced to reflect the cost to the
Portfolio of liquidating Securities to pay the redemption price.
As long as the Sponsor is maintaining a secondary market for Units (as
described below), the Trustee will not actually redeem your Units but will sell
them to the Sponsor for net asset value. If the Sponsor is not maintaining a
secondary market, the Trustee will redeem your Units for net asset value or will
sell your Units in the over-the-counter market if the Trustee believes it will
obtain a higher net price for your Units. If the Trustee is able to sell the
Units for a net price higher than net asset value, you will receive the net
proceeds of the sale.
If cash is not available in the Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Sponsor based on
market and credit factors determined to be in the best interest of the
Portfolio. These sales are often made at times when the Securities would not
otherwise be sold and may result in lower prices than might be realized
otherwise and may also reduce the size and diversity of the Portfolio. If
Securities are being sold during a time when additional Units are being created
by the purchase of additional Securities (as described under Portfolio
Description--The European Monetary Union Portfolio), Securities will be sold in
a manner designed to maintain, to the extent practicable, the proportionate
relationship among the number of shares of each Security in the Portfolio.
Any investor owning Units representing Securities with a value of at least
$500,000 who redeems those Units prior to the rollover notification date
indicated in Part A of the Prospectus may, in lieu of cash redemption, request
distribution in kind of an amount and value of Securities per Unit equal to the
otherwise applicable Redemption Price per Unit. Generally, whole shares of each
Security together with cash from the Capital Account equal to any fractional
shares to which the investor would be entitled (less any Deferred Sales Charge
payable) will be paid over to a distribution agent and either held for the
account of the investor or disposed of in accordance with instructions of the
investor. Any brokerage commissions on sales of Securities in connection with
in-kind redemptions may be borne by the redeeming investors. Any Security
distributed in accordance with this paragraph may be denominated in a foreign
currency, and therefore may not be readily resaleable. The in-kind redemption
option is subject to all applicable legal restrictions and may be terminated by
the Sponsor at any time upon prior notice to investors.
Redemptions may be suspended or payment postponed (i) if the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (ii) if
the SEC determines that trading on the New York Stock Exchange is restricted or
that an emergency exists making disposal or evaluation of the Securities not
reasonably practicable or (iii) for any other period permitted by SEC order.
SPONSOR'S SECONDARY MARKET FOR UNITS
The Sponsor, while not obligated to do so, will buy back Units at net asset
value without any other fee or charge as long as they are maintaining a
secondary market for Units. Because of the sales charge, market movements or
changes in the portfolio, net asset value at the time you sell your Units may be
greater or less than the original cost of your Units. You should consult your
financial professional for current market prices to determine if other
broker-dealers or banks are offering higher prices for Units.
The Sponsor may discontinue the secondary market for Units without prior
notice. Regardless of whether the Sponsor maintains a secondary market, you have
the right to redeem your Units for net asset value, as described above.
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<PAGE>
TRUST TERMINATION
Notice of impending termination of the Portfolio will be provided to
investors. A proportional share of the expenses associated with termination,
including brokerage costs incurred in disposing of Securities, will be borne by
investors remaining at that time. These expenses will reduce the amount of cash
or Securities those investors are to receive in any final distribution.
Upon termination of the Portfolio, the Trustee will distribute the
Securities and any cash in the Portfolio to a distribution agent that will act
as agent for the investors. Unless an investor elects to receive an in-kind
distribution of Securities, as discussed below, the distribution agent will, as
promptly as practicable, sell the investor's pro rata share of the Securities
and distribute to the investor the proceeds of the sale, less brokerage and
other related expenses, and the investor's pro rata share of any cash from the
Portfolio.
Any investor holding units at the termination of the Portfolio may, by
written notice to the Trustee at least ten business days prior to termination,
elect to received an in kind distribution of the investor's pro rata share of
the Securities remaining in the Portfolio at that time (net of the investor's
share of expenses). Fractional shares of Securities will be sold by the
distribution agent and the net proceeds distributed to investors. Investors
subsequently selling Securities received in kind will incur brokerage costs at
that time which may exceed the value of any tax deferral obtained through the
in-kind distribution. Securities received in an in-kind termination distribution
may not be contributed to acquire units of another Series.
ROLLOVER
In lieu of redeeming their units or receiving liquidation proceeds in cash
or in kind upon termination of the Portfolio, investors who hold their Units
with the Sponsor may elect, by contacting their financial adviser prior to the
rollover notification date indicated in Part A, to exchange their Units in the
Portfolio for units of a new portfolio (if available). No election to roll over
may be made prior to 30 days before the date of the rollover, and any rollover
election will be revocable at any time prior to the date of the rollover. It is
expected that the terms of the new portfolio will be substantially the same as
those of the Portfolio.
The rollover of an investor's Units is intended to be effected in a manner
that will not result in the recognition of either gain or loss for U.S. federal
income tax purposes with respect to Securities that are included in the new
portfolio ('Duplicated Securities'). Units held by an investor who elects the
rollover option will be redeemed through an in-kind distribution to a
distribution agent of the investor's pro rata share of Securities. The
distribution agent will then adjust the Securities distributed to the investor
so that its composition matches the investment profile of the new portfolio.
This adjustment will involve the sale of non-Duplicated Securities and,
possibly, of a portion of certain Duplicated Securities in order to rebalance
the portfolio, and the purchase of replacement Securities. Any excess sales
proceeds, net of sales related expenses, will be distributed to the investor.
After this adjustment the distribution agent will make an in-kind contribution
of the adjusted Securities to the new portfolio. Upon receipt of the in-kind
contribution, the trustee of the new portfolio will issue the appropriate number
of units in the new portfolio to the investor.
An investor who elects the rollover option will recognize capital gain or
loss with respect to the Securities, including fractional Securities, sold by
the distribution agent, but will not recognize gain or loss with respect to the
Duplicated Securities that are contributed in kind to the new portfolio. The
Sponsor intends to provide investors with information that will assist them in
determining their tax liability on an eventual sale of the Duplicated
Securities.
The Sponsor intends to cause the distribution agent to sell those
Securities that will not be contributed to the new portfolio, and then to create
units of the new portfolio, in each case as quickly as possible subject to the
Sponsor's 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 Sponsor may, in its sole discretion, undertake a
more gradual sale of Securities and a more gradual creation of units of the new
portfolio to help mitigate any negative market price consequences caused by this
large volume of securities trades. In order to minimize potential losses caused
by market movement during the rollover period, the Sponsor may enter into
program trades, which may increase brokerage commissions payable by investors.
There can be no assurance, however, that any trading procedures will be
successful or might not result in less advantageous prices. Pending the
investment of rollover proceeds in securities to comprise the new portfolio,
those moneys may be uninvested for several days.
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Investors who participate in the rollover will not be entitled to receive a
cash distribution with which to pay any taxes incurred as a result of the
rollover procedure. Investors who do not participate in the rollover or
otherwise redeem their Units will continue to hold their Units until the
termination of the Portfolio; however, depending upon the extent of
participation in the rollover, the aggregate size of the Portfolio will be
reduced which could result in an increase in per Unit expenses.
The Sponsor may, in its sole discretion and without penalty or liability to
investors, decide not to sponsor a new portfolio or to modify the terms of the
rollover. Prior notice of any decision would be provided to investors.
The Division of Investment Management of the SEC is of the view that the
rollover option constitutes an 'exchange offer', for the purposes of Section
11(c) of the Investment Company Act of 1940, and would therefore be prohibited
absent an exemptive order. The Sponsor has received exemptive orders under
Section 11(c) which it believes permit it to offer the rollover, but no
assurance can be given that the SEC will concur with the Sponsor's position and
additional regulatory approvals may be required.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME AND DISTRIBUTIONS
The annual U.S. dollar income per Unit, after deducting estimated annual
expenses per Unit, will depend primarily upon the amount of dividends declared
and paid by the issuers of the Securities, fluctuations in U.S. dollar exchange
rates and changes in the expenses of the Portfolio and, to a lesser degree, upon
the level of purchases of additional Securities and sales of Securities. There
is no assurance that dividends on the Securities will continue at their current
levels or be declared at all.
Each Unit receives an equal share of distributions of dividend income net
of expenses. Dividends received are credited to an Income Account in the
relevant currency and converted into U.S. dollars at the current exchange rate
upon declaration of a Portfolio distribution. Other receipts are credited to a
Capital Account after conversion into U.S. dollars at the current rate. Because
dividends on the Securities are not received at a constant rate throughout the
year, any distribution may be more or less than the amount then credited to the
Income Account. A Reserve Account may be created by withdrawing from the Income
and Capital Accounts amounts considered appropriate by the Trustee to reserve
for any material amount that may be payable out of the Portfolio. Funds held by
the Trustee in the various accounts do not bear interest. In addition,
distributions of amounts necessary to pay the Deferred Sales Charge will be made
from the Capital Account to an account maintained by the Trustee for purposes of
satisfying investors' sales charge obligations. Although the Sponsor may collect
the Deferred Sales Charge during the months stated in Part A, to keep Units more
fully invested the Sponsor currently does not anticipate sales of Securities to
pay the Deferred Sales Charge until after the final Deferred Sales Charge
installment in each year of the Portfolio. Proceeds of the disposition of any
Securities not used to pay Deferred Sales Charge or to redeem Units will be held
in the Capital Account and distributed following liquidation of the Fund.
REINVESTMENT
Any income and principal distributions on Units may be reinvested by
participating in the Portfolio's reinvestment plan. Under the plan, the Units
acquired for investors will be either Units already held in inventory by the
Sponsor or new Units created by the Sponsor's deposit of additional Securities,
contracts to purchase additional Securities or cash (or a bank letter of credit
in lieu of cash) with instructions to purchase additional Securities. Deposits
or purchases of additional Securities will generally be made so as to maintain
the then existing proportionate relationship among the number of shares of each
Security in the Portfolio. Units acquired by reinvestment will not be subject to
the initial sales charge but will be subject to any remaining installments of
Deferred Sales Charge. The Sponsor reserves the right to amend, modify or
terminate the reinvestment plan at any time without prior notice. Investors
holding Units in 'street name' should contact their broker, dealer or financial
institution if they wish to participate in the reinvestment plan.
PORTFOLIO EXPENSES
Estimated annual expenses are listed in Part A of the Prospectus; if actual
expenses exceed the estimate, the excess will be borne by the Portfolio. To the
extent that expenses exceed the amount available in the Income Account, the
Trustee is authorized to sell Securities and pay the excess expenses from the
Capital Account. The estimated expenses do not include the brokerage commissions
payable by the Portfolio in purchasing and selling Securities. The
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Trustee's Fee shown in Part A of this Prospectus assumes that the Portfolio will
reach a size estimated by the Sponsor and is based on a sliding scale that
reduces the Trustee's fee as the size of the Portfolio increases. The Trustee's
annual fee is payable in monthly installments. The Trustee also benefits when it
holds cash for the Portfolio in non-interest bearing accounts. Possible
additional charges include Trustee fees and expenses for extraordinary services,
costs of indemnifying the Trustee and the Sponsor, costs of action taken to
protect the Portfolio and other legal fees and expenses, Portfolio termination
expenses and any governmental charges. The Trustee has a lien on Portfolio
assets to secure reimbursement of these amounts and may sell Securities for this
purpose if cash is not available. The Sponsor receives an annual fee currently
estimated at $0.35 per 1,000 Units to reimburse it for the cost of providing
Portfolio supervisory services to the Portfolio. While the fee may exceed its
costs of providing these services to the Portfolio, the total supervision fees
from all Series of Equity Investor Fund will not exceed its costs for these
services to all of those Series during any calendar year. The Sponsor may also
be reimbursed for its costs of providing bookkeeping and administrative services
to Defined Asset Funds, currently estimated at $0.10 per 1,000 Units. The
Trustee's and Sponsor's fees may be adjusted for inflation without investors'
approval.
All or a portion of expenses incurred in establishing the Portfolio,
including the cost of the initial preparation of documents relating to the
Portfolio, Federal and State registration fees, the initial fees and expenses of
the Trustee, legal expenses and any other out-of-pocket expenses will be paid by
the Portfolio and amortized over the life of the Portfolio. Advertising and
selling expenses will be paid by the Sponsor at no charge to the Portfolio.
Defined Asset 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 Portfolios have no management fees, limited
transaction costs and no ongoing marketing expenses, operating expenses are
generally less than 0.25% a year. When compounded annually, small differences in
expense ratios can make a big difference in your investment results.
TAXES
U.S. TAXATION
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
persons with special tax circumstances, such as dealers, financial institutions,
insurance companies or former U.S. citizens or long term residents.
As used herein, the term 'U.S. Investor' means an owner of a Unit in the
Portfolio that is (i) for United States federal income tax purposes a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, or (iii) an estate or trust the income of which
is subject to United States federal income taxation regardless of its source. An
investor that is not a U.S. Investor but whose income from a Unit is effectively
connected with such Investor's conduct of a United States trade or business will
generally be taxed in the same manner as a U.S. Investor but should consult his
or her tax advisor in this regard.
The following discussion relates only to U.S. Investors. Since the
Portfolio holds only Securities of non-U.S. issuers, it is expected that income
earned by investors who are not U.S. Investors will not be treated as
U.S.-source income and should not be subject to any U.S. withholding tax.
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 U.S. 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 U.S. Investor will be considered to have received all of
the dividends paid on his pro rata portion of each Security and any
exchange gain or loss resulting from the conversion into U.S. dollars of
any such dividends paid in foreign currency when such amounts are received
or converted by the Portfolio, regardless of whether such dividends are
subject to withholding taxes or used to pay a portion of the Portfolio's
expenses or whether they are automatically reinvested (see Reinvestment).
Dividends considered to have been received by a corporate U.S. Investor
will not qualify for the dividends-received deduction because the
dividends-received deduction is generally only available for dividends
received from domestic corporations.
9
<PAGE>
Dividends received by the Portfolio will generally be subject to
withholding taxes imposed by the relevant European jurisdictions. The
Portfolio will report as gross income earned by U.S. Investors their pro
rata shares of such dividends, including their pro rata shares of any
corresponding amounts of foreign tax withheld. Capital gains attributable
to the Units or the underlying securities may also be subject to taxes by
certain of those jurisdictions. U.S. Investors should be entitled, subject
to applicable limitations, to either a credit or a deduction for these
foreign taxes and should consult their tax advisers in this regard.
An individual U.S. Investor who itemizes deductions will be entitled to
deduct his pro rata share of Portfolio expenses only to the extent that
this amount together with the U.S. Investor's other miscellaneous
deductions exceeds 2% of his adjusted gross income. The Code further
restricts the ability of an individual U.S. Investor with an adjusted gross
income in excess of a specified amount (for 1998, $124,500 or $62,250 for a
married person filing a separate return) to claim itemized deductions
(including his pro rata share of Portfolio expenses).
The U.S. 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 a U.S. 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 U.S. Investors will be based upon the
amounts paid to them, net of the Deferred Sales Charge and the charge for
organizational expenses. Accordingly, U.S. Investors should not increase
their basis in their Units by the Deferred Sales Charge or any amount used
to pay organizational expenses.
A U.S. investor will generally recognize capital gain or loss when the
U.S. Investor disposes of his Units for cash (by sale or redemption) or
when the Trustee disposes of the Securities from the Portfolio. A U.S.
Investor will not recognize gain or loss upon the distribution of a pro
rata amount of each of the Securities by the Trustee to a U.S. Investor (or
to his agent) in redemption of Units or upon termination of the Portfolio,
except to the extent of cash received in lieu of fractional shares. The
redeeming U.S. 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.
A U.S. investor who elects to roll over into a new portfolio (a
'rollover investor') will not recognize gain or loss either upon the
distribution of Securities by the Trustee to the distribution agent or upon
the contribution of Duplicated Securities (as defined under Rollover) to
the new portfolio. The rollover investor will generally recognize capital
gain or loss as a consequence of the distribution agent's sale of
non-Duplicated Securities. The rollover investor's basis for the Duplicated
Securities that are contributed in kind to the new portfolio will be equal
to his basis for the same Duplicated Securities prior to the rollover, and
his holding period for the contributed Duplicated Securities will include
the period during which he held an interest in the same Duplicated
Securities through an investment in the Portfolio and in prior years'
corresponding Focus Series Portfolio.
A U.S. 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 a U.S. Investor (or to his agent) in redemption of Units, except to the
extent of cash received in lieu of fractional shares. The redeeming U.S.
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. Capital gain on a disposition of
Units or Securities by U.S. Investors will generally be U.S. source income.
Any foreign currency gain or loss with respect to an investment in the
Portfolio will generally be treated as ordinary income or loss.
Net capital gain (the excess of net long-term capital gains over net
short-term capital losses) may be taxed at lower rates than ordinary income
for 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 rates will be unavailable to those noncorporate U.S.
Investors who, as of the mandatory termination date (or earlier termination
of the Portfolio), have held their Units for one year or less. The lower
net capital gain tax rates will also be unavailable to noncorporate
rollover investors for gains on non-Duplicated Securities if, as of the
beginning of the rollover period, those investors have held their Units for
a year or less. Similarly, U.S. Investors will not be entitled to the new
20% maximum federal tax rate for capital gains derived from the Fund
because they will not have held their Units for more than 18 months.
However, a noncorporate rollover investor may be eligible for reduced rates
on the portion of capital gain recognized on sales of Securities or Units
of the new portfolio (or subsequent portfolios) that is attributable to
Duplicated Securities
10
<PAGE>
if the investor is treated as having held the Duplicated Securities for
more than the relevant 12-month or 18-month holding period. Investors
should consult their tax advisers regarding these matters.
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 U.S. Investors in the
same manner as for federal income tax purposes.
The foregoing discussion relates only to the tax treatment of U.S.
Investors with regard to federal and certain aspects of New York State and
City income taxes. U.S. Investors may be subject to taxation in New York or
in other jurisdictions and should consult their own tax advisers in this
regard.
* * * *
At the termination of the Portfolio, the Trustee will furnish to each
investor an annual statement containing information relating to the dividends
received by the Portfolio on the Securities, the cash proceeds received by the
Portfolio from the disposition of any Security (resulting from redemption or the
sale by the Portfolio of any Security), and the fees and expenses paid by the
Portfolio. The Trustee will also furnish annual information returns to each
investor and to the Internal Revenue Service.
RETIREMENT PLANS
This Series of Equity Investor Fund may be well suited for purchase by
Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for special 5 or
10 year averaging (prior to the year 2000) or tax-deferred rollover treatment.
Investors in IRAs, Keogh plans and other tax-deferred retirement plans should
consult their plan custodian as to the appropriate disposition of distributions.
Investors considering participation in any of these plans should review specific
tax laws related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any of these plans. These plans
are offered by brokerage firms, including the Sponsor of this Portfolio, and
other financial institutions. Fees and charges with respect to such plans may
vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units may be purchased
by retirement plans established for self-employed individuals, partnerships or
unincorporated companies ('Keogh plans'). The assets of a Keogh plan must be
held in a qualified trust or other arrangement which meets the requirements of
the Code. Keogh plan participants may also establish separate IRAs (see below)
to which they may contribute up to an additional $2,000 per year ($4,000 in a
spousal account).
Individual Retirement Account--IRA. Any individual can make use of a
qualified IRA arrangement for the purchase of Units. Any individual (including
one covered by an employer retirement plan) can make a contribution to 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). These income threshholds will gradually be increased by 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.
The 10% surtax will be waived for withdrawals for certain educational and
first-time homebuyers expenses. The Taxpayer Relief Act of 1997 also provides,
subject to certain income limitations, for a special type of IRA under which
contributions would be non-deductible but distributions would be tax-free if the
account were held for at least five years and the account holder was at least
59 1/2 at the time of distribution.
11
<PAGE>
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan for employees of a corporation may purchase Units.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Portfolio,
including a current list of the Securities and a copy of the Indenture, which
may be inspected by investors at reasonable times during business hours.
With each distribution, the Trustee includes a statement of the amounts of
income and any other receipts being distributed. The Trustee sends each investor
of record an annual report summarizing transactions in the Portfolio's accounts
including amounts distributed from them during the year, identifying Securities
sold and purchased and listing Securities held and the number of Units
outstanding and stating the Redemption Price per 1,000 Units at year end, and
the fees and expenses paid by the Portfolio, among other matters. Portfolio
accounts are audited annually by independent accountants selected by the Sponsor
and audited financial statements are available from the Trustee on request.
TRUST INDENTURE
The Portfolio is a 'unit investment trust' created under New York law by a
Trust Indenture between the Sponsor and the Trustee. This Prospectus summarizes
various provisions of the Indenture, but each statement is qualified in its
entirety by reference to the Indenture.
The Indenture may be amended by the Sponsor and the Trustee without consent
by investors to cure ambiguities or to correct or supplement any defective or
inconsistent provision, to make any amendment required by the SEC or other
governmental agency or to make any other change not materially adverse to the
interest of investors (as determined in good faith by the Sponsor). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor without the
investor's consent or reduce the percentage of Units required to consent to any
amendment without unanimous consent of investors. Investors will be notified of
the substance of any amendment.
The Trustee may resign upon notice to the Sponsor. It may be removed by
investors holding 51% of the Units at any time or by the Sponsor without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the Sponsor
determines in good faith that its replacement is in the best interest of the
investors. The resignation or removal becomes effective upon acceptance of
appointment by a successor; in this case, the Sponsor will use its best efforts
to appoint a successor promptly; however, if upon resignation no successor has
accepted appointment within 30 days after notification, the resigning Trustee
may apply to a court of competent jurisdiction to appoint a successor.
If the Sponsor fails to perform its duties or becomes incapable of acting
or bankrupt or its affairs are taken over by public authorities, the Trustee may
appoint a successor Sponsor at reasonable rates of compensation, terminate the
Indenture and liquidate the Portfolio or continue to act as Trustee without a
Sponsor.
The Sponsor and the Trustee are not liable to investors or any other party
for any act or omission in the conduct of their responsibilities absent bad
faith, willful misfeasance, negligence (gross negligence in the case of the
Sponsor) or reckless disregard of duty. The Indenture contains customary
provisions limiting the liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsor.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
12
<PAGE>
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and New York
State banking authorities.
SPONSOR
The Sponsor is a wholly-owned subsidiary of Merrill Lynch & Co., Inc. The
Sponsor, or one of its predecessor corporations, has acted as Sponsor of a
number of series of unit investment trusts and as principal underwriter and
managing underwriter of other investment companies. The Sponsor, in addition to
participating as a member of various selling groups or as agent of other
investment companies, executes orders on behalf of investment companies for the
purchase and sale of securities of these companies and sells securities to these
companies in its capacities as broker or dealer in securities.
CODE OF ETHICS
The Sponsor has adopted a code of ethics requiring preclearance and
reporting of personal securities transactions by its personnel who have access
to information on Defined Asset portfolio transactions. The code is intended to
prevent any act, practice or course of conduct which would operate as a fraud or
deceit on any portfolio and to provide guidance to these persons regarding
standards of conduct consistent with the Sponsor's responsibilities to Defined
Asset Funds.
PUBLIC DISTRIBUTION
During the initial offering period and thereafter to the extent additional
Units continue to be offered for sale to the public by means of this Prospectus,
Units will be distributed directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above or to selected
dealers who are members of the National Association of Securities Dealers, Inc.
at a concession not in excess of the maximum sales charge. The Sponsor intends
to qualify Units for sale in all states in which qualification is deemed
necessary through the Underwriting Account and by dealers who are members of the
National Association of Securities Dealers, Inc.. The Sponsor does not intend to
qualify Units for sale in any foreign countries and this Prospectus does not
constitute an offer to sell Units in any country where Units cannot lawfully be
sold.
UNDERWRITER'S AND SPONSOR'S PROFITS
Upon sale of the Units, the Sponsor will be entitled to receive sales
charges. The Sponsor also realizes a profit or loss on deposit of the Securities
equal to the difference between the cost of the Securities to the Portfolio
(based on the aggregate value of the Securities on their date of deposit) and
the purchase price of the Securities to the Sponsor plus commissions payable by
the Sponsor. In addition, the Sponsor or Underwriter may realize profits or
sustain losses on Securities it deposits in the Portfolio which were acquired
from underwriting syndicates of which it was a member. During the initial
offering period, the Sponsor also may realize profits or sustain losses as a
result of fluctuations after the initial date of deposit in the Public Offering
Price of the Units. In maintaining a secondary market for Units, the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the prices at which it buys Units and the prices at which it resells
these Units (which include the sales charge) or the prices at which it redeems
the Units. Cash, if any, made available by buyers of Units to the Sponsor prior
to a settlement date for the purchase of Units may be used in the Sponsor's
business to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsor.
PERFORMANCE INFORMATION
Total returns, average annualized returns or cumulative returns for various
periods of the current Portfolio may be included from time to time in
advertisements, sales literature and reports to current and prospective
investors. Total return shows changes in unit price during the period plus
reinvestment of dividends and capital gains, divided by the maximum public
offering price. Average annualized returns show the average return for stated
periods for longer than a year. Figures reflect deduction of all Portfolio
expenses and, unless otherwise stated, the maximum sales charge. No provision is
made for any income taxes payable. Investors should bear in mind that this
represents past performance and is no assurance of the future results of any
current or future Portfolio.
13
<PAGE>
Advertisements and other material distributed to prospective investors may
include average annual total returns (with dividends reinvested) of equity
markets in major industrialized countries over the last 10 years, as compiled by
Morgan Stanley Capital International Europe, Australia, Far East Index.
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. These materials may also compare
the shrinking relative proportion of world stock market capitalization
represented by U.S. markets for different years.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset
Portfolios' philosophy is to allow investors to 'buy with knowledge' (because,
unlike managed funds, the portfolio is relatively fixed) and 'hold with
confidence' (because the portfolio is professionally selected and regularly
reviewed). Defined Asset Portfolios offers an array of simple and convenient
investment choices, suited to fit a wide variety of personal financial goals--a
buy and hold strategy for capital accumulation, such as for children's education
or retirement, or attractive, regular current income consistent with the
preservation of principal. Unit investment trusts are particularly suited for
the many investors who prefer to seek long-term profits by purchasing sound
investments and holding them, rather than through active trading. Few
individuals have the knowledge, resources or capital to buy and hold a
diversified portfolio on their own; it would generally take a considerable sum
of money to obtain the breadth and diversity that Defined Asset Portfolios
offer. Your investment objectives may call for a combination of Defined Asset
Portfolios.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.
Investors may pursue investment growth to meet long-term goals such as
children's education or retirement. But they are faced with decisions of
selecting stock groups, choosing individual stocks, determining when to buy and
sell and how to reinvest sales proceeds. Growth stocks--those whose price is
expected to appreciate above average usually because of superior growth in
earnings per share--can be difficult to select successfully because their prices
tend to be more volatile than more established stocks and, by the time they are
discovered by ordinary investors, their prices may have already increased beyond
attractive levels or may be susceptible to dramatic declines if actual
performance is less than anticipated.
EXCHANGE OPTION
You may exchange Units for units of other Focus or Select Portfolios or
certain selected Equity Investor Funds with one-or two-year terms and a
combination of initial and deferred sales charges. Select and Focus Portfolios
have a sales charge for first-time investors of 1% initially and annual deferred
sales charges of $17.50 per 1,000 units. On exchanges, the initial sales charge
is waived and units are acquired subject to any remaining deferred sales
charges. Investors can also exchange units of those Portfolios and similar
series of unaffiliated equity unit investment trusts for Units, subject only to
the Fund's remaining deferred sales charges. In the future, the Exchange Option
may be extended to other series and types of trusts with similar sales charge
structures.
To make an exchange, you should contact your financial professional to find
out what suitable exchange funds are available and to obtain a prospectus. You
may acquire units of only those exchange funds in which the Sponsor is
maintaining a 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).
14
<PAGE>
As the Sponsor is not obligated to maintain a market in any series or to
offer successor portfolios, there can be no assurance that units can be
exchanged. The Exchange Option may be amended or terminated at any time without
notice.
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.
15
<PAGE>
Defined
Asset FundsSM
SPONSOR: EQUITY INVESTOR FUND
Merrill Lynch, FOCUS SERIES
Pierce, Fenner & Smith IncorporatedEUROPEAN MONETARY UNION PORTFOLIO
Defined Asset Funds
P.O. Box 9051
Princeton, NJ 08543-9051
(609) 282-8500 This Prospectus does not contain all of the
TRUSTEE: information with respect to the investment
The Chase Manhattan Bank company set forth in its registration
Bowling Green Station statement and exhibits relating thereto which
P.O Box 5187 have been filed with the Securities and
New York, NY 10274-5187 Exchange Commission, Washington, D.C. under
1-800-323-1508 the Securities Act of 1933 and the Investment
Company Act of 1940, and to which reference
is hereby made. Copies of filed material can
be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
The Commission also maintains a Web site that
contains information statements and other
information regarding registrants such as
Defined Asset Funds that file electronically
with the Commission at http://www.sec.gov.
------------------------------
No person is authorized to give any
information or to make any representations
with respect to this investment company not
contained in its registration statement and
exhibits relating thereto; and any
information or representation not contained
therein must not be relied upon as having
been authorized.
------------------------------
When Units of this Portfolio are no longer
available or for investors who may reinvest
into subsequent Focus Series, this Prospectus
may be used as a preliminary prospectus for a
future series, and investors should note the
following:
Information contained herein is subject to
amendment. A registration statement relating
to securities of a future series has been
filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer,
solicitation or sale would be unlawful prior
to qualification under the securities laws of
any such State.
--5/98
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositors is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
I. Bonding arrangements of the Depositor are incorporated by reference to Item
A of Part II to the Registration Statement on Form S-6 under the Securities Act
of 1933 for Municipal Investment Trust Fund, Monthly Payment Series--573 Defined
Asset Funds (Reg. No. 333-08241).
II. The date of organization of the Depositor is set forth in Item B of Part II
to the Registration Statement on Form S-6 under the Securities Act of 1933 for
Municipal Investment Trust Fund, Monthly Payment Series--573 Defined Asset Funds
(Reg. No. 333-08241) and is herein incorporated by reference thereto.
III. The Charter and By-Laws of the Depositor are incorporated herein by
reference to Exhibits 1.3 and 1.4 to the Registration Statement on Form S-6
under the Securities Act of 1933 for Municipal Investment Trust Fund, Monthly
Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).
IV. Information as to Officers and Directors of the Depositor has been filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934 and is incorporated by reference to the SEC
filing indicated and made a part of this Registration Statement:
IncorporatedMerrill Lynch, Pierce, Fenner & Smith 8-7221
------------------------------------
B. The Internal Revenue Service Employer Identification Numbers of the
Sponsor and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 13-5674085
The Chase Manhattan Bank, Trustee............... 13-4994650
II-1
<PAGE>
SERIES OF EQUITY INCOME FUND, EQUITY INVESTOR FUND
AND DEFINED ASSET FUNDS MUNICIPAL INSURED SERIES
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933
SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
Equity Income Fund, 'MERIT' 1987 Series (Merrill Equity
Research Investment Trust).................................. 33-10989
Equity Income Fund, Group One Overseas Index Fund, Series 1
and 2....................................................... 33-05654
Equity Income Fund, Select Ten Portfolio--1995 Spring
Series...................................................... 33-55807
Equity Investor Fund, Focus Series Financial Portfolio...... 333-32179
Equity Investor Fund, Standard & Poor's Industry Turnaround
Portfolio................................................... 333-39121
Equity Investor Fund, Select Ten Portfolio 1997 Series A.... 333-15193
Equity Investor Fund, Select Growth Portfolio............... 33-51985
Defined Asset Funds Municipal Insured Series................ 33-54565
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference from the
Cross-Reference Sheet of the Registration Statement of Defined Asset Funds
Municipal Insured Series, 1933 Act File No. 33-54565).
The Prospectus.
The Signatures.
The following exhibits:
1.1 --Form of Trust Indenture (incorporated by reference to Exhibit 1.1 to
Amendment No. 2 to the Registration Statement on Form S-6 of Equity
Income Fund, Select Growth Portfolio--1995 Series 2, Defined Asset
Funds, Reg. No. 33-58535).
1.1.1 --Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement under the Securities Act
of 1933 of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the heading
'Miscellaneous--Legal Opinion' in the Prospectus.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Equity Income Fund, Select Ten Portfolio
1996 International Series B (United Kingdom and Japan Portfolios),
1933 Act File No. 33-00593).
R-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 4TH DAY OF MAY,
1998.
SIGNATURES APPEAR ON PAGE R-3.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: 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
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
</TABLE>
