<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1998
REGISTRATION NO. 333-50457
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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
1998 ML SELECT TEN V.I. TRUST
DEFINED ASSET FUNDS
B. NAME OF DEPOSITOR:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, NJ 08543-9051
D. NAMES AND COMPLETE ADDRESSES OF AGENT FOR SERVICE:
TERESA KONCICK, ESQ.
P.O. BOX 9051
PRINCETON, NJ 08543-9051 COPIES TO:
PIERRE DE SAINT PHALLE,
ESQ.
450 LEXINGTON AVENUE
NEW YORK, NY 10017
E. TITLE OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of the registration statement.
/ x / Check box if it is proposed that this filing will become effective upon
May 1, 1998 pursuant to Rule 487.
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<PAGE>
DEFINED ASSET FUNDSSM
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EQUITY INVESTOR FUND The objective of this Defined Fund is total return
1998 ML SELECT TEN V.I. TRUST through a combination of capital appreciation and
(A UNIT INVESTMENT current dividend income. The common stocks in the
TRUST) Trust were selected by following a strategy that
- ------------------------------invests for a period of about one year in
/ / DESIGNED FOR TOTAL RETURN approximately equal values of the ten common
/ / DEFINED PORTFOLIO OF 10 stocks in the Dow Jones Industrial Average (DJIA)
HIGHEST DIVIDEND YIELDING having the highest dividend yields three business
DOW STOCKS days prior to the date of this Prospectus.
/ / DIVIDEND INCOME The value of units will fluctuate with the value
of the common stocks in the Trust and no assurance
can be given that dividends will be paid or that
the units will appreciate in value.
Units of interest ('Units') are sold only to
separate accounts (the 'Accounts') to fund
benefits under variable annuity contracts or
variable life insurance policies (the 'Contracts')
issued by Merrill Lynch Life Insurance Company or
ML Life Insurance Company of New York (each an
'Insurer'). The Accounts invest in Units in
accordance with allocation instructions received
from Contractowners. Accordingly, the interest of
a Contractowner in the Units is subject to the
terms of the Contract and is described in the
accompanying Prospectus for the Contracts, which
should be reviewed carefully by a person
considering the purchase of a Contract. That
Prospectus describes the relationship between
increases or decreases in the net asset value of,
and any distributions on, Units, and the benefits
provided under the Contract. The rights of the
Accounts as Holders of Units should be
distinguished from the rights of a Contractowner
which are described in the Contracts. References
to Holder in this Prospectus shall refer to the
Accounts.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Inquiries should be directed to the Trustee at
SPONSOR: 1-800-221-7771.
Merrill Lynch, Prospectus dated May 1, 1998.
Pierce, Fenner & Smith INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Incorporated AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
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Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored over the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
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Defining the Strategy
- ---------------------------------------------------
The Select Ten Trust follows a simple, time-tested Strategy: buy approximately
equal amounts of the ten highest dividend-yielding common stocks (Strategy
Stocks) of the 30 stocks in the DJIA* (determined three business days prior to
the date of this Prospectus) and hold them for about one year. It is intended
that Securities selected for inclusion in the Trust will comply with any
investment limitations required to assure favorable Federal income tax treatment
for the Contracts. At the end of the year, the Trust will be liquidated and the
Strategy reapplied to the DJIA to select a new portfolio. As of three business
days prior to the initial date of deposit, Select Ten Portfolios (unit trusts
following the same strategy which are sold directly to the public) hold
approximately $15 billion of the DJIA Strategy Stocks. Each Select Ten Trust is
designed to be part of a longer term strategy and investors are advised to
follow the Strategy for at least three to five years. So long as the Sponsor
continues to offer new Trusts and if applicable regulatory approval is obtained,
the Accounts intend to reinvest into a new Trust each year. The Sponsor reserves
the right not to offer new Trusts.
The Strategy provides a disciplined approach to investing, based on a buy and
hold philosophy, which ignores market timing and investment research and rejects
active management. The Sponsor anticipates that the Trust portfolio will remain
unchanged over its one-year life despite any adverse developments concerning an
issuer, an industry or the economy or stock market generally. While the Strategy
does not work perfectly each and every year, the Strategy had a higher total
return than the DJIA in 16 of the last 25 years. Of course, past performance of
the Strategy is no guarantee of future results and there can be no guarantee
that the Trust will meet its objectives or will not lose money over its one-year
life or in subsequent rollovers.
- ---------
* The name 'Dow Jones Industrial Average' is the property of Dow Jones &
Company, Inc., which is not affiliated with the Sponsor, has not participated in
any way in the creation of the Trust or in the selection of stocks included in
the Trust and has not reviewed or approved any information included in this
Prospectus.
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Defining the Portfolio
- ---------------------------------------------------
Based upon the principal business of each issuer and current market values, the
following industries are represented in the Trust:
APPROXIMATE
PORTFOLIO PERCENTAGE
/ / Oil/Gas-International 20%
/ / Auto Manufacturing 10
/ / Chemical Products 10
/ / Financial Services/Banking 10
/ / Forest Products and Paper 10
/ / Manufacturing 10
/ / Photo Equipment/Supplies 10
/ / Tobacco/Food Processing 10
/ / Utilities/Telecommunications 10
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Defining the Risks
- ---------------------------------------------------
The Strategy Stocks, as the 10 highest dividend-yielding stocks in the DJIA,
generally share attributes that have caused them to have lower prices or higher
yields relative to the other stocks in the DJIA. The Strategy Stocks may, for
example, be experiencing financial difficulty, or be out of favor in the market
because of weak performance, poor earnings forecasts or negative publicity; or
they may be reacting to general market cycles. The Strategy is therefore
contrarian in nature. The Trust does not reflect any investment recommendations
of the Sponsor and one or more of the stocks in the Trust may, from time to
time, be subject to sell recommendations by the Sponsor.
The Trust is not an appropriate investment for those who are not comfortable
with the Strategy or for those who are unable or unwilling to assume the risk
involved generally with an equity investment. It may not be appropriate for
investors seeking either preservation of capital or high current income.
There can be no assurance that the market factors that caused the relatively low
prices and high yields of the Strategy Stocks will change, that any negative
conditions adversely affecting the stock price will not deteriorate, that the
dividend rates on the Strategy Stocks will be maintained or that share prices
will not decline further during the life of the Trust, or that the Strategy
Stocks will continue to be included in the DJIA.
Unit price fluctuates with the value of the Trust portfolio, and the value of
the portfolio could be affected by changes in the financial condition of the
issuers, changes in the various industries represented
A-2
<PAGE>
in the portfolio, movements in stock prices generally, the impact of the
purchase and sale of securities for the Trust (especially during the first few
days of a Trust and during the rollover period) and other factors. Additionally,
equity markets have been at historically high levels and no assurance can be
given that these levels will continue. Therefore, there is no guarantee that the
objective of the Trust will be achieved. Also, the return on an investment in
the Trust will be lower than the hypothetical returns on Strategy Stocks because
the Trust has transaction fees, brokerage commissions and expenses, purchases
Strategy Stocks at different prices, is not fully invested at all times and
because of other factors described under Hypothetical Strategy Stock Performance
Information (including charges and fees assessed under the Contracts). Trust
performance may also vary from that of Select Ten Portfolios because of
differences in timing and procedures for effecting purchases and redemptions.
Unlike a mutual fund, the Trust is not actively managed and the Sponsor receives
no management fee. Therefore, any adverse financial condition of an issuer or
any market movement in the price of a security will not require the sale of
securities from the Trust. Although the Sponsor may instruct the Trustee to sell
securities under certain limited circumstances, given the investment philosophy
of the Trust, the Sponsor is not likely to do so. The Trust may continue to
purchase or hold securities originally selected even though the market value and
yields on the securities may have changed or the securities may no longer be
included in the DJIA.
The portfolio is not considered to be 'concentrated' in stocks of any particular
industry.
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Defining the Investment
- ---------------------------------------------------
OFFERING OF UNITS
Full and fractional Units may be purchased by the Accounts to fund benefits
under Contracts. There is no minimum purchase amount. The Accounts may buy Units
only directly from the Trustee and may realize the value of Units only by
tendering them for redemption. Units of this Trust may not be held outside of an
Account.
INITIAL OFFER PRICE PER 1,000 UNITS $1,000.00
The Offer Price to the Accounts as of April 29, 1998, the business day prior to
the initial date of deposit is based on the aggregate value of the underlying
securities ($99,461.75) and any cash held to purchase securities ($10,538.25),
divided by the number of units outstanding (110,000) times 1,000. The Offer
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.
ROLLOVER
If the Account is invested in a Select Ten Trust at its termination, the Insurer
intends to redeem the Units and, subject to obtaining an exemptive order from
the SEC, to reinvest the proceeds in units of a successor trust (a 'rollover').
That trust will hold the current Strategy Stocks determined shortly before the
rollover. Brokerage commissions in selling securities during a rollover will be
borne by the Accounts and thus indirectly by Contractowners. If a Contractowner
no longer wishes to have Contract benefits determined by reference to the Trust,
the owner may change allocation instructions as permitted by the provisions of
the Contract.
DISTRIBUTIONS
Dividend income, net of expenses and transaction fees, will be distributed on
the 10th of June 1998, September 1998, December 1998 and March 1999 for Units
owned as of the 9th of those months. The Accounts intend to reinvest the
quarterly distributions of income and any principal on Units in additional Units
of the Trust. Reinvesting helps to compound your income for a greater total
return.
TERMINATION
The Trust will terminate on April 30, 1999.
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Defining Trust Costs
- ---------------------------------------------------
The following charges are paid out of the Trust and are therefore borne
indirectly by Contractowners. They are in addition to charges paid by the
Accounts or by Contractowners directly under the Contracts.
TRANSACTION FEE
The Sponsor receives a deferred transaction fee, accrued daily at the annual
rate of $4.70 per 1,000 Units (about 0.47%), for creating and maintaining the
Trust. No contingent fee will be owed if Units are redeemed before the Trust
terminates. Half of this fee is paid by the Sponsor to the Insurers to
compensate them for their administrative services relating to making Units
available to fund the Accounts.
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
As a % Amount per
of Net 1,000
Assets Units
---------- ----------
Trustee's Fee .082% $ 0.82
Portfolio Supervision,
Bookkeeping and
Administrative Fees .045% $ 0.45
Organizational Expenses .046% $ 0.46
Other Operating Expenses .006% $ 0.06
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TOTAL .179% $ 1.79
These estimates do not include the costs of purchasing and selling the
underlying Strategy Stocks.
This Trust (and therefore the Accounts and, indirectly, Contractowners) 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
Trust--as is common for mutual funds.
SELLING UNITS
The Account as Holder may redeem Units to reflect changed investment allocations
and to the extent necessary to provide benefits under the Contracts. The price
will be based on the then current net asset value, which may be more or less
than the cost. The redemption price as of April 29, 1998 was $1,000 per 1,000
Units.
A-3
<PAGE>
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Defined Portfolio
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Equity Investor Fund
1998 ML Select Ten V.I. Trust April 30, 1998
Defined Asset Funds
<TABLE><CAPTION>
PERCENTAGE CURRENT PRICE
TICKER OF PORTFOLIO DIVIDEND YIELD PER SHARE COST
NAME OF ISSUER SYMBOL (1) (2) TO TRUST TO TRUST (3)
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<S> <C> <C> <C> <C> <C>
1. Philip Morris Companies, Inc. MO 9.94% 4.27% $ 37.4375 $ 9,883.50
2. General Motors Corporation GM 10.10 2.95 67.8750 10,045.50
3. Chevron Corporation CHV 10.04 2.93 83.2500 9,990.00
4. J.P. Morgan & Company, Inc. JPM 10.06 2.89 131.6875 10,008.25
5. Eastman Kodak Company EK 10.08 2.46 71.5625 10,018.75
6. Minnesota Mining & Manufacturing
Company MMM 10.09 2.37 92.9375 10,037.25
7. Exxon Corporation XON 9.97 2.25 72.9375 9,919.50
8. American Telephone & Telegraph
Company T 9.77 2.23 59.2500 9,717.00
9. International Paper Company IP 10.00 1.93 51.8125 9,948.00
10. Union Carbide Corporation UK 9.95 1.86 48.5000 9,894.00
-------------- --------------
100.00% $ 99,461.75
-------------- --------------
-------------- --------------
</TABLE>
- ----------------------------
(1) Based on Cost to Trust.
(2) Current Dividend Yield for each security was calculated by annualizing the
last quarterly or semi-annual ordinary dividend declared on the security and
dividing the result by its market value as of the close of trading on April
29, 1998.
(3) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on April 29, 1998, the business day prior to the initial
date of deposit. The value of the Securities on any subsequent business day
will vary.
----------------------------
The securities were acquired on April 29, 1998 and are represented entirely by
contracts to purchase the securities. The Sponsor may have acted as an
underwriter, manager or co-manager 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
and/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-4
<PAGE>
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Hypothetical Strategy Stock Performance Information
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Select Ten Trusts are based on a strategy of investing equal amounts in the 10
highest dividend-yielding stocks ('Strategy Stocks') in the DJIA each year.
Although the Strategy Stocks underperformed the DJIA in eight of the last 25
years, their total return over several years generally outperformed the DJIA.
This is why the Sponsor recommends following the Strategy for at least three to
five years. Only the average annualized total return figures at the bottom of
each column reflect reinvestment of dividends (at the end of each year). The
results below are hypothetical for the following reasons: None of these figures
reflects any transaction fees, expenses or brokerage commissions which investors
in the Trust bear. Nor do they reflect any charges or fees deducted under the
Contracts. Trust performance will also differ from the hypothetical performance
of Strategy Stocks because Select Ten Trusts are established at various times
during a year, may not be fully invested at all times or equally weighted in all
10 stocks, and their stocks are normally purchased or sold at prices different
from the closing prices used in buying and selling Trust units. Past performance
is no guaranty of future results of the Strategy or any Select Ten Trust.
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
(FIGURES DO NOT REFLECT TRANSACTION FEES, COMMISSIONS, FUND EXPENSES OR TAXES)
<TABLE><CAPTION>
STRATEGY STOCKS(1) DOW JONES INDUSTRIAL AVERAGE (DJIA)
---------------------------------------------------------- ----------------------------------------------------------
ACTUAL DIVIDEND TOTAL ACTUAL DIVIDEND TOTAL
YEAR APPRECIATION(2) YIELD(3) RETURN(4) APPRECIATION(2) YIELD(3) RETURN(4)
- ---- -------------- ---------------------- -------------- -------------- ---------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1973 -6.22% 5.20% -1.02% -16.58% 3.46% -13.12%
1974 -7.73 7.42 -0.31 -27.57 4.43 -23.14
1975 49.06 7.96 57.02 38.32 6.08 44.40
1976 27.69 7.12 34.81 17.86 4.86 22.72
1977 -6.75 5.92 -0.83 -17.27 4.56 -12.71
1978 -6.94 7.10 0.16 -3.15 5.84 2.69
1979 3.94 8.41 12.35 4.19 6.33 10.52
1980 17.83 8.54 26.37 14.93 6.48 21.41
1981 -0.94 8.41 7.47 -9.23 5.83 -3.40
1982 17.24 8.22 25.46 19.60 6.19 25.79
1983 30.22 8.24 38.46 20.30 5.38 25.68
1984 0.69 6.65 7.34 -3.76 4.82 1.06
1985 21.66 6.97 28.63 27.66 5.12 32.78
1986 23.76 10.81 34.57 22.58 4.33 26.91
1987 1.87 5.10 6.97 2.26 3.76 6.02
1988 15.70 8.44 24.14 11.85 4.10 15.95
1989 20.35 6.95 27.30 26.96 4.75 31.71
1990 -13.00 5.06 -7.94 -4.34 3.77 -0.57
1991 28.16 5.21 33.37 20.32 3.61 23.93
1992 3.62 4.70 8.32 4.17 3.17 7.34
1993 22.71 4.21 26.92 13.72 3.00 16.72
1994 -0.19 4.08 3.89 2.14 2.81 4.95
1995 32.45 4.03 36.48 33.45 3.03 36.48
1996 24.46 3.48 27.94 26.01 2.56 28.57
1997 18.34 3.25 21.59 22.64 2.14 24.78
1998
(through
3/31/98) 8.40 0.70 9.10 11.27 0.85 11.72
Average Annualized Total Return 18.33 13.37
</TABLE>
- ----------------------------
(1) The Strategy Stocks for any given year were selected by ranking the dividend
yields for each of the stocks in the DJIA as of the beginning of the year,
based upon an annualization of the last quarterly or semi-annual regular
dividend distribution (which would have been declared in the preceding year)
divided by that stock's market value on the first trading day that year on
the New York Stock Exchange.
(2) Appreciation for the Strategy Stocks is calculated by subtracting the market
value of these stocks at the opening value on the first trading day on the
New York Stock Exchange in a given year from the market value of those
stocks at the closing value on the last trading day in the year, and
dividing the result by the market value of the stocks at the opening value
on the first trading day in that year. Appreciation for the DJIA is
calculated by subtracting the opening value of the DJIA on the first trading
day in each year from the closing value of the DJIA on the last trading day
in the year, and dividing the result by the opening value of the DJIA on the
first trading day in that year.
(3) Actual Dividend Yield for the Strategy Stocks is calculated by adding the
total dividends on the stocks in the year and dividing the result by the
market value of the stocks on the first trading day in that year. Actual
Dividend Yield for the DJIA is calculated by taking the total dividends
credited to the DJIA and dividing the result by the opening value of the
DJIA on the first trading day of the year.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Individual year Total Returns do not take into consideration any
reinvestment of dividend income.
A-5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders of Equity Investor Fund, 1998 ML Select Ten
V.I. Trust, Defined Asset Funds (the 'Trust'):
We have audited the accompanying statement of condition and the related defined
portfolio included in the prospectus of the Trust as of April 30, 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 cash and 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 Trust as of April 30, 1998
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
April 30, 1998
STATEMENT OF CONDITION AS OF APRIL 30, 1998
TRUST PROPERTY
Investments--Contracts to purchase Securities(1).........$ 99,461.75
Cash..................................................... 10,538.25
Organizational Costs(2).................................. 92,000.00
--------------------
Total............................................$ 202,000.00
--------------------
--------------------
LIABILITY AND INTEREST OF HOLDERS
Accrued Liability(2).................................$ 92,000.00
--------------------
Interest of Holders of 110,000 Units of fractional
undivided interest outstanding:
Cost to investors(3)...................................$ 110,000.00
--------------------
Total............................................$ 202,000.00
--------------------
--------------------
- ------------
(1) Aggregate cost to the Fund of the securities listed under Defined
Portfolio determined by the Trustee at 4:00 p.m., Eastern time on April 29,
1998. The contracts to purchase securities are collateralized by an irrevocable
letter of credit which has been issued by DBS Bank, New York Branch, in the
amount of $99,539.35 and deposited with the Trustee. The amount of the letter of
credit includes $99,461.75 for the purchase of securities.
(2) This represents a portion of the Trust's organizational costs which
will be deferred and amortized over the life of the Trust. Organizational costs
have been estimated based on projected total assets of $200 million. To the
extent the Trust is larger or smaller, the amount may vary.
(3) Aggregate offer price computed on the basis of the value of the
underlying securities at 4:00 p.m., Eastern time on April 29, 1998.
A-6
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INVESTOR FUND SELECT TEN V.I. TRUST
FURTHER INFORMATION REGARDING THE TRUST MAY BE OBTAINED
WITHIN FIVE DAYS OF WRITING OR CALLING THE TRUSTEE AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
Index
PAGE
----
Portfolio Description...................... 1
Risk Factors............................... 3
Sale of Units.............................. 4
Redemption of Units........................ 5
Rollover................................... 5
Income, Distributions and Reinvestment..... 6
PAGE
----
Expenses................................... 6
Taxes...................................... 7
Records and Reports........................ 7
Trust Indenture............................ 7
Miscellaneous.............................. 7
Supplemental Information................... 8
PORTFOLIO DESCRIPTION
THE STRATEGY
Simple strategies can sometimes be the most effective. The Trust seeks total
return by acquiring the ten highest dividend yielding stocks in the Dow Jones
Industrial Average* as of the date indicated in Part A, and holding them for
about one year. This investment strategy is based on three time-tested
investment principles: time in the market is more important than timing the
market; the stocks to buy are the ones everyone else is selling; and dividends
can be an important part of total return. Because issuers of DJIA stocks are
highly capitalized, established companies, they are generally able to survive
adverse developments. An investment in the Trust can be cost-efficient, avoiding
the odd-lot costs of buying small quantities of securities directly. Purchasing
a portfolio of these stocks as opposed to one or two provides a more diversified
holding. There is only one investment decision instead of ten, four quarterly
dividends instead of 40. Investments in a number of companies with high
dividends relative to their stock prices is designed to increase the Trust's
potential for higher returns. Investing in these stocks of the DJIA may be
effective as well as conservative because regular dividends are common for
established companies and dividends have accounted for a substantial portion of
the total return on stocks of the DJIA as a group. The Trust's return will
consist of a combination of capital appreciation and current dividend income.
The Trust will terminate in about one year. There can be no assurance that the
dividend rates on the selected stocks will be maintained. Reduction or
elimination of a dividend could adversely affect the stock price as well.
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The Dow Jones Industrial Average includes some of the most
well-known, widely followed and highly capitalized companies in America. These
companies are major factors in their industries. These companies file
information with the SEC which is available free of charge upon request from the
Trustee.
- --------------
* The name 'Dow Jones Industrial Average' is the property of Dow Jones &
Company, Inc., which is not affiliated with the Sponsors, has not participated
in any way in the creation of the Trust or in the selection of stocks included
in the Trust portfolio and has not reviewed or approved any information included
in this Prospectus.
1
<PAGE>
LIST AS OF OCTOBER 1, 1928 CURRENT LIST
- ----------------------------------------------------------------------
Allied Chemical Allied Signal
American Can Aluminum Co. of America
American Smelting American Express
American Sugar AT&T
American Tobbaco Boeing
Atlantic Refining Caterpillar
Bethlehem Steel Chevron
Chrysler Coca-Cola
General Electric Du Pont
General Motors Eastman Kodak
General Railway Signal Exxon
Goodrich General Electric
International Harvester General Motors
International Nickel Goodyear
Mack Trucks Hewlett-Packard
Nash Motors IBM
North American International Paper
Paramount Publix Johnson & Johnson
Postum, Inc. J.P. Morgan & Co.
Radio Corporation of America (RCA) McDonald's
Sears Roebuck Merck
Standard Oil of New Jersey Minnesota Mining & Manufacturing
Texas Corporation Philip Morris
Texas Gulf Sulphur Procter & Gamble
Union Carbide Sears Roebuck
United States Steel Travelers Group
Victor Talking Machine Union Carbide
Westinghouse Electric United Technologies
Woolworth Wal-Mart Stores
Wright Aeronautical Walt Disney
PORTFOLIO SELECTION
The Trust holds ten common stocks in the DJIA having the highest dividend
yields as of the date indicated in Part A. 'Highest dividend yield' is
calculated for each Security by annualizing the last quarterly or semi-annual
ordinary dividend distributed on the Security and dividing the result by its
closing sales price. This yield is historical and there is no assurance that any
dividends will be declared or paid in the future on the Securities.
The Strategy selection process is a straightforward, objective, mathematical
application that ignores any subjective factors concerning an issuer in the
DJIA, an industry or the economy generally. The application of the Strategy may
cause the Trust to own a stock that the Sponsor does not recommend for purchase
and, in fact, the Sponsor may have sell recommendations on a number of the
stocks in the Trust at the time the stocks are selected for inclusion in the
Trust. Various theories attempt to explain why a common stock is among the ten
highest yielding stocks in the DJIA at any given time: the issuer may be in
financial difficulty or out of favor in the market because of weak earnings or
performance or forecasts or negative publicity; uncertainties relating to
pending or threatened litigation or pending or proposed legislation or
government regulation; the stock may be a cyclical stock reacting to national
and international economic developments; or the market may be anticipating a
reduction in or the elimination of the issuer's dividend. Some of the foregoing
factors may be relevant to only a segment of an issuer's overall business yet
the publicity may be strong enough to outweigh otherwise solid business
performance. In addition, companies in certain industries have historically paid
relatively high dividends.
The deposit of the Securities on the initial date of deposit established a
proportionate relationship among the number of shares of each Security. New
Units may be created thereafter, maintaining to the extent practicable that
original proportionate relationship. Acquisition of additional Securities
subsequent to the initial 90-day period must
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<PAGE>
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 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 Contractowners 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 Trust. To minimize the risk of price
fluctuations when purchasing Securities, the Trust will try to purchase
Securities as close to the Evaluation Time or at prices as close to the
evaluated prices as possible. The Trust may also enter into program trades with
unaffiliated broker/dealers, which will have the effect of increasing brokerage
commissions while reducing market risk. The Trust may benefit from reduced
commissions and institutional prices available to the Trust.
PORTFOLIO SUPERVISION
The Trust follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. Although the Trust portfolio is regularly reviewed, because of
the Strategy, the Trust 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 Trust to dispose of a Security or cease buying it.
Furthermore, the Trust will likely continue to hold a Security and purchase
additional shares notwithstanding its ceasing to be included among the ten
highest dividend yielding stocks in the DJIA or even its deletion from the DJIA.
RISK FACTORS
An investment in the Trust entails certain risks, including the risk that
the value of an 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 may be especially susceptible to
general stock market movements and to volatile increases and decreases in value
as market confidence in and perceptions of the issuers change. Equity markets
can be affected by unpredictable factors including expectations regarding
government, economic, monetary and fiscal policies, inflation and interest
rates, economic expansion or contraction, and global or regional political,
economic or banking crises. The Sponsor cannot predict the direction or scope of
any of these factors. Additionally, equity markets have been at historically
high levels and no assurance can be given that these levels will continue. There
can be no assurance that the Trust will be effective in achieving its objective
over its one-year life or that future portfolios selected through this process
during consecutive one-year periods will meet their objectives. The Trust is not
designed to be a complete investment program.
LITIGATION AND LEGISLATION
Philip Morris Companies common stock represents approximately 10% of the
value of the Portfolio. Pending legal proceedings against Philip Morris cover a
wide range of matters including product liability and consumer protection.
Damages claimed in many of the smoking and heatlh cases alleging personal injury
(both individual and class actions), and in health cost recovery cases brought
by governments, unions and similar entities seeking reimbursement for health
care expenditures, aggregate many billions of dollars.
In June 1997, Philip Morris and other companies in the U.S. tobacco industry
entered into a settlement of significant litigation and regulatory issues
affecting the industry generally. While the costs of that settlement to the
tobacco
3
<PAGE>
industry would have been great, industry leaders considered that it at least
would reduce uncertainties facing the industry and increase stability in
business and capital markets. Now, however, legislation pending in Congress (the
McCain bill) threatens the negotiated settlement, substantially changing many
aspects of it and increasing the uncertainty surrounding the proposed resolution
of issues that could adversely affect the volume, operating revenues and
financial position of tobacco companies such as Philip Morris.
The Sponsor cannot predict the outcome of the litigation pending against
Philip Morris or how the current uncertainty concerning regulatory and
legislative measures will ultimately be resolved. The Sponsor cannot predict
whether these and other possible developments will have a material effect on the
price of Philip Morris stock over the term of the Portfolio, which could in turn
adversely affect Unit prices.
Except as set forth above, 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 Trust, although pending litigation and
legislation, particularly with respect to the tobacco industry, may have a
material adverse effect on the value of certain of the Securities in the Trust.
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 Trust or the issuers of the Securities. Changing approaches to
regulation, particularly with respect to the environment or with respect to the
petroleum or tobacco industry, may have a negative impact on certain companies
represented in the Trust. There can be no assurance that future litigation,
legislation, regulation or deregulation will not have a material adverse effect
on the Trust or will not impair the ability of the issuers of the Securities to
achieve their business goals.
LIFE OF THE TRUST
The size and composition of the Trust will be affected by the level of
purchases or redemptions of Units that may occur from time to time. Principally,
this will depend upon the number of Contractowners whose premium payments or
cash value are allocated to be invested in Units. The Trust 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 Holders of 51% of the Units. See Trust Termination.
SALE OF UNITS
OFFER PRICE
Units may be purchased by an Account from the Trustee as an investment
medium for the Contracts. Units are continuously offered at prices equal to the
net asset value per Unit, determined daily as described under Evaluations. For a
Unit to be purchased or sold at same day net asset value, allocation
instructions must be received by the Account no later than 4 p.m. Eastern time.
Units are subject to a transaction charge accrued daily at the annual rate of
$4.70 per 1,000 Units (about 0.47%). Units purchased after the Initial Date of
Deposit are subject only to future transaction charge accruals. The Sponsor is
also the principal underwriter of the Trust.
EVALUATIONS
Evaluations are determined by the Trustee on each Business Day. This
excludes Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas. If the Securities are listed on a national securities exchange or the
Nasdaq National Market, evaluations are generally based on closing sales prices
on that exchange or that system (unless the Trustee deems these prices
inappropriate) or, if closing sales prices are not available, at the mean
between the closing bid and offer prices. If the Securities are not listed or if
listed but the principal market is elsewhere, the evaluation is generally
determined based on sales prices of the Securities on the over-the-counter
market or, if sales prices in that market are not available, on the basis of the
mean between current bid and offer prices for the Securities or for comparable
securities or by appraisal or by any combination of these methods. Neither the
Sponsor nor the Trustee guarantee the enforceability, marketability or price of
any Securities.
NO CERTIFICATES
Units are issued only in uncertificated form.
4
<PAGE>
REDEMPTION OF UNITS
Units may be redeemed at any time by the Account by sending the Trustee a
redemption request.
No later than the seventh calendar day after tender (normally on the next
Business Day), the Account will be wired an amount equal to the net asset value
per Unit next computed after receipt of Contractowner instructions. Because of
market movements, changes in the Portfolio and accrued transaction fees, this
price may be more or less than the cost of the Units.
If cash is not available in the Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Sponsor in a manner
designed to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each Security. Provision is made under the
Indenture for the Sponsor to specify the minimum dollar amount in which blocks
of Securities are to be sold in order to obtain the best price for the Trust.
While these minimum amounts may vary from time to time in accordance with market
conditions, the Sponsor believes that the minimum dollar amount of sales which
would be specified would be approximately $25,000. 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 of the
Trust.
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.
ROLLOVER
Upon termination of the Trust the Accounts will redeem Units held and,
subject to obtaining an exemptive order from the SEC, invest the proceeds in the
next Select Ten V.I. Trust. Proceeds will generally be reinvested in the next
Trust on the termination date of the terminating Trust. An Insurer may, however,
stop offering the Select Ten Trust as an allocation alternative at any time. The
Sponsor may, in its sole discretion and without penalty or liability to Holders
or Contractowners, decide not to sponsor any successor Trust or decide to modify
the terms of the rollover. Prior notice of any decision would be provided to the
Accounts.
The rollover is accomplished by the in-kind redemption of Units to the
distribution agent acting on behalf of the Accounts.
The distribution agent will then adjust the Securities held for the Accounts
so that its composition matches the investment profile of the next Trust. 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. After this adjustment the
distribution agent will make an in-kind contribution of the adjusted Securities
to the next Trust. Upon receipt of the in-kind contribution, the trustee of the
next Trust will issue the appropriate number of units in the Trust to the
Accounts.
The Sponsor intends to cause the distribution agent to sell those Securities
that will not be contributed to the next Trust, and then to create units of the
next Trust, 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 the
Accounts. Accordingly, the Sponsor may, in its sole discretion, undertake a more
gradual sale of Securities and a more gradual creation of units of the next
Trust 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 incurred by the
Accounts. 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 next Trust, those
moneys may be uninvested for several days.
The Division of Investment Management of the SEC is of the view that the
rollover option (to the Account) 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.
5
<PAGE>
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME AND DISTRIBUTIONS
The annual income per Unit, after deducting estimated annual Trust expenses
per Unit, will depend primarily upon the amount of dividends declared and paid
by the issuers of the Securities and changes in Trust expenses and, to a lesser
degree, upon the level of purchases of additional Securities and sales of
Securities. There is no assurance that dividends on the Securities will continue
at their current levels or be declared at all.
Each Unit receives an equal share of distributions of dividend income net of
estimated expenses and the transaction charge. Because dividends on the
Securities are not received at a constant rate throughout the year, any
distribution may be more or less than the amount then credited to the Income
Account. Dividends received are credited to an Income Account and other receipts
to a Capital Account. A Reserve Account may be created by withdrawing from the
Income and Capital Accounts amounts considered appropriate by the Trustee to
reserve for any material amount that may be payable out of the Trust. Funds held
by the Trustee in the various accounts do not bear interest. In addition,
distributions of amounts necessary to pay the transaction fee will be made
quarterly from the Income Account to an account maintained by the Trustee for
purposes of satisfying this obligation. Proceeds of the disposition of any
Securities not used to redeem Units will be held in the Capital Account and
distributed on the final Distribution Day or following liquidation of the Trust.
REINVESTMENT
Income and principal distributions on Units will be reinvested by
participating in the Trust's reinvestment plan. Under the plan, new Units will
be created with cash to purchase additional Securities. 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
Trust portfolio. Units acquired by reinvestment will be subject to unaccrued
transaction fees. Although the Sponsor has no intention of doing so, it reserves
the right to amend, modify or terminate the reinvestment plan at any time
without prior notice to Contractowners.
EXPENSES
TRANSACTION FEE
A transaction fee, to reimburse the Sponsor for certain expenses at the rate
set forth under Defining Trust Costs, calculated on a daily basis, will be
deducted from the Income Account and distributed to the Sponsor on the quarterly
distribution days. Accrued transaction fees will be deducted from the Income
Account at the time of any interim redemption.
OTHER EXPENSES
Estimated Trust expenses are listed in Part A of the Prospectus; if actual
expenses exceed the estimate, the excess will be borne by the Trust. The
estimated expenses do not include the brokerage commissions payable by the Trust
in purchasing and selling Securities. The Trustee's Fee shown in Part A of this
Prospectus assumes that the Trust will reach a size estimated by the Sponsor and
is based on a sliding fee scale that reduces the per 1,000 Units Trustee's fee
as the size of the Trust increases. The Trustee's annual fee is payable in
monthly installments. The Trustee also benefits when it holds cash for the Trust
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 Trust and other legal fees
and expenses, termination expenses and any governmental charges. The Trustee has
a lien on Trust 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. While the fee may exceed its
costs of providing these services, the total supervision fees from all trusts of
Equity Investor Fund will not exceed its costs for providing these services to
all of those trusts 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 Holders' approval.
6
<PAGE>
Expenses incurred in establishing the Trust, including the cost of the
initial preparation of documents relating to the Trust, the initial fees and
expenses of the Trustee, legal expenses and any other out-of-pocket expenses
will be paid by the Trust and amortized over the life of the Trust. Advertising
and selling expenses will be paid by the Sponsor at no charge to the Trust.
TAXES
The Trust is not an association taxable as a corporation for federal income
taxes. Taxable income received by an Account will in effect be offset by a
deduction for an increase in reserves. For information on tax consequences to
Contractowners, see the attached Prospectus for the Contracts.
RECORDS AND REPORTS
The Trustee keeps records of the transactions of the Trust, including a
current list of the Securities and a copy of the Indenture, which may be
inspected by Holders at reasonable times during business hours.
With each distribution to the Accounts, the Trustee includes a statement of
the amounts of income and any other receipts being distributed. Following the
termination of the Trust, the Trustee sends each Account a statement summarizing
transactions in the Trust's accounts including amounts distributed from them,
identifying Securities sold and purchased and listing Securities held and the
number of Units outstanding at termination and stating the Redemption Price per
1,000 Units at termination, and the fees and expenses paid by the Trust, among
other matters. Trust accounts may be audited by independent accountants selected
by the Sponsor and any report of the accountants will be available from the
Trustee on request.
TRUST INDENTURE
The Trust is a 'unit investment trust' created under New York law by a Trust
Indenture among 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 Holders 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 Holders (as determined in good faith by the Sponsor). The Indenture
may also generally be amended upon consent of Holders of 51% of the Units. No
amendment may reduce the interest of any Holder of the Trust without the
Holder's consent or reduce the percentage of Units required to consent to any
amendment without unanimous consent of Holders. Holders will be notified of the
substance of any amendment.
The Trustee may resign upon notice to the Sponsor. It may be removed by
Holders of 51% of the Units at any time or by the Sponsor without the consent of
Holders 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.
The Sponsor and the Trustee are not liable to the Accounts 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.
7
<PAGE>
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and New York
State banking authorities.
SPONSOR
Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch & Co., Inc. 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 members of various selling groups or as agents 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 Funds portfolio transactions. The code is
intended to prevent any act, practice or course of conduct which would operate
as a fraud or deceit on any Trust and to provide guidance to these persons
regarding standards of conduct consistent with the Sponsor's responsibilities to
the Trust.
PERFORMANCE INFORMATION
Total returns, average annualized returns or cumulative returns for various
periods of the Strategy Stocks, the related index, the current or one or more
prior Select Ten Trusts may be included from time to time in advertisements,
sales literature and reports to current or prospective investors. Total return
shows changes in Unit price during the period plus reinvestment of dividends and
capital gains, divided by the offer price. Average annualized returns show the
average return for stated periods of longer than a year. Sales material may also
include an illustration of the cumulative results of like annual investments in
Strategy Stocks during an accumulation period and like annual withdrawals during
a distribution period. Figures for actual Trusts (but not Strategy Stocks or the
related index) reflect deduction of all Trust expenses, but do not reflect any
charges or deductions assessed under the Contracts. No provision is made for any
income taxes payable. Similar figures may be given for Strategy Stocks. The
performance of Strategy Stocks may also be shown in comparison to other indexes.
Investors should bear in mind that this represents past performance and is no
assurance of future results of the current or any future Trust.
SUPPLEMENTAL INFORMATION
Upon writing or calling the Trustee shown on the back cover of this
Prospectus, Holders 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.
8
<PAGE>
Defined
Asset FundsSM
SPONSOR: EQUITY INVESTOR FUND
Merrill Lynch, 1998 ML SELECT TEN
Pierce, Fenner & Smith IncorporatedV.I. TRUST
Defined Asset Funds This Prospectus does not contain all of the
P.O. Box 9051 information with respect to the investment
Princeton, NJ 08543-9051 company set forth in its registration
(609) 282-8500 statement and exhibits relating thereto which
- ------------------------ have been filed with the Securities and
TRUSTEE: Exchange Commission, Washington, D.C. under
The Bank of New York the Securities Act of 1933 and the Investment
Unit Investment Trust Department Company Act of 1940, and to which reference
Box 974--Wall Street Division is hereby made. Copies of filed material can
New York, NY 10268-0974 be obtained from the Public Reference Section
1-800-221-7771 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
related exhibits; and any information or
representation not contained therein must not
be relied upon as having been authorized.
------------------------
This Prospectus may be used as a preliminary
prospectus for a future series; in which case
investors should note the following:
Information contained herein is subject to
amendment. A registration statement relating
to securities of a future series has been
filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer
solicitation or sale would be unlawful prior
to registration or qualification under the
securities laws of any such State.
70078--5/98
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositor 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 through 1.12 to the Registration Statement on Form S-6
under the Securities Act of 1933 for Municipal Investment Trust Fund, Monthly
Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).
IV. Information as to Officers and Director 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
filings indicated and made a part of this Registration Statement:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 8-7221
----------------------------
B. The Internal Revenue Service Employer Identification Numbers of the Sponsor
and Trustee are as follows:
Merrill Lynch, Pierce, Fenner & Smith Incorporated 13-5674085
The Bank of New York, Trustee..................... 13-4941102
UNDERTAKING
The Sponsor undertakes that it will not make any amendment to the Supplement to
this Registration Statement which includes material changes without submitting
the amendment for Staff review prior to distribution.
II-1
<PAGE>
SERIES OF EQUITY INCOME FUND,
DEFINED ASSET FUNDS MUNICIPAL INSURED SERIES
AND MERRILL LYNCH FUND OF STRIPPED ('ZERO') U.S. TREASURY SECURITIES
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933
SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
Equity Income Fund, Index Series, S&P 500 Trust 2 and S&P
Midcap Trust................................................ 33-44844
Equity Income Fund, Investment Philosophy Series 1991
Selected Industrial Portfolio............................... 33-39158
Equity Income Fund, Select Ten Portfolio--1995 Winter
Series...................................................... 33-55811
Equity Income Fund, Select Ten Portfolio--1995 Spring
Series...................................................... 33-55807
Equity Income Fund, Select Ten Portfolio--1997 Series A..... 333-15193
Defined Asset Funds Municipal Insured Series................ 33-54565
Merrill Lynch Fund of Stripped ('Zero') U.S. Treasury
Securities Series A......................................... 2-89536
CONTENTS OF REGISTRATION STATEMENT
The Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference from the
Cross-Reference Sheet of the Registration Statement of Defined Asset Funds
Municipal Insured Series, 1933 Act File No. 33-54565).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The following exhibits:
1.1 --Form of Trust Indenture.
1.1.1 --Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement under the Securities Act
of 1933 of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the headings
'Taxes' and 'Miscellaneous--Legal Opinion' in the Prospectus.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Equity Income Fund, Select Ten
Portfolio, 1996 International Series B (United Kingdom and Japan
Portfolios), 1933 Act File No. 333-00593).
9.2 --Form of Participation Agreement.
R-1
<PAGE>
SIGNATURES
The registrant hereby identifies the series numbers of Equity Income Fund and
Defined Asset Funds Municipal Insured Series listed on page R-1 for the purposes
of the representations required by Rule 487 and represents the following:
1) That the portfolio securities deposited in the series as to which this
registration statement is being filed do not differ materially in type or
quality from those deposited in such previous series;
2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information
for, the series with respect to which this registration statement is
being filed, this registration statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 30TH DAY OF
APRIL, 1998.
SIGNATURES APPEAR ON PAGE R-3.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Numbers: 33-43466 and 33-51607
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
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
EQUITY INVESTOR FUND
1998 ML SELECT TEN V.I. TRUST
DEFINED ASSET FUNDS
REFERENCE TRUST INDENTURE
Dated as of April 30, 1998
This Trust Indenture (the "Indenture") sets forth certain provisions
in full and incorporates other provisions by reference to the document
entitled "Standard Terms and Conditions of Trust Effective October 21,
1993" (the "Standard Terms and Conditions of Trust") and such provisions as
are set forth in full herein and such provisions as are incorporated by
reference constitute a single instrument. All references herein to
Articles and Sections are to Articles and Sections of the Standard Terms
and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Sponsor and the Trustee agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities (or contracts for the purchase of such Securities)
listed under "Defined Portfolio" in the Prospectus have been deposited with
(or assigned to) the Trustee under this Indenture, and the number of Units
specified under Statement of Condition in the Prospectus have been
delivered to, or assigned in the name of or on the order of, Merrill Lynch
Life Insurance Company by the Trustee in exchange therefor.
(b) The Sponsor is Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
(c) The Trustee is The Bank of New York.
(d) The Trust is organized as a Grantor Trust for Federal tax
purposes.
(e) Units must be held in uncertificated form.
(f) The "Trustee Expense Limit" shall initially mean $_____ per 1,000
Units.
(g) The definition "Date of Deposit" is revised to read in its
entirety, "The date of creation of the Trust."
(h) The words "Deferred Sales Charge", wherever used in the Standard
Terms and Conditions, shall mean the "transaction fee", as described in the
Prospectus.
(i) The definition of "Non-Qualifying Securities" is revised to read
in its entirety: "As of each Diversification Test Day, all Securities the
holding of which would, unless cured as set forth in Section 3.17, cause an
investing separate account not to qualify under Section 817(h) of the
Code."
(j) The following new definitions are added to Article I:
Insurance Companies
Merrill Lynch Life Insurance Company and ML Life Insurance Company of
New York and their successors and assigns.
Policyowner
An owner of a policy supported by a Separate Account.
Separate Account
Any separate account supporting variable annuity contracts or variable
life insurance policies issued by an Insurance Company that invests in
Units of the Trust.
(k) The word "Sponsors", wherever used in the Standard Terms and
Conditions (except as set forth below) shall mean the Sponsor identified in
paragraph (b) of this Reference Trust Indenture.
(l) Wherever the word "Sponsors" is used in Section 2.02(a), the words
"Insurance Companies" shall be substituted in lieu thereof.
(m) Section 2.02(b)(1) of the Standard Terms is amended to read as
follows:
"(1) Subject to the requirements set forth below in this paragraph
(b), a Separate Account may, on any Business Day (the 'Day following the
Trade Date'), subscribe for additional Units as follows:
(A) By 9:00 a.m. New York time on the Day following the Trade
Date, the Separate Account shall provide notice (the "Subscription
Notice") to the Sponsor, by facsimile transmission, of the Separate
Account's intention to subscribe for additional Units. Each Insurance
Company has agreed that it will only submit such a Subscription Notice
for Units for which instructions were received from Policyowners
before the Evaluation Time on the Trade Date. The Subscription Notice
shall identify the dollar amount to be subscribed.
(B) Before the Evaluation Time on any Business Day on which
it receives a Subscription Notice, the Sponsor shall transmit to the
Trustee a copy of the Subscription Notice, shall verify with the
Trustee the number of Units to be issued pursuant to the notice,
determined by dividing the amount specified in the Subscription Notice
by the Unit Value as of the Evaluation Time on the Trade Date less the
amount per Unit of any accrued transaction fees as of the Trade Date,
and, as provided below, shall specify the Additional Securities to be
purchased.
(C) Not later that 2:00 p.m. on the Day following the Trade
Date, the Separate Account shall wire to the Trustee in federal funds
the amount specified in the Subscription Notice.
(D) Following receipt of said wire, the Trustee shall
credit to the account of the purchasing Separate Account as of the
close of business on such date, the number of Units applicable to that
Subscription Notice."
(n) Wherever the word "Sponsors" is used in Section 2.02(b)(3), in
lines 1 and 9 of Section 2.03, and in line 6 of Section 3.01(b), the words
"Separate Account" shall be substituted in lieu thereof.
(o) Section 2.02(b)(7) of the Standard Terms is amended to read as
follows:
"(7) In connection with each Subscription Notice pursuant to this
Section 2.02(b), the Sponsor and Trustee shall execute a Deposit
Certificate specifying the amount of the deposit, the number of Units
to be issued and the description and quantity of Additional Securities
to be acquired therewith. Execution of a Deposit Certificate shall be
deemed a certification by the Sponsor that the purchase of Additional
Securities specified therein complies with the conditions of this
Section 2.02(b) and a restatement by the Sponsor of the
representations, agreements and certifications made by it in Sections
1 and 8 through 11, inclusive, of the Standard Terms of Closing
incorporated by reference into the Closing Memorandum for the Trust to
which the deposit relates as though the representations, agreements
and certifications were made with respect to the Deposit Certificate."
(p) The words "Sponsor, on behalf of the Separate Account" shall be
substituted in lieu of the word "Sponsors" in lines 2, 4 and 8 of Section
2.03.
(q) In line 16 of Section 3.05(b), the words "create additional Units"
shall be substituted for the words "purchase Units from the Sponsors".
(r) Section 3.06 shall be amended to read in its entirety: "Section
3.06. Reinvestment Program. If a Holder is participating in a
Reinvestment Program, amounts to be reinvested shall be applied by the
Trustee to purchase Additional Securities, in the manner set forth in
Section 2.02(b), in the creation of additional Units of the Trust."
(s) The following sentence shall be added to the first paragraph of
Section 3.14: "With respect to any matter involving voting of Securities
held by a Trust, to the Trustee shall determine how to vote."
(t) Paragraphs (a) and (b) of Section 3.17 shall be replaced in their
entirety by the following, and paragraph (c) shall be redesignated as
paragraph (b):
"(a) At least five Business Days before each Diversification Test
Day, the Trustee shall request in writing from independent certified
public accountants designated by the Sponsor pursuant to Section
8.01(g) written certification, in form and substance satisfactory to
the Trustee and its counsel, as to whether there are any
Non-Qualifying Securities held in the Trust on such Diversification
Test Day and on the last Business Day of such quarter. Such certifi
cations shall be delivered to the Trustee and the Sponsor no later
than (i) the Business Day following such Diversification Test Day or
(ii) such last Business Day, as the case may be. In the event that
such accountants' certifications with respect to a Diversification
Test Day state that any Non-Qualifying Securities are held by the
Trust as of such Diversification Test Day, the Trustee, at the
direction of the Sponsor, shall sell such portion of the
Non-Qualifying Securities as necessary so that no Non-Qualifying
Securities are held by the Trust on the last Business Day of that
quarter or take such other action as the Sponsor may direct. In the
event that such accountants' certifications with respect to the last
Business Day of a quarter state that any Non-Qualifying Securities are
held by the Trust as of such last Business Day, the Trustee, at the
direction of the Sponsors, shall sell such portion of the
Non-Qualifying Securities as promptly as possible or take such other
action as shall be directed by the Sponsor as necessary so that the
Trust continues to be an eligible investment for the Separate Account
in compliance with Section 817(h) of the Code. Within five Business
Days after any sale of Non-Qualifying Securities, the Trustee shall
certify to the Sponsor, in form and substance satisfactory to the
Sponsor and its counsel, that any such action required hereinabove has
been taken."
(u) Section 4.01(f) shall be amended to read in its entirety:
"(f) The Evaluator shall furnish to the independent certified
public accountants designated by the Sponsor pursuant to Section
8.01(g) the closing sale prices of the Securities as of each Diversi
fication Test Day and the last Business Day of each quarter. These
evaluations shall be furnished promptly on the day on which they are
made."
(v) At the end of Section 5.01, the following new paragraph shall be
added: "Promptly following the determination of the Trust Value on each
Business Day, the Trustee shall transmit, by facsimile to the Insurance
Companies at such telephone number as is furnished to the Trustee for such
purpose from time to time by the Insurance Companies, notice of an amount
representing the Unit Value less the amount of accrued but unpaid
transaction fees per Unit as of the Evaluation Time on said Business Day."
(w) Section 5.02(a) shall be amended to read in its entirety:
"(a) A Holder may tender Units for redemption on any Business Day
by notifying the Sponsor, at such telephone number as the Sponsor
shall designate in writing to the Insurance Companies from time to
time, by facsimile no later than 9:00 a.m. New York time on the
following Business Day of Units to be tendered for redemption pursuant
to instructions received by the Insurance Company from Policyowners of
the Separate Account no later than the Evaluation Time on the Business
Day on which tender is deemed to occur, to be paid by wire on or
before 2:00 p.m. Eastern time on the next succeeding Business Day.
The Sponsor shall promptly provide written notice of any such redemp
tion to the Trustee, which may be by facsimile transmission. Any Unit
so tendered shall be redeemed and cancelled by the Trustee on or
before the Redemption Date."
(x) In the third line of Section 5.02(b), the words "next following"
shall be replaced by the words "subject to satisfaction of Section 5.02(a),
on the Business Day immediately preceding receipt of the notification of".
The proviso in the third sentence, and the entire fourth and fifth
sentences, of Section 5.02(b) and the entirety of Section 5.02(g) shall be
deleted.
(y) The last two sentences of the second paragraph of Section 5.03
shall be revised to read in their entirety: "The Distribution Agent will
appoint the Sponsor as its agent to sell Non-Duplicated Securities and any
excess amount of Duplicated Securities and to use the proceeds and any cash
to acquire additional securities so that the composition of the securities
held exactly matches the composition of the new Trust and shall then on
behalf of the Holders contribute those Securities and any cash to the
Trustee of the new Trust in exchange for Units, all in accordance with the
Prospectus for the new Trust."
EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
APRIL 30, 1998
EQUITY INVESTOR FUND,
1998 ML SELECT TEN V.I. TRUST, DEFINED ASSET FUNDS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, N.J. 08543-9051
(609) 282-8500
Dear Sirs:
We have acted as special counsel for you, as sponsors (the 'Sponsors') of
Equity Investor Fund, 1998 ML Select Ten V.I. Trust, Defined Asset Funds (the
'Fund'), in connection with the issuance of units of fractional undivided
interest in the Fund (the 'Units') in accordance with the Trust Indenture
relating to the Fund (the 'Indenture').
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indenture and the issuance of the Units have been duly
authorized by the Sponsor and (ii) the Units, when duly issued and delivered by
the Trustee in accordance with the Indenture, will be legally issued, fully paid
and non-assessable.
We hereby consent to the use of this opinion as Exhibit 3.1 to the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the headings 'Taxes' and 'Miscellaneous--Legal
Opinion.'
Very truly yours,
DAVIS POLK & WARDWELL
<PAGE>
EXHIBIT 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of Equity Investor Fund, 1998 ML Select Ten V.I. Trust,
Defined Asset Funds:
We consent to the use in this Registration Statement No. 333-50451 of our report
dated April 30, 1998, relating to the Statement of Condition of Equity Investor
Fund, 1998 ML Select Ten V.I. Trust, Defined Asset Funds and to the reference to
us under the heading 'Miscellaneous--Auditors' in the Prospectus which is a part
of this Registration Statement.
DELOITTE & TOUCHE LLP
New York, N.Y.
April 30, 1998
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of the day of , 1998, by and
between Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), as Sponsor and principal underwriter of Equity Investor Fund, 1998
ML Select Ten V.I. Trust and each successor V.I. Trust (each, a "Fund"),
and MERRILL LYNCH LIFE INSURANCE COMPANY, a life insurance company
organized under the laws of the state of Arkansas, (the "Company"), on its
behalf and on behalf of each segregated asset account of the Company set
forth on Schedule A as attached hereto, as such schedule may be amended
from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, Equity Investor Fund has a registration statement effective
with the Securities Exchange Commission ("SEC") under the Investment
Company Act of 1940, as amended (the "1940 Act") by which it has registered
as a unit investment trust and the Fund will have a registration statement
effective with the SEC registering its units of fractional undivided
interest ("Units") for offer and sale under the Securities Act of 1933, as
amended (the "1933 Act"); and
WHEREAS, Merrill Lynch desires the Fund to act as an investment
vehicle for separate accounts established for variable annuity contracts
and/or variable life insurance contracts set forth on Schedule A attached
hereto, as it may be amended from time to time, to be offered by the
Company; and
WHEREAS, Merrill Lynch is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act") and
is a member in good standing of the National Association of Securities
Dealers Inc. (the "NASD"); and
WHEREAS, the Company has registered or will register under the 1933
Act certain variable annuity contracts and/or variable life insurance
contracts funded or to be funded through one or more of the Accounts (the
"Contracts"); and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act, unless exempt from such
registration; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase units of fractional undivided
interest of the Fund ("Units") on behalf of the Accounts to fund the
Contracts, and the Fund intends to sell such Units to the relevant Accounts
at the applicable net asset value of such Units, subject to a deferred
transaction fee as described in the Fund prospectus;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
Sale of Units
1.1 Subject to Section 1.3 of this Agreement, Merrill Lynch shall
cause the Fund to make Units available to the Accounts at such Units' most
recent net asset value provided to the Company prior to receipt by the unit
trust department of Merrill Lynch ("Defined Asset Funds") of a purchase
order, in accordance with the operational procedures mutually agreed to by
the Defined Asset Funds and the Company from time to time and the
provisions of the then-current prospectus of the Fund. Units shall be
ordered in such quantities and at such times as determined by the Company
to be necessary to meet the requirements of the Contracts. The Fund,
acting through Defined Asset Funds, may refuse to sell Units to any person
(including the Company and the Accounts) or suspend or terminate the
offering of Units if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of Merrill
Lynch acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interest of
the holders of Units.
1.2 Subject to Section 1.3 of this Agreement, the Fund will redeem
any full or fractional Units when requested by the Company on behalf of an
Account at their most recent net asset value (reflecting deduction of any
accrued but uncollected transaction fees) provided to the Company prior to
receipt by Defined Asset Funds of the request for redemption, established
in accordance with the operational procedures mutually agreed to by Defined
Asset Funds and the Company from time to time and the provisions of the
then-current prospectus of the Fund. The Fund's Trustee shall make payment
for such Units in the manner established from time to time by Defined Asset
Funds, consistent with the terms of the Indenture relating to the Fund, and
will use its best efforts to make such payment by 2:00 p.m. on the same
Business Day on which such orders for redemption are received by Defined
Asset Funds. In no event shall payment be delayed for a greater period
than is permitted by the 1940 Act (including any Rule or order of the SEC
thereunder).
1.3 Defined Asset Funds, on behalf of the Fund, shall accept purchase
and redemption orders resulting from investment in and payments under the
Contracts on each Business Day, provided that such orders are received
prior to 9:00 a.m. New York time on such Business Day and reflect
instructions received by the Company from Contract holders in good order
prior to 4:00 p.m. Eastern time on the prior Business Day. Any purchase or
redemption order for Units received by the Company from a Contract holder
after said time on any Business Day shall not be submitted by the Company
until the second succeeding Business Day. "Business Day" shall be defined
as set forth in the Fund prospectus. Purchase and redemption orders for
Units shall be provided by the Company to Defined Asset Funds in such
written or electronic form (including facsimile) as may be mutually
acceptable to the Company and Defined Asset Funds. On behalf of the Fund,
Defined Asset Funds may reject purchase and redemption orders that are not
in proper form. In the event that the Company and Defined Asset Funds
agree to use a form of written or electronic communication which is not
capable of recording the time, date and recipient of any communication and
confirming good transmission, the Company agrees that it shall be
responsible (i) for confirming with Defined Asset Funds that any
communication sent by the Company was in fact received by Defined Asset
Funds in proper form, and (ii) for the effect of any delay in Defined Asset
Funds' receipt of such communication in proper form. Defined Asset Funds
and its agents shall be entitled to rely, and shall be fully protected from
all liability in acting, upon the instructions of the persons named in the
list of authorized individuals attached hereto as Schedule B, or any
subsequent list of authorized individuals provided to Defined Asset Funds
or its agents by the Company in such form, without being required to
determine the authenticity of the authorization or the authority of the
persons named therein.
1.4 Purchase orders that are received by Defined Asset Funds in
accordance with Section 1.3 of this Agreement shall be paid for no later
than 2:00 p.m. on the Business Day when Defined Asset Funds receives notice
of the order. Payments shall be made by the Company in federal funds
transmitted by wire to the Fund Trustee. In the event that the Company
shall fail to pay in a timely manner for any purchase order validly
received by Defined Asset Funds on behalf of the Fund pursuant to Section
1.3 of this Agreement (whether or not such failure is the fault of the
Company), the Company shall hold the Fund and Merrill Lynch harmless from
any losses reasonably sustained by either as the result of acting in
reliance on such purchase order.
1.5 Issuance and transfer of the Fund's Units will be by book entry
only. Certificates representing Units will not be issued to the Company or
to any Account. Units acquired by an Account will be recorded in the
appropriate title for the Account.
1.6 Merrill Lynch shall cause the Fund Trustee to furnish prompt
written notice to the Company of any income, dividends or capital gain
distributions payable on Units. The Company hereby elects to receive all
such income distributions and capital gain distributions in additional
Units. The Trustee shall notify the Company of the number of Units so
issued.
1.7 Merrill Lynch shall cause the Fund Trustee to make the net asset
value per Unit (reflecting deduction of any accrued but uncollected
transaction fees) available to the Company on a daily basis as soon as
reasonably practical after such net asset value is calculated and shall use
its best efforts to make such net asset value per Unit available no later
than 6:30 p.m. New York time. Any error in the net asset value per Unit
that is discovered by the Trustee after such value has been reported to the
Company shall be reported to the Company immediately.
1.8 Merrill Lynch agrees that Units will be sold only to the Company,
any affiliated insurance company and their separate accounts. No Units
will be sold directly to the general public. The Company agrees that Fund
Units will be used only for the purposes of funding the Contracts and
Accounts listed in Schedule A, as such schedule may be amended from time to
time.
1.9 The Company hereby appoints Defined Asset Funds as its attorney
in fact for each Account purchasing Units for the purpose of executing any
documents required to be executed on behalf of an Account in connection
with purchase of Units under Article II of the Trust's Indenture or
redemption of Units under Article V thereof.
ARTICLE 2
Obligations of the Parties
2.1 Merrill Lynch, acting through Defined Asset Funds, shall prepare
and be responsible for filing with the SEC and any state securities
regulators, all prospectuses, notices and other documents of the Fund
required to be filed with said regulators. The Fund shall bear the costs
of registration and qualification of its Shares, preparation and filing of
the documents listed in this Section 2.1 and all taxes to which the Fund,
as an issuer, is subject on the issuance and transfer of its securities.
2.2 At least annually, Merrill Lynch, acting through Defined Asset
Funds or its designee, shall provide the Company, free of charge, with a
camera-ready proof of the current prospectus of the Fund and any other
assistance as is reasonably necessary in order for the parties hereto once
each year (or more frequently if the Fund prospectus is supplemented or
amended) to have the prospectus for the Contracts and the Fund prospectus
printed together in one document; the expenses of such printing to be borne
by the Company. Defined Asset Funds shall be responsible solely for
providing the Fund prospectus in the format in which it is accustomed to
formatting prospectuses, the Fund shall bear the expense of providing the
prospectus in such format (e.g., typesetting expenses), and the Company
shall bear the expense of adjusting or changing the format to conform with
any of its prospectuses.
2.3 Merrill Lynch, acting through Defined Asset Funds or its
designee, shall provide the Company, if and to the extent applicable to the
Units, free of charge with copies of each Fund report to Unitholders and
other communications to Unitholders.
2.4 The Company shall furnish, or cause to be furnished, to Defined
Asset Funds or its designee, a copy of each prospectus for the Contracts or
statement of additional information for the Contracts in which the Fund or
Merrill Lynch is named prior to the filing of such document with the SEC.
The Company shall furnish, or shall cause to be furnished, to Defined Asset
Funds or its designee, each piece of sales literature or other promotional
material intended for distribution to the public in which the Fund or
Merrill Lynch is named, at least five Business Days prior to its use. No
such prospectus, statement of additional information or material shall be
used if Defined Asset Funds or an authorized agent thereof reasonably
objects to such use within five Business Days after receipt of such
material.
2.5 The Company shall not give any information or make any
representations or statements on behalf of or concerning the Fund or
Defined Asset Funds in connection with the sale of the Contracts other than
information or representations contained in and accurately derived from the
registration statement or prospectus for the Fund (as such registration
statement and prospectus may be amended or supplemented from time to time)
or in sales literature or other promotional materials approved by Defined
Asset Funds or its designee, except with written permission of Defined
Asset Funds or its designee.
2.6 Neither the Fund nor Defined Asset Funds shall give any
information or make any representations or statements on behalf of the
Company or concerning the Company, the Accounts or the Contracts other than
information or representations contained in and accurately derived from the
registration statement or prospectus for the Contracts (as such
registration statement and prospectus may be amended or supplemented from
time to time), or in materials approved by the Company for distribution
including sales literature or other promotional materials, except with the
written permission of the Company.
2.7 The Company shall amend the registration statement of the
Contracts under the 1933 Act and registration statement for each Account
under the 1940 Act from time to time as required in order to effect the
continuous offering of the Contracts or as may otherwise be required by
applicable law. The Company shall register and qualify the Contracts for
sale to the extent required by applicable federal and state securities laws
and insurance laws of the various states.
ARTICLE 3
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the state of
its incorporation and has established each Account as a segregated asset
account under such laws on the date set forth in Schedule A.
3.2 The Company represents and warrants that it has registered or,
prior to any issuance or sale of the contracts, unless exempt from such
registration will register each of its Accounts as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
3.3 The Company represents and warrants that the issuance of the
Contracts, unless exempt from such registration, will be registered under
the 1933 Act prior to any issuance or sale of the Contracts; the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance suitability
requirements.
3.4 The Company represents and warrants that, provided the
representations and warranties made pursuant to Section 3.7 of this
Agreement are true, its Contracts are currently and at the time of issuance
will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company shall make every effort to maintain such treatment
and shall notify Defined Asset Funds immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that
they might not be so treated in the future.
3.5 Merrill Lynch represents and warrants that the Fund, prior to any
issuance of sale of Units, will be duly organized and validly existing as a
trust in accordance with the laws of the State of New York.
3.6 Merrill Lynch represents and warrants that the Units offered and
sold pursuant to this Agreement will be registered under the 1933 Act and
that the Fund will be a part of a unit investment trust registered under
the 1940 Act. Defined Asset Funds shall use its best efforts to amend the
Fund's registration statement under the 1933 Act and the 1940 Act from time
to time as required in order to effect the continuous offering of Units of
the Fund and annual successor series. The Company shall consult with
Defined Asset Funds concerning any requirements to register Units for sale
to the Accounts in any state. Defined Asset Funds will advise the Company
promptly of any action of the SEC or any state authority of which it may be
advised, affecting registration or qualification of the Units or the right
to offer Units for sale. The Company agrees that it will not solicit any
orders for the purchase of Units if and so long as effectiveness of the
Fund's registration statement or any necessary amendments thereto shall be
suspended under any of the provisions of the 1933 Act, or if and so long as
a current prospectus, as required by Section 5(b) of such Act, is not on
file with the SEC, or redemption rights of shareholders have been suspended
under any of the circumstances specified in Section 22(e) of the 1940 Act,
provided nothing in this Section 3.6 shall affect the Fund's obligations to
redeem its Units in accordance with the provisions of the Indenture and the
Fund's prospectus, and provided further that the Company may continue to
act under this Agreement until it has been notified in writing (which may
include written notice by facsimile) of the occurrence of any of these
events.
3.7 Merrill Lynch represents and warrants that the Fund's investments
will comply with the diversification requirements set forth in section
817(h) of the Code and regulations thereunder and any successor provisions
of the Code or regulations thereunder.
3.8 Merrill Lynch represents that each Fund prospectus, as of their
respective effective dates, will contain all statements and information
which are required to be stated therein by the 1933 Act, will in all
respects conform to the requirements thereof and will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein, or necessary to make the statements therein
not misleading; provided, however, that this representation shall not apply
to information contained in or omitted from a Fund prospectus in reliance
upon, and in conformity with, written information furnished by the Company
specifically for use in the preparation thereof. Defined Asset Funds shall
promptly advise the Company of the happening of any event which makes
untrue any material statement in a Fund's registration statement or
prospectus or which requires the making of any change in either of those
documents in order to make the statements therein not misleading.
ARTICLE 4
Indemnification
4.1 The Company agrees to indemnify and hold harmless the Fund and
Merrill Lynch and each of its directors, officers, employees and agents and
each person, if any, who controls Merrill Lynch within the meaning of
Section 15 of the 1933 Act (collectively, "Indemnified Parties") against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or expenses (including
reasonable costs of investigating or defending any alleged loss, claim,
damage, liability or expense and reasonable counsel fees incurred in
connection therewith [collectively, "Losses"] to which any such Indemnified
Party may become subject under any statute or regulation, or common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement, prospectus or statement of additional
information for the Contracts or in any sales literature or other
promotional material generated or approved by the Company on behalf of
the Contracts or Accounts (or any amendment or supplement to any of
the foregoing) (collectively, "Company Documents"), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this indemnity shall
not apply as to any Indemnified Party if such statement was made in
reliance upon and was accurately derived from written information
furnished to the Company by or on behalf of the Fund for use in
Company Documents or otherwise for use in connection with the sale of
the Contracts or Units; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Fund Documents (as defined in Section 4.2(a) below) or
wrongful conduct of the Company or persons under its control, with
respect to the sale or acquisition of the Contracts or Units; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Fund
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to Defined Asset Funds or its designee by or on behalf of
the Company; or
(d) arise out of or result from any failure by the Company
to provide the services or furnish the materials required under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company.
4.2 Merrill Lynch agrees to indemnify and hold harmless the Company
and each of its directors, officers, employees and agents and each person,
if any, who controls the Company within the meaning of Section 15 of the
1933 Act (also collectively, the "Indemnified Parties") against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of Merrill Lynch) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim,
damage, liability or expense and reasonable legal fees incurred in
connection therewith [collectively, "Losses"] to which such Indemnified
Parties may become subject under any statute or regulation, or at common
law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Fund (or any amendment or
supplement thereto) or in sales literature with respect to the Fund
generated or approved by Defined Asset Funds (but regarding sales
literature so approved, solely with respect to statements regarding
the Fund) (collectively, "Fund Documents") or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this indemnity shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to Defined Asset
Funds by or on behalf of the Company for use in Fund Documents or
otherwise for use in connection with the sale of the Contracts or
Units; or
(b) arise out of or result from statements or
representations (other than statements or representations contained in
and accurately derived from Company Documents) or wrongful conduct of
Defined Asset Funds or persons under its control, with respect to the
sale or acquisition of the Contracts or Units; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
concerning the Fund furnished to the Company by or on behalf of
Defined Asset Funds; or
(d) arise out of or result from any failure by Merrill Lynch
or Defined Asset Funds to provide the services or furnish the
materials required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by Merrill Lynch in this Agreement
or arise out of or result from any other material breach of this
Agreement by Merrill Lynch or Defined Asset Funds.
4.3 Neither the Company, Merrill Lynch nor Defined Asset Funds shall
be liable under the indemnification provisions of Section 4.1 or 4.2, as
applicable, with respect to any Losses incurred or assessed against any
Indemnified Party to the extent such Losses arise out of or result from
such Indemnified Party's willful misfeasance, bad faith or negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
4.4 Neither the Company, Merrill Lynch nor Defined Asset Funds shall
be liable under the indemnification provisions of Section 4.1 or 4.2, as
applicable, with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the party against whom
indemnification is sought in writing within a reasonable time after the
summons, or other first written notification giving information of the
nature of the claim, shall have been served upon or otherwise received by
such Indemnified Party (or after such Indemnified Party shall have received
notice of service upon or other notification to any designated agent), but
failure to notify the party against whom indemnification is sought of any
such claim shall not relieve that party from any liability that it may have
to the Indemnified Party in the absence of Sections 4.1 and 4.2.
4.5 In case any such action is brought against the Indemnified
Parties, the indemnifying party shall be entitled to participate, at its
own expense, in the defense of such action. The indemnifying party also
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice from the
indemnifying party to the Indemnified Party of an election to assume such
defense, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the indemnifying party will not be
liable to the Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
ARTICLE 5
Termination
5.1 This Agreement may be terminated by either party for any reason
by six (6) months' advance written notice to the other party, and may be
terminated by either party pursuant to Sections 5.2 through 5.7 below upon
written notice to the other party.
5.2 This Agreement may be terminated at the option Merrill Lynch,
acting through Defined Asset Funds, upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance department of any
state, or any other regulatory body regarding the Company's duties under
this Agreement, or related to the sale of the Contracts, the operation of
the Account, the administration of the Contracts or the purchase of the
Units, or an expected or anticipated ruling, judgment or outcome that
would, in Defined Asset Funds' reasonable judgment, materially impair the
Company's ability to meet and perform the Company's obligations and duties
hereunder.
5.3 This Agreement may be terminated at the option of Merrill Lynch,
acting through Defined Asset Funds if the Contracts cease to qualify as
annuity contracts under the Code, or if Defined Asset Funds reasonably
believes that the Contracts may fail to so qualify.
5.4 This Agreement may be terminated by Merrill Lynch, acting through
Defined Asset Funds, at its option, if it shall determine, in its sole
judgment exercised in good faith, that either (1) the Company shall have
suffered a materially adverse change in its business or financial condition
or (2) the Company shall have been the subject of material adverse
publicity that is likely to have a material adverse impact upon the
business and operations of either the Fund or Defined Asset Funds.
5.5 This Agreement may be terminated at the option of the Company
upon institution of formal proceedings against the Fund, Defined Asset
Funds or Merrill Lynch by the NASD, the SEC, the insurance department of
any state, or any other regulatory body regarding Merrill Lynch's or
Defined Asset Funds' duties under this Agreement or related to the sale of
Units or the operation of the Fund, or an expected or anticipated ruling,
judgment or outcome that would, in the Company's reasonable judgment,
materially impair Merrill Lynch's or Defined Asset Funds' ability to meet
and perform its obligations hereunder.
5.6 This Agreement may be terminated at the option of the Company if
the Fund ceases to comply with Section 817(h) of the Code and the rules and
regulations thereunder, or if the Company reasonably believes that the Fund
may fail to so comply.
5.7 This Agreement may be terminated by the Company, at its option, if
the Company shall determine, in its sole judgment exercised in good faith,
that either (1) Merrill Lynch or the Fund shall have suffered a material
adverse change in its business or financial condition or (2) Merrill Lynch
or the Fund shall have been the subject of material adverse publicity that
is likely to have a material adverse impact upon the business and
operations of the Company.
5.8 Nothwithstanding the termination of this Agreement pursuant to
this Article 5, the Fund, at the option of Merrill Lynch, acting through
Defined Asset Funds, may continue to make available additional Units for so
long after the termination of this Agreement as Merrill Lynch, acting
through Defined Asset Funds, desires pursuant to the terms and conditions
of this Agreement as provided in Section 5.9 below, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation,
if Merrill Lynch, acting through Defined Asset Funds, so elects to make
additional Units available, the owners of the Existing Contracts or the
Company, whichever shall have legal authority to do so, shall be permitted
to reallocate investments in the Fund, redeem investments in the Fund
and/or invest in the Fund upon the making of additional purchase payments
under the Existing Contracts.
5.9 In the event of a termination of this Agreement pursuant to this
Article 5, Merrill Lynch, acting through Defined Asset Funds, shall
promptly notify the Company whether the Fund will continue to make Units
available after such termination; if the Fund will continue to make Units
so available, the provisions of this Agreement shall remain in effect
except for Section 5.1 hereof and thereafter either Merrill Lynch, acting
through Defined Asset Funds, or the Company may terminate the Agreement, as
so continued pursuant to this Section 5.9, upon prior written notice to the
other party, such notice to be for a period that is reasonable under the
circumstances but, if given by Defined Asset Funds, need not be greater
than six months.
5.10 The provisions of Article 4 shall survive the termination of
this Agreement, and the provisions of Sections 2.4 and 2.10 shall survive
the termination of this Agreement so long as Units are held on behalf of
Contract owners in accordance with Section 5.8.
ARTICLE 6
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund, Merrill Lynch or Defined Asset Funds:
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Defined Asset Funds
800 Scudders Mill Road, Section F
Plainsboro, N.J. 08536
Attention: Teresa Koncick, Esq.
If to the Company:
Merrill Lynch Insurance Group, Inc.
Administrative Offices
800 Scudders Mill Road
Plainsboro, N.J. 08536
Attention: Barry Skolnick, Esq.
ARTICLE 7
Miscellaneous
7.1 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
7.2 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York,
shall be subject to the provisions of the 1933, 1934, and 1940 Acts, and
the rules, regulations and rulings thereunder, including such exemptions
from those statutes, rules and regulations as the SEC has granted or may
grant and the terms thereof shall be interpreted and construed in
accordance therewith.
7.3 Each party shall cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
7.4 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
7.5 The parties to this Agreement acknowledge and agree that, for a
period of one year from the date of this Agreement, Merrill Lynch shall not
create or offer any unit investment trust applying the Select Ten Strategy
to the Dow Jones Industrial Average to fund any insurance company separate
account other than one sponsored by an insurance company controlled by
Merrill Lynch & Co., Inc., and the Company shall not offer any allocation
option for a separate account to be funded by investing in a unit
investment trust applying that Strategy other than a trust sponsored by
Merrill Lynch.
7.6 Neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the prior written consent of the
other party.
7.7 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by
all parties hereto.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Agreement as of the date and year first above
written.
MERRILL LYNCH LIFE INSURANCE COMPANY
By
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
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