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DEFINED ASSET FUNDSSM
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EQUITY INVESTOR FUND
PREMIER WORLD PORTFOLIO--2
(A UNIT INVESTMENT TRUST)
O PROFESSIONAL SELECTION
O DIVERSIFICATION
O OPTIONAL REINVESTMENT OF CASH DISTRIBUTIONS
SPONSORS: -------------------------------------------------
Merrill Lynch, The Securities and Exchange Commission has not
Pierce, Fenner & Smith approved or disapproved these Securities or
Incorporated passed upon the adequacy of this prospectus. Any
Salomon Smith Barney Inc. representation to the contrary is a criminal
PaineWebber Incorporated offense.
Dean Witter Reynolds Inc. Prospectus dated October 27, 1999.
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Def ined Asset FundsSM
Defined Asset FundsSM is America's oldest and largest family of unit investment
trusts, with over $160 billion sponsored over the last 28 years. Defined Asset
Funds has been a leader in unit investment trust research and product
innovation. Our family of Funds helps investors work toward their financial
goals with a full range of quality investments, including municipal, corporate
and government bond portfolios, as well as domestic and international equity
portfolios.
Defined Asset Funds offer a number of advantages:
o A disciplined strategy of buying and holding with a long-term view is the
cornerstone of Defined Asset Funds.
o Fixed portfolio: Defined Funds follow a buy and hold investment strategy;
funds are not managed and portfolio changes are limited.
o Defined Portfolios: We choose the stocks or bonds in advance, so you know what
you're investing in.
o Professional research: Our dedicated research team seeks out stocks or bonds
appropriate for a particular fund's objectives.
o Ongoing supervision: We monitor each portfolio on an ongoing basis.
No matter what your investment goals, risk tolerance or time horizon, there's
probably a Defined Asset Fund that suits your investment style. Your financial
professional can help you select a Defined Asset Fund that works best for your
investment portfolio.
THE FINANCIAL INFORMATION ON THIS PROSPECTUS IS AS OF THE EVALUATION DATE, JULY
31, 1999.
CONTENTS
PAGE
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Risk/Return Summary..................................... 3
What You Can Expect From Your Investment................ 5
Income............................................... 5
Records and Reports.................................. 5
The Risks You Face...................................... 5
Concentration Risk................................... 5
Foreign Issuer Risk.................................. 5
European Risk Factors................................ 6
Litigation and Legislation Risks..................... 6
Selling Units........................................... 6
Sponsors' Secondary Market........................... 6
Selling Units to the Trustee......................... 7
Rollover/Exchange Option............................. 7
How The Fund Works...................................... 8
Pricing.............................................. 8
Evaluations.......................................... 8
Income............................................... 8
Expenses............................................. 9
Portfolio Changes.................................... 9
Fund Termination..................................... 9
Certificates......................................... 10
Trust Indenture...................................... 10
Legal Opinion........................................ 10
Auditors............................................. 10
Sponsors............................................. 11
Trustee.............................................. 11
Underwriters' and Sponsors' Profits.................. 11
Public Distribution.................................. 11
Code of Ethics....................................... 11
Year 2000 Issues..................................... 11
Taxes................................................... 12
Supplemental Information................................ 13
Financial Statements.................................... D-1
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RISK/RETURN SUMMARY
1. WHAT IS THE PORTFOLIO'S OBJECTIVE?
O The objective of this Defined Fund is total return through a
combination of capital appreciation and, to a lesser extent,
dividend income by investing in a diversified portfolio of
common stocks issued primarily by some of the largest
non-U.S. companies with records of uninterrupted dividends
over at least ten years.
2. WHAT IS THE FUND'S INVESTMENT STRATEGY?
O The Portfolio contains 37 common stocks issued primarily by
companies that are among the largest non-U.S. companies in
annual revenue, with established records of earnings and
uninterrupted dividend payments over at least 10 years as of
the initial deposit, August 3, 1998. The stocks contained in
the Portfolio are generally considered to be 'blue chip'
stocks.
-- The Fund is designed for investors who want to invest a
portion of their equity portfolio in securities of
foreign issuers.
-- Since all of the Portfolio stocks are in the
international sector, this Fund is not designed to be a
complete equity investment program.
o The Fund plans to hold the stocks in the Portfolio for
approximately one year. The Fund will terminate by August
28, 2000.
3. WHAT COUNTRIES AND INDUSTRY SECTORS ARE REPRESENTED IN THE
PORTFOLIO?
Based upon current market values, the following countries
are represented in the Portfolio:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / France 25%
/ / United Kingdom 15%
/ / Switzerland 13%
/ / Netherlands 12%
/ / Germany 10%
/ / Japan 9%
/ / Canada 5%
/ / Finland 5%
/ / Italy 3%
/ / Belgium 2%
/ / Australia 1%
Based upon the principal business of each issuer and current market values, the
following industries are represented in the Portfolio:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / Financial Services/
Insurance/Banking 19%
/ / Oil 16%
/ / Medical-Drugs 15%
/ / Telecommunications 15%
/ / Automobile 9%
/ / Food/Beverage 8%
/ / Consumer Products 5%
/ / Transportation 4%
/ / Retail 4%
/ / Building Materials 3%
/ / Chemicals 1%
/ / Diversified Operations 1%
4. WHAT ARE THE SIGNIFICANT RISKS?
YOU CAN LOSE MONEY BY INVESTING IN THE FUND. THIS CAN HAPPEN
FOR VARIOUS REASONS, INCLUDING:
o Stock prices can be volatile.
o Dividend rates on the stocks or share prices may decline
during the life of the Fund.
o The Fund may continue to hold the stocks originally selected
even though their market value or yield may have changed.
o Investments in securities of foreign issuers involve risks
that are different from investments in securities of
domestic issuers.
5. IS THIS FUND APPROPRIATE FOR YOU?
Yes, if you want a professionally selected and supervised
international equity portfolio whose risk is reduced by
investing in equity securities of different foreign issuers.
The Fund is not appropriate for you if you are unwilling to
take the risk involved with an international equity
investment.
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6. WHAT ARE THE FUND'S FEES AND EXPENSES?
This table shows the costs and expenses you may pay,
directly or indirectly, when you invest in the Fund.
ESTIMATED ANNUAL OPERATING EXPENSES
AMOUNT
PER 1,000 UNITS
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$ 0.90
Trustee's Fee
$ 0.70
Portfolio Supervision,
Bookkeeping and
Administrative Fees
(including updating
and organizational
expenses)
$ 3.01
Other Operating Expenses
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$ 4.61
TOTAL
The Sponsors historically paid organization costs and
updating expenses.
You will pay an initial up-front sales fee of
approximately 1.00% and a monthly deferred sales charge of
$2.50 per 1,000 units (17.50 annually), that will be
deducted from the net asset value of the Portfolio on the
1st of each month, September 1, 1999 through March 1,
2000.
7. IS THE FUND MANAGED?
Unlike a mutual fund, the Fund is not managed and stocks
are not sold because of market changes. The Sponsors
monitor the portfolio and may instruct the Trustee to sell
securities under certain limited circumstances.
8. HOW DO I BUY UNITS?
The minimum investment is $250.
You can buy units from the Sponsors.
UNIT PRICE PER 1,000 UNITS $1,058.30
(as of July 31, 1999)
Unit price is based on the net asset value of the Fund
plus the up-front sales fee.
The Portfolio stocks are valued by the Trustee on the
basis of their closing prices at 4:00 p.m. Eastern time
every business day. Unit price changes every day with
changes in the prices of the stocks.
9. HOW DO I SELL UNITS?
You may sell your units at any time to the Sponsors or the
Trustee for the net asset value determined at the close of
business on the date of sale.
10. HOW ARE DISTRIBUTIONS MADE AND TAXED?
The Fund pays distributions of any dividend income, net of
expenses, on the 25th of December, 1999, if you own units
on the 10th of that month. Distributions of ordinary
income (together with related foreign tax withholding
amounts) will be dividends for federal income tax purposes
but will not be eligible for the dividends-received
deduction. Distributions to foreign investors will
generally be subject to withholding taxes. You may be
entitled to a credit for the foreign taxes withheld.
Because income of the type received by the Portfolio would
generally not be subject to the U.S. withholding taxes if
received directly by foreign investors, an investment in
the Portfolio is likely to be inappropriate for such
investors.
11. WHAT OTHER SERVICES ARE AVAILABLE?
REINVESTMENT
You may choose to reinvest your distributions into
additional units of the Fund. Unless you choose
reinvestment, you will receive your distributions in cash.
EXCHANGE/ROLLOVER OPTION
You may exchange units of any Focus or Select Series or
certain other selected Equity Investor Series. If you
continue to hold your units, at termination you may have
an option to roll your proceeds into the next Premier
World Portfolio, if available.
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WHAT YOU CAN EXPECT FROM YOUR INVESTMENT
INCOME
Distributions of dividend income, if any, will be made on the 25th of December,
1999, if you own units on the 10th of that month. Amounts will depend upon the
amount of dividends declared and paid by each issuer. Other reasons your income
may vary are:
o changes to the Portfolio because of sales of securities;
o changes in the Fund's expenses; and
o the amount of dividends declared and paid.
There can be no assurance that any dividends will be declared or paid.
RECORDS AND REPORTS
You will receive:
o a notice from the Trustee if new equity securities are deposited in exchange
or substitution for equity securities originally deposited;
o annual reports on Fund activity; and
o annual tax information. This will also be sent to the IRS. You must report the
amount of income received during the year. Please contact your tax advisor in
this regard.
You may inspect records of Portfolio transactions at the Trustee's office during
regular business hours.
THE RISKS YOU FACE
CONCENTRATION RISK
When stocks in a particular category make up 25% or more of the Portfolio, it is
said to be 'concentrated' in that category, which makes the Portfolio less
diversified. This Portfolio is concentrated in securities of foreign issuers.
FOREIGN ISSUER RISK
Investments in securities of foreign issuers involve risks that are different
from investments in securities of domestic issuers. They may include:
o adverse political and economic developments;
o possibility of withholding taxes;
o exchange controls or other governmental restrictions on the payment of
dividends;
o conversion of local currency to U.S. dollars upon the sale of Portfolio
Securities;
o less publicly available information; and
o absence of uniform accounting, auditing and financial reporting standards,
practices and requirements.
American Depositary Shares and Receipts
American depositary shares and receipts are issued by an American bank or trust
company to evidence ownership of underlying common stock issued by a foreign
corporation and deposited in a depositary facility. The terms and conditions of
the depositary facility may result in less liquidity or lower market prices for
the ADRs than for the underlying shares. Certain of the Portfolio securities
were purchased in ADR form in the United States.
Foreign Currency Risk
Because securities of non-U.S. issuers generally pay dividends and trade in
foreign currencies, there is the risk that the U.S. dollar value of these
securities will vary widely with fluctuations in foreign exchange rates.
At the present time the Sponsors do not believe that any of the Portfolio
securities are subject to exchange control restrictions which would materially
interfere with payment to the Portfolio of amounts due on the Portfolio
securities. The adoption of exchange control regulations or other legal
restrictions could
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have an adverse impact on the marketability of international securities in the
Portfolio and on the ability of the Portfolio to satisfy redemptions. There can
be no assurance that exchange control regulations might not be adopted in the
future that would adversely affect payments to the Portfolio.
EUROPEAN RISK FACTORS
The economies of individual European countries may differ unfavorably from the
U.S. economy in gross national product, growth of gross national product, rate
of inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
For a number of years, certain European countries have been seeking economic and
political unification which would reduce barriers between countries, increase
competition among companies, reduce government subsidies in certain industries
and reduce or eliminate currency fluctuations among these European countries.
On January 1, 1999, the European Monetary Union (EMU) introduced a new single
currency, the euro. A newly created European Central Bank (ECB) has the
authority to direct the monetary policy for this region, including the
determination of interest rates. These changes may affect the European capital
markets, and the related risks may increase the volatility in European capital
and currency markets. This, in turn, may affect the Portfolio's performance.
No assurances can be given that changes planned for Europe can be successfully
implemented or that these changes will not result in lower market prices for the
securities in the Portfolio.
Risks associated with investing in European securities may be heightened in the
case of investments in smaller European securities markets because of risks due
to the inexperience of financial intermediaries, the lack of modern technology,
the lack of a sufficient capital base and the possibility of permanent or
temporary termination of trading in those markets.
LITIGATION AND LEGISLATION RISKS
We do not know of any pending litigation that might have a material adverse
effect upon the Fund.
Future tax legislation could affect the value of the Fund by:
o reducing the dividends-received deduction or
o increasing the corporate tax rate resulting in less money available for
dividend payments.
SELLING UNITS
You can sell your units at any time for a price based on their net asset value.
Your net asset value is calculated each business day by:
o adding the value of the Portfolio securities, cash and any other Fund
assets;
o subtracting accrued but unpaid Fund expenses, unreimbursed Trustee
advances, cash held to buy back units or for distribution to investors,
and any other Fund liabilities; and
o dividing the result by the number of outstanding units.
Your net asset value when you sell may be more or less than your cost because of
sales fees, market movements and changes in the Portfolio.
SPONSORS' SECONDARY MARKET
While we are not obligated to do so, we will buy back units at net asset value
less any remaining deferred sales fee and the cost of liquidating securities to
meet the redemption. We may resell the units to other buyers or to the Trustee.
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We have maintained a secondary market continuously for more than 28 years, but
we could discontinue it without prior notice for any business reason.
SELLING UNITS TO THE TRUSTEE
Regardless of whether we maintain a secondary market, you can sell your units to
the Trustee at any time by contacting your broker, dealer or financial
institution that holds your units in street name. Sometimes, additional
documents are needed such as a trust document, certificate of corporate
authority, certificate of death or appointment as executor, administrator or
guardian.
Within seven days after your request and the necessary documents are received,
the Trustee will mail a check to you. Contact the Trustee for additional
information.
As long as we are maintaining a secondary market, the Trustee will sell your
units to us at a price based on net asset value. If there is no secondary
market, the Trustee will sell your units in the over-the-counter market if it
believes it can obtain a higher price. In that case, you will receive the net
proceeds of the sale.
If the Fund does not have cash available to pay you for the units you are
selling we will select securities to be sold. These sales could be made at times
when the securities would not otherwise be sold and may result in your receiving
less than you paid for your unit and also reduce the size and diversity of the
Fund.
There could be a delay in paying you for your units:
o if the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o if the SEC determines that trading on the New York Stock Exchange is
restricted or that an emergency exists making sale or evaluation of the
securities not reasonably practicable; and
o for any other period permitted by SEC order.
ROLLOVER/EXCHANGE OPTION
When this Portfolio is about to terminate, you may have the option to roll your
proceeds into the next Premier World Portfolio if one is available.
If you hold your Units with one of the Sponsors and notify your financial
adviser by August 8, 2000, your units will be redeemed and certain distributed
securities plus the proceeds from the sale of the remaining distributed
securities will be reinvested in units of the next Portfolio if available. If
you decide not to roll over your proceeds, you will receive a cash distribution
(or, if you so choose, an in-kind distribution) after the Portfolio terminates.
The Portfolio will terminate by August 28, 2000. You may, by written notice to
the Trustee at least ten business days prior to termination, elect to receive an
in-kind distribution of your pro rata share of the securities remaining in the
Portfolio at that time (net of your share of expenses). Of course you can sell
your units at any time prior to termination.
If you continue to hold your units, you may exchange units of this Portfolio any
time before this Portfolio terminates for units of
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certain other Defined Asset Funds at a reduced sales fee if your investment
goals change. In addition, you may exchange into this Fund from certain other
Defined Asset Funds. To exchange units, you should talk to your financial
professional about what Portfolios are exchangeable, suitable and currently
available.
We may amend or terminate the options to exchange your units or roll your
proceeds at any time without notice.
HOW THE FUND WORKS
PRICING
Units are charged a combination of initial and deferred sales fees. The deferred
sales fee is generally a monthly charge of $2.50 per 1,000 units and is accrued
in seven monthly installments. Units redeemed or repurchased prior to the
accrual of the final deferred sales fee installment will have the amount of any
remaining installments deducted from the redemption or repurchase proceeds or
deducted in calculating an in-kind distribution, however, this deduction will be
waived in the event of the death or disability (as defined in the Internal
Revenue Code of 1986) of an investor. The initial sales fee is equal to the
aggregate sales fee less the aggregate amount of any remaining installments of
the deferred sales fee.
It is anticipated that securities will not be sold to pay the deferred sales fee
until after the date of the last installment. Investors will be at risk for
market price fluctuations in the securities from the several installment accrual
dates to the dates of actual sale of securities to satisfy this liability.
EVALUATIONS
The Trustee values the securities on each business day (i.e., any day other than
Saturdays, Sundays and the following holidays as observed by the New York Stock
Exchange: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas).
In addition, for individual stocks, 'business day' shall also exclude various
foreign holidays in the relevant countries. If the securities are listed on a
national securities exchange or the Nasdaq National Market, evaluations are
generally based on closing sales prices on that exchange or that system or, if
closing sales prices are not available, at the mean between the closing bid and
offer prices.
INCOME
o The annual U.S. dollar income per unit, after deducting estimated annual
Portfolio expenses per unit, will depend primarily upon the amount of
dividends declared and paid by the issuers of the securities, fluctuations in
U.S. dollar exchange rates and changes in the expenses of the Portfolio and,
to a lesser degree, upon the level of purchases of additional securities and
sales of securities. There is no assurance that dividends on the securities
will continue at their current levels or be declared at all.
o Each unit receives an equal share of distributions of dividend income net of
estimated expenses. Because dividends on the securities are not received at a
constant rate throughout the year, any distribution may be more or less than
the amount then credited to the income account. The Trustee credits dividends
received to an Income
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Account which are converted into U.S. dollars at the current exchange rate
and other receipts to a Capital Account after conversion into U.S.dollars at
the current rate. The Trustee may establish a reserve account by withdrawing
from these accounts amounts it considers appropriate to pay any material
liability. These accounts do not bear interest.
EXPENSES
The Trustee is paid a fee monthly. It also benefits when it holds cash for the
Fund in non-interest bearing accounts. The Trustee may also receive additional
amounts:
o for extraordinary services and costs of indemnifying the Trustee and the
Sponsors;
o costs of actions taken to protect the Fund and other legal fees and
expenses;
o expenses for keeping the Fund's registration statement current; and
o Fund termination expenses and any governmental charges.
The Sponsors are currently reimbursed up to 70 cents per 1,000 units annually
for providing portfolio supervisory, bookkeeping and administrative services and
for any other expenses properly chargeable to the Fund. Legal, typesetting,
electronic filing and regulatory filing fees and expenses associated with
updating the Fund's registration statement yearly are now chargeable to the
Fund. While this fee may exceed the amount of these costs and expenses
attributable to this Fund, the total of these fees for all Series of Defined
Asset Funds will not exceed the aggregate amount attributable to all of these
Series for any calendar year. Certain of these expenses were previously paid for
by the Sponsors.
The Trustee's and Sponsors' fees may be adjusted for inflation without
investors' approval.
The Sponsors will pay advertising and selling expenses at no charge to the Fund.
If Fund expenses exceed initial estimates, the Fund will owe the excess. The
Trustee has a lien on Fund assets to secure reimbursement of Fund expenses and
may sell securities if cash is not available.
PORTFOLIO CHANGES
If we maintain a secondary market in units but are unable to sell the units that
we buy in the secondary market, we will redeem units, which will affect the size
and composition of the portfolio.
We decide whether to offer units for sale that we acquire in the secondary
market after reviewing:
o diversity of the Portfolio;
o size of the Fund relative to its original size;
o ratio of Fund expenses to income; and
o cost of maintaining a current prospectus.
FUND TERMINATION
When the Fund is about to terminate you will receive a notice, and you will be
unable to sell your units after that time. Unless you choose to receive an
in-kind distribution of securities, we will sell any remaining securities, and
you will receive your final distribution in cash.
You will pay your share of the expenses associated with termination, including
brokerage costs in selling securities. This may reduce the amount you receive as
your final distribution.
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NO CERTIFICATES
All investors are required to hold their Units in uncertificated form and in
'street name' by their broker, dealer or financial institution at the Depository
Trust Company ('DTC').
TRUST INDENTURE
The Fund is a 'unit investment trust' governed by a Trust Indenture, a contract
among the Sponsors and the Trustee, which sets forth their duties and
obligations and your rights. A copy of the Indenture is available to you on
request to the Trustee. The following summarizes certain provisions of the
Indenture.
The Sponsors and the Trustee may amend the Indenture without your consent:
o to cure ambiguities;
o to correct or supplement any defective or inconsistent provision;
o to make any amendment required by any governmental agency; or
o to make other changes determined not to be materially adverse to your best
interest (as determined by the Sponsors).
Investors holding 51% of the units may amend the Indenture. Every investor must
consent to any amendment that changes the 51% requirement. No amendment may
reduce your interest in the Fund without your written consent.
The Trustee may resign by notifying the Sponsors. The Sponsors may remove the
Trustee without your consent if:
o it fails to perform its duties and the Sponsors determine that its
replacement is in your best interest; or
o it becomes incapable of acting or bankrupt or its affairs are taken over by
public authorities.
Investors holding 51% of the units may remove the Trustee. The Trustee may
resign or be removed by the Sponsors without the consent of investors. The
resignation or removal of the Trustee becomes effective when a successor accepts
appointment. The Sponsors will try to appoint a successor promptly; however, if
no successor has accepted within 30 days after notice of resignation, the
resigning Trustee may petition a court to appoint a successor.
Any Sponsor may resign as long as one Sponsor with a net worth of $2 million
remains and agrees to the resignation. The remaining Sponsors and the Trustee
may appoint a replacement. If there is only one Sponsor and it fails to perform
its duties or becomes bankrupt the Trustee may:
o remove it and appoint a replacement Sponsor;
o liquidate the Fund; or
o continue to act as Trustee without a Sponsor.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acts as agent for the
Sponsors.
The Trust Indenture contains customary provisions limiting the liability of the
Trustee and the Sponsors.
LEGAL OPINION
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, as
special counsel for the Sponsors, has given an opinion that the units are
validly issued.
AUDITORS
Deloitte & Touche LLP, 2 World Financial Center, New York, New York 10281,
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independent accountants, audited the Statement of Condition included in this
prospectus.
SPONSORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (a wholly-owned subsidiary of
Merrill Lynch & Co., Inc.)
P.O. Box 9051,
Princeton, NJ 08543-9051
SALOMON SMITH BARNEY INC. (an indirectly wholly-owned subsidiary of Citigroup
Inc.)
388 Greenwich Street--23rd Floor,
New York, NY 10013
DEAN WITTER REYNOLDS INC. (a principal operating subsidiary of Morgan Stanley
Dean Witter & Co.)
Two World Trade Center--59th Floor,
New York, NY 10048
PAINEWEBBER INCORPORATED (a wholly-owned subsidiary of PaineWebber Group Inc.)
1285 Avenue of the Americas,
New York, NY 10019
Each Sponsor is a Delaware corporation and it, or its predecessor, has acted as
sponsor to many unit investment trusts. As a registered broker-dealer each
Sponsor buys and sells securities (including investment company shares) for
others (including investment companies) and participates as an underwriter in
various selling groups.
TRUSTEE
The Chase Manhattan Bank, Unit Investment Trust Department, 4 New York
Plaza--6th Floor, New York, New York 10004, is the Trustee. It is supervised by
the Federal Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System and New York State banking authorities.
UNDERWRITERS' AND SPONSORS' PROFITS
Underwriters receive sales charges when they sell units. Any cash made available
by you to the Sponsors before the settlement date for your units may be used in
the Sponsors' businesses to the extent permitted by federal law and may benefit
the Sponsors.
In maintaining a secondary market, the Sponsors will also realize profits or
sustain losses in the amount of any difference between the prices at which they
buy units and the prices at which they resell or redeem them.
PUBLIC DISTRIBUTION
The Sponsors do not intend to qualify units for sale in any foreign countries.
This prospectus does not constitute an offer to sell units in any country where
units cannot lawfully be sold.
CODE OF ETHICS
Merrill Lynch, as agent for the Sponsors, has adopted a code of ethics requiring
reporting of personal securities transactions by its employees with access to
information on portfolio transactions. The goal of the code is to prevent fraud,
deception or misconduct against the Fund and to provide reasonable standards of
conduct.
YEAR 2000 ISSUES
Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 (commonly known as the 'Year
2000 Problem'). We do not expect that the computer system changes necessary to
prepare for the Year 2000 will cause any major operational difficulties for the
Fund. The Year 2000 Problem may adversely affect the issuers
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of the securities contained in the Fund, but we cannot predict whether any
impact will be material to the Fund as a whole.
TAXES
The following summarizes the material income tax consequences of holding Units.
It assumes that you are not a dealer, financial institution, insurance company
or other investor with special circumstances or subject to special rules. You
should consult your own tax adviser about your particular circumstances.
In the opinion of our counsel, under existing law:
GENERAL TREATMENT OF THE FUND AND YOUR INVESTMENT
The Fund intends to quality for special tax treatment as a regulated investment
company so that it will not be subject to federal income tax on the portion of
its taxable income that it distributes to investors in a timely manner.
DISTRIBUTIONS
Distributions to you of the Fund's dividend income and of the Fund's gains from
Securities it has held for one year or less will generally be taxed to you as
ordinary income, to the extent of the Fund's taxable income not attributable to
the Fund's net capital gain. Distributions to you in excess of the Fund's
taxable income will be treated as a return of capital and will reduce your basis
in your Units. To the extent such distributions exceed your basis, they will be
treated as gain from the sale of your Units.
Distributions to you that are treated as ordinary income will constitute
dividends for federal income tax purposes but will not be eligible for the
dividends-received deduction for corporations. You should consult your tax
adviser.
Distributions to you of the Fund's net capital gain will generally be taxable to
you as long-term capital gain, regardless of how long you have held your Units.
Dividends received by the Portfolio from foreign issuers will in most cases be
subject to withholding taxes, although these taxes may be reduced by treaties
between the United States and the relevant country. The Sponsors have filed a
special election that will allow you to credit your share of these taxes against
your U.S. federal income tax liability, subject to certain limitations. You will
also be required to include your share of these taxes in your taxable income
(even though you will not receive it in cash). Consult your tax adviser about
the application of foreign tax credit rules to your particular circumstances.
GAIN OR LOSS UPON DISPOSITION
You will generally recognize capital gain or loss when you dispose of your
Units. If you receive Securities upon redemption of your Units (including
pursuant to the rollover option), you will generally recognize capital gain or
loss equal to the difference between your basis in your Units and the fair
market value of the Securities received in redemption.
If your net long-term capital gains exceed your net short-term capital losses,
the excess may be subject to tax at a lower rate than ordinary income. Any
capital gain or loss that you recognize on a disposition of your Units will be
long-term if you have held your Units for more than one year and short-term
otherwise. Because the deductibility of capital losses is
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subject to limitations, you may not be able to deduct all of your capital
losses. You should consult your tax adviser in this regard.
YOUR BASIS IN THE SECURITIES
Your aggregate basis in the Units will generally be equal to the cost of your
Units, including the initial sales charge. You should not increase your basis in
your Units by deferred sales charges or organizational expenses.
FOREIGN INVESTORS
If you are a foreign investor and you are not engaged in a U.S. trade or
business, you will generally be subject to 30% withholding tax (or a lower
applicable treaty rate) on distributions. Because foreign-source income of the
type received by the Portfolio would generally not be subject to withholding if
received directly by you, an investment in the Portfolio is likely to be
inappropriate for you. You should consult your tax adviser about the possible
application of federal, state and local, and foreign taxes.
RETIREMENT PLANS
You may wish to purchase units for an Individual Retirement Account ('IRAs') or
other retirement plan. Generally, capital gains and income received in each of
these plans are exempt from federal taxation. However, all distributions from
these types of plans are generally treated as ordinary income, subject to
tax-deferred rollover treatment in some cases. You should consult your attorney
or tax adviser about the specific tax rules relating to these plans. These plans
are offered by brokerage firms, including the Sponsors of this Portfolio, and
other financial institutions. Fees and charges with respect to such plans may
vary.
SUPPLEMENTAL INFORMATION
You can receive at no cost supplemental information about the Fund by calling
the Trustee. The supplemental information includes more detailed risk disclosure
and general information about the structure and operation of the Fund. The
supplemental information is also available from the SEC.
13
<PAGE>
Def ined
Asset FundsSM
HAVE QUESTIONS ? EQUITY INVESTOR FUND
Request the most PREMIER WORLD PORTFOLIO--2
recent free Information (A Unit Investment Trust)
Supplement that gives more ---------------------------------------
details about the Fund, This Prospectus does not contain
by calling: complete information about the
The Chase Manhattan Bank investment company filed with the
1-800-323-1508 Securities and Exchange Commission in
Washington, D.C. under the:
o Securities Act of 1933 (file no.
333-57373) and
o Investment Company Act of 1940 (file
no. 811-3044).
TO OBTAIN COPIES AT PRESCRIBED RATES--
WRITE: Public Reference Section of the
Commission
450 Fifth Street, N.W., Washington,
D.C. 20549-6009
CALL: 1-800-SEC-0330.
VISIT: http://www.sec.gov.
---------------------------------------
No person is authorized to give any
information or representations about
this Fund not contained in this
Prospectus or the Information
Supplement, and you should not rely on
any other information.
---------------------------------------
When units of this Fund are no longer
available, this Prospectus may be used
as a preliminary prospectus for a
future series, but some of the
information in this Prospectus will be
changed for that series.
Units of any future series may not be
sold nor may offers to buy be accepted
until that series has become effective
with the Securities and Exchange
Commission. No units can be sold in any
State where a sale would be illegal.
70095--10/99
