<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1998
REGISTRATION NO. 333-64567
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
AMENDMENT NO. 1
TO
FORM S-6
------------------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------------------------
A. EXACT NAME OF TRUST:
EQUITY INVESTOR FUND FOCUS SERIES
1999 YEAR AHEAD INTERNATIONAL PORTFOLIO
(FORMERLY SELECT SERIES 1999 YEAR
AHEAD INTERNATIONAL PORTFOLIO)
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITOR:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
C. COMPLETE ADDRESSES OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEFINED ASSET FUNDS
P.O. BOX 9051
PRINCETON, NJ 08543-9051
D. 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 registration statement shall become
effective upon filing on December 11, 1998 pursuant to Rule 487.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------
EQUITY INVESTOR FUND The objective of this Defined Fund is capital
FOCUS SERIES appreciation by investing for a period of about
1999 YEAR AHEAD one year in a portfolio of international common
INTERNATIONAL PORTFOLIO stocks. These stocks were named by the Merrill
(A UNIT INVESTMENT Lynch Global Research and Economics group as their
TRUST) top international stocks for 1999. Current
- ------------------------------dividend income is not an objective of the
Portfolio.
The Portfolio is not an appropriate investment for
investors seeking preservation of capital or high
current income. The Portfolio may be considered
speculative and therefore may be appropriate only
for those investors able and willing to assume the
increased risks of higher price volatility and
currency fluctuations associated with investments
in international equities. The Portfolio should be
considered as a vehicle for investing a portion of
an investor's assets in foreign securities and not
as a complete equity investment program.
The value of units will fluctuate with the value
of the common stocks in the Portfolio and with the
value of the U.S. dollar relative to the various
foreign currencies represented in the Portfolio,
and there can be no assurance that the Portfolio
will achieve its objective.
Unless otherwise indicated, all amounts are stated
in U.S. dollars computed on the basis of the
exchange rates for the relevant currencies on the
business day prior to the date of this Prospectus.
Minimum purchase: $250.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Inquiries should be directed to the Trustee at
SPONSOR: 1-800-323-1508.
Merrill Lynch, Prospectus dated December 11, 1998.
Pierce, Fenner & Smith INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Incorporated AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
- --------------------------------------------------------------------------------
Defined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal bond portfolios
o Corporate bond portfolios
o Government bond portfolios
o Equity portfolios
o International bond and equity portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.
- ----------------------------------------------------------------
Defined Year Ahead International Portfolio
- ----------------------------------------------------------------
The Portfolio contains 12 common stocks from 8 different countries, selected by
the Sponsor for capital appreciation. This Focus Series permits investors to buy
and hold the Portfolio for approximately one year. At the end of the year, the
Portfolio will be liquidated and a similar selection process applied to select a
new portfolio. Each Focus Portfolio is designed to be part of a longer term
strategy and the Sponsor believes that more consistent results are likely if the
strategy is followed for at least three to five years.
So long as the Sponsor continues to offer new portfolios, investors will have
the option to reinvest into a new portfolio each year at a reduced sales charge.
The Sponsor reserves the right, however, not to offer a new portfolio.
The Securities were selected by the Merrill Lynch Global Research and Economics
group as the international common stocks to focus on for the coming year.
- ----------------------------------------------------------------
Defining Your Portfolio
- ----------------------------------------------------------------
The Portfolio is diversified among 8 countries.
Based upon current market values, the following countries are represented in the
Portfolio:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / Japan 25%
/ / China 16
/ / United Kingdom 16
/ / Germany 9
/ / Italy 9
/ / Netherlands 9
/ / France 8
/ / Spain 8
Based upon the principal business of each issuer and current market values, the
following industries are represented in the Portfolio:
APPROXIMATE
PORTFOLIO
PERCENTAGE
/ / Banking 25%
/ / Telecommunications 25
/ / Automobile 9
/ / Medical-Drugs 9
/ / Computer Services 8
/ / Diversified Manufacturing 8
/ / Electronic Equipment 8
/ / Oil 8
- ----------------------------------------------------------------
Defining Your Risks
- ----------------------------------------------------------------
The Portfolio is 'concentrated' in stocks of Europe and Japan. The Portfolio is
also concentrated in stocks of issuers in the Banking and Telecommunications
industries. Each issuer is a foreign issuer. Investing in securities of foreign
issuers involves risks that are different from investing in securities of
domestic issuers. (See Risk Factors in Part B.)
There can be no assurance that the Portfolio will meet its objective over its
one-year life or that portfolios selected through this process during
consecutive one-year periods will meet their objectives. In addition, the
opinions of Merrill Lynch research analysts may change during the year. The
Portfolio is not appropriate for investors who are unable or unwilling to assume
the increased risks involved generally with an international equity investment
or who are seeking preservation of capital or high current income. The Portfolio
should be considered a vehicle for investing a portion of your assets in foreign
securities and not as a complete equity investment program.
Unit price fluctuates with the value of the Portfolio, which could be affected
by changes in the financial condition of the issuers, changes in the economies
of the various countries represented in the Portfolio,
A-2
<PAGE>
currency exchange rate fluctuations, movements in stock prices generally, the
impact of the Sponsor's purchase and sale of securities for the Portfolio and
other factors.
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsor
receives no management fee. Therefore, the adverse financial condition of an
issuer, changes in research analysts' opinions or any market movement in the
price of a security will not require the sale of securities from the Portfolio
or mean that the Sponsor will not continue to purchase the security in order to
create additional Units; however, the Sponsor may instruct the Trustee to sell
securities under certain limited circumstances. (See Portfolio Supervision in
Part B.)
- ----------------------------------------------------------------
Defining Your Investment
- ----------------------------------------------------------------
PUBLIC OFFERING PRICE PER 1,000 UNITS $999.93
The Public Offering Price as of December 10, 1997, the business day prior to the
initial date of deposit, is based on the aggregate U.S. dollar value of the
underlying securities ($384,949.14) and any cash held to purchase securities,
divided by the number of units outstanding (388,837) times 1,000, plus the
initial sales charge. The Public Offering Price includes the estimated
organization costs of $2.58 per 1,000 Units, to which no sales charge has been
applied. Units offered on the Initial Date of Deposit will also be priced at
$999.93 per 1,000 Units although the aggregate value of the underlying
securities, cash amount and number of Units may vary. The Public Offering Price
on any subsequent date will vary. The underlying securities are valued by the
Trustee on the basis of their closing sale prices at 4:00 p.m. Eastern time on
every business day (see How To Buy Units-- Evaluations in part B).
SALES CHARGES
The total sales charge for this investment combines an initial up-front sales
charge and a deferred sales charge that will be deducted from the net asset
value of the Portfolio on March 1 and 15, 1999 and thereafter on the 1st of each
month through November 1, 1999.
ROLLOVER/EXCHANGE OPTION
You may exchange your units of this Portfolio for units of any other Focus or
Select Series, or certain other selected Defined Assset Funds, any time prior to
termination of this Portfolio. If you continue to hold your units, when this
Year Ahead International Portfolio is about to be liquidated, you may have the
option to roll your proceeds into the next Year Ahead International portfolio.
If you hold your Units with one of the Sponsors and notify your financial
adviser by December 20, 1999, your units will be redeemed and certain
distributed securities plus the proceeds from the sale of the remaining
securities will be reinvested in units of the next Year Ahead International
Portfolio. If you decide not to roll over your proceeds, you will receive a cash
distribution (or, if you so elect, an in-kind distribution) after the Portfolio
terminates. Of course you can sell or redeem your Units at any time prior to
termination.
DISTRIBUTIONS
You will receive distributions of dividend income, net of expenses, on the 25th
day of October 1999, if you own Units on the 10th of that month.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into additional units
of the Portfolio subject only to the deferred sales charge remaining at the time
of reinvestment. Reinvesting helps to compound your income for a greater total
return.
TAXES
In the opinion of counsel, you will be considered to have received all the
dividends paid on your pro rata portion of each security in the Portfolio when
those dividends are received by the Portfolio, even though a portion of the
dividend payments may be used to pay expenses of the Portfolio and regardless of
whether you reinvest your dividends in the Portfolio. (See Taxes in Part B.)
TAX BASIS REPORTING
The proceeds received when you sell this investment will reflect the deduction
of the deferred sales charge and, after the initial offering period, the charge
for organizational expenses. In addition, the annual statement and the relevant
tax reporting forms you receive at year-end will be based upon the amount paid
to you (net of the deferred sales charge and the charge for organizational
expenses). Accordingly, you should not increase your basis in your units by the
deferred sales charge or the charge for organizational expenses.
TERMINATION DATE
The Portfolio will terminate by January 21, 2000. The final distribution will be
made within a reasonable time afterward. The Portfolio may be terminated earlier
if its value is less than 40% of the value of the securities when deposited.
SPONSOR'S PROFIT OR LOSS
The Sponsor's profit or loss from the Portfolio will include the receipt of
applicable sales charges, fluctuations in the Public Offering Price or secondary
market price of units, a loss of $792.99 on the initial deposit of the
securities and a gain or loss on subsequent deposits of securities (see
Sponsor's and Underwriters' Profits in Part B).
A-3
<PAGE>
- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------
SALES CHARGE
First-time investors pay a maximum sales charge of 2.75% of the offering price,
of which $17.50 per 1,000 Units is deferred. For example, on a $1,000
investment, 2.75% less $17.50 (or about 1%) is deducted when they buy, and the
remaining $990 is invested in the Portfolio. The initial sales charge is reduced
on purchases of $50,000 or more, as described in Part B. In addition, a deferred
sales charge of $1.75 per 1,000 units will be deducted from the Portfolio's net
asset value over the last nine months of the Portfolio's life ($17.50 total).
This deferred method of payment keeps more of your money invested over a longer
period of time. If you roll the proceeds of your investment into a new
portfolio, you will not be subject to the 1% initial charge, just the $17.50
deferred fee. Although this is a unit investment trust rather than a mutual
fund, the following information is presented to permit a comparison of fees and
an understanding of the direct or indirect costs and expenses that you pay.
As a %
of Initial Public Amount per
Offering Price 1,000 Units
----------------- --------------
Initial Sales Charge 1.00% $ 10.00
Deferred Sales Charge 1.75% 17.50
----------------- --------------
2.75% $ 27.50
----------------- --------------
----------------- --------------
Maximum Sales Charge Imposed on
Reinvested Dividends .175% $ 1.75
ORGANIZATION COSTS
Investors will bear all or a portion of the expenses incurred in organizing the
Portfolio--including costs of preparing the registration statement, the trust
indenture and other closing documents, registering units with the SEC and the
states and the initial audit of the Portfolio--as is common for mutual funds.
Estimated organization costs shown below are included in the public offering
price and will be deducted from the assets of the Portfolio as of the close of
the initial offering period.
Amount per
1,000 Units
---------------
Estimated Organization Costs $ 2.58
ESTIMATED ANNUAL FUND OPERATING EXPENSES
As a % Amount per
of Net Assets 1,000 Units
----------------- --------------
Trustee's Fee .091% $ 0.90
Portfolio Supervision,
Bookkeeping and Administrative
Fees .045% $ 0.45
Other Operating Expenses .071% $ 0.70
----------------- --------------
TOTAL .207% $ 2.05
These estimates do not include the costs of purchasing and selling the
underlying common stocks.
COSTS OVER TIME
You would pay the following cumulative expenses on a $1,000 investment, assuming
5% annual return on the investment throughout the indicated periods and
redemption at the end of the period:
1 Year 3 Years 5 Years 10 Years
$32 $79 $129 $264
Although the Portfolio has a term of only one year and is a unit investment
trust rather than a mutual fund, this information is presented to permit a
comparison of fees, assuming the principal amount and distributions are rolled
over each year into a new portfolio subject only to the deferred sales charge
and fund expenses.
The example uses a 5% annual rate of return as mandated by SEC regulations
applicable to mutual funds.
Reductions to the repurchase and cash redemption prices in the secondary market
to recoup the costs of liquidating securities to meet redemption (described
below) have not been reflected. The example should not be considered a
representation of past or future expenses or annual rates of return; the actual
expenses and annual rates of return may be more or less than the example.
REDEEMING OR SELLING YOUR INVESTMENT
You may redeem or sell your units at any time prior to the termination of the
Portfolio. Your price will be based on the then current net asset value. The
redemption and secondary market repurchase price as of December 10, 1998 was
$972.50 per 1,000 units ($17.50 per 1,000 units less than the net asset value).
This price reflects deductions of the deferred sales charge which declines over
the life of the Portfolio ($17.50 initially). If you redeem or sell your units
before the termination of the Portfolio, you will pay the remaining balance of
the deferred sales charge. As of the close of the initial public offering period
these prices will be reduced to reflect the estimated organization costs shown
above.
After the initial offering period, the repurchase and cash redemption prices for
units will be reduced to reflect the estimated costs of liquidating securities
to meet the redemption, currently estimated at $1.92 per 1,000 units. If you
reinvest in the new Series, you will pay your share of any brokerage commissions
on the sale of underlying securities when your units are liquidated during the
rollover.
A-4
<PAGE>
- --------------------------------------------------------------------------------
Defined Portfolio
- --------------------------------------------------------------------------------
Equity Investor Fund Focus Series
1999 Year Ahead International Portfolio December 11, 1998
Defined Asset Funds
<TABLE>
<CAPTION>
PRICE
PER SHARE COST
PERCENTAGE TO PORTFOLIO TO PORTFOLIO
OF PORTFOLIO IN U.S. IN U.S. DOLLARS
LOCATION OF ISSUER NAME OF ISSUER (1) DOLLARS (2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
China 1. China Telecom (Hong Kong)
Limited 8.40% $ 38.5000 $ 32,340.00
2. HSBC Holdings PLC 7.95 25.4904 30,588.54
France 3. Cap Gemini SA 8.18 149.9729 31,494.32
Germany 4. Volkswagen AG 8.55 74.8336 32,926.80
Italy 5. Telecom Italia SpA 8.55 82.2500 32,900.00
Japan 6. The Bank of Tokyo-Mitsubishi,
Ltd. 8.32 11.6875 32,023.75
7. Sony Corporation 8.36 74.8750 32,196.25
8. Yamanouchi Pharmaceutical
Company, Ltd. 8.35 32.1398 32,139.81
Netherlands 9. Royal Dutch Petroleum Company 8.37 46.6875 32,214.38
Spain 10. Argentaria, Caja Postal y Banco
Hipotecario de Espana, SA 8.42 49.1250 32,422.50
United Kingdom 11. Siebe PLC 8.43 3.7430 32,452.16
12. Vodafone Group PLC 8.12 148.8125 31,250.63
--------------- ------------------
100.00% $ 384,949.14
--------------- ------------------
--------------- ------------------
</TABLE>
- ------------------------------------
(1) Based on Cost to Portfolio in U.S. dollars.
(2) Valuation by the Trustee made on the basis of closing sale prices at the
evaluation time on December 10, 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 December 10, 1998 and are represented entirely
by contracts to purchase the securities. The Sponsor may have acted as
underwriter, manager or co-manager of a public offering of the securities in
this Portfolio during the last three years. Affiliates of the Sponsor may serve
as specialists in the securities in this Portfolio on one or more stock
exchanges and may have a long or short position in any of these securities or in
options on any of them, and may be on the opposite side of public orders
executed on the floor of an exchange where the securities are listed. An
officer, director or employee of the Sponsor may be an officer or director of
one or more of the issuers of the securities in the Portfolio. The Sponsor may
trade for its own account as an odd-lot dealer, market maker, block positioner
or arbitrageur in any of the securities or in options on them. The Sponsor, its
affiliates, directors, elected officers and employee benefits programs may have
either a long or short position in any securities or in options on them.
A-5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsor, Trustee and Holders of Equity Investor Fund Focus Series 1999 Year
Ahead International Portfolio, Defined Asset Funds (the 'Fund'):
We have audited the accompanying statement of condition and the defined
portfolio included in the prospectus of the Fund as of December 11, 1998. This
financial statement is the responsibility of the Trustee. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of an irrevocable letter of credit deposited for the purchase of
securities, as described in the statement of condition, with the Trustee. An
audit also includes assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Fund as of December 11,
1998 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, N.Y.
December 11, 1998
STATEMENT OF CONDITION AS OF DECEMBER 11, 1998
TRUST PROPERTY
Investments--Contracts to purchase Securities(1).........$ 384,949.14
--------------------
Total.........................................$ 384,949.14
--------------------
--------------------
LIABILITY AND INTEREST OF HOLDERS
Reimbursement of Sponsors for organization
expenses(2)..........................................$ 1,003.20
--------------------
Subtotal...............................................$ 1,003.20
--------------------
Interest of Holders of 388,837 Units of fractional
undivided interest outstanding(3):
Cost to investors(4)...................................$ 388,809.78
Gross underwriting commissions(5) and organization
expenses(2).......................................... (4,863.84)
--------------------
Subtotal...............................................$ 383,945.94
--------------------
Total.........................................$ 384,949.14
--------------------
--------------------
- ---------------
(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 December 10,
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 $385,742.13 and deposited with the Trustee. The amount of the letter
of credit includes $384,949.14 for the purchase of securities.
(2) A portion of the Public Offering Price consists of securities in
an amount sufficient to pay all or a portion of the costs incurred in
establishing the Portfolio. These costs have been estimated at $2.58 per 1,000
Units. A distribution will be made as of the close of the initial offering
period to an account maintained by the Trustee from which the organizational
expenses obligation of the investors to the Sponsor will be satisfied.
(3) Because the value of securities at the evaluation time on the
Initial Date of Deposit may differ from the amounts shown in this statement of
condition, the number of Units offered on the Initial Date of Deposit will be
adjusted to maintain the $999.93 per 1,000 Units offering price only for that
day. The Public Offering Price on any subsequent day will vary.
(4) Aggregate public offering price computed on the basis of the U.S.
dollar value of the underlying securities at 4:00 p.m., Eastern time on December
10, 1998.
(5) Assumes the maximum initial sales charge per 1,000 units of 1.00%
of the Public Offering Price. A deferred sales charge of $1.75 per 1,000 Units
is payable on March 1 and 15, 1999 and thereafter on the 1st day of each month
through November 1, 1999. Distributions will be made on behalf of the investors
to an account maintained by the Trustee from which the deferred sales charge
obligation of the investors to the Sponsor will be satisfied. If units are
redeemed prior to November 1, 1999, the remaining portion of the distribution
applicable to such units will be transferred to such account on the redemption
date.
A-6
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INVESTOR FUND FOCUS SERIES, 1999 YEAR AHEAD INTERNATIONAL PORTFOLIO
FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS BY WRITING OR CALLING THE TRUSTEE AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
INDEX
PAGE
--------
PORTFOLIO DESCRIPTION............................................ 1
RISK FACTORS..................................................... 2
HOW TO BUY UNITS................................................. 7
HOW TO REDEEM OR SELL UNITS...................................... 8
TRUST TERMINATION................................................ 9
ROLLOVER......................................................... 10
INCOME, DISTRIBUTIONS AND REINVESTMENT........................... 11
PORTFOLIO EXPENSES............................................... 11
TAXES............................................................ 12
RECORDS AND REPORTS.............................................. 14
TRUST INDENTURE.................................................. 15
MISCELLANEOUS.................................................... 15
EXCHANGE OPTION.................................................. 17
SUPPLEMENTAL INFORMATION......................................... 18
PORTFOLIO DESCRIPTION
THE YEAR AHEAD INTERNATIONAL PORTFOLIO
This Focus Series seeks capital appreciation and is designed to permit an
investor to buy and hold a portfolio of international equity securities for a
period of approximately one year. At the end of the year a similar selection
process is applied and the investor may reinvest in a new portfolio, if
available.
Investors should be aware that the Portfolio may not be able to buy each
Security at the same time because of the availability of the Security, any
restrictions applicable to the Portfolio relating to the purchase of the
Security by reason of the federal securities laws or otherwise. Any monies
allocated to the purchase of a Security will generally be held for the purchase
of the Security.
The deposit of the Securities in the Portfolio on the initial date of
deposit established a proportionate relationship among the number of shares of
each Security. During the 90-day period following the iniitial date of deposit
the Sponsor may deposit additional Securities in order to create new Units,
maintaining to the extent practicable that original proportionate relationship.
Deposits of additional Securities subsequent to the 90-day period must generally
replicate exactly the proportionate relationship among the number of shares of
each Security in the Portfolio at the end of the initial 90-day period. The
ability to acquire each Security at the same time will generally depend upon the
Security's availability and any restrictions on the purchase of that Security
under the federal securities laws or otherwise.
Additional Units may also be created by the deposit of cash (including a
letter of credit) with instructions to purchase additional Securities. This
practice could cause both existing and new investors to experience a dilution of
their investments and a reduction in their anticipated income because of price
fluctuations in the Securities between the time of the cash deposit and the
actual purchase of the additional Securities and because the associated
brokerage fees will be an expense of the Portfolio. To minimize the risk of
price fluctuations when purchasing Securities, the Portfolio will try to
purchase Securities as close to the evaluation time or at prices as close to the
evaluated prices as possible. The Portfolio may also enter into program trades
with unaffiliated broker/dealers, which may have the effect of increasing
brokerage commissions, while reducing market risk.
1
<PAGE>
PORTFOLIO SUPERVISION
The Portfolio 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 Portfolio is regularly reviewed, the Portfolio is
unlikely to sell any of the Securities, other than to satisfy redemptions of
units, or to cease buying additional shares in connection with the issuance of
additional Units. More specifically, adverse developments concerning a Security
including the adverse financial condition of the issuer, a failure to maintain a
current dividend rate, the institution of legal proceedings against the issuer,
a default under certain documents materially and adversely affecting the future
declaration of dividends, or a decline in the price or the occurrence of other
market or credit factors (including a public tender offer or a merger or
acquisition transaction) that might otherwise make retention of the Security
detrimental to the interest of investors, will generally not cause the Portfolio
to dispose of a Security or cease buying it. Securities can be sold to meet
redemption of Units. The Portfolio may continue to hold a Security and purchase
additional shares in connection with the issuance of additional Units even
though a research analyst's opinion or the assessment of a Security may have
changed.
RISK FACTORS
An investment in the Portfolio entails certain risks, including the risk
that the value of your investment will decline if the financial condition of the
issuers of the Securities becomes impaired or if the general condition of the
stock market worsens. The rights of holders of common stocks to receive payments
from the issuer are generally inferior to the rights of creditors of, or holders
of debt obligations or preferred stocks issued by, the issuer. Moreover, because
common stocks do not represent an obligation of the issuer they do not offer any
assurance of income or provide the degree of protection of capital provided by
debt securities. Common stocks in general are susceptible to general stock
market movements and to volatile increases and decreases in value as market
confidence in and perceptions of issuers change. Equity markets can be affected
by unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
The Sponsor cannot predict the direction or scope of any of these factors.
Equity prices can be volatile. There can be no assurance that the Portfolio will
be effective in achieving its objective over the one-year life of the Portfolio
or that future portfolios selected through this process during consecutive
one-year periods will meet their objectives. The Portfolio is not designed to be
a complete equity investment program.
FOREIGN EXCHANGE RATES
Because securities of non-U.S. issuers generally pay dividends and trade in
their principal markets in foreign currencies, there is the risk that the U.S.
dollar value of these securities will vary with fluctuations in foreign exchange
rates. Most foreign currencies have fluctuated widely in value against the U.S.
dollar because of changing investor perceptions, currency speculation by
institutional investors, supply and demand of the respective currency, the
soundness of the world economy and the relative strength of the respective
economy, the impact of actual and proposed government policies, interest rate
differentials between currencies and the balance of imports and exports of goods
and services and transfers of income and capital from one country to another.
Asian currencies have been particularly volatile in recent months. For example,
some of the currencies in developing Asian countries have experienced
significant devaluations relative to the U.S. dollar, and major adjustments have
been made periodically in certain of such currencies. Certain countries face
serious exchange constraints. There can be no assurance that the value of these
currencies will not decline further, or continue to fluctuate widely against the
U.S. dollar or other currencies in the future.
Inflation accounting rules in some developing Asian countries require, for
companies that keep accounting records in the local currency, for both tax and
accounting purposes, that certain assets and liabilities be restated on the
company's balance sheet in order to express items in terms of currency of
constant purchasing power. Inflation accounting may indirectly generate losses
or profits for certain companies in developing Asian countries.
The Trustee is required to conduct the Portfolio's foreign exchange
conversions either on a spot (i.e., cash) or forward foreign exchange basis,
whichever will synchronize the currency conversions as exactly as practicable
with the settlement dates of the relevant foreign stock or with the dividend
distribution dates of the Portfolio, as the case may be. Foreign currency
exchange conversions are generally conducted on a principal basis and foreign
exchange dealers realize a profit based upon the difference between the price at
which they are willing to buy a particular currency (bid price) and the price at
which they are willing to sell the currency (offer price). The cost to the
Portfolio of engaging in
2
<PAGE>
these foreign currency conversions also varies with such factors as the currency
involved, the length of the contract period and the market conditions then
prevailing. Portfolio evaluations include the cost of buying or selling a
forward foreign exchange contract in the relevant currency to correspond to the
settlement period for purchases and redemptions of Units.
FOREIGN ISSUERS
Investing in securities of foreign issuers involves risks that are
different from investing in securities of domestic issuers. These risks may
include future political and economic developments, the possibility of exchange
controls or other governmental restrictions on the payment of dividends or
conversion of local currency to U.S. dollars upon sale of securities, less
publicly available information and the absence of uniform accounting, auditing
and financial reporting standards, practices and requirements. The information
set forth below has been extracted from various governmental and private
publications, but no representation can be made as to its accuracy; furthermore,
no representation is made that any correlation exists between the state of the
economies of Japan, China, or the countries of Europe and Asia Pacific and the
value of any Securities held by the Portfolio.
American Depositary Shares and Receipts. Certain of the Securities in the
Portfolio were purchased in ADR form in the United States. ADRs evidence
American Depositary Shares which represent common stock deposited with a
custodian in a depositary. American Depositary Shares (ADSs) and receipts
therefor (ADRs) are issued by an American bank or trust company to evidence
ownership of underlying securities issued by a foreign corporation. These
instruments may not necessarily be denominated in the same currency as the
securities into which they may be converted. Generally, ADSs and ADRs are
designed for use in the United States securities markets. For purposes of this
Prospectus, the term ADR generally includes ADSs. The terms and conditions of
depositary facilities may result in less liquidity or lower market prices for
ADRs than for the underlying shares. For those Securities that are ADRs,
currency fluctuations will also affect the U.S. dollar equivalent of the local
currency price of the underlying domestic share and, as a result, are likely to
affect the value of the ADRs and consequently the value of the Securities.
European Risk Factors
The economies of individual European countries may differ favorably or
unfavorably from the U.S. economy in gross national product, growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
The risks associated with investing in European Securities may be
heightened in the case of investments in smaller or emerging European Securities
markets because of risks due to the inexperience of financial intermediaries,
the lack of modern technology, the lack of a sufficient capital base to expand
business operations and the possibility of permanent or temporary termination of
trading and greater spreads between bid and asked prices for securities in those
markets.
New European Currency to be introduced on January 1, 1999. On January 1,
1999, the European Monetary Union (EMU) is scheduled to introduce a new single
currency, the euro, replacing the national currencies of Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal
and Spain. On that date, the national currencies of these countries are expected
to be converted into the euro at an irrevocable exchange rate.
A newly created European Central Bank (ECB) will have 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 world capital markets. This, in turn, may
affect the Portfolio's performance. The risks associated with the introduction
of the euro include:
o The exchange rates between the U.S. dollar and European currencies may
become more volatile and unstable;
o European entities may face substantial conversion costs which may not
have been accurately anticipated and which may affect issuer
profitability and creditworthiness;
o Some major European countries, including the United Kingdom, Sweden, and
Denmark, will not introduce the euro at this time. This could lead to
greater volatility in exchange rates between the currencies of
participating and non-participating countries, especially when these, or
other non-participating countries, will adopt the euro at some later
point;
3
<PAGE>
o Some financial contracts (e.g. bank loan agreements, derivative
contracts, and foreign exchange contracts) that refer to existing
national currencies may be subject to some legal uncertainties when these
currencies are converted into the euro.
o Depending on how the tax authorities rule on this issue, the euro
conversion may result in a 'realization event' for a financial instrument
denominated in a non-euro currency;
o Suitable clearing, settlement and operational systems of banks and other
financial institutions may not be ready for the euro conversion;
o European interest rates and exchange rates could become more volatile as
the European Central Bank and market participants search for a common
understanding of policy targets and instruments; and
o The currency unification could be delayed, or partially or completely
reversed, causing uncertainty in world markets and creating unanticipated
expenses as a result of having to undo changes made in anticipation of
the euro's introduction;
These or other factors may cause market disruptions and could adversely
affect the value of foreign securities, currencies and financial contracts held
by the Portfolio.
Japan Risk Factors
The Japanese stocks in the Portfolio are common stocks of Japanese
companies whose principal trading market is on the Tokyo Stock Exchange. Reports
of official improprieties, resignations and political reallignments have
recently been followed by significant economic reforms. There is currently
uncertainty as to the future of Japan's political outlook (including the
influence and effectiveness of Japan's bureaucracy) and the impact of these
political factors on the Japanese economy and the stock market.
The Japanese economy has experienced in the 1990s its worst recession since
World War II. The economy came out of this recession for a short time in 1996,
only to weaken again in 1997. Further deceleration of economic growth is evident
thus far in 1998. Consequently, the unemployment rate has been rising. Japan has
also recently experienced a period of prolonged price deflation, weak real
estate prices and a weak currency. The government budget deficits have been
rising in part due to fiscal stimulus policies. Strains on the financial system
in the form of non-performing loans of financial institutions and real estate
companies have also been one of the major causes of Japan's economic weakness.
Resolution of the bad debt problem may require disproportionate contributions by
major banks. Structural problems of overregulation, excessive government
intervention and under-consumption, coupled with the failure of recent
governments to apply strong fiscal direction, could undercut Japan's economic
recovery. Japanese exports could be adversely affected by pressure from trading
partners--particularly the U.S.--to improve trade imbalances, and by the current
instability of its trading partners in Asia.
Asian Pacific Risk Factors
Social, political and economic instability may be significantly greater in
many of the Asian-Pacific countries than that typically associated with the
United States and other industrialized countries. Few of the Asian-Pacific
countries have western-style or fully democratic governments. Some governments
in the region are authoritarian and subject to control by the military. Over the
past twenty-five years, governments in the region have been installed or removed
as a result of military coups, while others have periodically demonstrated
against repressive police state characteristics. Disparities of wealth, among
other factors, have also led to social unrest in some of the Asian-Pacific
countries, accompanied, in certain cases, by violence and labor unrest.
Several of the Asian-Pacific countries have, or in the past have had,
hostile relationships with neighboring nations or have experienced internal
insurgency. Among the Asian-Pacific countries, any internal conflicts or
conflicts with neighbors, including war, could adversely affect not only the
securities markets of the countries directly involved but also the securities
markets of countries not involved.
A number of Asian economies, including Japan, China, Hong Kong, Malaysia,
Thailand, Indonesia and South Korea, have experienced difficulties since the
second half of 1997. These difficulties have included one or several of the
following: decline in the value of the local currency versus the U.S. dollar,
decline in gross domestic product, decline in corporate earnings, political
turmoil and stock market volatility. Consumer demand has remained weak due to
increased unemployment, and exports have been adversely affected by a general
reduction in global growth. In addition, many Asian countries have been in a
state of political transition which has contributed to their recent economic
instability. Moreover, in many Asian countries where currency depreciation has
occurred, the governments of
4
<PAGE>
these countries have taken steps to stabilize their currencies, such as raising
official interest rates and other measures, resulting in higher market interest
rates for local currency-denominated borrowings and liquidity shortages. There
has also been price inflation due to increased costs of imported goods. In
addition, equity markets have experienced significant volatility and overall
declines due to many factors, including currency depreciation, higher market
interest rates, declining corporate earnings and inflationary concerns.
Thailand, Korea and other Asian countries have sought financial assistance from
supranational financial institutions including the International Monetary Fund
and have agreed to adopt economic reform measures that may exacerbate their
current economic conditions. These and other factors have and may continue to
adversely affect economic growth in Asia, and may result in reduced availability
of credit or other financing sources and may result in lower demand for the
products of the issuers of the Portfolio securities in Asian markets, which in
turn would have an adverse effect on the value of the units of the Portfolio.
The reduction of available credit or other financing resources could limit the
ability of the issuers of the Portfolio securities to obtain adequate financing
or to refinance or restructure existing indebtedness, which could materially and
adversely affect their operating results and financial condition, and thus the
value of the units of the Portfolio. In addition, Asian companies, particularly
those with significant indebtedness or costs denominated in U.S. dollars, may
have difficulty passing on increased local currency costs to their customers,
may face financial difficulties or liquidity problems and may be unable or
unwilling to meet their obligations when due. Any adverse change in the economic
condition of countries represented in the Portfolio may have an adverse effect
on the business of the issuers of the Portfolio securities, which in turn would
have an adverse effect on the value of the units of the Portfolio. Although the
governments of some of the countries represented in the Portfolio are pursuing
measures intended to mitigate the effects of the economic slowdown, there can be
no assurance that economic conditions in those countries or elsewhere in Asia
will not worsen in the future. In addition, the operations of the issuers of the
Portfolio securities may also be affected by the imposition of currency controls
and changes in inflation, interest rates, foreign exchange conversion rates,
confiscatory taxation, social instability and expropriation of assets and other
political or diplomatic developments in or affecting Asia. Each of these factors
could potentially have an adverse impact on the value of the Portfolio units.
The economies of most of the Asian-Pacific countries are heavily dependent
upon international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners, principally, the
United States, Japan, China and the European Union. The enactment by the United
States or other principal trading partners of protectionist trade legislation,
reduction of foreign investment in the local economies and general declines in
the international securities markets could have a significant adverse effect
upon the securities markets of the Asian-Pacific Countries.
Governments in certain of the Asian-Pacific countries participate to a
significant degree, through ownership interests or regulation, in their
respective economies. Action by these governments could have a significant
adverse effect on market prices of securities and payment of dividends.
THE BANKING INDUSTRY
The profitability of a financial institution is largely dependent upon the
credit quality of its loan portfolio which, in turn, is affected by the
institution's underwriting criteria, concentrations within the portfolio and
specific industry and general economic conditions. The operating performance of
financial institutions is also impacted by changes in interest rates, the
availability and cost of funds, the intensity of competition and the degree of
governmental regulation. The banks represented in the Portfolio may be subject
to less extensive governmental regulation and different accounting, auditing,
reporting and record keeping standards than those applicable to U.S. banks.
The banking industry is particularly susceptible to downturns in economic
conditions and volatility in political conditions as well as fiscal or monetary
policies of governmental units. Banking operations depend heavily on the
availability and cost of capital and are highly sensitive to interest rate
levels.
Banks are subject to substantial competition from other banking
institutions and from other financial service institutions for deposits, as well
as corporate and retail customers. To the extent a bank's portfolio is
concentrated in assets related to a particular industry or geographic region,
the bank's operating results will be subject to additional risks associated with
that industry or region. Loan portfolios of banks may be adversely affected by
depressed conditions in certain markets, such as real estate, agriculture and
energy. Profitability, therefore, is subject to significant fluctuation. Banks
are also exposed to the risks of an inflationary or a deflationary economy,
which could affect the value of a bank's direct investments and contribute to
loan defaults if the value of secured property or other collateral for loans
declines.
5
<PAGE>
THE TELECOMMUNICATIONS INDUSTRY
Companies in this industry are engaged in providing local, long-distance,
wireless, cable television and internet services, in the manufacture of
telecommunications products and in a wide range of other activities including
directory publishing, information systems and the operation of voice, data and
video telecommunications networks. Payment on common stocks of companies in the
telecommunications industry, including local, long-distance, wireless, cable
television and internet services, the manufacture of telecommunications
equipment, and other ancillary services, is generally dependent upon the amount
and growth of customer demand, the level of rates permitted to be charged by
regulatory authorities and the effects of inflation on the cost of providing
services and the rate of technological innovation. To meet increasing
competition, companies may have to commit substantial capital, particularly in
the formulation of new products and services using new technology.
Telecommunications companies in both developed and emerging countries are
undergoing significant change due to varying and evolving levels of governmental
regulation or deregulation and other factors. As a result, competitive pressures
are intense and the securities of such companies may be subject to significant
price volatility. In addition, all telecommunications companies in both
developed and emerging countries are subject to the additional risk that
technological innovations will make their products and services obsolete.
While the worldwide market for telecommunications equipment is expected to
grow, the overall effect on the Portfolio of factors such as competing
technologies, increasing capital requirements, protectionist actions by foreign
governments and demand for new technologies, is impossible to predict. The
telecommunications companies represented in the Portfolio may include former
government owned telecommunications systems that have been privatized in stages.
The Sponsor cannot predict whether such privatization will continue in the
future or what, if any, effect this will have on the Portfolio.
LIQUIDITY
Many of the Securities may be traded in foreign countries where the
securities markets are not as developed or efficient as those of the United
States. Foreign securities markets, although growing in volume, generally have
substantially less volume than United States markets, and securities of many
foreign companies are less liquid and their prices more volatile than securities
of comparable U.S. companies. Fixed brokerage commissions and other transaction
costs on foreign securities exchanges are generally higher than in the United
States and there is generally less government supervision and regulation of
exchanges, brokers and issuers in foreign countries than there is in the United
States. To the extent the liquidity of these foreign facilities markets becomes
impaired, the ability of the Portfolio to respond to a substantial volume of
requests for redemption of Units received at or about the same time could be
adversely affected. This might occur, for example, as a result of economic or
political turmoil in a country in whose currency the Portfolio had a substantial
portion of its assets invested, or should relations between the United States
and that foreign country deteriorate markedly.
Whether or not the Securities are listed on a national securities exchange,
the principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the Securities
may depend on whether dealers will make a market in the Securities. There can be
no assurance that a market will be made for any of the Securities, that any
market for the Securities will be maintained or of the liquidity of the
Securities in any markets made. In addition, the Portfolio may be restricted
under the Investment Company Act of 1940 from selling Securities to the Sponsor.
The price at which the Securities may be sold to meet redemptions and the value
of the Portfolio will be adversely affected if trading markets for the
Securities are limited or absent.
EXCHANGE CONTROLS
At the present time the Sponsor does not believe that any of the Securities
is subject to exchange control restrictions that would materially interfere with
payment to the Portfolio of amounts due on the Securities. There can be no
assurance that exchange control regulations might not be adopted in the future
that might adversely affect payments to the Portfolio. In addition, the adoption
of exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of the Securities and on the ability of the
Fund to satisfy redemptions.
LITIGATION AND LEGISLATION
The Sponsor does not know of any pending litigation as of the initial date
of deposit that might reasonably be expected to have a material adverse effect
on the Fund, although pending litigation may have a material adverse effect
6
<PAGE>
on the value of Securities in the Portfolio. In addition, at any time after the
initial date of deposit, litigation may be initiated on a variety of grounds, or
legislation may be enacted, affecting the Securities in the Portfolio or the
issuers of the Securities. Changing approaches to regulation may have a negative
impact on certain companies represented in the Portfolio. There can be no
assurance that future litigation, legislation, regulation or deregulation will
not have a material adverse effect on the Portfolio or will not impair the
ability of the issuers of the Securities to achieve their business goals.
LIFE OF THE PORTFOLIO
The size and composition of the Portfolio will be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units or
participating in a rollover. The Portfolio will be terminated no later than the
mandatory termination date specified in Part A of the Prospectus. It will
terminate earlier upon the disposition of the last Security or upon the consent
of investors holding 51% of the Units. The Portfolio may also be terminated
earlier by the Sponsors once its total assets have fallen below the minimum
value specified in Part A of the Prospectus. A decision by the Sponsors to
terminate the Portfolio early, which will likely be made following the rollover,
will be based on factors such as the size of the Portfolio relative to its
original size, the ratio of Portfolio expenses to income, and the cost of
maintaining a current prospectus. See Trust Termination.
HOW TO BUY UNITS
Units are available from the Sponsor at the Public Offering Price. The
Public Offering Price varies each Business Day with changes in the value of the
Portfolio and other assets and liabilities of the Fund.
PUBLIC OFFERING PRICE
Units are charged a combination of Initial and Deferred Sales Charges
equal, in the aggregate, to a maximum charge of 2.75% of the public offering
price or, for quantity purchases of units of all Focus and Select Portfolios by
an investor and the investor's spouse and minor children, or by a single trust
state or fiduciary account, made on a single day, the following percentages of
the public offering price:
<TABLE>
<CAPTION>
APPLICABLE SALES CHARGE
(GROSS UNDERWRITING PROFIT)
------------------------------------
AS % OF PUBLIC AS % OF NET
AMOUNT PURCHASED OFFERING PRICE AMOUNT INVESTED
- --------------------------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Less than $50,000............................................................................ 2.75% 2.778%
$50,000 to $99,999........................................................................... 2.50 2.519
$100,000 to $249,999......................................................................... 2.00 2.005
$250,000 to $999,999......................................................................... 1.75 1.750
$1,000,000 or more........................................................................... 1.00 1.000
</TABLE>
In addition, a portion of the Public Offering Price also consists of securities
in an amount sufficient to pay for all or a portion of the costs incurred in
establishing the Portfolio, including the cost of the initial preparation of
documents relating to the Portfolio, federal and state registration fees, and
the initial fees and expenses of the Trustee, legal expenses and any other
out-of-pocket expenses. The estimated organziation costs will be deducted from
the assets of the Portfolio as of the close of the initial offering period.
The Deferred Sales Charge is a monthly charge of $1.75 per 1,000 units and
is accrued in ten monthly installments commencing on the date indicated in part
A of this Prospectus. Units redeemed or repurchased prior to the accrual of the
final Deferred Sales Charge installment will have the amount of any remaining
installments deducted from the redemption or repurchase proceeds or deducted in
calculating an in-kind distribution, although 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 Charge is equal to the aggregate sales
charge, determined as described above, less the aggregate amount of any
remaining installments of the Deferred Sales Charge (see Rollover below).
It is anticipated that Securities will not be sold to pay the Deferred
Sales Charge 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.
7
<PAGE>
Employees of the Sponsor and Sponsor affiliates and non-employee directors
of Merrill Lynch & Co. Inc. may purchase Units subject only to the Deferred
Sales Charge.
EVALUATIONS
Evaluations are determined by the Trustee on each Business Day. This
excludes Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas and, with respect to individual stocks in the Portfolio, various
additional holidays in the relevant country. Evaluations are generally based on
the U.S. dollar equivalent of the last reported closing sales prices or, if
closing sales prices are not available, at the mean between the closing bid and
offer prices. If the Securities are not listed or if listed but the principal
market is elsewhere, the evaluation is generally determined based on sales
prices of the Securities on the over-the-counter market or, if sales prices in
that market are not available, on the basis of the mean between current bid and
offer prices for the Securities or for comparable securities or by appraisal or
by any combination of these methods. Neither the Sponsor nor the Trustee
guarantees the enforceability, marketability or price of any Securities.
NO CERTIFICATES
All investors are required to hold their Units in uncertificated form and
in 'street name' by their broker, dealer or financial institution at the
Depository Trust Company ('DTC').
HOW TO REDEEM OR SELL UNITS
You can redeem your Units at any time for net asset value. In addition, the
Sponsor has maintained an uninterrupted secondary market for Units for over 20
years and will ordinarily buy back Units at net asset value. The following
describes these two methods to redeem or sell Units in greater detail.
REDEEMING UNITS WITH THE TRUSTEE
You can always redeem your Units for net asset value. This can be done by
contacting your broker, dealer or financial institution that holds your Units in
street name. In certain instances, additional documents may be required such as
a trust instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian.
Within seven days after the receipt of your request (and any necessary
documents), a check will be mailed to you in an amount equal to the net asset
value of your Units. Because of the sales charge, market movements or changes in
the Portfolio, net asset value at the time you redeem your Units may be greater
or less than the original cost of your Units. Net asset value is calculated each
Business Day by adding the value of the Securities, declared but unpaid
dividends on the Securities, cash and the value of any other Portfolio assets;
deducting unpaid taxes or other governmental charges, accrued but unpaid
Portfolio expenses and any remaining deferred sales charges, unreimbursed
Trustee advances, cash held to redeem Units or for distribution to investors and
the value of any other Fund liabilities; and dividing the result by the number
of outstanding Units. After the initial offering period, net asset value will be
reduced to reflect the cost of liquidating Securities to pay the redemption
price.
As long as the Sponsor is maintaining a secondary market for Units (as
described below), the Trustee will not actually redeem your Units but will sell
them to the Sponsor for net asset value. If the Sponsor is not maintaining a
secondary market, the Trustee will redeem your Units for net asset value or will
sell your Units in the over-the-counter market if the Trustee believes it will
obtain a higher net price for your Units. If the Trustee is able to sell the
Units for a net price higher than net asset value, you will receive the net
proceeds of the sale.
If cash is not available in the Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Sponsor based on
market and credit factors determined to be in the best interest of the
Portfolio. These sales are often made at times when the Securities would not
otherwise be sold and may result in lower prices than might be realized
otherwise and may also reduce the size and diversity of the Fund. If Securities
are being sold during a time when additional Units are being created by the
purchase of additional Securities (as described under Portfolio Selection),
Securities will be sold in a manner designed to maintain, to the extent
practicable, the proportionate relationship among the number of shares of each
Security in the Portfolio.
Any investor and related accounts owning Units representing Securities with
a value of at least $1,500,000 who redeems those Units prior to the rollover
notification date indicated in Part A of the Prospectus may, in lieu of cash
8
<PAGE>
redemption, request distribution in kind of an amount and value of Securities
per Unit equal to the otherwise applicable Redemption Price per Unit. Generally,
whole shares of each Security together with cash from the Capital Account equal
to any fractional shares to which the investor would be entitled (less any
Deferred Sales Charge payable) will be paid over to a distribution agent and
either held for the account of the investor or disposed of in accordance with
instructions of the investor. Any brokerage commissions on sales of Securities
in connection with in-kind redemptions will be borne by the redeeming investors.
The in-kind redemption option is subject to all applicable legal restrictions
and may be terminated by the Sponsor at any time upon prior notice to investors.
Redemptions may be suspended or payment postponed (i) if the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (ii) if
the SEC determines that trading on the New York Stock Exchange is restricted or
that an emergency exists making disposal or evaluation of the Securities not
reasonably practicable or (iii) for any other period permitted by SEC order.
SPONSOR'S SECONDARY MARKET FOR UNITS
The Sponsor, while not obligated to do so, will buy back Units at net asset
value without any other fee or charge as long as they are maintaining a
secondary market for Units. Because of the sales charge, market movements or
changes in the portfolio, net asset value at the time you sell your Units may be
greater or less than the original cost of your Units. You should consult your
financial professional for current market prices to determine if other
broker-dealers or banks are offering higher prices for Units.
The Sponsor may discontinue the secondary market for Units without prior
notice if the supply of Units exceeds demand or for other business reasons.
Regardless of whether the Sponsor maintains a secondary market, you have the
right to redeem your Units for net asset value with the Trustee at any time, as
described above.
TRUST TERMINATION
Notice of impending termination of the Portfolio will be provided to
investors. A proportional share of the expenses associated with termination,
including brokerage costs incurred in disposing of Securities, will be borne by
investors remaining at that time. These expenses will reduce the amount of cash
or Securities those investors are to receive in any final distribution.
Upon termination of the Portfolio, the Trustee will distribute the
Securities and any cash in the Portfolio to a distribution agent that will act
as agent for the investors. Unless an investor elects to receive an in-kind
distribution of Securities, as discussed below, the distribution agent will, as
promptly as practicable, sell the investor's pro rata share of the Securities
and distribute to the investor the proceeds of the sale, less brokerage and
other related expenses, and the investor's pro rata share of any cash from the
Portfolio.
Any investor holding units at the termination of the Portfolio may, by
written notice to the Trustee at least ten business days prior to termination,
elect to receive an in-kind distribution of the investor's pro rata share of the
Securities remaining in the Portfolio at that time (net of the investor's share
of expenses). Fractional shares of Securities will be sold by the distribution
agent and the net proceeds distributed to investors. Investors subsequently
selling Securities received in-kind will incur brokerage costs at that time
which may exceed the value of any tax deferral obtained through the in-kind
distribution. Securities received in an in-kind termination distribution may not
be contributed to acquire units of another Series.
ROLLOVER
In lieu of redeeming their Units or receiving liquidation proceeds in cash
or in-kind upon the termination of the Portfolio, investors may elect, by
contacting their financial adviser prior to the rollover notification date
indicated in Part A, to exchange their Units in the Portfolio for units of next
year's corresponding Year Ahead International Portfolio (if available). No
election to roll over may be made prior to 30 days before the date of the
rollover, and any rollover election will be revocable at any time prior to the
date of the rollover. It is expected that the terms of the new portfolio will be
substantially the same as those of the Portfolio.
The rollover of an investor's Units is intended to be effected in a manner
that will not result in the recognition of either gain or loss for U.S. federal
income tax purposes with respect to Securities that are included in the new
portfolio ('Duplicated Securities'). Units held by an investor who elects the
rollover option will be redeemed through an in-kind distribution to a
distribution agent of the investor's pro rata share of Securities. The
distribution agent will then
9
<PAGE>
adjust the Securities distributed to the investor so that its composition
matches the investment profile of the new portfolio. This adjustment will
involve the sale of non-Duplicated Securities and, possibly, of a portion of
certain Duplicated Securities in order to rebalance the portfolio, and the
purchase of replacement Securities. Any excess sales proceeds, net of sales
related expenses, will be distributed to the investor. After this adjustment the
distribution agent will make an in-kind contribution of the adjusted Securities
to the new portfolio. Upon receipt of the in-kind contribution, the trustee of
the new portfolio will issue the appropriate number of units in the new
portfolio to the investor.
An investor who elects the rollover option will recognize capital gain or
loss with respect to the Securities, including fractional Securities, sold by
the distribution agent, but will not recognize gain or loss with respect to the
Duplicated Securities that are contributed in kind to the new portfolio. The
Sponsor intends to provide investors with information that will assist them in
determining their tax liability on an eventual sale of the Duplicated
Securities.
The Sponsor intends to cause the distribution agent to sell those
Securities that will not be contributed to the new portfolio, and then to create
units of the new portfolio in each case as quickly as possible, subject in both
cases to the Sponsor's sensitivity that the concentrated sale and purchase of
large volumes of securities may affect market prices in a manner adverse to the
interest of investors. Accordingly, the Sponsor may, in its sole discretion,
undertake a more gradual sale of the distributed Securities and a more gradual
creation of units of the new portfolio to help mitigate any negative market
price consequences caused by this large volume of securities trades. In order to
minimize potential losses caused by market movement during the rollover period,
the Sponsor may enter into program trades, which might increase brokerage
commissions payable by investors. There can be no assurance, however, that any
trading procedures will be successful or might not result in less advantageous
prices. Pending the investment of rollover proceeds in the securities to
comprise the new portfolio, those moneys may be uninvested for up to several
days.
Investors who participate in the rollover will not be entitled to receive a
cash distribution with which to pay any taxes incurred as a result of the
rollover procedure. Investors who do not participate in the rollover or
otherwise redeem their Units will continue to hold their Units until the
termination of the Portfolio; however, depending upon the extent of
participation in the rollover, the aggregate size of the Portfolio will be
reduced which could result in an increase in per Unit expenses.
The Sponsor may, in its sole discretion and without penalty or liability to
investors, decide not to sponsor a new portfolio or to modify the terms of the
rollover. Prior notice of any decision would be provided to investors.
The Division of Investment Management of the SEC is of the view that the
rollover option constitutes an 'exchange offer', for the purposes of Section
11(c) of the Investment Company Act of 1940, and would therefore be prohibited
absent an exemptive order. The Sponsor has received exemptive orders under
Section 11(c) which it believes permit it to offer the rollover, but no
assurance can be given that the SEC will concur with the Sponsor's position, and
additional regulatory approvals may be required.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME AND DISTRIBUTIONS
Although current dividend income is not an objective of the Portfolio and
it is anticipated that expenses will exceed available income, the annual income
per Unit will depend primarily upon the amount of dividends declared and paid by
the issuers of the Securities and changes in the expenses of the Portfolio and,
to a lesser degree, upon the level of purchases of additional Securities and
sales of Securities. There is no assurance that dividends on the Securities will
continue at their current levels or be declared at all.
Each Unit receives an equal share of distributions of dividend income net
of estimated expenses. Because dividends on the securities are not received at a
constant rate throughout the year, any distribution may be more or less than the
amount then credited to the Income Account. Dividends received are credited to
an Income Account and other receipts to a Capital Account. A Reserve Account may
be created by withdrawing from the Income and Capital Accounts amounts
considered appropriate by the Trustee to reserve for any material amount that
may be payable out of the Portfolio. Funds held by the Trustee in the various
accounts do not bear interest. In addition, distributions of amounts necessary
to pay the Deferred Sales Charge will be made from the Capital Account to an
account maintained
10
<PAGE>
by the Trustee for purposes of satisfying investors' sales charge obligations.
Although the Sponsor may collect the Deferred Sales Charge monthly, to keep
Units more fully invested the Sponsor currently does not anticipate sales of
Securities to pay the deferred sales charge until after the rollover
notification date. Proceeds of the disposition of any Securities not used to pay
Deferred Sales Charge or to redeem Units will be held in the Capital Account and
distributed following liquidation of the Portfolio.
REINVESTMENT
Any income and principal distributions on Units may be reinvested by
participating in the Portfolio's reinvestment plan. Under the plan, the Units
acquired for investors will be either Units already held in inventory by the
Sponsor or new Units created by the Sponsor's deposit of additional Securities,
contracts to purchase additional Securities or cash (or a bank letter of credit
in lieu of cash) with instructions to purchase additional Securities. Deposits
or purchases of additional Securities will generally be made so as to maintain
the then existing proportionate relationship among the number of shares of each
Security in the Fund. Units acquired by reinvestment will not be subject to the
initial sales charge but will be subject to any remaining installments of
Deferred Sales Charge. The Sponsor reserves the right to amend, modify or
terminate the reinvestment plan at any time without prior notice. Investors
holding Units in 'street name' should contact their broker, dealer or financial
institution if they wish to participate in the reinvestment plan.
PORTFOLIO EXPENSES
Estimated annual Portfolio expenses are listed in Part A of the Prospectus;
if actual expenses exceed the estimate, the excess will be borne by the
Portfolio. To the extent that expenses exceed the amount available in the Income
Account, the Trustee is authorized to sell Securities and pay the excess
expenses from the Capital Account. The estimated expenses do not include the
brokerage commissions or stamp taxes payable by the Portfolio in purchasing and
selling Securities. The Trustee's Fee shown in Part A of this Prospectus assumes
that the Portfolio will reach a size estimated by the Sponsor and is based on a
sliding fee scale that reduces the per 1,000 Units Trustee's fee as the size of
the Portfolio increases. The Trustee's annual fee is payable in monthly
installments. The Trustee also benefits when it holds cash for the Portfolio in
non-interest bearing accounts. Possible additional charges include Trustee fees
and expenses for extraordinary services, costs of indemnifying the Trustee and
the Sponsor, costs of action taken to protect the Portfolio and other legal fees
and expenses, Portfolio termination expenses and any governmental charges. The
Trustee has a lien on Portfolio assets to secure reimbursement of these amounts
and may sell Securities for this purpose if cash is not available. The Sponsor
receives an annual fee currently estimated at $0.45 per 1,000 Units to reimburse
it for the cost of providing Portfolio supervisory, bookkeeping and
administrative services and for any other expenses properly chargeable to the
Portfolio. While the fee may exceed the amount of these costs and expenses
attributable to the Portfolio, the total of these fees from all Series of
Defined Asset Funds will not exceed the aggregate amount attributable to all of
those Series during any calendar year. The Trustee's and Sponsor's fees may be
adjusted for inflation without investors' approval.
Advertising and selling expenses will be paid by the Sponsor at no charge
to the Fund. Defined Asset Funds can be a cost-effective way to purchase and
hold investments. Annual operating expenses are generally lower than for managed
funds. Because Defined Asset Funds have no management fees, limited transaction
costs and no ongoing marketing expenses, operating expenses are generally less
than 0.25% a year. When compounded annually, small differences in expense ratios
can make a difference in your investment results.
TAXES
U.S. TAXATION
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
persons with special tax circumstances, such as dealers, financial institutions,
insurance companies or former U.S. citizens or long term residents.
As used herein, the term 'U.S. Investor' means an owner of a Unit in the
Portfolio that is (i) for United States federal income tax purposes a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, or (iii) an estate or trust the income of which
is subject to United States federal income taxation regardless of its source. An
investor that is not a U.S. Investor but whose income from a Unit is effectively
connected with such Investor's conduct of a United
11
<PAGE>
States trade or business will generally be taxed in the same manner as a U.S.
Investor but should consult his or her tax advisor in this regard.
The following discussion relates only to U.S. Investors. Since the
Portfolio holds only Securities of non-U.S. issuers, it is expected that income
earned by investors who are not U.S. Investors will not be treated as
U.S.-source income and should not be subject to any U.S. withholding tax.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors,
under existing law:
The Portfolio is not an association taxable as a corporation for federal
income tax purposes. Each U.S. Investor will be considered the owner of a
pro rata portion of each Security in the Portfolio under the grantor trust
rules of Sections 671-679 of the Internal Revenue Code of 1986, as amended
(the 'Code'). Each U.S. Investor will be considered to have received all of
the dividends paid on his pro rata portion of each Security and any
exchange gain or loss resulting from the conversion into U.S. dollars of
any such dividends paid in foreign currency when such amounts are received
or converted by the Portfolio, regardless of whether such dividends are
subject to withholding taxes or used to pay a portion of the Portfolio's
expenses or whether they are automatically reinvested (see Reinvestment).
Dividends considered to have been received by a corporate U.S. Investor
will not qualify for the dividends-received deduction because the
dividends-received deduction is generally only available for dividends
received from domestic corporations.
Dividends received by the Portfolio will generally be subject to
withholding taxes imposed by the relevant jurisdictions. Amounts withheld
on payments to the Portfolio may be greater than the amounts that would be
withheld if the shares were held directly by a U.S. Investor. The Portfolio
will report as gross income earned by U.S. Investors their pro rata shares
of such dividends, including their pro rata shares of any corresponding
amounts of foreign tax withheld. Capital gains attributable to the Units or
the underlying securities may also be subject to taxes by certain of those
jurisdictions. U.S. Investors should be entitled, subject to applicable
limitations, to either a credit or a deduction for these foreign taxes and
should consult their tax advisers in this regard.
An individual U.S. Investor who itemizes deductions will be entitled to
deduct his pro rata share of Portfolio expenses only to the extent that
this amount together with the U.S. Investor's other miscellaneous
deductions exceeds 2% of his adjusted gross income. The Code further
restricts the ability of an individual U.S. Investor with an adjusted gross
income in excess of a specified amount (for 1998, $124,500 or $62,250 for a
married person filing a separate return) to claim itemized deductions
(including his pro rata share of Portfolio expenses).
The U.S. Investor's basis in his Units will equal the cost of his Units,
including the initial sales charge. A portion of the sales charge is
deferred until the termination of the Portfolio or the redemption of the
Units. The proceeds received by a U.S. Investor upon such event will
reflect deduction of the deferred amount (the 'Deferred Sales Charge') and,
after the initial offering period, a charge for organizational expenses.
The annual statement and the relevant tax reporting forms received by U.S.
Investors will be based upon the amounts paid to them, net of the Deferred
Sales Charge and the charge for organizational expenses. Accordingly, U.S.
Investors should not increase their basis in their Units by the Deferred
Sales Charge or any amount used to pay organizational expenses.
A U.S. investor will generally recognize capital gain or loss when the
U.S. Investor disposes of his Units for cash (by sale or redemption) or
when the Trustee disposes of the Securities from the Portfolio. A U.S.
Investor will not recognize gain or loss upon the distribution of a pro
rata amount of each of the Securities by the Trustee to a U.S. Investor (or
to his agent) in redemption of Units or upon termination of the Portfolio,
except to the extent of cash received in lieu of fractional shares. The
redeeming U.S. Investor's basis for such Securities will be equal to his
basis for the same Securities (previously represented by his Units) prior
to such redemption, and his holding period for such Securities will include
the period during which he held his Units.
A U.S. investor who elects to roll over into a new portfolio (a
'rollover investor') will not recognize gain or loss either upon the
distribution of Securities by the Trustee to the distribution agent or upon
the contribution of Duplicated Securities (as defined under Rollover) to
the new portfolio. The rollover investor will generally recognize capital
gain or loss as a consequence of the distribution agent's sale of
non-Duplicated Securities. The rollover investor's basis for the Duplicated
Securities that are contributed in kind to the new portfolio will be equal
to his basis for the same Duplicated Securities prior to the rollover, and
his holding period for the contributed
12
<PAGE>
Duplicated Securities will include the period during which he held an
interest in the same Duplicated Securities through an investment in the
Portfolio and in prior years' corresponding Year Ahead International
Portfolio.
A U.S. Investor will generally not recognize gain or loss upon the
distribution of a pro rata amount of each of the Securities by the Trustee
to a U.S. Investor (or to his agent) in redemption of Units, except to the
extent of cash received in lieu of fractional shares. The redeeming U.S.
Investor's basis for such Securities will be equal to his basis for the
same Securities (previously represented by his Units) prior to such
redemption, and his holding period for such Securities will include the
period during which he held his Units. Capital gain on a disposition of
Units or Securities by U.S. Investors will generally be U.S. source income.
Any foreign currency gain or loss with respect to an investment in the
Portfolio will generally be treated as ordinary income or loss.
Net capital gain (the excess of net long-term capital gains over net
short-term capital losses) may be eligible for the maximum federal tax rate
of 20% for noncorporate taxpayers. A capital gain or loss is long-term if
the asset is held for more than one year and short-term if held for one
year or less. Accordingly, a noncorporate investor whose holding period for
Units or, in the case of the new portfolio, Duplicated Securities, is
longer than one year may be entitled to the benefits of the lower net
capital gain tax rates. The deduction of capital losses is subject to
limitations. Investors should consult their tax advisers regarding these
matters.
Under the income tax laws of the State and City of New York, the
Portfolio is not an association taxable as a corporation and the income of
the Portfolio will be treated as the income of the U.S. Investors in the
same manner as for federal income tax purposes.
The foregoing discussion relates only to the tax treatment of U.S.
Investors with regard to federal and certain aspects of New York State and
City income taxes. U.S. Investors may be subject to taxation in New York or
in other jurisdictions and should consult their own tax advisers in this
regard.
* * * *
The Trustee will furnish to each investor a statement containing
information relating to the dividends received by the Portfolio on the
Securities, the cash proceeds received by the Portfolio from the disposition of
any Security (resulting from redemption or the sale by the Portfolio of any
Security), and the fees and expenses paid by the Portfolio. The Trustee will
also furnish information returns to each investor and to the Internal Revenue
Service.
RETIREMENT PLANS
This Series of Equity Investor Fund may be well suited for purchase by
Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for special 5 or
10 year averaging (prior to the year 2000) or tax-deferred rollover treatment.
Investors in IRAs, Keogh plans and other tax-deferred retirement plans should
consult their plan custodian as to the appropriate disposition of distributions.
Investors considering participation in any of these plans should review specific
tax laws related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any of these plans. These plans
are offered by brokerage firms, including the Sponsor of this Portfolio, and
other financial institutions. Fees and charges with respect to such plans may
vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units may be purchased
by retirement plans established for self-employed individuals, partnerships or
unincorporated companies ('Keogh plans'). The assets of a Keogh plan must be
held in a qualified trust or other arrangement which meets the requirements of
the Code. Keogh plan participants may also establish separate IRAs (see below)
to which they may contribute up to an additional $2,000 per year ($4,000 in a
spousal account).
Individual Retirement Account--IRA. Any individual can make use of a
qualified IRA arrangement for the purchase of Units. Any individual (including
one covered by an employer retirement plan) can make a contribution in an IRA
equal to the lesser of $2,000 ($4,000 in a spousal account) or 100% of earned
income; such investment must be made in cash. However, the deductible amount of
a contribution by an individual covered by an employer retirement plan will be
reduced if the individual's adjusted gross income exceeds $25,000 (in the case
of a single individual), $40,000 (in the case of a married individual filing a
joint return) or $200 (in the case of a married individual
13
<PAGE>
filing a separate return). These income threshholds will gradually be increased
by 2004 to $50,000 for a single individual and $80,000 for a married individual
filing jointly. Certain transactions which are prohibited under Section 408 of
the Code will cause all or a portion of the amount in an IRA to be deemed to the
distributed and subject to tax at that time. Unless nondeductible contributions
were made in 1987 or a later year, all distributions from an IRA will be treated
as ordinary income but generally are eligible for tax-deferred rollover
treatment. Taxable distributions made before attainment of age 59 1/2, except in
the case of the participant's death or disability or where the amount
distributed is part of a series of substantially equal periodic (at least
annual) payments that are to be made over the life expectancies of the
participant and his or her beneficiary, are generally subject to a surtax in an
amount equal to 10% of the distribution. The 10% surtax will be waived for
withdrawals for certain educational and first-time homebuyers expenses. Under a
special type of IRA, contributions would be non-deductible but distributions
would be tax-free if the account were held for at least five years and the
account holder was aged at least 59 1/2 at the time of distribution.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan for employees of a corporation may purchase Units.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Portfolio,
including a current list of the Securities and a copy of the Indenture, which
may be inspected by investors at reasonable times during business hours.
With each distribution, the Trustee includes a statement of the amounts of
income and any other receipts being distributed. Following the termination of
the Portfolio, the Trustee sends each investor of record a statement summarizing
transactions in the Portfolio'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 Portfolio,
among other matters. Portfolio accounts may be audited by independent
accountants selected by the Sponsors and any report of the accountants will be
available from the Trustee on request.
TRUST INDENTURE
The Portfolio is a 'unit investment trust' created under New York law by a
Trust Indenture between the Sponsor and the Trustee. This Prospectus summarizes
various provisions of the Indenture, but each statement is qualified in its
entirety by reference to the Indenture.
The Indenture may be amended by the Sponsor and the Trustee without consent
by investors to cure ambiguities or to correct or supplement any defective or
inconsistent provision, to make any amendment required by the SEC or other
governmental agency or to make any other change not materially adverse to the
interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Portfolio
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified of the substance of any amendment.
The Trustee may resign upon notice to the Sponsor. It may be removed by
investors holding 51% of the Units at any time or by the Sponsor without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the Sponsor
determines in good faith that its replacement is in the best interest of the
investors. The resignation or removal becomes effective upon acceptance of
appointment by a successor; in this case, the Sponsor will use its best efforts
to appoint a successor promptly; however, if upon resignation no successor has
accepted appointment within 30 days after notification, the resigning Trustee
may apply to a court of competent jurisdiction to appoint a successor.
If the Sponsor fails to perform its duties or becomes incapable of acting
or bankrupt or its affairs are taken over by public authorities, the Trustee may
appoint a successor Sponsor at reasonable rates of compensation, terminate the
Indenture and liquidate the Fund or continue to act as Trustee without a
Sponsor.
The Sponsor and the Trustee are not liable to investors or any other party
for any act or omission in the conduct of their responsibilities absent bad
faith, willful misfeasance, negligence (gross negligence in the case of the
Sponsor) or reckless disregard of duty. The Indenture contains customary
provisions limiting the liability of the Trustee.
14
<PAGE>
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and New York
State banking authorities.
SPONSOR
The Sponsor is a wholly-owned subsidiary of Merrill Lynch & Co., Inc. The
Sponsor, or one of its predecessor corporations, has acted as Sponsor of a
number of series of unit investment trusts and as principal underwriter and
managing underwriter of other investment companies. The Sponsor, in addition to
participating as a member of various selling groups or as agent of other
investment companies, executes orders on behalf of investment companies for the
purchase and sale of securities of these companies and sells securities to these
companies in its capacities as broker or dealer in securities.
CODE OF ETHICS
The Sponsor has adopted a code of ethics requiring preclearance and
reporting of personal securities transactions by its personnel who have access
to information on Defined Asset 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 Fund and to provide guidance to these persons
regarding standards of conduct consistent with the Sponsor's responsibilities to
the Funds.
YEAR 2000 ISSUES
Many computer systems were designed using only two digits to designate
years. These systems may not be able to distinguish the Year 2000 from the Year
1900 (commonly known as the 'Year 2000 Problem'). Like other investment
companies and financial and business organizations, the Portfolio could be
adversely affected if the computer systems used by the Sponsor or Portfolio
service providers do not properly address this problem prior to January 1, 2000.
The Sponsor has established a dedicated group to analyze these issues and to
implement any systems modifications necessary to prepare for the Year 2000.
Currently, we do not anticipate that the transition to the 21st century will
have any material effect on the Portfolio. The Sponsor has sought assurances
from the Portfolio's other service providers that they are taking all necessary
steps to ensure that their computer systems will accurately reflect the Year
2000, and the Sponsor will continue to monitor the situation. At this time,
however, no assurance can be given that the Portfolio's other service providers
have anticipated every step necessary to avoid any adverse effect on the
Portfolio attributable to the Year 2000 Problem.
PUBLIC DISTRIBUTION
During the initial offering period and thereafter to the extent additional
Units continue to be offered for sale to the public by means of this Prospectus,
Units will be distributed directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above or to selected
dealers who are members of the National Association of Securities Dealers, Inc.
at a concession not in excess of the maximum sales charge. The Sponsor intends
to qualify Units for sale in all states in which qualification is deemed
necessary through the Underwriting Account and by dealers who are members of the
National Association of Securities Dealers, Inc.. The Sponsor does not intend to
qualify Units for sale in any foreign countries and this Prospectus does not
constitute an offer to sell Units in any country where Units cannot lawfully be
sold.
15
<PAGE>
UNDERWRITER'S AND SPONSOR'S PROFITS
Upon sale of the Units, the Sponsor will be entitled to receive sales
charges. The Sponsor also realizes a profit or loss on deposit of the Securities
equal to the difference between the cost of the Securities to the Fund (based on
the aggregate value of the Securities on their date of deposit) and the purchase
price of the Securities to the Sponsor plus commissions payable by the Sponsor.
In addition, the Sponsor or Underwriter may realize profits or sustain losses on
Securities it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Sponsor also may realize profits or sustain losses as a result of fluctuations
after the initial date of deposit in the Public Offering Price of the Units. In
maintaining a secondary market for Units, the Sponsor will also realize profits
or sustain losses in the amount of any difference between the prices at which it
buys Units and the prices at which it resells these Units (which include the
sales charge) or the prices at which it redeems the Units. Cash, if any, made
available by buyers of Units to the Sponsor prior to a settlement date for the
purchase of Units may be used in the Sponsor's business to the extent permitted
by Rule 15c3-3 under the Securities Exchange Act of 1934 and may be of benefit
to the Sponsor.
PERFORMANCE INFORMATION
Advertisements and other material distributed to prospective investors may
include average annual total returns (with dividends reinvested) of equity
markets in major industrialized countries over the last 10 years, as compiled by
Morgan Stanley Capital International Europe, Australia, Far East Index.
Advertisements and other material distributed to prospective investors may
include the average annual compounded rate of return on selected types of assets
for periods of at least 10 years, as compiled by Ibbotson Associates, compared
to the rate of inflation over the same period. These materials may also compare
the shrinking relative proportion of world stock market capitalization
represented by U.S. markets for different years.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio is generally fixed) and 'hold with confidence'
(because the portfolio is professionally selected and regularly reviewed).
Defined Asset Funds offers an array of simple and convenient investment choices,
suited to fit a wide variety of personal financial goals--a buy and hold
strategy for capital accumulation, such as for children's education or
retirement or regular current income consistent with the preservation of
principal. Unit investment trusts are particularly suited for the many investors
who prefer to seek long-term profits by purchasing and holding investments,
rather than through active trading. Few individuals have the knowledge,
resources or capital to buy and hold a diversified portfolio on their own; it
would generally take a considerable sum of money to obtain the breadth and
diversity that Defined Asset Funds offer. Your investment objectives may call
for a combination of Defined Asset Funds.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.
Investors may pursue investment growth to meet long-term goals such as
children's education or retirement. But they are faced with decisions of
selecting stock groups, choosing individual stocks, determining when to buy and
sell and how to reinvest sales proceeds. Growth stocks--those whose price is
expected to appreciate above average usually because of superior growth in
earnings per share--can be difficult to select successfully because their prices
tend to be more volatile than more established stocks and, by the time they are
discovered by ordinary investors, their prices may have already increased beyond
attractive levels or may be susceptible to dramatic declines if actual
performance is less than anticipated.
16
<PAGE>
EXCHANGE OPTION
You may exchange units of this Portfolio for units of other Select and
Focus Series and certain other Defined Asset Funds with a combination of initial
and deferred sales charges. Select and Focus Portfolios have a sales charge for
first-time investors of 1% initially and annual deferred sales charges of $17.50
per 1,000 units. On exchanges, the initial sales charge is waived and units are
acquired subject to any remaining deferred sales charges. Investors can also
exchange units of those Portfolios, similar series of unaffiliated equity unit
investment trusts and Select Series Year Ahead Portfolios of Group One
International Trust for Portfolio Units, subject only to the Portoflio's
remaining deferred sales charges. In the future, the Exchange Option may be
extended to other series and types of trusts with similar sales charge
structures.
To make an exchange, you should contact your financial professional to find
out what suitable exchange funds are available and to obtain a prospectus. You
may acquire units of only those exchange funds in which the Sponsor is
maintaining a market and which are lawfully for sale in the state where you
reside. An exchange is a taxable event normally requiring recognition of any
gain or loss on the units exchanged. However, the Internal Revenue Service may
seek to disallow a loss if the portfolio of the units acquired is not materially
different from the portfolio of the units exchanged; you should consult your own
tax adviser. If the proceeds of units exchanged are insufficient to acquire a
whole number of exchange fund units, you may pay the difference in cash (not
exceeding the price of a single unit acquired).
As the Sponsor is not obligated to maintain a market in any series, there
can be no assurance that units can be exchanged. The Exchange Option may be
amended or terminated at any time without notice.
17
<PAGE>
SUPPLEMENTAL INFORMATION
Upon writing or calling the Trustee shown on the back cover of this
Prospectus, investors will receive without charge supplemental information about
the Portfolio, which has been filed with the SEC. The supplemental information
includes more detailed risk factor disclosure about the types of securities that
may be part of the Portfolio and general information about the structure and
operation of the Portfolio.
18
<PAGE>
Defined
Asset FundsSM
SPONSOR:
EQUITY INVESTOR FUND
Merrill Lynch, FOCUS SERIES
Pierce, Fenner & Smith Incorporated1999 YEAR AHEAD
Defined Asset Funds INTERNATIONAL PORTFOLIO
P.O. Box 9051
Princeton, NJ 08543-9051
(609) 282-8500
TRUSTEE: This Prospectus does not contain all of the
The Chase Manhattan Bank information with respect to the investment
Customer Service Retail Department company set forth in its registration
Bowling Green Station statement and exhibits relating thereto which
P.O. Box 5187 have been filed with the Securities and
New York, NY 10274-5187 Exchange Commission, Washington, D.C. under
1-800-323-1508 the Securities Act of 1933 and the Investment
Company Act of 1940, and to which reference
is hereby made. Copies of filed material can
be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
The Commission also maintains a Web site that
contains information statements and other
information regarding registrants such as
Defined Asset Funds that file electronically
with the Commission at http://www.sec.gov.
------------------------------
No person is authorized to give any
information or to make any representations
with respect to this investment company not
contained in its registration statement and
exhibits relating thereto; and any
information or representation not contained
therein must not be relied upon as having
been authorized.
------------------------------
When Units of this Fund are no longer
available or for investors who may reinvest
into subsequent Select Year Ahead
International Portfolios, this Prospectus may
be used as a preliminary prospectus for a
future series, and investors should note the
following:
Information contained herein is subject to
amendment. A registration statement relating
to securities of a future series has been
filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer,
solicitation or sale would be unlawful prior
to qualification under the securities laws of
any such State.
32714--12/98
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositors is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
I. Bonding arrangements of the Depositor are incorporated by reference to Item
A of Part II to the Registration Statement on Form S-6 under the Securities Act
of 1933 for Municipal Investment Trust Fund, Monthly Payment Series--573 Defined
Asset Funds (Reg. No. 333-08241).
II. The date of organization of the Depositor is set forth in Item B of Part II
to the Registration Statement on Form S-6 under the Securities Act of 1933 for
Municipal Investment Trust Fund, Monthly Payment Series--573 Defined Asset Funds
(Reg. No. 333-08241) and is herein incorporated by reference thereto.
III. The Charter and By-Laws of the Depositor are incorporated herein by
reference to Exhibits 1.3 through 1.4 to the Registration Statement on Form S-6
under the Securities Act of 1933 for Municipal Investment Trust Fund, Monthly
Payment Series--573 Defined Asset Funds (Reg. No. 333-08241).
IV. Information as to Officers and Directors of the Depositors has been filed
pursuant to Schedules A and D of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934 and is incorporated by reference to the SEC
filing indicated and made a part of this Registration Statement:
IncorporatedMerrill Lynch, Pierce, Fenner & Smith 8-7221
------------------------------------
B. The Internal Revenue Service Employer Identification Numbers of the
Sponsors and Trustee are as follows:
IncorporatedMerrill Lynch, Pierce, Fenner & Smith 13-5674085
The Chase Manhattan Bank, Trustee............... 13-4994650
II-1
<PAGE>
SERIES OF EQUITY INCOME FUND, MUNICIPAL INVESTMENT TRUST FUND
AND DEFINED ASSET FUNDS MUNICIPAL INSURED SERIES
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933
SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
Equity Income Fund, 'MERIT' 1987 Series (Merrill Equity
Research Investment Trust).................................. 33-10989
Equity Income Fund, Group One Overseas Index Fund, Series 1
and 2....................................................... 33-05654
Equity Income Fund, Select Ten Portfolio--1995 Winter
Series...................................................... 33-55811
Equity Income Fund, Select Ten Portfolio--1995 Spring
Series...................................................... 33-55807
Defined Asset Funds Municipal Insured Series................ 33-54565
Municipal Investment Trust Fund, Multistate Series 325...... 333-50907
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference from the
Cross-Reference Sheet of the Registration Statement of Defined Asset Funds
Municipal Insured Series, 1933 Act File No. 33-54565).
The Prospectus.
The Signatures.
The following exhibits:
1.1 --Form of Trust Indenture (incorporated by reference to Exhibit 1.1 to
Amendment No. 2 to the Registration Statement on Form S-6 of Equity
Income Fund, Select Growth Portfolio--1995 Series 2, Defined Asset
Funds, Reg. No. 33-58535).
1.1.1 --Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement under the Securities Act
of 1933 of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their name under the heading
'Miscellaneous--Legal Opinion' in the Prospectus.
5.1 --Consent of independent accountants.
9.1 --Information Supplement (incorporated by reference to Exhibit 9.1 to
the Registration Statement of Equity Income Fund, Select Ten Portfolio
1996 International Series B (United Kingdom and Japan Portfolios),
1933 Act File No. 33-00593).
R-1
<PAGE>
SIGNATURE
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 11TH DAY OF
DECEMBER, 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.
JOHN L. STEFFENS
By ERNEST V. FABIO
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
DECEMBER 11, 1998
EQUITY INVESTOR FUND,
FOCUS SERIES 1999 YEAR AHEAD INTERNATIONAL PORTFOLIO
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 sponsor (the 'Sponsor') of
Equity Investor Fund, Focus Series 1999 Year Ahead International Portfolio,
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 Sponsor and 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 Sponsor and Trustee of Equity Investor Fund
Focus Series 1999 Year Ahead International Portfolio,
Defined Asset Funds:
We consent to the use in this Registration Statement No. 333-64567 of our
opinion dated December 11, 1998, relating to the Statement of Condition of
Equity Investor Fund Focus Series 1999 Year Ahead International Portfolio,
Defined Asset Funds and to the reference to us under the heading
'Miscellaneous-- Auditors' in the Prospectus which is part of this Registration
Statement.
DELOITTE & TOUCHE LLP
New York, N.Y.
December 11, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> DEC-11-1998
<INVESTMENTS-AT-COST> 384,949
<INVESTMENTS-AT-VALUE> 384,949
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 384,949
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 384,949
<SHARES-COMMON-STOCK> 388,837
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 384,949
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 388,837
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
