<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 1998
...........................................................................
Commission file number 001-08642
...........................................................................
The Equity Income Fund, First Exchange Series - AT&T Shares
...........................................................................
(Exact name of registrant as specified in its charter)
New York 13-6824382
...........................................................................
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
Merrill Lynch, Pierce, Fenner Prudential Securities
& Smith Incorporated Incorporated
P.O. Box 9051 One Seaport Plaza
Princeton, New Jersey 08543-9051 199 Water Street
New York, New York 10292
Morgan Stanley Dean Witter Smith Barney Inc.
Two World Trade Center 388 Greenwich Street
New York, New York 10048 New York, New York 10013
...........................................................................
(Addresses of principal executive offices of Sponsors)
The Bank of New York, 101 Barclay Street, New York, N.Y. 10286
...........................................................................
(Address of principal executive offices of Trustee)
(212) 815-2887
...........................................................................
(Trustee's telephone number, including area code)
<PAGE> 2
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ------------------- -------------------
<S> <C>
Units of Beneficial Interest American Stock
in The Equity Income Fund, Exchange, Inc.
First Exchange Series -
AT&T Shares Pacific Stock Exchange,
Incorporated
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X .
---
The aggregate market value of units of beneficial interest held of record
on the books of the Trustee by non-affiliates of the registrant as of February
26, 1999 was $2,523,670,115.96
The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant is not applicable.
<PAGE> 3
PART I
ITEM 1. BUSINESS.
The Equity Income Fund, First Exchange Series - AT&T Shares (the "Fund")
was formed in 1983 as a unit investment trust under New York law and in
accordance with the Investment Company Act of 1940 by a trust indenture among
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley Dean Witter,
Prudential Securities Incorporated and Smith Barney Inc. as Sponsors and The
Bank of New York as Trustee.
The Fund was formed for the purpose of permitting an investor in common
shares of the predivestiture American Telephone and Telegraph Company ("AT&T")
to hold an investment in AT&T and the seven regional holding companies created
pursuant to the AT&T Plan of Reorganization in the form of units of beneficial
interest (the "Units") of the Fund, which consists solely of shares of AT&T
common stock and those securities which are distributed to holders of such AT&T
common stock pursuant to the reorganization. The Fund is not sponsored by, or
affiliated with, AT&T or any of the regional holding companies.
ITEM 2. PROPERTIES.
The Fund owns no physical properties.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
- 1 -
<PAGE> 4
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a)
(i) MARKET INFORMATION
The principal United States markets in which Units of the Fund are traded
are the American Stock Exchange, Inc. and the Pacific Stock Exchange,
Incorporated.
The following are the high and low sale prices of Units of the Fund during
each quarter for the last two fiscal years in which the Units were traded on the
American Stock Exchange, Inc., which was the principal exchange market for the
Units:
<TABLE>
<CAPTION>
HIGH SALE LOW SALE
QUARTER ENDED PRICE PRICE
- ------------- --------- --------
<S> <C> <C>
March 31, 1997 89.750 81.825
June 30, 1997 95.262 79.250
September 30, 1997 100.000 92.925
December 31, 1997 120.125 101.475
March 31, 1998 144.875 117.562
June 30, 1998 146.250 132.750
September 30, 1998 150.500 132.937
December 31, 1998 200.000 142.375
</TABLE>
(ii) HOLDERS
There were 4,781 record holders of Units of the Fund on the books of the
Trustee on February 26, 1999, eighty-seven and fifteen hundredths of a percent
(87.15%) of such Units were held of record by Cede & Co., a nominee of the
Depository Trust Company, for certain of its participants on that date.
- 2 -
<PAGE> 5
(iii) DIVIDENDS
The following are the cash distributions which were paid to holders of
Units of the Fund during the last two fiscal years:
<TABLE>
<CAPTION>
DISTRIBUTION DATE 1997 RATE PER UNIT TOTAL DISTRIBUTION
- ---------------------- ------------- ------------------
<S> <C> <C>
January 1, 1997 $ .229 $ 3,623,693.48
February 1, 1997 .231 3,632,133.81
March 1, 1997 .231 3,596,267.37
April 1, 1997 .231 3,579,311.04
May 1, 1997 .233 3,591,628.13
June 1, 1997 .233 3,565,001.12
July 1, 1997 .233 3,542,990.78
August 1, 1997 .235 3,543,449.85
September 1, 1997 .233 3,462,465.51
October 1, 1997 .235 3,466,592.63
November 1, 1997 .233 3,429,871.37
December 1, 1997 .233 3,413,966.79
TOTALS $2.790 $42,447,371.88
----- -------------
<CAPTION>
DISTRIBUTION DATE 1998 RATE PER UNIT TOTAL DISTRIBUTION
- ---------------------- ------------- ------------------
<S> <C> <C>
January 1, 1998 $ .233 $ 3,387,399.44
February 1, 1998 .235 3,408,767.82
March 1, 1998 .235 3,371,680.83
April 1, 1998 .237 3,383,641.65
May 1, 1998 .237 3,379,420.68
June 1, 1998 .237 3,343,488.40
July 1, 1998 .239 3,365,616.88
August 1, 1998 .240 3,369,916.32
September 1, 1998 .240 3,343,889.52
October 1, 1998 .240 3,335,564.64
November 1, 1998 .240 3,321,332.64
December 1, 1998 .240 3,296,179.44
TOTALS $2.853 $40,306,898.26
----- -------------
</TABLE>
(b) If required pursuant to Rule 463 of the Securities Act of 1933, furnish the
information required by Item 701(f) of Regulation S-K.
Not Applicable.
- 3 -
<PAGE> 6
ITEM 6. SELECTED FINANCIAL DATA.
SELECTED FINANCIAL DATA
(in thousands except for outstanding Units and Per Unit Data)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net investment
income $49,755 $46,316 $44,766 $41,961 $40,561
Net realized
And unrealized
Gain (loss)
on investments $(65,659) $406,598 $(91,579) $542,775 $895,796
Net increase
(decrease) in net
assets resulting
from operations $(15,904) $452,914 $(46,813) $584,736 $936,357
Income distri-
utions to
Unit holders $49,743 $47,658 $45,241 $42,211 $40,229
Net assets at
end of year $1,138,226 $1,474,906 $1,306,794 $1,735,234 $2,513,292
Units outstand-
ing at end
of year 17,701,839 16,670,493 15,726,053 14,505,395 13,657,832
Per Unit Data:
Income distribu-
tions during year $2.73 $2.77 $2.79 $2.79 $2.85
Net asset value
at end of year $64.30 $88.47 $83.10 $119.63 $184.02
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Fund, as a non-managed unit investment trust, has no officers or
directors. The Trustees and Sponsors of the Fund are named in Item 1.
The Fund had net investment income of $40.6 million and net realized and
unrealized gain on investments of $895.8 million for the year 1998 as compared
with net investment income of $42.0 million and net realized and unrealized gain
on investments of $542.8 million for the year 1997 and net investment income of
$44.8 million and net realized and unrealized loss on investments of $91.6
million for the year 1996.
- 4 -
<PAGE> 7
The net gain in net assets resulting from operations for the year 1998 was
$936.4 million as compared to a net increase of $584.7 million for the year 1997
and a net decrease of $46.8 million for the year 1996. The increase in net
assets resulting from operations of $936.4 million for the year 1998 was
substantially the result of realized and unrealized gain on investments. The net
increase in net assets resulting from operations of $584.7 for the year 1997 was
also the result of realized and unrealized gain on investments.
Income distributions accrued per Unit during each year amounted to $2.85
for the year ending December 31, 1998 as compared to $2.79 for the year ending
December 31, 1997. The income distribution per Unit for the year ending December
31, 1996 was $2.79.
The per Unit net asset value was $184.02 at December 31, 1998, $119.63 at
December 31, 1997 and $83.10 at December 31, 1996. The per Unit net asset value
increased $64.39 from 1997 to 1998 and increased $36.53 from 1996 to 1997.
There were 13,657,832 Units outstanding as of December 31, 1998, 14,505,395
Units outstanding as of December 31, 1997 and 15,726,053 Units outstanding as of
December 31, 1996. There was a decrease of 847,563 Units during fiscal year
1998, a decrease of 1,220,658 Units during fiscal year 1997 and decrease of
944,440 Units during fiscal year 1996 as a result of redemptions.
YEAR 2000 PROBLEM
The Trustee has established a Year 2000 compliance program consisting of,
among other things, updating major proprietary application systems and
evaluating the Year 2000 compliance efforts of vendors of major vendor-supplied
systems and certain other business partners. The Trustee believes that its Year
2000 compliance program is currently on schedule to meet the needs of its
customers and the compliance deadlines defined by its regulators. As of December
31, 1998, testing and renovation of the proprietary application systems that the
Trustee deems "mission critical" were substantially completed and these systems
are currently being used by the Trustee. In addition, all vendor supplied
software systems that the Trustee deems mission critical have been tested and,
based upon such testing, the Trustee believes that such systems will not be
adversely affected in a material way by the date change to the Year 2000.
- 5 -
<PAGE> 8
Due to the general uncertainty inherent in the Year 2000 problem, resulting
in part from the uncertainty of the Year 2000 readiness of suppliers, customers
and other business partners, the Trustee is unable to determine at this time
whether the consequences of Year 2000 failures will have a material impact on
the Trustee and its ability to perform its obligations under the Trust
Indenture. The Year 2000 compliance program is intended to reduce significantly
the Trustee's level of uncertainty about the Year 2000 problem and, in
particular, the Year 2000 compliance and readiness of the Trustee and its
material business partners. The Trustee believes that, with completion of its
Year 2000-compliance program as scheduled, the possibility of significant
interruption of normal operations should be reduced. However, because of the
unprecedented nature of the Year 2000 problem, there can be no certainty as to
its impact.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
Not Applicable
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See following pages 7 through 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
- 6 -
<PAGE> 9
INDEPENDENT ACCOUNTANTS' REPORT
The Sponsors, Trustee and Holders
of The Equity Income Fund,
First Exchange Series - AT&T Shares:
We have audited the accompanying statements of condition of The Equity Income
Fund, First Exchange Series - AT&T Shares as of December 31, 1998 and 1997 and
the related statements of operations and of changes in net assets for the years
ended December 31, 1998, 1997 and 1996. These financial statements are the
responsibility of the Trustee. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits 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 statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Securities owned at
December 31, 1998 and 1997 were confirmed to us by The Bank of New York, 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Equity Income Fund, First
Exchange Series - AT&T Shares at December 31, 1998 and 1997 and the results of
its operations and changes in its net assets for the above-stated years in
conformity with generally accepted accounting principles.
March 1, 1999
- 7 -
<PAGE> 10
THE EQUITY INCOME FUND,
FIRST EXCHANGE SERIES - AT&T SHARES
STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities - at market value
(Notes 1 and 2):
1997 cost - $298,343,900 $1,732,776,714
1998 cost - $280,910,516 $2,510,764,391
Dividends receivable 3,188,431 3,286,297
Cash 2,732,763 2,564,043
Total 2,516,685,585 1,738,627,054
LESS LIABILITIES:
Distribution payable (Note 3) 3,309,627 3,387,399
Accrued expenses 84,393 5,561
Total 3,394,020 3,392,960
TOTAL TRUST PROPERTY $2,513,291,565 $1,735,234,094
NET ASSETS, REPRESENTED BY:
Units of fractional undivided interest outstanding:
1997 - 14,505,395 (Note 6) $1,732,733,426
1998 - 13,657,832 (Note 6) $2,510,730,037
Undistributed net investment income 2,561,528 2,500,668
NET ASSETS $2,513,291,565 $1,735,234,094
UNIT VALUE:
1997 - $1,735,234,094/14,505,395 units $119.63
1998 - $2,513,291,565/13,657,832 units $184.02
</TABLE>
See Notes to Financial Statements.
- 8 -
<PAGE> 11
THE EQUITY INCOME FUND,
FIRST EXCHANGE SERIES - AT&T SHARES
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income $ 41,091,956 $ 42,399,400 $ 45,286,433
Trustee's fees and expenses (452,453) (386,416) (465,437)
Sponsors' fees (78,070) (52,443) (54,909)
Net investment income 40,561,433 41,960,541 44,766,087
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized gain on securities sold 100,374,644 86,260,735 53,301,227
Unrealized appreciation (depreciation) of
investments 795,421,062 456,514,395 (144,879,937)
Net realized and unrealized gain (loss) on
investments 895,795,706 542,775,130 (91,578,710)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $936,357,139 $584,735,671 $(46,812,623)
</TABLE>
See Notes to Financial Statements.
- 9 -
<PAGE> 12
THE EQUITY INCOME FUND,
FIRST EXCHANGE SERIES - AT&T SHARES
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 40,561,433 $ 41,960,541 $ 44,766,087
Realized gain on securities sold 100,374,644 86,260,735 53,301,227
Unrealized appreciation (depreciation) of
investments 795,421,062 456,514,395 (144,879,937)
Net increase (decrease) in net assets
resulting from operations 936,357,139 584,735,671 (46,812,623)
INCOME DISTRIBUTIONS TO HOLDERS (Note 3) (40,229,125) (42,211,078) (45,241,306)
CAPITAL SHARE TRANSACTIONS:
Redemptions of 847,563, 1,220,658 and
944,440 units, respectively (Note 5) (118,070,543) (114,084,794) (76,057,777)
NET INCREASE (DECREASE) IN NET ASSETS 778,057,471 428,439,799 (168,111,706)
NET ASSETS AT BEGINNING OF YEAR 1,735,234,094 1,306,794,295 1,474,906,001
NET ASSETS AT END OF YEAR $2,513,291,565 $1,735,234,094 $1,306,794,295
PER UNIT:
Income distributions during year $2.85 $2.79 $2.79
Net asset value at end of year $184.02 $119.63 $83.10
UNITS OUTSTANDING AT END OF YEAR 13,657,832 14,505,395 15,726,053
</TABLE>
See Notes to Financial Statements.
- 10 -
<PAGE> 13
THE EQUITY INCOME FUND,
FIRST EXCHANGE SERIES - AT&T SHARES
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. A summary of the significant accounting policies, which are
in conformity with generally accepted accounting principles, followed by the
Fund in the preparation of its financial statements since July 7, 1983, its
initial date of deposit, is as follows:
(a) Securities are stated at market value based on the last sales price
reported at the close of business on the New York Stock Exchange. Substantially
all of the aggregate cost of securities represents the market value of the
shares of common stock of American Telephone and Telegraph Company (AT&T) on
the days the shares were exchanged for units of the Fund; such aggregate cost
was subsequently allocated among the portfolio holdings in shares of AT&T and
the seven regional holding companies following their divestiture by AT&T in
accordance with its Plan of Reorganization. Realized gains or losses on sales
of securities are determined using the identified cost basis.
(b) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
(c) Dividend income has been recognized on the ex-dividend date.
2. MARKETABLE SECURITIES, AT DECEMBER 31, 1997:
<TABLE>
<CAPTION>
Total Market
Name of Issuer Shares Cost Value
<S> <C> <C> <C>
AT&T 4,762,732 $ 58,829,554 $ 291,717,335
Airtouch Communications 1,905,120 10,737,194 79,181,550
Ameritech Corp. 2,857,659 31,359,314 230,041,549
Bell Atlantic Corporation 3,368,236 61,851,410 306,509,476
BellSouth Corporation 4,286,460 34,504,478 241,381,279
Lucent Technologies 1,543,554 25,524,130 123,291,376
NCR Corp. 297,713 3,179,421 8,280,143
SBC Communications Inc. 4,251,128 45,168,484 311,395,126
U.S. West Incorporated 1,905,120 16,263,966 85,968,540
U.S. West Media Group 1,905,120 10,925,949 55,010,340
$298,343,900 $1,732,776,714
</TABLE>
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<PAGE> 14
THE EQUITY INCOME FUND,
FIRST EXCHANGE SERIES - AT&T SHARES
NOTES TO FINANCIAL STATEMENTS
MARKETABLE SECURITIES, AT DECEMBER 31, 1998:
<TABLE>
<CAPTION>
Total Market
Name of Issuer Shares Cost Value
<S> <C> <C> <C>
AT&T 4,484,416 $ 55,391,778 $ 337,452,304
Airtouch Communications 1,793,809 10,109,849 129,378,474
Ameritech Corp. 5,381,333 29,526,775 341,041,979
Bell Atlantic Corporation 6,342,826 58,237,121 336,169,778
BellSouth Corporation 8,071,942 32,488,131 402,588,107
Lucent Technologies 2,906,729 24,032,761 319,740,190
NCR Corp. 280,342 2,993,908 11,704,279
SBC Communications Inc. 8,005,395 42,528,895 429,289,307
U.S. West Incorporated 1,842,800 15,698,478 119,090,950
Mediaone Group 1,793,809 9,902,820 84,309,023
$280,910,516 $2,510,764,391
</TABLE>
3. DISTRIBUTIONS
Any monthly distributions to Holders, who have not elected to participate
in the Fund's Reinvestment Plan, are made on or about the first day of each
month. The income distribution payable at December 31, 1997 and 1998 to
holders of record at December 15, 1997 and December 15, 1998 was at the rate of
$.233 and $.242 per unit, respectively.
4. REINVESTMENT PLAN
Holders could reinvest any distributions in the Fund prior to April 1,
1984, or in certain subsequent series of The Equity Income Fund after March 31,
1984, by executing an appropriate notice of election to participate in the
Fund's Reinvestment Plan. The Sponsors (Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley Dean Witter, Prudential Securities Incorporated
and Smith Barney Inc.) may, in their sole discretion, cancel the Fund's
Reinvestment Plan at any time.
5. REDEMPTIONS
Holders may request redemptions of units by presentation thereof to the
Trustee, The Bank of New York. Redemptions of units are made in kind by the
Trustee; fractional undivided interests are redeemed in cash. Under certain
circumstances, Holders may request redemptions of units in cash. Units of the
Fund are listed and traded on the American and Pacific Stock Exchanges.
- 12 -
<PAGE> 15
THE EQUITY INCOME FUND,
FIRST EXCHANGE SERIES - AT&T SHARES
NOTES TO FINANCIAL STATEMENTS
6. NET CAPITAL
<TABLE>
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Cost at dates of deposit, including
subsequent reinvested distributions,
of remaining units outstanding $ 290,151,777 $ 308,157,703
Less sales charge 4,352,273 4,622,362
Net amount applicable to Holders 285,799,504 303,535,341
Redemptions of units - net cost
of units redeemed less redemption
amounts (650,990,278) (550,927,021)
Realized gain on securities sold 646,066,936 545,692,292
Unrealized appreciation of
investments 2,229,853,875 1,434,432,814
Net capital applicable to Holders $2,510,730,037 $1,732,733,426
</TABLE>
7. INCOME TAXES
All Fund items of income received, expenses paid, and realized gains and
losses on securities sold are attributable to the Holders, on a pro rata basis,
for Federal income tax purposes in accordance with the grantor trust rules of
the United States Internal Revenue Code.
8. QUARTERLY RESULTS OF OPERATIONS - UNAUDITED
A summary of the Fund's 1998 and 1997 quarterly results of operations, in
thousands of dollars, is as follows:
Year Ended December 31, 1997
<TABLE>
<CAPTION>
For the Quarter Ended
March 31 June 30 September 30 December 31 1997 Total
<S> <C> <C> <C> <C> <C>
Net investment
income $12,165 $ 8,819 $ 10,536 $ 10,441 $ 41,961
Net realized
and unrealized
gain (loss) on
investments (19,417) 185,607 92,210 284,375 542,775
Net increase
(decrease)
in net assets
resulting from
operations $(7,252) $194,426 $102,746 $294,816 $584,736
</TABLE>
- 13 -
<PAGE> 16
THE EQUITY INCOME FUND,
FIRST EXCHANGE SERIES - AT&T SHARES
NOTES TO FINANCIAL STATEMENTS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
For the Quarter Ended
March 31 June 30 September 30 December 31 1998 Total
<S> <C> <C> <C> <C> <C>
Net investment
income $ 10,234 $ 10,184 $10,101 $ 10,042 $ 40,561
Net realized
and unrealized
gain (loss) on
investments 334,314 (54,139) 73,352 542,269 895,796
Net increase
(decrease)
in net assets
resulting from
operations $344,548 $(43,955) $83,453 $552,311 $936,357
</TABLE>
- 14 -
<PAGE> 17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
None.
ITEM 11. EXECUTIVE COMPENSATION.
None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
- 15 -
<PAGE> 18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K.
<TABLE>
<CAPTION>
Page
<S> <C> <C>
a. 1.1 - Statements of Condition as of
December 31, 1997 and 1998 ......................... 8
1.2 - Statements of Operations for the years
ended December 31, 1996, December 31, 1997
and December 31, 1998 .............................. 9
1.3 - Statements of Changes in Net Assets for
the years ended December 31, 1996,
December 31, 1997 and December 31, 1998 ............ 10
2 - Financial schedules are not filed because of the absence
of conditions under which they are required or because
the required information, where material, is included in
the financial statements or the footnotes thereto.
b. None.
c. 4.1 - Form of Trust Indenture (incorporated by reference to
Exhibit 1.1 to the Registration Statement of The Equity
Income Fund, First Exchange Series - AT&T Shares, 1933
Act File No. 2-83192)
4.1.1 - Form of Certificate of Amendment to Trust Indenture dated
August 8, 1983 (incorporated by reference to Registration
Statement on Form 8-A of The Equity Income Fund, First
Exchange Series - AT&T Shares, 1934 Act File No. 001-08642)
4.1.2 - Form of Standard Terms and Conditions of Trust effective
January 1, 1983 (incorporated by reference to Exhibit 1.1.1
to the Registration Statement of The Equity Income Fund, First
Exchange Series - AT&T Shares, 1933 Act File No. 2-83192)
9. - None.
11. - Computation of per Unit earnings (See Statement of Changes in
Net Assets, Item 1.3, above)
13.1 - Form 10-Q, for the quarter ended March 31, 1997, incorporated
by reference to 1934 Act File No. 001-08642.
</TABLE>
- 16 -
<PAGE> 19
<TABLE>
<S> <C>
13.2 - Form 10-Q, for the quarter ended June 30, 1997, incorporated by
reference to 1934 Act File No. 001-08642.
13.3 - Form 10-Q, for the quarter ended September 30, 1997, incorporated by
reference to 1934 Act File No. 001-08642.
13.4 - Form 10-K for the fiscal year ended December 31, 1997, incorporated
by reference to 1934 Act File No. 001-08642.
13.5 - Form 10-Q for the quarter ended March 31, 1998, incorporated by
reference to 1934 Act File No. 001-08642.
13.6 - Form 10-Q for the quarter ended June 30, 1998, incorporated by
reference to 1934 Act File No. 001-08642.
13.7 - Form 10-Q for the quarter ended September 30, 1998, incorporated by
reference to 1934 Act File No. 001-08642.
18. - None.
21. - None.
22. - None.
23 - Consents (incorporated by reference to Registration Statement of The
Equity Income Fund, First Exchange Series - AT&T Shares, 1933 Act
File No. 2-83192).
27. - Financial Data Schedule.
d. None.
</TABLE>
- 17 -
<PAGE> 20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Trustee of the Fund has duly caused this report to be signed on behalf of
the Fund by the undersigned, thereunto duly authorized.
The Equity Income Fund, First
Exchange Series - AT&T Shares
By: The Bank of New York,
as Trustee
Date: March 24, 1999 By: /s/ Alfred Irving
----------------------------
Name: Alfred Irving
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AT&T- FIRST
EXCHANGE SERIES IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 280,910,516
<INVESTMENTS-AT-VALUE> 2,510,264,391
<RECEIVABLES> 3,188,431
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 2,732,263
<TOTAL-ASSETS> 2,516,685,585
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,394,020
<TOTAL-LIABILITIES> 3,394,020
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 280,876,162
<SHARES-COMMON-STOCK> 13,657,832
<SHARES-COMMON-PRIOR> 14,505,395
<ACCUMULATED-NII-CURRENT> 2,561,528
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,229,853,875
<NET-ASSETS> 2,513,291,565
<DIVIDEND-INCOME> 41,091,956
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (530,523)
<NET-INVESTMENT-INCOME> 40,561,433
<REALIZED-GAINS-CURRENT> 100,374,644
<APPREC-INCREASE-CURRENT> 795,421,062
<NET-CHANGE-FROM-OPS> 936,357,139
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 40,229,125
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 847,563
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 778,057,471
<ACCUMULATED-NII-PRIOR> 2,500,668
<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>
