<PAGE>
Def ined
Asset FundsSM
EQUITY INCOME
FUND
- ------------------------------------------------------------
UTILITY COMMON STOCK SERIES--15
A UNIT INVESTMENT TRUST
(HQU2)
/ / MONTHLY INCOME
/ / PROFESSIONAL SELECTION
/ / DIVERSIFICATION
/ / REINVESTMENT OPTION
SPONSORS:
Merrill Lynch,
Pierce, Fenner & Smith Inc.
Smith Barney Shearson Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Dean Witter Reynolds Inc.
This Fund is a defined portfolio of preselected securities formed for the
purpose of providing a current income and the potential for increasing dividend
payments through investment in a fixed portfolio consisting of publicly-traded
common stocks issued by domestic public utility companies. The common stocks
included in the Portfolio were selected for their current dividend yields,
record of uninterrupted dividend payments and history of dividend increases. In
the opinion of the Sponsors, as of the Initial Date of Deposit, these stocks
have potential for continuing to increase future dividends. Of course, past
performance should not be considered an indication of future results, and there
is no assurance that the Fund's objectives will be met, because the payment of
dividends and preservation of capital depend on several factors, including the
financial condition of the issuers of the common stocks in the Portfolio and
declaration of dividends by those issuers. The value of Units of the Fund will
fluctuate with the value of the Portfolio of underlying Securities. Units of the
Fund are particularly designed for purchase by Individual Retirement Accounts,
Keogh plans, pension funds and other tax deferred retirement plans.
MINIMUM PURCHASE: 1,000 UNITS
- ------------------------------------------------------------------------
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
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------
Inquiries should be directed to the Trustee at (800) 338-6019.
Prospectus dated August 26, 1994.
Read and retain this Prospectus for future reference.
<PAGE>
- --------------------------------------------------------------------------------
DEFINED ASSET FUNDSSM are America's oldest and largest family of unit investment
trusts with over $90 billion sponsored since 1970. Each Defined Fund is a
defined 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.
With Defined Asset Funds you know in advance what you are investing in and that
changes in the portfolio are limited. Most defined bond funds pay interest
monthly and repay principal as bonds are called, redeemed, sold or as they
mature. Defined equity funds offer preselected stock portfolios with defined
termination dates.
Your financial advisor can help you select a Defined Fund to meet your personal
investment objectives. Our size and market presence enable us to offer a wide
variety of investments. Defined Funds are available in the following types of
securities: municipal bonds, corporate bonds, government bonds, utility stocks,
growth stocks, even international securities denominated in foreign currencies.
Termination dates are as short as one year or as long as 30 years. Special funds
are available for investors seeking extra features: insured funds, double and
triple tax-free funds, and funds with 'laddered maturities' to help protect
against rising interest rates. Defined Funds are offered by prospectus only.
- --------------------------------------------------------------------------------
CONTENTS
Investment Summary.......................................... A-3
Fund Structure.............................................. 1
Risk Factors................................................ 1
Description of the Fund..................................... 5
Taxes....................................................... 8
Public Sale of Units........................................ 10
Market for Units............................................ 12
Redemption.................................................. 12
Expenses and Charges........................................ 14
Administration of the Fund.................................. 14
Resignation, Removal and Limitations on Liability........... 18
Miscellaneous............................................... 18
Exchange Option............................................. 21
Accountants' Opinion Relating to the Fund................... D-1
Statement of Condition...................................... D-2
Portfolio................................................... D-6
A-2
<PAGE>
DEFINED ASSET FUNDS--EQUITY INCOME FUND, UTILITY COMMON STOCK SERIES--15
INVESTMENT SUMMARY AS OF MAY 31, 1994, THE EVALUATION DATE
NUMBER OF UNITS............................................. 396,952,082
FRACTIONAL UNDIVIDED INTEREST IN FUND REPRESENTED BY EACH
UNIT...................................................... 1/396,952,082nd
PUBLIC OFFERING PRICE PER 1,000 UNITS
Aggregate value of Securities in Fund(a)...............$ 358,072,975
-----------------
Divided by Number of Units (times 1,000)...............$ 902.06
Plus sales charge of 4.499%(b) of Public Offering
Price(c) (4.712% of net amount invested in
Securities).......................................... 42.50
Plus the amount per 1,000 Units in the Income Account
and applicable commissions(f)........................ 6.22
-----------------
Public Offering Price per 1,000 Units..................$ 950.78
SPONSORS' REPURCHASE PRICE PRICE PER 1,000 UNITS AND
REDEMPTION PRICE PER 1,000 UNITS (based on value of
underlying Securities) ($48.72 less than Public Offering
Price per 1,000 Units)....................................$ 902.06
MONTHLY INCOME DISTRIBUTIONS
Distributions of income will be paid on the
25th day of each month to holders of re-
cord on the 10th day of such month.
RECORD DAY
The tenth day of each month.
DISTRIBUTION DAY
The twenty-fifth day of each month.
CAPITAL DISTRIBUTION
No distribution (other than distributions of capital gains) need be made
from Capital Account if balance is less than $5.00 per 1,000 Units (see
Administration of the Fund--Accounts and Distributions).
MANDATORY TERMINATION DATE
June 31, 2017
MINIMUM VALUE OF FUND
Trust Indenture may be terminated if value of Fund is less than 40% of the
value of the Securities on the dates of their deposit.
EVALUATION TIME
4:00 P.M. New York Time
TRUSTEE'S ANNUAL FEE AND EXPENSES(d)
$1.49 per 1,000 Units (see Expenses and Charges)
PORTFOLIO SUPERVISION FEE(e)
Maximum of $0.35 per 1,000 Units (see Expenses and Charges)
OBJECTIVES OF THE FUND--To provide a high level of current income and the
possibility of long-term capital appreciation through investment in a fixed
portfolio of common stocks issued by electric and gas public utility companies.
Income from the Fund, when received by Holders, will constitute dividends for
Federal income tax purposes and so may be eligible for the dividends-received
deduction for corporations (see Taxes). The value of all Securities in the
Portfolio and therefore the value of the Units may be expected to fluctuate with
changes in values of stocks in general and of public utility stocks in
particular. The Sponsors believe that the Fund's portfolio of utility companies
is well positioned for what may be a more competitive utility environment in the
future. By purchasing this Fund, investors can not only avoid the responsibility
of selecting individual securities by themselves, but can enjoy the convenience
through a single purchase of one monthly dividend and one price to track. Of
course, there can be no assurance that the Fund will continue to achieve its
objectives.
DIVERSIFICATION--The Portfolio is diversified among 24 different common stocks
issued by 24 domestic public utility companies.
FUND PORTFOLIO (see Portfolio): 100% of the Portfolio consists of common stocks
of domestic electric and gas public utility companies (see Risk Factors).
- ------------------------------
(a)On the Date of Deposit (June 4, 1992), the aggregate value of
securities in the Fund was $441,112.50.
(b)This sales charge will be reduced on a graduated scale in the case of
quantity purchases (see Public Sale of Units-- Public Offering Price).
(c)Exclusive of any applicable commissions.
(d)Of the Trustee's Annual Fee and Expenses, the Trustee receives
annually for its services as Trustee $0.84 per 1,000 Units, calculated
as set forth under Expenses and Charges.
(e)In addition to this amount, the Sponsors may be reimbursed for
bookkeeping or other administrative expenses not exceeding their
actual costs, currently at a maximum annual rate of $0.10 per 1,000
Units.
(f)The amount of applicable commissions (currently estimated to be
approximately $1.66 per 1,000 Units) is added to Units created during
the primary offering period and when Units are created for the
Reinvestment Plan. Any commissions collected by the Sponsors from
Holders in excess of commissions actually incurred will be distributed
to Holders. (See Public Sale of Units--Public Offering Price;
Administration of the Fund--Reinvestment Plan.)
A-3
<PAGE>
DEFINED ASSET FUNDS--EQUITY INCOME FUND, UTILITY COMMON STOCK SERIES--15
The common stocks included in the Portfolio were selected for their current
dividend yields from among stocks with an established record of maintaining and
increasing quarterly dividends. In the opinion of the Sponsors, these stocks
have potential for continued dividend growth. All but one issuer has paid
quarterly dividends since 1948 and only one has decreased its dividends in the
last 10 years. Of course, past performance should not be considered an
indication of future results, and there can be no assurance that the current
level of dividends will be maintained or increased by the issuers.
RISK FACTORS--Investment in the Fund should be made with an understanding that
the value of the underlying Portfolio may fluctuate in accordance with changes
in the financial condition of the issuers of the Securities in the Portfolio,
the value of stocks generally, the impact of the Sponsors' buying Securities
(especially during the initial offering period of Units of the Fund) and other
factors. The value of equity securities issued by utilities, because of their
higher yields, may be more adversely affected by a reduction in the
dividends-received deduction than equity securities generally. Further
distributions of income on the underlying Securities will generally depend upon
the declaration of dividends by the issuers of the Securities in the Portfolio
and the declaration of any dividends depends upon several factors including the
financial condition of the issuers and general economic conditions, and there
can be no assurance that the issuers of Securities will pay dividends or that
the current level of dividends can be maintained or increased. (See Risk
Factors).
The Fund is considered to be 'concentrated' in common stocks of the
electric and gas public utility industry (100% of the aggregate value of the
Fund)*. In addition, the issuers of 73% of the stocks in the Portfolio (based on
aggregate value) face regulatory, operating and financial risks associated with
the operation of nuclear generating facilities. (See Risk Factors.)
The Securities may not be listed on a national securities exchange. Whether
or not the Securities are listed, 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 Fund may be restricted under the Investment Company Act of 1940
from selling Securities to any Sponsor. The price at which the Securities may be
sold to meet redemptions and the value of the Fund will be adversely affected if
trading markets for the Securities are limited or absent.
Investors should note that additional Units may be offered to the public
and that the creation of additional Units may have an effect upon the value of
previously existing Units. The Trustee may purchase additional Securities for
the Fund (where funds are available from reinvestment of Fund distributions) or
the Sponsors may deposit either 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 (where additional Units are to be
offered to the public), in each instance maintaining, as closely as practicable,
the original proportionate relationship, subject to adjustment under certain
circumstances, among the number of shares of each Security in the Fund. If cash
(or a letter of credit in lieu of cash) is deposited with instructions to
purchase Securities, to the extent the price of a Security increases or
decreases between the time of deposit and the time any Security is purchased,
Units may represent less or more of that Security and more or less of the other
Securities in the Fund. Price fluctuations during the period from the time of
deposit to the time the Securities are purchased and any commissions payable by
the Fund in purchasing Securities upon the creation of additional Units will
affect the value of every Holder's Units and the income per Unit received by the
Fund. Thus, investors purchasing Units during the primary offering period may
pay a share of any commissions payable by the Fund in purchasing Securities upon
the creation of additional Units. In order to minimize these effects, the Fund
will try to purchase Securities as near as possible to the Evaluation Time or at
prices as close as possible to the prices used to evaluate the Fund at the
Evaluation Time. In addition, although the Portfolio is not managed, the
Sponsors may instruct the Trustee to sell Securities and to reinvest the
proceeds in replacement Securities. (see Fund Structure; Administration of the
Fund--Portfolio Supervision).
- ------------------------------
* A Fund is considered to be 'concentrated' in a particular category when
the Securities in that category constitute 25% or more of the aggregate value of
the Portfolio (see Risk Factors).
A-4
<PAGE>
Def ined
Asset FundsSM
INVESTOR'S GUIDE DEFINED EQUITY INCOME FUND
EQUITY INCOME FUND Our defined portfolios of equities offer investors
- ------------------------------a simple and convenient way to participate in the
UTILITY COMMON STOCK equity markets. By purchasing equity income funds,
SERIES--15 investors not only avoid the difficulties of
selecting securities by themselves, but also gain
the advantage of reduced risk by investing in
securities of several different issuers.
UTILITY COMMON STOCK SERIES--15
The Utility Common Stock Series--15 is a
convenient way to invest in a professionally
selected portfolio of many different utility
stocks and earn monthly dividend income with the
potential for increased future income.
PROFESSIONAL SELECTION AND QUALITY
The companies in the portfolio were carefully
screened based on their reputation for paying
regular cash dividends and for dividend increases.
Each security was chosen by professional
securities analysts after thorough research into
its financial performance. You don't have to
select the stocks yourself. It's all done for you.
MONTHLY INCOME
Dividend income is paid to you monthly--not
quarterly like the stocks themselves--so you don't
have to juggle dividend dates to budget your cash
flow or structure your own portfolio.
INCOME INCREASING POTENTIAL
All but two of the stocks in the portfolio have
paid uninterrupted dividends since 1947. Over the
past 10 years these stocks had a record of rising
common stock dividends. Increasing dividends
provide you with increasing monthly income.
DIVERSIFICATION WITHIN THE UTILITY INDUSTRY
The number of different utility companies
represented in the Fund's portfolio gives you the
broad base that may be beyond the resources of
many individuals. Although the portfolio is
concentrated in the electric public utility
industry, the stocks represent a variety of
issuers within that industry group.
This page may not be distributed unless included in a current prospectus.
<PAGE>
DEFINED SUPERVISION
The Fund is not actively managed. However, each
stock is reviewed regularly and stocks can be sold
to meet redemptions or in the event of
developments that would make their retention
detrimental to holders.
VOLUME DISCOUNTS
For larger purchases, the rate of sales charges is
reduced to put a greater percentage of your
investment dollars to work for you.
<TABLE>
<CAPTION>
SALES CHARGE
AS A
PERCENTAGE
OF THE PUBLIC
OFFERING
NUMBER OF UNITS PRICE
------------------------------------------------ -------------
<S> <C> <C>
Less than 250,000............................... 4.50%
250,000 but less than 500,000................... 3.50%
500,000 but less than 750,000................... 3.00%
750,000 but less than 1,000,000................. 2.50%
1,000,000 or more............................... 2.00%
</TABLE>
REINVESTMENT OPTION
You can elect to automatically reinvest your
monthly interest payments in additional units of
the Fund with no sales charge. Reinvestment allows
you to increase your overall investment in the
Fund and compound income for a greater total
return.
This page may not be distributed unless included in a current prospectus.
<PAGE>
AUTHORIZATION FOR REINVESTMENT
DEFINED ASSET FUNDS--EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES--15
/ / Yes, I want to participate in the Fund's Reinvestment Plan and purchase
additional Units of the Fund each month.
I hereby acknowledge receipt of the Prospectus for Defined Asset
Funds--Equity Income Fund, Utility Common Stock Series--15 and authorize
Investors Bank & Trust Company to pay distributions on my Units as indicated
below (distributions to be reinvested will be paid for my account to Investors
Bank & Trust Company).
Income distributions
(check one): / / in cash / / reinvested
Principal
distributions (check
one): / / in cash / / reinvested
Please print or type
Name Registered Holder
Address
Registered Holder
(Two signatures required if
joint tenancy)
City State Zip Code
This page is a self-mailer. Please complete the information above, cut
along the dotted line, fold along the lines on the reverse side, tape, and mail
with the Trustee's address displayed on the outside.
12345678
<PAGE>
BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 7036 BOSTON, MA NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
DEFINED ASSET FUNDS--EQUITY INCOME FUND UNITED STATES
UTILITY COMMON STOCK SERIES--15
INVESTORS BANK & TRUST COMPANY
ONE LINCOLN PLAZA
P.O. BOX 1537
BOSTON, MA 02205-1537
- ------------------------------------------------------------------------------
(Fold along this line.)
- ------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
DEFINED ASSET FUNDS--EQUITY INCOME FUND, UTILITY COMMON STOCK SERIES--15
DISTRIBUTIONS--Monthly distributions of dividends will be made in cash on or
shortly after the twenty-fifth day of each month to Holders of record on the
tenth day of the month (see ADMINISTRATION OF THE FUND--Accounts and
Distributions). Alternatively, Holders may elect to have their distributions
representing dividends reinvested in whole or fractional Units of the Fund (see
ADMINISTRATION OF THE FUND--Reinvestment Plan). Holders electing to reinvest
their dividends will receive additional Units and therefore will own a greater
percentage of the Fund than Holders who receive their distributions in cash. It
is anticipated that cash for monthly distributions, to a certain extent, will be
generated by sales of Securities received by the Fund under reinvestment plans
of the issuers of the Securities. This may result in an increase in the monthly
distributions.
Distributions of any capital gain net income (i.e., the excess of capital
gains over capital losses) recognized by the Fund in any taxable year will be
made annually and shortly before or after the end of the year. In order to meet
certain tax requirements the Fund may make a special distribution of income,
including capital gains, to Holders of record as of a date in December. These
distributions may be invested in additional Units of the Fund.
It is anticipated that the proceeds of sale or redemption of Securities
will not be distributed but will be reinvested in additional Securities. To the
extent that the proceeds of sale or redemption of Securities are available for
distribution, they will be distributed on the next succeeding Distribution Day
(see ADMINISTRATION OF THE FUND--Accounts and Distributions). These
distributions may be invested in additional Units of the Fund.
TAXATION--Distributions which are taxable as ordinary income to Holders will
constitute dividends for Federal income tax purposes and will be eligible for
the dividends received deduction available to certain corporations (see Taxes).
PUBLIC OFFERING PRICE--The Public Offering Price per 1,000 Units is equal to the
aggregate value of the underlying Securities (the price at which they could be
directly purchased by the public assuming they were available) divided by the
number of Units outstanding times 1,000, plus a sales charge of 4.712%* of the
value per 1,000 Units (the net amount invested); this results in a sales charge
of 4.50%* of the Public Offering Price. Units are offered at the Public Offering
Price plus the amount per 1,000 Units in the Income Account and (in connection
with the creation of Units) applicable commissions computed as of the Evaluation
Time for all sales subsequent to the previous evaluation. The Public Offering
Price on the date of this prospectus or on any subsequent dates, will vary from
the Public Offering Price set forth on p A-3. (See PUBLIC SALE OF UNITS--Public
Offering Price.) The minimum purchase is 1,000 Units except that Individual
Retirement Accounts may purchase as few as 250 Units.
MARKET FOR UNITS--Although not obligated to do so, the Sponsors intend to
maintain a market for Units based on the aggregate value of the underlying
Securities. If a market is not maintained, it is unlikely that a Holder would be
able to dispose of his Units other than through redemption (see Redemption).
REPLACEMENT SECURITIES--The Indenture permits the deposit of Replacement
Securities not previously deposited in the Fund under certain circumstances
described under Administration of the Fund--Portfolio Supervision. The
Securities on the current list from which these Securities are to be selected
are:
Central Louisiana
Cincinnati Gas & Electric
- ------------------------------------
* This sales charge will be reduced on a graduated scale in the case of
quantity purchases of Units (see Public Sale of Units--Public Offering Price).
A-5
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES - 15
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Co-Trustees and Holders
of Defined Asset Funds - Equity Income Fund,
Utility Common Stock Series - 15:
We have audited the accompanying statement of condition of Defined Asset
Funds - Equity Income Fund, Utility Common Stock Series - 15, including
the portfolio, as of May 31, 1994 and the related statements of operations
and of changes in net assets for the year ended May 31, 1994 and the
period June 5, 1992 to May 31, 1993. These financial statements are the
responsibility of the Co-Trustees. 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 May 31, 1994, as shown in such portfolio,
were confirmed to us by Investors Bank & Trust Company, a Co-Trustee. An
audit also includes assessing the accounting principles used and
significant estimates made by the Co-Trustees, 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 Defined Asset Funds -
Equity Income Fund, Utility Common Stock Series - 15 at May 31, 1994 and
the results of its operations and changes in its net assets for the
above-stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE
NEW YORK, N.Y.
July 26, 1994
D - 1
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES - 15
STATEMENT OF CONDITION
As of May 31, 1994
<TABLE>
<S> <C>
TRUST PROPERTY:
INVESTMENT IN MARKETABLE SECURITIES - AT VALUE (COST $404,712,154) (NOTE 1)................................ $ 358,072,975
CASH PRINCIPAL............................................................................................. 1,710,849
DIVIDENDS RECEIVABLE....................................................................................... 2,837,347
RECEIVABLE FOR SECURITIES SOLD OR REDEEMED................................................................. 6,671,411
-------------
TOTAL TRUST PROPERTY....................................................................................... 369,292,582
LESS LIABILITIES:
ADVANCE FROM CO-TRUSTEE...................................................................... $ 813,069
REDEMPTIONS PAYABLE.......................................................................... 1,314,571
ACCRUED EXPENSES............................................................................. 208,953
PAYABLE FOR SECURITIES PURCHASED............................................................. 7,065,011
-------------
TOTAL LIABILITIES............................................................................ 9,401,604
-------------
NET ASSETS, REPRESENTED BY:
396,952,082 UNITS OF FRACTIONAL UNDIVIDED INTEREST OUTSTANDING (NOTE 3)..................... 358,079,119
UNDISTRIBUTED NET INVESTMENT INCOME.......................................................... 1,811,859
-------------
NET ASSETS..................................................................................... $ 359,890,978
=============
UNITS OUTSTANDING............................................................................................ 396,952,082
=============
NET ASSET VALUE PER UNIT..................................................................................... $ 0.90664
=============
See Notes To Financial Statements.
</TABLE>
D - 2
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES - 15
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
June 5,
1992
Year Ended to
May 31, May 31,
1994 1993
---- ----
<S> <C> <C>
INVESTMENT INCOME:
DIVIDEND INCOME............................................................................. 24,600,150 11,949,272
CO-TRUSTEES' FEES AND EXPENSES.............................................................. (469,396) (317,551)
SPONSORS' FEES.............................................................................. (141,676) 0
------------- -------------
NET INVESTMENT INCOME....................................................................... 23,989,078 11,631,721
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
NET REALIZED LOSS ON SECURITIES SOLD OR REDEEMED............................................ (12,888,292) 0
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS....................................... (64,446,484) 17,807,305
------------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS...................................... (77,334,776) 17,807,305
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................... $ (53,345,698) $ 29,439,026
============= =============
See Notes to Financial Statements.
</TABLE>
D - 3
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES - 15
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
June 5,
1992
Year Ended to
May 31, May 31,
1994 1993
---- ----
<S> <C> <C>
OPERATIONS:
NET INVESTMENT INCOME....................................................................... $ 23,989,078 $ 11,631,721
NET REALIZED LOSS ON SECURITIES SOLD OR REDEEMED............................................ (12,888,292) 0
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS....................................... (64,446,484) 17,807,305
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................. (53,345,698) 29,439,026
------------- -------------
DISTRIBUTIONS TO HOLDERS: (NOTE 2)
INCOME...................................................................................... (24,083,793) (10,786,355)
------------- -------------
TOTAL DISTRIBUTIONS......................................................................... (24,083,793) (10,786,355)
------------- -------------
UNIT TRANSACTIONS:
ISSUANCE OF ADDITIONAL UNITS................................................................ 75,912,360 382,449,612
REDEMPTION AMOUNTS - PRINCIPAL.............................................................. (40,046,587) 0
REDEMPTION AMOUNTS - INCOME................................................................. (88,700) 0
------------- -------------
TOTAL UNIT TRANSACTIONS..................................................................... 35,777,073 382,449,612
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS......................................................... (41,652,418) 401,102,283
NET ASSETS AT BEGINNING OF PERIOD............................................................. 401,543,396 441,113
------------- -------------
NET ASSETS AT END OF PERIOD................................................................... $ 359,890,978 $ 401,543,396
============= =============
PER UNIT:
INCOME DISTRIBUTIONS DURING PERIOD.......................................................... $ 0.05831 $ 0.05190
============= =============
NET ASSET VALUE AT END OF PERIOD............................................................ $ 0.90664 $ 1.08322
============= =============
TRUST UNITS:
REDEEMED DURING PERIOD...................................................................... 41,856,119 0
============= =============
ISSUED DURING PERIOD........................................................................ 68,115,294 370,231,010
============= =============
OUTSTANDING AT END OF PERIOD................................................................ 396,952,082 370,692,907
============= =============
See Notes To Financial Statements.
</TABLE>
D - 4
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES - 15
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
(a) Securities are stated at value. For securities listed on
a national securities exchange, value is based on the closing
sale price on such exchange and for securities not so listed,
value is based on the current bid price on the over-the-counter
market. See "Redemption - Computation of Redemption Price Per
Unit" in this Prospectus, Part B. Gains and losses on sales of
securities are determined using the first-in, first-out cost
method.
(b) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(c) Dividend income is recorded on the ex-dividend date.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders each month.
Receipts other than dividends, after deductions for redemptions and
applicable expenses, are distributed as explained in "Administration
of the Fund - Accounts and Distributions" in this Prospectus, Part B.
3. NET CAPITAL
Cost of 396,952,082 units at Dates of Deposit.......... $ 434,158,173
Less sales charge...................................... 20,158,660
-------------
Net amount applicable to Holders....................... 413,999,513
Redemptions of units - net cost of 41,856,119 units
redeemed less redemption amounts..................... 3,607,077
Net realized loss on securities sold or redeemed....... (12,888,292)
Net unrealized depreciation of investments............. (46,639,179)
-------------
Net capital applicable to Holders...................... $ 358,079,119
=============
4. INCOME TAXES
As of May 31, 1994, net unrealized depreciation of investments,
based on cost for Federal income tax purposes, aggregated $46,639,179,
of which $754,567 related to appreciated securities and $47,393,746
related to depreciated securities. The cost of investment securities
for Federal income tax purposes was $404,712,154 at May 31, 1994.
D - 5
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES - 15
PORTFOLIO
AS OF MAY 31, 1994
<TABLE>
<CAPTION>
Number of Current Annual or
Shares of Percentage Indicated Dividend
Description of Securities Common Stock of Value Per Share(2) Cost(1) Value(1)
_________________________ ____________ ________ ____________ _______ ________
<S> <C> <C> <C> <C> <C> <C>
1 Carolina Power & Light Co 756,000 5.146% $ 1.70 $ 21,776,910 $ 18,427,500
2 Central & South West Corp 739,800 4.545 1.70 22,386,320 16,275,600
3 DPL, Inc 1,004,300 5.645 1.18 19,533,810 20,211,537
4 Dominion Resources, Inc 553,600 6.107 2.54 23,022,430 21,867,200
5 Duke Power Co 561,300 5.643 1.88 21,144,652 20,206,800
6 FPL Group, Inc 356,200 3.158 1.68 13,267,510 11,309,350
7 Florida Progress Corp 554,600 4.163 1.98 18,402,947 14,904,875
8 General Public Utilities 175,000 1.399 1.80 4,932,535 5,009,375
9 Hawaiian Electric Industries, Inc 303,200 2.731 2.32 11,951,010 9,778,200
10 IPALCO Enterprises, Inc 483,000 3.979 2.12 17,521,212 14,248,500
11 KU Energy Corp 574,600 4.132 1.64 16,584,580 14,795,950
12 LG&E Energy Corp 386,400 3.844 2.08 13,973,218 13,765,500
13 New England Electric System 361,400 3.558 2.30 13,881,020 12,739,350
14 Northern States Power Co 480,500 5.485 2.64 21,192,150 19,640,438
15 Pennsylvania Power & Light Co 724,000 4.474 1.67 20,401,500 16,018,500
16 San Diego Gas & Electric Co 665,800 3.719 1.52 16,653,615 13,316,000
17 SCANA Corp 386,400 4.735 2.82 17,119,770 16,953,300
18 Southern Co 267,500 1.382 1.18 4,995,725 4,948,750
19 TECO Energy, Inc (3) 1,087,300 5.997 1.01 23,439,772 21,474,175
20 Union Electric Co 483,000 4.536 2.38 18,471,963 16,240,875
21 Wisconsin Pwr & Light (WPL) Holdings Co 483,000 3.726 1.92 16,721,525 13,342,875
22 Western Resources, Inc 376,400 2.943 1.98 12,071,220 10,539,200
23 Wisconsin Energy Corp 724,500 5.109 1.41 19,624,100 18,293,625
24 Wisconsin Public Service Corp 483,000 3.844 1.82 15,642,660 13,765,500
____________ _______________ ____________
TOTAL 100.000% $404,712,154 $358,072,975
============ =============== ============
See Notes To Portfolio.
</TABLE>
D - 6
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES - 15
NOTES TO PORTFOLIO
AS OF MAY 31, 1994
(1) See Notes to Financial Statements.
(2) Based on the latest quarterly or semi-annual declaration.
(3) Includes 100% stock dividend distributed in 1993.
D - 7
<PAGE>
DEFINED ASSET FUNDS--EQUITY INCOME FUND
UTILITY COMMON STOCK SERIES
FUND STRUCTURE
This Series (the 'Fund') of Defined Asset Funds--Equity Income Fund is a
'unit investment trust' created under New York law by a Trust Indenture (the
'Indenture') among the Sponsors and the Trustee. Unless otherwise indicated,
when Investors Bank & Trust Company and The First National Bank of Chicago act
as Co-Trustees to the Fund, references to the Trustee in the Prospectus shall be
deemed to refer to Investors Bank & Trust Company and The First National Bank of
Chicago, as Co-Trustees. To the extent that references in this Prospectus are to
articles and sections of the Indenture, which are hereby incorporated by
reference, the statements made herein are qualified in their entirety by this
reference.
The Portfolio contains different common stocks issued by public utility
companies. As used herein, the term 'Stocks' or 'Securities' means the common
stocks initially deposited in the Fund and described under Portfolio and any
additional common stocks acquired and held by the Fund pursuant to the
provisions of the Indenture.
The Sponsors established a proportionate relationship among the number of
shares of each Stock in the Portfolio. Following the Initial Date of Deposit,
the Sponsors may deposit either additional Securities ('Additional Securities'),
contracts to purchase Additional Securities or cash with instructions to
purchase Additional Securities (or a bank letter of credit in lieu of cash), in
order to create new Units, maintaining to the extent practicable the original
proportionate relationship among the number of shares of each Stock in the
Portfolio. However, it may not be practicable to maintain the original
proportionate relationship because of, among other reasons, changes in prices
and restrictions upon those Securities the Sponsors may purchase. Units may be
continuously offered for sale to the public by means of this Prospectus (see
Public Sale of Units--Public Distribution) resulting in a potential increase in
the number of Units outstanding. (See Administration of the Fund--Portfolio.)
The holders of record ('Holders') of Units will have the right to have
their Units redeemed (see Redemption) at a price computed as set forth under
'Computation of Redemption Price per Unit' ('Redemption Price per Unit') if they
cannot be sold in the over-the-counter market which the Sponsors propose to
maintain (see Market for Units). On the Initial Date of Deposit each Unit
represented the fractional undivided interest in the Securities and net income
of the Fund set forth under Investment Summary.
RISK FACTORS
An investment in Units of the Fund should be made with an understanding of
the risks inherent in an investment in equity securities, including the risk
that the financial condition of the issuers of the Securities may become
impaired or that the general condition of the stock market may worsen (both of
which may contribute directly to a decrease in the value of the Securities and
thus in the value of the Units) or those arising from the fact that holders of
common stocks have the right to receive payments from the issuers of those
stocks that are generally inferior to those of creditors of, or holders of debt
obligations issued by the issuers and that the rights of holders of common
stocks generally rank inferior to the rights of holders of preferred stock.
Common stocks are especially susceptible to general stock market movements and
to volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on 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
value of equity securities issued by utilities, because of their higher yields,
may be more adversely affected by reason of certain legislative enactment such
as a reduction in the dividendsreceived deduction than equity securities
generally. In addition, holders of common stocks incur more risk than holders of
preferred stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the issuer
in comparison with the rights of creditors of, or holders of debt obligations or
preferred stocks issued by the issuer. Holders of common stocks of the type held
by the Portfolio have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's Board of Directors and to participate in
amounts available for distribution by the issuer only after all
1
<PAGE>
other claims on the issuer have been paid or provided for. However, common
stocks do not represent an obligation or liability of the issuer and therefore
do not offer any assurance of income or provide the degree of protection of
capital of debt securities. Indeed, the issuance of debt securities (as compared
with common stocks) will create prior claims for payment of principal, interest
(in the case of debt securities) liquidation preferences, which could adversely
affect the ability and inclination of the issuer to declare or pay dividends on
its common stock or the rights of holders of common stock with respect to assets
of the issuer upon liquidation or bankruptcy. Further, unlike debt securities
which typically have a stated principal amount payable at maturity (whose value,
however, will be subject to market fluctuations prior thereto), common stocks
have neither a fixed principal amount or liquidation preference nor a maturity
or redemption date and have values which are subject to market fluctuations for
as long as the stocks remain outstanding. While it may not be likely that any
Stocks' dividends would be omitted, no assurances can, of course, be given since
earnings available for dividends, regardless of the size of the company, are
subject to numerous events which are often beyond the issuer's control. The
value of the Stocks in the Portfolio thus may be expected to fluctuate over the
entire life of the Fund to values higher or lower than those prevailing on the
Initial Date of Deposit (see Administration of the Fund--Amendment and
Termination).
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 Fund may be restricted under
the Investment Company Act of 1940 from selling Securities to any Sponsor. The
price at which the Securities may be sold to meet redemptions and the value of
the Fund will be adversely affected if trading markets for the Securities are
limited or absent.
Investors should note that additional Units may be offered to the public
subsequent to the Initial Date of Deposit and that the creation of additional
Units may have an effect upon the value of previously existing Units. To create
additional Units the Sponsors may deposit cash with instructions to purchase
Securities (or a bank letter of credit in lieu of cash) in amounts sufficient to
maintain to the extent practicable the original percentage relationship among
the number of shares of each Security based on the price of the Securities at
the Evaluation Time on the date the cash is deposited. To the extent the price
of a Security increases or decreases between the time cash is deposited with
instructions to purchase the Security and the time the cash is used to purchase
the Security, Units will represent less or more of that Security and more or
less of the other Securities in the Fund. Holders will be at risk because of
price fluctuations during this period such that if the price of shares of a
Security increases, Unitholders will have an interest in fewer shares of that
Security, and if the price of a Security decreases, Holders will have an
interest in more shares of that Security, than if the Security had been
purchased on the date cash was deposited with instructions to purchase the
Security. In addition, estimated brokerage fees incurred in purchasing
Securities are reflected in the Public Offering Price during the primary
offering period. Any brokerage fees collected from purchasers in excess of fees
actually incurred will be distributed to Holders. Price fluctuations during this
period and commissions payable in purchasing Securities will affect the value of
every Holder's Units and the income per Unit received by the Fund. In order to
minimize these effects, the Fund will try to purchase Securities as close as
possible to the next Evaluation Time or at prices as close as possible to the
prices used to evaluate the Fund at the next Evaluation Time (see Public Sale of
Units -- Public Offering Price).
The Fund is considered to be concentrated in Stocks of the gas and electric
public utility industry. Percentages of concentrations for this Fund are set out
under Investment Summary. An investment in Units of the Fund should be made with
an understanding of the risks which this investment may entail, certain of which
are described below.
Gas and Electric Public Utilities. The ability of utilities to pay
dividends on their common stock is dependent on various factors, including the
rates they may charge their customers, the demand for their services and the
cost of providing those services. Utilities, in particular investor-owned
utilities, are subject to extensive regulation relating to the rates which they
may charge customers. Utilities can experience regulatory, political and
consumer resistance to rate increases. Utilities engaged in long-term capital
projects are especially sensitive to regulatory lags and disallowances in
granting rate increases. Any difficulty in obtaining timely and adequate rate
increases could adversely affect a utility's results of operations.
2
<PAGE>
The demand for a utility's services is influenced by, among other factors,
competition, weather conditions and economic conditions. Electric utilities, for
example have experienced increased competition as a result of the availability
of other energy sources, the effects of conservation on the use of electricity,
self-generation by industrial customers, and the generation of electricity by
co-generators and other independent power producers. Also, increased competition
will result if federal regulators determine that utilities must open their
transmission lines to competitors. Utilities which distribute natural gas also
are subject to competition from alternative fuels, including fuel oil, propane
and coal and the impact of deregulation.
The utility industry is an increasing cost business making the cost of
generating electricity more expensive and heightening its sensitivity to
regulation. A utility's costs are influenced by its cost of capital, the
availability and cost of fuel and other factors. There can be no assurance that
a utility will be able to pass on these increased costs to customers through
increased rates. Utilities incur substantial capital expenditures for plant and
equipment. In the future they will also incur increasing capital and operating
expenses to comply with environmental legislation such as the Clean Air Act of
1990, and other energy, licensing and other laws and regulations relating to,
among other things, air emissions, the quality of drinking water, waste water
discharge, solid and hazardous substance handling and disposal, and siting and
licensing of facilities. Environmental legislation and regulations are changing
rapidly and are the subject of current public policy debate and legislative
proposals. It is increasingly likely that many utilities will be subject to more
stringent environmental standards in the future that could result in significant
capital expenditures. Future legislation and regulation could include, among
other things, regulating of so-called electromagnetic fields associated with
electric transmission and distribution lines as well as emissions of carbon
dioxide and other so-called greenhouse gases associated with the burning of
fossil fuels. Compliance with these requirements may limit a utility's
operations or require substantial investments in new equipment and, as a result,
may adversely affect a utility's results of operations.
The electric utility industry in general is subject to various external and
additional factors including (a) the effects of inflation upon the costs of
operation and construction, (b) uncertainties in predicting future load
requirements, (c) increased financing requirements coupled with limited
availability of capital, (d) exposure to cancellation and penalty charges on new
generating units under construction, (e) problems of cost and availability of
fuel, (f) litigation and proposed legislation designed to delay or prevent
construction of generating and other facilities, (g) the uncertain effects of
conservation on the use of electric energy, (h) regulatory, political and
consumer resistance to rate increases and (i) increased competition as a result
of the availability of other energy sources and state deregulation efforts.
These factors may delay the construction and increase the cost of new
facilities, limit the use of, or necessitate costly modifications to, existing
facilities, impair the access of electric utilities to credit markets, or
substantially increase the cost of credit for electric generating facilities.
The Sponsors cannot predict at this time the ultimate effect of such factors on
the issuers represented in the Fund.
The National Energy Policy Act ('NEPA'), which became law in October, 1992,
makes it mandatory for a utility to permit non-utility generators of electricity
access to its transmission system for wholesale customers, thereby increasing
competition for electric utilities. NEPA also mandated demand-side management
policies to be considered by utilities. NEPA prohibits the Federal Energy
Regulatory Commission from mandating electric utilities to engage in retail
wheeling, which is competition among suppliers of electric generation to provide
electricty to retail customers (particularly industrial retail customers) of a
utility. However, under NEPA, a state can mandate retail wheeling under certain
conditions. California, Michigan, New Mexico and Ohio have instituted
investigations into the possible introduction of retail wheeling within their
respective states which could foster competition among the utilities. Retail
wheeling might result in the issue of stranded investment (investment in assets
previously allowed to be recovered in base rates), thus hampering a utility's
ability to pay.
There is concern by the public, the scientific community, and the U.S.
Congress regarding environmental damage resulting from the use of fossil fuels.
Congressional support for the increased regulation of air, water, and soil
contaminants is building and there are a number of pending or recently enacted
legislative proposals which may affect the electric utility industry. In
particular, on November 15, 1990, legislation was signed into law that
substantially revises the Clean Air Act (the '1990 Amendments'). The 1990
Amendments seek to improve the ambient air quality throughout the United States
by the year 2000. A main feature of the 1990 Amendments is the reduction of
sulphur dioxide and nitrogen oxide emissions caused by electric utility power
plants, particularly those fueled by coal. Under the 1990 Amendments the U.S.
Environmental Protection Agency ('EPA') must develop limits for nitrogen oxide
emissions by 1993. The sulphur dioxide reduction will be achieved in two phases.
Phase I addresses specific generating units named in the 1990 Amendments. In
3
<PAGE>
Phase II the total U.S. emissions will be capped at 8.9 million tons by the year
2000. The 1990 Amendments contain provisions for allocating allowances to power
plants based on historical or calculated levels. An allowance is defined as the
authorization to emit one ton of sulphur dioxide.
The 1990 Amendments also provide for possible further regulation of toxic
air emissions from electric generating units pending the results of several
federal government studies to be presented to Congress by the end of 1995 with
respect to anticipated hazards to public health, available corrective
technologies, and mercury toxicity.
Electric utilities which own or operate nuclear power plants are exposed to
risks inherent in the nuclear industry. These risks include exposure to new
requirements resulting from extensive federal and state regulatory oversight,
public controversy, decommissioning costs, and spent fuel and radioactive waste
disposal issues. While nuclear power construction risks are no longer of
paramount concern, the emerging issue is radioactive waste disposal. In
addition, nuclear plants typically require substantial capital additions and
modifications throughout their operating lives to meet safety, environmental,
operational and regulatory requirements and to replace and upgrade various plant
systems. The high degree of regulatory monitoring and controls imposed on
nuclear plants could cause a plant to be out of service or on limited service
for long periods. When a nuclear facility owned by an investor-owned utility or
a state or local municipality is out of service or operating on a limited
service basis, the utility operator or its owners may be liable for the recovery
of replacement power costs. Risks of substantial liability also arise from the
operation of nuclear facilities and from the use, handling, and possible
radioactive emissions associated with nuclear fuel. Insurance may not cover all
types or amounts of loss which may be experienced in connection with the
ownership and operation of a nuclear plant and severe financial consequences
could result from a significant accident or occurrence. The Nuclear Regulatory
Commission (the 'NRC') has promulgated regulations mandating the establishment
of funded reserves to assure financial capability for the eventual
decommissioning of licensed nuclear facilities. These funds are to be accrued
from revenues in amounts currently estimated to be sufficient to pay for
decommissioning costs. Since there have been very few nuclear plants
decommissioned to date, these estimates may be unrealistic.
The Public Utility Holding Company Act of 1935 (the '1935 Act') regulates,
among other things, certain acquisitions of voting securities of electric
utility companies and gas utility companies by any one who is an 'affiliate' of
a public utility company (a person or organized group of persons that directly
or indirectly owns, controls or holds with power to vote 5% or more of the
outstanding voting securities of a public utility company). In addition, the
1935 Act requires a 'holding company' (among other categories, a company which
directly or indirectly owns, controls or holds with power to vote 10% or more of
the outstanding voting securities of a public utility company or a 'holding
company') to register as such with the Securities and Exchange Commission and be
otherwise subject to certain restrictions on the acquisition of securities and
other interests in public utility companies. The Fund does not presently intend
to make any investment that would result in its becoming subject to the
provisions of the 1935 Act and will cease acquiring additional shares of any
utility company if the acquisition would result in its becoming subject to the
1935 Act. If the Fund were considered to be a member of an organized group of
persons, the 1935 Act might limit the Fund's acquisitions of the voting
securities of public utility companies by reason of the control by the group of
5% or more of the voting securities of a public utility company.
The following illustrates the performance of electric utility stocks
compared to stocks in general and high-grade corporate bonds over the last
twenty years:
4
<PAGE>
COMPARISON OF ANNUAL RETURNS OF UTILITIES, INDUSTRIALS AND BONDS
MOODY'S ELECTRIC STANDARD & POOR'S LONG-TERM
UTILITY AVERAGE 500 INDEX CORPORATE BONDS
----------------- ----------------- -----------------
1972 3.40% 18.90% 7.26%
1973 -21.20% -14.77% 1.14%
1974 -24.40% -26.39% -3.06%
1975 47.30% 37.16% 14.64%
1976 28.40% 23.57% 18.65%
1977 11.20% -7.41% 1.71%
1978 -3.90% 6.39% -0.07%
1979 4.80% 18.20% -4.18%
1980 8.10% 32.27% -2.62%
1981 19.70% -5.01% -0.96%
1982 34.90% 21.44% 43.79%
1983 14.50% 22.56% 4.70%
1984 22.70% 6.10% 16.39%
1985 28.10% 31.57% 30.90%
1986 29.90% 18.76% 19.85%
1987 -9.10% 5.10% -0.27%
1988 16.60% 16.33% 10.70%
1989 30.60% 31.47% 16.23%
1990 3.20% -3.27% 6.78%
1991 30.00% 30.41% 19.89%
1992 4.00% 7.67% 9.39%
1993 10.40% 9.97% 13.19%
1/1/94 to
6/30/94 -16.81% -3.47% -6.96%
- ------------------------------------
Sources: The Moody's Electric Utility Average represents a market capitalization
weighted average of 24 selected domestic public utility stocks, published since
1929 by Moody's Investors Service. The S&P 500 Index is composed of 500 selected
common stocks, most of which are listed on the New York Stock Exchange. It
contains a variety of companies with diverse capitalization, market-value
weighted to represent the overall market. Data on long-term corporate bonds are
compiled by Ibbotson Associates, based primarily on the Salomon Brothers
Long-Term High-Grade Corporate Bond Index, which includes nearly all Aaa-and
Aa-rated bonds.
The returns shown in the chart above represent changes in security prices
during each year plus income distributed, divided by the price on the first day
of the year. The average annualized returns for 1972 through 6/30/94 were 10.49%
for the Moody's Electric Utility Average, 11.00% for the Standard & Poor's 500
Index and 9.03% for Ibbotson Associates' corporate bond composite. For example,
$1,000 invested on January 2, 1972 in Moody's Electric utility average would
have been worth $9,444.26 by June 30, 1994; $1,000 invested in the Standard &
Poor's 500 Index would have been worth $10,473.30; $1,000 in long term corporate
bonds would have been worth $6,989.60, after this period. These represent
compounded returns, assuming income distributed during each year was reinvested
on the first day of the succeeding year. They do not reflect any deduction for
commissions or taxes. These figures represent past performance, and are no
guarantee of future results. Of course, an investor in the Fund may experience
somewhat lower returns because of sales charges, commissions and Fund expenses,
as well as the fact that the Fund will hold many stocks different from the
Moody's Electric Utility Average and may not be fully invested at all times.
The Fund may be an appropriate medium for investors who desire to
participate in a portfolio of common stocks of public utilities with greater
variety than they might be able to acquire individually.
DESCRIPTION OF THE FUND
THE PORTFOLIO
The Portfolio contains different common stocks. As used herein the term
'Stocks' or 'Securities' means the common stocks initially deposited in the Fund
and described under Portfolio and any additional common stocks acquired and held
by the Fund pursuant to the provisions of the Indenture. See Investment Summary
for a summary of particular matters relating to the Portfolio.
5
<PAGE>
In selecting Stocks for deposit in the Fund, professional securities
analysts in the Unit Investment Trusts division of Merrill Lynch, Pierce, Fenner
& Smith Incorporated carefully screened available utility issues through
thorough analysis of financial performance, considering the following factors,
among others: (i) the quality of the Stocks (including whether their record of
dividend payments has been uninterrupted over a period of 30 or more years and
whether they had a record of rising dividend payments over at least the past ten
years); (ii) whether the issuers of the Stocks had outstanding first mortgage or
senior debt securities rated investment grade, (iii) the yield and price of the
Stocks relative to other public utility stocks of comparable quality and (iv)
the variety of the Stocks in the Portfolio, taking into account the availability
on the market of utility issues which met the Fund's criteria. These are the
same selection criteria used for the previous Fund in this Series (Utility
Common Stock Series-14), the Portfolio of which included 15 of the 25 Stocks in
the Portfolio of this Fund. The yield and price of utility stocks of the type
deposited in the Fund are dependent on a variety of factors, including money
market conditions, general conditions of the corporate bond and equity markets,
size of a particular offering and capital structure of the issuer. While it may
not be likely that dividends on any Stocks would be omitted, of course no
assurances can be given since earnings available for dividends, regardless of
the size of the company, are subject to numerous events which are often beyond
the issuer's control.
The chart below sets forth information on the dividend history of the
Stocks included in the Portfolio. This chart represents past performance.
Dividends are subject to declaration by the issuers, and there can be no
assurance that these issuers will increase or maintain their dividend rates in
the future.
<TABLE>
<CAPTION>
NUMBER OF
DIVIDEND INCREASES CONSECUTIVE YEARS OF CASH DIVIDENDS
COMPANY LAST 10 YEARS DIVIDEND INCREASES EACH YEAR SINCE
- ---------------------------------------------------- ----------------------- ------------------------- -----------------
<S> <C> <C> <C>
Carolina Power & Light Co. ......................... 8 6 1937
Central & South West Corp. ......................... 10 43 1947
Dominion Resources, Inc. ........................... 10 18 1925
DPL, Inc. .......................................... 7 2 1919
Duke Power Co. ..................................... 10 18 1926
Florida Progress Corp. ............................. 10 40 1937
FPL Group, Inc. .................................... 9 0 1944
GPU................................................. 8 8 1987
Hawaiian Electric Industries, Inc. ................. 10 29 1901
IPALCO Enterprises, Inc. ........................... 9 8 1934
KU Energy Corp. .................................... 13 13 1939
LG & E Energy Corp. ................................ 10 38 1913
New England Electric System......................... 8 4 1947
Northern States Power Co. .......................... 10 19 1910
Pennsylvania Power & Light Co. ..................... 10 15 1946
SCANA Corp. ........................................ 10 19 1946
Southern Co. ....................................... 6 3 1948
TECO Energy, Inc. .................................. 10 34 1900
Union Electric Co. ................................. 7 3 1906
Western Resources, Inc. (KP&L) ..................... 10 19 1924
Wisconsin Energy Corp. ............................. 10 32 1924
Wisconsin Public Service Corp. ..................... 10 35 1940
WPL Holdings, Inc. ................................. 10 21 1946
</TABLE>
The Fund consists of such of the Securities listed under Portfolio as may
continue to be held from time to time in the Fund and any Additional Securities,
contracts to purchase Securities or cash deposited with instructions to purchase
Securities (or a bank letter of credit in lieu of cash) acquired and held by the
Fund pursuant to the provisions of the Indenture (including provisions with
respect to the sale of additional Units to the public) together with
undistributed income therefrom and undistributed and uninvested cash realized
from the disposition of Securities (see Administration of the Fund--Portfolio
Supervision). Neither the Sponsors nor the Trustee shall be liable in any way
for any default, failure or defect in any of the Securities. However, should any
contract to be deposited in connection with the sale of additional Units fail,
the Sponsors shall, on or before the next following Distribution Day, cause to
be refunded the attributable sales charge, plus the attributable Cost of
Securities to Fund listed under Portfolio, unless substantially all of the
moneys held in the
6
<PAGE>
Fund to cover such purchase are reinvested in substitute Securities in
accordance with the Indenture (see Administration of the Fund--Portfolio
Supervision).
The Indenture authorizes the Sponsors to increase the size and number of
Units of the Fund by the deposit of Additional Securities, Replacement
Securities, contracts to purchase Additional or Replacement Securities or cash
with instructions to purchase Securities (or a bank letter of credit in lieu of
cash), and the issue of a corresponding number of additional Units, provided
that to the extent practicable the percentage relationship among the number of
shares of each Stock is maintained. Investors should note that cash deposited
with instructions to purchase Securities (or a bank letter of credit in lieu of
cash) will be in amounts sufficient to maintain to the extent practicable the
percentage relationship among the number of shares of each Security. To the
extent the price of a Security increases or decreases between the time the cash
is deposited with instructions to purchase the Security and the time the cash is
used to purchase the Security, Units will represent less or more of that
Security and more or less of the other Securities in the Fund. Also, Securities
may be sold under certain circumstances (see Redemption: Administration of the
Fund--Portfolio Supervision). Because the proceeds from these sales received by
the Fund (less certain amounts deducted by the Trustee as described under
Expenses and Charges) will be reinvested in Additional Securities, distributed
to Holders or paid out upon redemptions, and because additional Securities may
be deposited following the Initial Date of Deposit, the aggregate value of the
Securities in the Portfolio will vary over time.
Sales charges on Defined Asset Funds range from under 1.0% to 5.5%. This
may be less than you might pay to buy a comparable 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 unit investment
trusts are not actively managed and have limited transactions, costs are
generally less than 0.25% per year. Keeping costs low increases earnings. When
compounded annually, small differences in expense ratios can make a big
difference in earnings. See Public Sale of Units--Public Offering Price.
Because each Defined Asset Fund is a defined portfolio of preselected
securities, purchasers know in advance what they are investing in. Of course,
the Portfolio will change somewhat over time as additional securities are
deposited, or redeemed or as they are sold to meet redemptions and in the
limited other circumstances described below. However, since the Portfolio will
remain relatively fixed, there are no management fees.
Our defined portfolios of equities offer investors a simple and convenient
way to participate in the equity markets. Our funds seek to benefit from
opportunities often created by economic changes that affect specific areas of
the economy or by increased demand for the companies' products or services. By
purchasing equity income funds, investors not only avoid the problem of
selecting securities by themselves, but also gain the advantage of reduced risk
by investing in securities of several different issuers selected by experienced
buyers and market analysts.
Each portfolio is divided into units, representing equal shares of
underlying assets. If any Units are redeemed by the Trustee, the aggregate value
of Securities in the Fund will be reduced by amounts allocable to redeemed
Units, and the fractional undivided interest represented by each Unit in the
balance will be increased. However, if additional Units are issued by the Fund,
the aggregate value of Securities in the Fund will be increased by amounts
allocable to additional Units and the fractional undivided interest represented
by each Unit in the balance will be decreased. Units will remain outstanding
until redeemed upon tender to the Trustee by any Holder (which may include the
Sponsors) or until the termination of the Indenture. (See Redemption;
Administration of the Fund--Amendment and Termination.)
INCOME AND DISTRIBUTIONS
The net annual income per Unit that is earned by the Fund is determined by
subtracting from the annual dividend income of the Securities in the Portfolio
the annual expenses (total estimated annual Trustee's, Sponsors' and
administrative fees and expenses) and dividing by the number of Units
outstanding. The net annual income per Unit will depend upon the amount of
dividends declared and paid by the issuers of the Securities, sales and
replacement of Securities and the purchase of additional Securities
(recognizing, however, that the sale or purchase of Securities by itself should
have a minimal effect on income per Unit because, as much as practicable, each
Unit will continue to represent a fractional undivided interest in the same
percentages of Securities of the same issuers) and changes in the expenses of
the Fund.
There is no assurance that any dividends will be declared or paid in the
future on the Stocks in the Fund.
7
<PAGE>
Record Days and Distribution Days are set forth under Investment Summary.
An amount substantially equal to one-twelfth of the estimated annual income to
the Income Account, after deducting estimated expenses, will be distributed on
or shortly after each Distribution Day to the Holders of record on the preceding
Record Day (see Administration of the Fund--Accounts and Distributions). This
avoids the need to structure a portfolio to stagger dividend dates to provide
regular cash flow. In the case of distributions from the Capital Account, the
distributable balance in the Capital Account as of the Record Day must be at
least the minimum amount set forth under Investment Summary except for
distributions of capital gains (see Administration of the Fund--Accounts and
Distributions). Normally, dividends on the Securities in the Fund are paid on a
quarterly basis which may or may not coincide with a Record Day. Therefore, to
the extent dividends are paid, it may take several months after the Initial Date
of Deposit for the Trustee to receive sufficient dividends on the Securities to
be able to begin distributions to Holders.
Capital gain net income (i.e., the excess of capital gains over capital
losses) recognized by the Fund in any taxable year will be distributed annually
to Holders shortly after the end of the year. In order to meet certain tax
requirements the record date for this distribution may be in December.
From time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. Congress is currently considering a proposal which
may be included in a technical corrections bill to the Internal Revenue Code of
1986, as amended, to reduce the rate of the dividends-received deduction.
Enactment into law of a proposal to reduce the rate would aversely affect the
after-tax return to investors who can take advantage of the deduction. Holders
are urged to consult their own tax advisers.
FUND PERFORMANCE
Information on changes in the dollar value of Units, on the basis of
changes in Unit price plus the amount of dividends and capital gains distributed
(reinvested on S&P 500 Index (First Monthly Payment Series), Utility Common
Stock Series and Concept Series, Food Fund and Northwest Investment Trust), may
be included from time to time in advertisements, sales literature, reports and
other information furnished to current or prospective Holders. Total return
figures are not averaged, and may not reflect deduction of the sales charge,
which would decrease the return. Average annualized return figures reflect
deduction of the maximum sales charge. No provision is made for any income taxes
payable.
Past performance may not be indicative of future results. The S&P Index
Trusts are adjusted only to conform to changes in the respective indices, and
the other Funds are not actively managed. Unit price and return fluctuate with
the value of the common stocks in the portfolio, so there may be a gain or loss
when Units are sold.
Fund performance may be compared to performance on the same basis
(distributions reinvested or distributed) of the Dow Jones Industrial Average,
Moody's Electric Utility Average, the S&P 500 Composite Price Stock Index, or
performace data from publications such as Lipper Analytical Services, Inc.,
Morningstar Publications, Inc., Money Magazine, The New York Times, U.S. News
and World Report, Business Week, CDA Investment Technology, Inc., Forbes
Magazine or Fortune Magazine. As with other performance data, performance
comparisons should not be considered representative of the Fund's relative
performance for any future period.
TAXES
TAXATION OF THE FUND
The Fund intends to qualify for and elect the special tax treatment
applicable to 'regulated investment companies' under Section 851-855 of the
Internal Revenue Code of 1986, as amended (the 'Code'). Qualification and
election as a 'regulated investment company' involve no supervision of
investment policy or management by any government agency. If the Fund qualifies
as a 'regulated investment company' and distributes to Holders 90% or more of
its taxable income without regard to its net capital gain (i.e., the excess of
its net long-term capital gain over its net short-term capital loss), it will
not be subject to Federal income tax on any portion of its taxable income
(including any net capital gain) distributed to Holders in a timely manner. In
addition, the Fund will not be subject to the 4% excise tax on certain
undistributed income of 'regulated investment companies' to the extent it
distributes to Holders in a timely manner at least 98% of its taxable income
(including any net capital gain). It is anticipated that the Fund will not be
subject to Federal income tax or the excise tax because the Indenture requires
the distribution of the Fund's taxable income (including any
8
<PAGE>
net capital gain) in a timely manner. Although all or a portion of the Fund's
taxable income (including any net capital gain) for a taxable year may be
distributed shortly after the end of the calendar year, such a distribution will
be treated for Federal income tax purposes as having been received by Holders
during the calendar year.
DISTRIBUTIONS
Distributions to Holders of the Fund's dividend income and net short-term
capital gain in any year will be taxable as ordinary income to Holders to the
extent of the Fund's taxable income (without regard to its net capital gain) for
that year. Any excess will be treated as a return of capital and will reduce the
Holder's basis in his Units and, to the extent that such distributions exceed
his basis, will be treated as a gain from the sale of his Units as discussed
below. It is anticipated that substantially all of the distributions of the
Fund's dividend income and net short-term capital gain will be taxable as
ordinary income to Holders.
Distribution of the Fund's net capital gain (designated as capital gain
dividends by the Fund) will be taxable to Holders as long-term capital gain,
regardless of the length of time the Units have been held by a Holder. A Holder
may recognize a taxable gain or loss if the Holder sells or redeems his Units.
Any gain or loss arising from (or treated as arising from) the sale or
redemption of Units will be a capital gain or loss, except in the case of a
dealer in securities. Capital gains are currently taxed at the same rate as
ordinary income, however, the excess of net long-term capital gains over net
short-term capital losses may be taxed at a lower rate than ordinary income for
certain noncorporate taxpayers. A capital gain or loss is long-term if the asset
is held for more than one year and short-term if held for one year or less. The
deduction of capital losses is subject to limitations.
A distribution of Securities to a Holder upon redemption of his Units will
be a taxable event to such Holder, and that Holder will recognize taxable gain
or loss (equal to the difference between such Holder's tax basis in his Units
and the fair market value of Securities received in redemption), which will be
capital gain or loss upon such distribution, except in the case of a dealer in
securities. Holders should consult their own tax advisers in this regard.
Distributions which are taxable as ordinary income to Holders will
constitute dividends for Federal income tax purposes. To the extent that
distributions are appropriately designated by the Fund and are attributable to
dividends received by the Fund from domestic issuers with respect to whose
Securities the Fund satisfies the requirements for the dividends-received
deduction, such distributions will be eligible for the dividends-received
deduction for corporations (other than corporations such as 'S' corporations
which are not eligible for such deduction because of their special
characteristics and other than for purposes of special taxes such as the
accumulated earnings tax and the personal holding company tax). The
dividends-received deduction generally is currently 70%. However, Congress from
time to time considers proposals to reduce the rate, and enactment of such a
proposal would adversely affect the after-tax return to investors who can take
advantage of the deduction. Holders are urged to consult their own tax advisers.
Sections 246 and 246A of the Code contain additional limitations on the
eligibility of dividends for the corporate dividends-received deduction.
Depending upon the corporate Holder's circumstances (including whether it has a
45-day holding period for its Units and whether its Units are debt financed),
these limitations may be applicable to dividends received by a Holder from the
Fund which would otherwise qualify for the dividends-received deduction under
the principles discussed above. Accordingly, Holders should consult their own
tax advisers in this regard. A corporate Holder should be aware that the receipt
of dividend income for which the dividends-received deduction is available may
give rise to an alternative minimum tax liability (or increase an existing
liability) because the dividend income will be included in the corporation's
'adjusted current earnings' for purposes of the adjustment to alternative
minimum taxable income required by Section 56(g) of the Code.
Holders will be taxed in the manner described above regardless of whether
distributions from the Fund are actually received by the Holder or are
reinvested pursuant to the Reinvestment Plan.
The Federal tax status of each year's distributions will be reported to
Holders and to the Internal Revenue Service. The foregoing discussion relates
only to the Federal income tax status of the Fund and to the tax treatment of
distributions by the Fund to U.S. Holders. Holders that are not United States
citizens or residents should be aware that distributions from the Fund will
generally be subject to a withholding tax of 30%, or a lower treaty rate, and
should consult their own tax advisers to determine whether investment in the
Fund is
9
<PAGE>
appropriate. Distributions may also be subject to state and local taxation and
Holders should consult their own tax advisers in this regard.
RETIREMENT PLANS
This Series of The Equity Income 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 or tax-deferred rollover treatment. Holders of Units 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 each of the Sponsors of this Fund, and
other financial institutions. Fees and charges with respect to such plans may
vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units of the Fund may
be purchased by retirement plans established pursuant to the Self-Employed
Individuals Tax Retirement Act of 1962 ('Keogh plans') for self-employed
individuals, partnerships or unincorporated companies. Qualified individuals may
generally make annual tax-deductible contributions up to the lesser of 20% of
annual compensation or $30,000 to Keogh plans. The assets of the plan must be
held in a qualified trust or other arrangement which meets the requirements of
the Code. Generally, there are penalties for premature distributions from a plan
before attainment of age 59 1/2, except in the case of a participant's death or
disability and certain other related circumstances. Keogh plan participants may
also establish separate IRAs (see below) to which they may contribute up to an
additional $2,000 per year ($2,250 in a spousal account).
Individual Retirement Account--IRA. Any individual (including one covered
by an employer retirement plan) can establish an IRA or make use of a qualified
IRA arrangement set up by an employer or union for the purchase of Units of the
Fund. Any individual can make a contribution to an IRA equal to the lesser of
$2,000 ($2,250 in a spousal account) or 100% of earned income; such investment
must be made in cash. However, the deductible amount an individual may
contribute 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 married
individuals filing a joint return) or $200 (in the case of a married individual
filing a separate return). A married individual filing a separate return will
not be entitled to any deduction if the individual is covered by an
employer-maintained retirement plan, without regard to whether the individual's
spouse is an active participant in an employer retirement plan. 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. It should be noted that 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 be distributed and subject to tax at
that time. A participant's entire interest in an IRA must be, or commence to be,
distributed to the participant not later than the April 1 following the taxable
year during which the participant attains the age of 70 1/2. 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.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan established for employees of a corporation may purchase Units of the Fund.
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units is computed by dividing the
aggregate value of the Securities (as determined by the Trustee), by the number
of Units outstanding, and adding to that quotient the sales charge at the
applicable percentage of the aggregate value per Unit (the net amount invested).
A proportionate share of the amount in the Income Account (described under
Administration of the Fund--Accounts and Distributions) on the date of delivery
of the Units to the purchaser and (during the primary offering period and
thereafter when Units are created in connection with the Reinvestment Plan)
estimated applicable commissions to cover
10
<PAGE>
purchase of the Securities are added to the Public Offering Price. The Public
Offering Price on the date of this Prospectus or on any subsequent date will
vary from the Public Offering Price on the business day prior to the date of
this Prospectus (set forth under Investment Summary) in accordance with
fluctuations in the aggregate value of the underlying Securities.
The applicable percentage of sales charge and the concession to dealers and
to introducing dealers (i.e., dealers that buy and clear directly through a
Sponsor or an Underwriter who is an affiliate of a Sponsor) referred to below
under Public Distribution is reduced on a graduated scale for sales to any
purchaser of at least 250,000 Units and will be applied on whichever basis is
more favorable to the purchaser. To qualify for the reduced sales charge and
concession applicable to quantity purchases, the dealer must confirm that the
sale is to a single purchaser as defined below or is purchased for its own
account and not for distribution. Sales charges and concessions are as follows:
<TABLE>
<CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
------------------------------------
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS PRIMARY MARKET
PUBLIC OFFERING NET AMOUNT PERCENT OF PUBLIC CONCESSION TO
NUMBER OF UNITS PRICE INVESTED OFFERING PRICE INTRODUCING DEALERS
- ------------------------------------------------- ------------------- --------------- --------------------- -------------------
<S> <C> <C> <C> <C> <C>
1,000 - 249,999.................................. 4.50% 4.712% 2.925% $ 32.40
250,000 - 499,999................................ 3.50 3.627 2.275 25.20
500,000 - 749,999................................ 3.00 3.093 1.950 21.60
750,000 - 999,999................................ 2.50 2.564 1.625 18.00
1,000,000 or more................................ 2.00 2.041 1.300 14.40
</TABLE>
The above graduated sales charges will apply on all purchases on any one
day by the same purchaser of Units in this Fund only in the amounts stated. For
this purpose purchases during the initial offering period will not be aggregated
with concurrent purchases of any other unit trusts sponsored by the Sponsors.
Purchases in the secondary market of one or more Series sponsored by the
Sponsors which have the same rates of sales charge will be aggregated. Units
held in the name of the spouse of the purchaser or in the name of a child of the
purchaser under 21 years of age are deemed to be registered in the name of the
purchaser. The graduated sales charges are also applicable to a trustee or other
fiduciary purchasing securities for a single trust estate or single fiduciary
account.
Employees of certain of the Sponsors and their affiliates may purchase
Units of this Fund pursuant to employee benefit plans at a price equal to the
aggregate value of the Securities in the Fund divided by the number of Units
outstanding plus a reduced sales charge of not less than $5.00 per 1,000 Units.
The value of the Securities is determined on each business day by the
Trustee based on the closing sale prices at the Evaluation Time on the day the
evaluation is made or, if there are no reported sales or if closing sale prices
are not reported or a Security is not listed on a national securities exchange
or if the principal market therefor becomes other than on an exchange, taking
into account the same factors referred to under Redemption--Computation of
Redemption Price per Unit (Section 4.01). The term 'business day', as used
herein and under 'Redemption', shall exclude Saturdays, Sundays and the
following holidays as observed by the New York Stock Exchange, Inc.: New Year's
Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
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.
The Sponsors intend to continue to qualify Units for sale in all states in
the U.S. 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 Sponsors do 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. Sales to dealers and to
introducing dealers, if any, will initially be made at prices which represent a
concession of the amount per 1,000 Units specified in the table above, but the
Agent for the Sponsors reserves the right to change the amount of the concession
to dealers and the concession to introducing dealers from time to time. Any
dealer or introducing dealer may reallow a concession not in excess of the
concession to dealers.
11
<PAGE>
UNDERWRITERS' AND SPONSORS' PROFITS
On each subsequent deposit of Securities (rather than a letter of credit
accompanied by instructions to purchase specified securities) with respect to
the sale of additional Units to the public the Sponsors may realize a profit or
loss. In addition, any Sponsor or Underwriter may realize profits or sustain
losses in respect of Securities deposited in the Fund which were acquired by the
Sponsor or Underwriter from underwriting syndicates of which the Sponsor or
Underwriter was a member. To the extent additional Units continue to be offered
for sale to the public, the Underwriting Account also may realize profits or
sustain losses as a result of fluctuations in the aggregate value of the
Securities and hence in the Public Offering Price of the Units (see Investment
Summary). Cash, if any, made available by buyers of Units to the Sponsors prior
to the settlement date for purchase of Units may be used in the Sponsors'
businesses subject to the limitations of Rule 15c3-3 under the Securities
Exchange Act of 1934 and may be of benefit to the Sponsors.
The Sponsors also receive an annual fee in the amount set forth under
Investment Summary for portfolio supervision services which they provide during
the life of the Fund (see Expenses and Charges--Fees).
In maintaining a market for the Units (see Market for Units), the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units (based on the aggregate value of the
Securities) and the prices at which they resell these Units (which include the
sales charge) or the prices at which they redeem the Units (based on the
aggregate value of the Securities), as the case may be.
MARKET FOR UNITS
At the present time certain of the Sponsors maintain a secondary market for
units of certain other series of Defined Asset Funds--Equity Income Fund and
continually offer to purchase units at prices which are based upon the value of
the Securities in the portfolios of those series. While the Sponsors are not
obligated to do so, it is their intention to maintain a secondary market for
Units of this Series and continuously to offer to purchase Units of this Series
at prices subject to change at any time, which will be computed on the basis of
the aggregate value of the Securities, taking into account the same factors
referred to in determining the Redemption Price per Unit (see Redemption). The
Sponsors may discontinue purchases of Units of this Series at prices based on
the aggregate value of the Securities should the supply of Units exceed demand
or for other business reasons. The Sponsors, of course, do not in any way
guarantee the enforceability, marketability or price of any Securities in the
Portfolio or of the Units. However, the Sponsors will not repurchase Units in
the secondary market at a price below the aggregate value of the Securities in
the Fund. During the initial public offering period or thereafter, on a given
day the price offered by the Sponsors for the purchase of Units shall be an
amount not less than the Redemption Price per Unit, based on the aggregate value
of Securities in the Fund on the date on which the Units are tendered for
redemption (see Redemption).
The Sponsors may redeem any Units they have purchased in the secondary
market if they determine that it is undesirable to continue to hold these Units
in their inventory. Factors which the Sponsors will consider in making this
determination will include the number of units of all funds which they hold in
their inventory, the saleability of the units and their estimate of the time
required to sell the units and general market conditions. For a description of
certain consequences of any redemption for remaining Holders, see Redemption.
A Holder who wishes to dispose of his Units should inquire of his bank or
broker as to current market prices in order to determine if there exist
over-the-counter prices in excess of the redemption price and the repurchase
price (see Redemption).
REDEMPTION
While it is anticipated that Units in most cases can be sold in the
over-the-counter market for an amount at least equal to the Redemption Price per
Unit (see Market for Units), Units may be redeemed at the office of the Trustee
set forth on the back cover of this Prospectus, upon tender of Certificates or,
in the case of uncertificated Units, delivery of a request for redemption, and
payment of any relevant tax, without any other fee (Section 5.02). Certificates
to be redeemed must be properly endorsed or accompanied by a written instrument
or instruments of transfer. Holders must sign exactly as their names appear on
the face of the Certificate with the signatures guaranteed by an eligible
guarantor institution or in some other manner acceptable to the Trustee. In
certain instances the Trustee may require additional documents including, but
not limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority.
12
<PAGE>
On the seventh calendar day following the tender (or if the seventh
calendar day is not a business day on the first business day prior thereto), the
Holder will be entitled to receive the proceeds of the redemption in an amount
per Unit equal to the Redemption Price per Unit (see below) as determined as of
the day of tender. The Trustee is authorized in its discretion, if the Sponsors
do not elect to repurchase any Units tendered for redemption or if the Sponsors
tender Units for redemption, to sell the Units in the over-the-counter market at
prices which will return to the Holder a net amount in cash equal to or in
excess of the Redemption Price per Unit for the Units (Section 5.02).
The Trustee is empowered to sell Securities at the expense of the Fund in
order to make funds available for redemption (Section 5.02) if funds are not
otherwise available in the Capital and Income Accounts to meet redemptions (see
Administration of the Fund--Accounts and Distributions). The Securities to be
sold will be selected by the Trustee in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares of each
Stock and the number of any Other Fund Units in the Fund. Provision is made in
the Indenture under which the Sponsors may, but need not, specify minimum
amounts in which blocks of Securities are to be sold in order to obtain the best
price for the Fund. While these minimum amounts may vary from time to time in
accordance with market conditions, the Sponsors believe that the minimum amounts
which would be specified would be approximately 100 shares for readily
marketable Securities.
To the extent that Securities are sold, the size and diversity of the Fund
will be reduced but each remaining Unit will continue to represent the same
proportional interest in each Security. Sales will usually be required at a time
when Securities would not otherwise be sold and may result in lower prices than
might otherwise be realized. The price received upon redemption may be more or
less than the amount paid by the Holder depending on the value of the Securities
in the Portfolio at the time of redemption. In addition, because of the minimum
amounts in which Securities are required to be sold, the proceeds of sale may
exceed the amount required at the time to redeem Units; these excess proceeds
will be distributed to Holders unless reinvested in substitute Securities (see
Administration of the Fund--Accounts and Distributions).
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange, Inc. is closed other than for
customary weekend and holiday closings or (2) for any period during which, as
determined by the Securities and Exchange Commission ('SEC'), (i) trading on
that Exchange is restricted or (ii) an emergency exists as a result of which
disposal or evaluation of the Securities is not reasonably practicable, or (3)
for any other periods which the SEC may by order permit (Section 5.02).
COMPUTATION OF REDEMPTION PRICE PER UNIT
Redemption Price per Unit is computed by the Trustee, as of the Evaluation
Time, on each June 30 and December 31 (or the last business day prior thereto),
on any day on which the New York Stock Exchange is open as of the Evaluation
Time next following the tender of any Unit for redemption, and on any other
business day desired by the Trustee or the Sponsors, by adding (a) the aggregate
value of the Securities as determined by the Trustee and (b) cash on hand in the
Fund (other than cash covering contracts to purchase Securities) including
dividends receivable on stocks trading ex-dividend and deducting therefrom the
sum of (x) taxes or other governmental charges against the Fund not previously
deducted, (y) accrued fees and expenses of the Trustee (including legal and
auditing expenses), the Sponsors and counsel, and certain other expenses and (z)
cash held for distribution to Holders of record as of a date prior to the
evaluation; and dividing the result by the number of Units outstanding as of the
date of computation (Section 5.01).
The aggregate value of the Securities is determined in good faith by the
Trustee in the following manner: if the Securities are listed on a national
securities exchange or the NASDAQ national market system, this evaluation is
generally based on the closing sale prices on that exchange (unless the Trustee
deems these prices inappropriate as a basis for valuation) or, if there is no
closing sale price on that exchange, at the mean between the closing bid and
asked prices. If the Securities are not so listed or, if so listed and the
principal market therefor is other than on the exchange, the evaluation shall
generally be based on the current bid price on the over-the-counter market
(unless the Trustee deems these prices inappropriate as a basis for evaluation).
If current bid prices are unavailable, the evaluation is generally determined
(a) on the basis of current bid prices for comparable securities, (b) by
appraising the value of the Securities on the bid side of the market or (c) by
any combination of the above.
13
<PAGE>
EXPENSES AND CHARGES
FEES
The Trustee's Annual Fee and Expenses and the Portfolio Supervision Fee are
set forth under Investment Summary. Because there is no management fee, the Fund
is expected to have expenses of less than 0.25% annually, substantially less
than might be incurred on a comparable managed fund. The Portfolio Supervision
Fee is an annual fee equal to the lesser of the cost to the Sponsors of
supplying the services and the maximum amount per 1,000 Units of the Fund set
forth under Investment Summary, based on the average of the largest number of
Units in the Fund during each month of a calendar year in which additional
Securities are deposited in the Fund, and thereafter based on the largest number
of Units outstanding at any time during the year. The Sponsors' fee, which is
not to exceed the maximum amount set forth under Investment Summary, may exceed
the actual costs of providing portfolio supervisory services for this Fund, but
at no time will the total amount they receive for portfolio supervisory services
rendered to all series of Equity Income Fund in any calendar year exceed the
aggregate cost to them of supplying these services in that year (Section 7.06).
In addition, the Sponsors may also be reimbursed for bookkeeping or other
administrative services provided to the Fund in amounts not exceeding their
costs of providing these services (Section 3.04, 7.06). The Trustee receives for
its services as Trustee and for reimbursement of expenses incurred on behalf of
the Fund, payable in monthly installments, the amount per 1,000 Units set forth
under Investment Summary as Trustee's Annual Fee and Expenses, which includes
the estimated Sponsors' Portfolio Supervision Fee, estimated reimbursable
bookkeeping or other administrative expenses paid to the Sponsors and certain
evaluation, auditing, printing and mailing expenses. Expenses in excess of the
amount so included less any amounts received by the Trustee relating to
reimbursement of applicable commissions will be borne by the Fund (Section
3.17). The Trustee also receives benefits to the extent that it holds funds on
deposit in the various non-interest bearing accounts created under the
Indenture. The foregoing fees may be adjusted for inflation in accordance with
the terms of the Indenture without approval of Holders (Sections 4.02, 7.06 and
8.05).
OTHER CHARGES
Other charges which may be incurred by the Fund include: (a) fees of the
Trustee for extraordinary services (Section 8.05), (b) certain extraordinary
expenses of the Trustee (including legal and auditing expenses) and of counsel
designated by the Sponsors (Sections 3.04, 3.10, 8.01(e), 8.03 and 8.05), (c)
various governmental charges (Sections 3.03 and 8.01 (h)), (d) expenses and
costs of action taken to protect the Fund and the rights and interests of
Holders (Sections 7.06 and 8.01 (d)), (e) indemnification of the Trustee for any
losses, liabilities and expenses incurred without gross negligence, bad faith or
wilful misconduct on its part (Section 8.05), (f) indemnification of the
Sponsors for any losses, liabilities and expenses incurred without gross
negligence, bad faith or wilful misconduct (Section 7.05(b)) and (g)
expenditures incurred in contacting Holders upon termination of the Fund
(Section 9.02). The amounts of these charges and fees are secured by a lien on
the Fund and, if the balances in the Income and Capital Accounts (see below) are
insufficient, the Trustee has the power to sell Securities to pay these amounts
(Section 8.05).
ADMINISTRATION OF THE FUND
RECORDS
The Trustee keeps a register of the names, addresses and holdings of all
Holders. The Trustee also keeps records of transactions of the Fund, including a
current list of the Securities and a copy of the Indenture, which records are
available to Holders for inspection at the office of the Trustee at reasonable
times during business hours (Sections 8.02 and 8.04).
ACCOUNTS AND DISTRIBUTIONS
Dividends payable to the Fund are credited by the Trustee to an Income
Account, as of the date on which the Fund is entitled to receive the dividends
as a Holder of record of the Securities. Other receipts, including amounts
received upon the sale of rights pursuant to Section 3.08 of the Indenture, are
credited to a Capital Account (Sections 3.01 and 3.02). Subject to the
Reinvestment Plan described below, the Monthly Income Distribution for each
Holder as of each Record Day will be made on the following Distribution Day or
shortly thereafter and shall consist of an amount, computed monthly by the
Trustee, substantially equal to one-twelfth of the Holder's pro rata share of
the estimated annual income to the Income Account, after deducting
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<PAGE>
estimated expenses. There is no assurance that actual distributions will be made
since all dividends received may be used to pay expenses.
An amount equal to any capital gain net income (i.e., the excess of capital
gains over capital losses) recognized by the Fund in any taxable year will be
distributed to Holders shortly after the end of the year. In order to meet
certain tax requirements the Fund may make a special distribution of income,
including capital gains, to Holders of record as of a date in December. Proceeds
received from the disposition of any of the Securities which are not used to
make the distribution of capital gain net income, for redemption of Units or
reinvested in substitute Securities will be held in the Capital Account to be
distributed on the next succeeding Distribution Day. The first distribution for
persons who purchase Units between a Record Day and a Distribution Day will be
made on the second Distribution Day following their purchase of Units. No
distribution need be made from the Capital Account, other than distributions of
capital gains, if the balance therein is less than the amount set forth under
Investment Summary--Capital Distributions (Section 3.04). A Reserve Account may
be created by the Trustee by withdrawing from the Income or Capital Accounts,
from time to time, those amounts as it deems requisite to establish a reserve
for any taxes or other governmental charges that may be payable out of the Fund
(Section 3.03). Funds held by the Trustee in the various accounts created under
the Indenture do not bear interest (Section 8.01).
REINVESTMENT PLAN
Monthly income distributions, annual distributions of any capital gain net
income (i.e., the excess of capital gains over capital losses) and other capital
distributions in respect of the Units may be reinvested by participating in the
Fund's reinvestment plan (the 'Reinvestment Plan'). A Holder (including any
Holder which is a broker or nominee of a bank or other financial institution)
may indicate to the Trustee, by filing the written notice of election
accompanying this Prospectus or by notice to the Holder's account executive or
sales representative, that he wishes such distributions to be automatically
invested in additional Units (or fractions thereof) of the Fund. The Holder's
completed notice of election to participate in the Reinvestment Plan must be
received by the Trustee at least ten days prior to the Record Date applicable to
any distribution in order for the Reinvestment Plan to be in effect as to such
distribution and will remain effective until notice to the contrary is timely
received by the Trustee.
Deposits of Additional Securities in connection with the Reinvestment Plan
will be made so as to maintain, as closely as practicable, the proportionate
relationship (subject to adjustment under certain circumstances) among the
number of shares of each Stock in the Fund (see Administration of the
Fund--Portfolio Supervision). In the event an issuer of a Security has a
shareholder dividend reinvestment plan, a stock purchase plan or a similar plan
under which its shareholders may automatically reinvest their dividends or
invest optional cash payments in additional shares of the issuer's common or
preferred stock without brokerage commission or service charge or otherwise on a
basis favorable to the shareholder in the opinion of the Sponsors, the Fund (as
a shareholder of such issuer) upon the direction of the Sponsors may participate
in such plans to the extent practicable given the other restrictions on the
purchase of additional Securities even if such participation temporarily results
in the proportionate relationship of the Securities not being maintained.
Purchases made pursuant to the Reinvestment Plan will be at the applicable
Public Offering Price for Units of the Fund, less the sales charge, on (or as
soon as possible after) the close of business on the Distribution Date. If new
Units are created for the Reinvestment Plan, the estimated amount of applicable
commissions will be included in the Public Offering Price for the Units. Under
the Reinvestment Plan, the Fund will pay the distributions to the Trustee which
in turn will purchase for the Holder full and fractional Units of the Fund at
the price and time indicated above, will add the Units to the Holder's account,
and will send the Holder an account statement reflecting the reinvestment. These
Units may be Units already held in inventory by the Sponsors (see Market for
Units) or new Units created by the Sponsors' 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 (see
Description of the Fund--The Portfolio).
The Trustee will issue Certificates for whole units purchased through the
Reinvestment Plan only if the Holder so requests in writing. Certificates will
not be issued for fractional units. When Certificates are not issued the Trustee
will credit each Holder's account with the number of units purchased with such
Holder's reinvested distribution. Each Holder receives account statements both
annually and after each Reinvestment Plan transaction to provide the Holder with
a record of the total number of units in his account. This relieves the Holder
of responsibility for safekeeping of Certificates and, should he sell his units,
eliminates the need to
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<PAGE>
deliver certificates. The Holder may at any time request the Trustee (at the
Fund's cost) to issue Certificates for full units. The cost of administering the
Reinvestment Plan will be borne by the Fund and thus will be borne indirectly by
all Holders.
Holders of Units held in 'street name' by their broker or dealer should
contact their account executive or sales representative to determine whether or
not participation in the Reinvestment Plan through that broker or dealer is
available. Holders of Units participating in the Reinvestment Plan through their
broker or dealer will receive confirmation of their reinvestments in their
regular account statements or on a quarterly basis.
Certain of the shareholder dividend reinvestment, stock purchase or similar
plans maintained by issuers of the Securities in the Portfolio offer shares
pursuant to such plans at a discount from market value. The Trustee is required
by applicable provisions of the Code to distribute pro rata to all Holders
(i.e., not just to those Holders participating in the Reinvestment Program) the
income attributable to such discounts.
PORTFOLIO SUPERVISION
The Fund is a unit investment trust and is not an actively managed fund.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The Portfolio of the Fund, however, will not be
actively managed and therefore the adverse financial condition of an issuer will
not necessarily require the sale of its Securities from the Portfolio. However,
the Unit Investment Trusts division of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Agent for the Sponsors, reviews the Securities regularly and
may direct the disposition of Securities upon default in payment of amounts due
on any of the Securities, institution of certain legal proceedings, default
under certain documents materially and adversely affecting future declaration or
payment of amounts due, or decline in price or the occurrence of other market or
credit factors that in the opinion of the Sponsors would make the retention of
these Securities detrimental to the interest of the Holders, or if the
disposition of these Securities is necessary in order to enable the Fund to make
distributions of the Fund's capital gain net income or desirable in order to
maintain the qualification of the Fund as a regulated investment company under
the Code (Section 3.08). If a default in the payment of amounts due on any
Security occurs and if the Sponsors fail to give instructions to sell or hold
that Security, the Indenture provides that the Trustee, within 30 days of that
failure by the Sponsors, may sell the Security (Section 3.12). Therefore the
portfolio should remain relatively unchanged for the life of the Fund.
The Sponsors are also authorized to direct the reinvestment of the proceeds
of the sale of Securities, as well as moneys held to cover the purchase of
Securities pursuant to contracts which have failed, in Replacement Securities
which satisfy certain conditions specified in the Indenture including, among
other conditions, requirements that the Replacement Securities shall be selected
by the Sponsors from a list of securities maintained by them and updated from
time to time; shall be publicly-traded common stocks issued by domestic public
utility corporations; shall be issued by an issuer subject to or exempt from the
reporting requirements under Section 13 or 15(d) of the Securities and Exchange
Act of 1934 (or similar provisions of law); and have, in the opinion of the
Sponsors, characteristics sufficiently similar to the characteristics of the
other securities in the Fund as to be acceptable for acquisition by the Fund.
The Indenture also requires that the purchase of the Replacement Securities will
not (i) disqualify the Fund as a regulated investment company under the Code,
(ii) result in more than 10% of the Fund consisting of securities of a single
issuer (or of two or more issuers which are Affiliated Persons as this term is
defined in the Investment Company Act of 1940) which are not registered and are
not being registered under the Securities Act of 1933 or (iii) result in the
Fund owning more than 50% of any single issue which has been registered under
the Securities Act of 1933 (Section 3.11). The common stocks on the current list
filed by the Sponsors with the Trustee from which Replacement Securities are to
be selected are set forth under Investment Summary.
The Fund will attempt to obtain the most favorable prices and executions of
orders. Accordingly, Securities will generally only be purchased or sold in
round lots (or whatever transaction size that will minimize the payment of
commissions). (See Risk Factors.) Transactions in securities of the nature held
in the Fund are generally made in brokerage transactions (as distinguished from
principal transactions) and the Sponsors or any of their affiliates may act as
brokers for the Fund if the Fund expects to obtain the most favorable prices and
execution. The furnishing of statistics and research information to the Trustee
by any of the securities dealers through which transactions are executed will
not be considered in placing securities transactions.
During the life of the Fund the Sponsors, as part of their portfolio
supervisory responsibilities, may make additions and deletions to the list
referred to above and may conduct regular quarterly reviews to determine
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<PAGE>
whether or not to recommend the disposition of Securities pursuant to the
procedures under the Indenture summarized above. In addition, the Sponsors shall
undertake to perform such other reviews and procedures as it may deem necessary
for it to make the reinvestment recommendations and to give the consents and
directions required by the Indenture and to make such changes in the original
proportionate relationship among the shares of Stock as may be required by any
sales or purchases of Securities provided for thereunder. For the portfolio
supervisory services in making such recommendations and giving such consents and
directions, and in performing the reviews and procedures, called for in
connection therewith, the Sponsors shall receive the Portfolio Supervision fee
referred to under Expenses and Charges--Fees.
REPORTS TO HOLDERS
With each distribution, the Trustee will furnish Holders a statement of the
amounts of income and the amounts of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. After the end
of each calendar year and following the termination of the Fund, the Trustee
will furnish to each person who at any time during the calendar year was a
Holder of record, a statement (i) summarizing transactions for that year in the
Income and Capital Accounts, (ii) identifying Securities redeemed, sold and
purchased during the year and listing Securities held and the number of Units
outstanding at the end of that calendar year, (iii) stating the Redemption Price
per Unit based upon the computation thereof made at the end of that calendar
year and (iv) specifying the amounts distributed during that calendar year from
the Income and Capital Accounts (Section 3.07). The accounts of the Fund shall
be audited at least annually by independent accountants designated by the
Sponsors and the report of the accountants shall be furnished by the Trustee to
Holders upon request (Section 8.01 (e)).
CERTIFICATES
Certain of the Sponsors may collect additional charges for registering and
shipping certificates to purchasers. These Certificates are transferable or
interchangeable upon presentation at the office of the Trustee, with a payment
of $2.00 if required by the Trustee (or other amounts specified by the Trustee
and approved by the Sponsors) for each new Certificate and any sums payable for
taxes or other governmental charges imposed upon the transaction (Section 6.01)
and compliance with the formalities necessary to redeem Certificates (see
Redemption). Mutilated, destroyed, stolen or lost Certificates will be replaced
upon delivery of satisfactory indemnity and payment of expenses incurred
(Section 6.02).
AMENDMENT AND TERMINATION
The Sponsors and Trustee may amend the Indenture, without the consent of
the Holders, (a) to cure any ambiguity or to correct or supplement any provision
thereof which may be defective or inconsistent, (b) to change any provision
thereof as may be required by the SEC or any successor governmental agency, (c)
to add or change any provision as may be necessary or advisable for the
continuing qualification of the Fund as a regulated investment company under the
Code or (d) to make any other provisions which do not materially adversely
affect the interest of the Holders (as determined in good faith by the
Sponsors). The Indenture may also be amended in any respect by the Sponsors and
the Trustee, or any of the provisions thereof may be waived, with the consent of
the Holders of 51% of the Units, provided that none of these amendments or
waivers will reduce the interest in the Fund of any Holder without the consent
of the Holder or reduce the percentage of Units required to consent to any of
these amendments or waivers without the consent of all Holders (Section 10.01).
The Indenture will terminate upon the maturity, sale, or other disposition
of the last Security held thereunder but in no event is it to continue beyond
the mandatory termination date set forth under Investment Summary. The Indenture
may be terminated by the Sponsors if the value of the Fund is less than the
minimum value set forth under Investment Summary, and may be terminated at any
time by Holders of 51% of the Units (Sections 8.01 (g) and 9.01). The Trustee
will deliver written notice of any termination to each Holder within a
reasonable period of time prior to the termination, specifying the times at
which the Holders may surrender their Certificates for cancellation. Within a
reasonable period of time after the termination, the Trustee must sell all of
the Securities then held and distribute to each Holder, upon surrender for
cancellation of his Certificates and after deductions for accrued but unpaid
fees, taxes and governmental and other charges, the Holder's interest in the
Income and Capital Accounts (Section 9.01). This distribution will normally be
made by mailing a check in the amount of each Holder's interest in these
accounts to the address of the Holder appearing on the record books of the
Trustee.
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RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsors. The
Trustee may be removed upon the direction of the Holders of 51% of the Units at
any time or by the Sponsors without the consent of any of the Holders if the
Trustee becomes incapable of acting or becomes bankrupt or its affairs are taken
over by public authorities or if for any reason the Sponsors determine in good
faith that the replacement of the Trustee is in the best interest of the
Holders. The resignation or removal shall become effective upon the acceptance
of appointment by the successor which may, in the case of a resigning or removed
Co-Trustee, be one or more of the remaining Co-Trustees. In case of resignation
or removal the Sponsors are to use their best efforts to appoint a successor
promptly and if upon resignation of the Trustee no successor has accepted
appointment within thirty days after notification, the Trustee may apply to a
court of competent jurisdiction for the appointment of a successor (Section
8.06). The Trustee shall be under no liability for any action taken in good
faith in reliance on prima facie properly executed documents or for the
disposition of monies or Securities, nor shall it be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any Security.
This provision, however, shall not protect the Trustee in cases of wilful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsors to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the Securities
or upon the interest thereon. In addition, the Indenture contains other
customary provisions limiting the liability of the Trustee (Sections 3.04, 3.08,
8.01 and 8.05).
SPONSORS
Any Sponsor may resign if one remaining Sponsor maintains a net worth of
$2,000,000 and is agreeable to the resignation (Section 7.04). A new Sponsor may
be appointed by the remaining Sponsors and the Trustee to assume the duties of
the resigning Sponsor. If there is only one Sponsor and it shall fail to perform
its duties or becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, then the Trustee may (a) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and as
may not exceed amounts prescribed by the SEC, or (b) terminate the Indenture and
liquidate the Fund or (c) continue to act as Trustee without terminating the
Indenture (Section 8.01(f)). Merrill Lynch has been appointed by the other
Sponsors as agent for purposes of taking action under the Indenture (Section
7.01). If the Sponsors are unable to agree with respect to action to be taken
jointly by them under the Indenture and they cannot agree as to which Sponsor
shall continue to act as sole Sponsor, then Merrill Lynch shall continue to act
as sole Sponsor (Section 7.02(b)). If one of the Sponsors fails to perform its
duties or becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, then that Sponsor is automatically discharged
and the other Sponsors shall act as sole Sponsors (Section 7.02(a)). The
Sponsors shall be under no liability to the Fund or to the Holders for taking
any action or for refraining from taking any action in good faith or for errors
in judgment and shall not be liable or responsible in any way for depreciation
or loss incurred by reason of the sale of any Security. This provision, however,
shall not protect the Sponsors in cases of wilful misfeasance, bad faith, gross
negligence or reckless disregard of their obligations and duties (Section 7.05).
The Sponsors and their successors are jointly and severally liable under the
Indenture. A Sponsor may transfer all or substantially all of its assets to a
corporation or partnership which carries on its business and duly assumes all of
its obligations under the Indenture and in that event it shall be relieved of
all further liability under the Indenture (Section 7.03).
MISCELLANEOUS
TRUSTEE
The Trustee of the Fund is named on the back cover page of this Prospectus
and is either The Chase Manhattan Bank, N.A., a national banking association
with its Unit Trust Department at 1 Chase Manhattan Plaza--3B, New York, New
York 10081 (which is subject to supervision by the Comptroller of the Currency,
the Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System); Bankers Trust Company, a New York banking corporation
with its corporate trust office at 4 Albany Street, 7th Floor, New York, New
York 10015 (which is subject to supervision by the New York Superintendent of
Banks, the Federal Deposit Insurance Corporation and the Board of Governors of
the Federal Reserve System); or (acting as Co-Trustees) Investors Bank & Trust
Company, a Massachusetts trust company with its unit investment
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<PAGE>
trust servicing group at One Lincoln Plaza, Boston, Massachusetts 02111 (which
is subject to supervision by the Massachusetts Commissioner of Banks, the
Federal Deposit Insurance Corporation and the Board of Governors of the Federal
Reserve System) and the First National Bank of Chicago, a national banking
association with its corporate trust office at One First National Plaza, Suite
0126, Chicago, Illinois 60670-0126 (which is subject to Supervision by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve Systems).
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. Hawkins, Delafield & Wood, 67 Wall Street, New York, New York 10005,
act as counsel for Bankers Trust Company, as Trustee. Bingham, Dana & Gould, 150
Federal Street, Boston, Massachusetts 02110, act as counsel for The First
National Bank of Chicago and Investors Bank & Trust Company, as Co-Trustees.
AUDITORS
The Statement of Condition, including the Portfolio of the Fund, has been
audited by Deloitte & Touche, independent accountants, as stated in their
opinion appearing in this prospectus and has been so included in reliance upon
that opinion given on the authority of that firm as experts in accounting and
auditing.
SPONSORS
Each Sponsor is a Delaware corporation and is engaged in the underwriting,
securities and commodities brokerage business and is a member of the New York
Stock Exchange, Inc., other major securities exchanges and commodity exchanges,
and the National Association of Securities Dealers, Inc. Merrill Lynch, Pierce,
Fenner & Smith Incorporated, a subsidiary of Merrill Lynch & Co., Inc., is
engaged in the investment advisory business. Smith Barney Inc., an investment
banking and securities broker-dealer firm, is an indirect wholly-owned
subsidiary of The Travelers Inc. PaineWebber Incorporated is engaged in the
investment advisory business and is a wholly-owned subsidiary of PaineWebber
Group Inc. Prudential Securities Incorporated, a wholly-owned subsidiary of
Prudential Securities Group Inc. and an indirect wholly-owned subsidiary of the
Prudential Insurance Company of America, is engaged in the investment advisory
business. Dean Witter Reynolds Inc., a principal operating subsidiary of Dean
Witter, Discover & Co. is engaged in the investment advisory business. Each
Sponsor has acted as principal underwriter and managing underwriter of other
investment companies. The Sponsors, in addition to participating as members of
various selling groups or as agents of other investment companies, execute
orders on behalf of investment companies for the purchase and sale of securities
of these companies and sell securities to these companies in their capacities as
brokers or dealers in securities.
DEFINED ASSET FUNDS
Each Sponsor (or a predecessor) has acted as Sponsor of series of Defined
Asset Funds. A subsidiary of Merrill Lynch, Pierce, Fenner & Smith Incorporated
succeeded in 1970 to the business of Goodbody & Co., which had been a co-Sponsor
of Defined Asset Funds since 1964. That subsidiary resigned as Sponsor of each
of the Goodbody series in 1971. Merrill Lynch, Pierce, Fenner & Smith
Incorporated has been co-Sponsor and the Agent for the Sponsors of each series
of Defined Asset Funds created since 1971. Shearson Lehman Brothers Inc.
('Shearson') and certain of its predecessors were underwriters beginning in 1962
and co-Sponsors from 1965 to 1967 and from 1980 to 1993 of various Defined Asset
Funds. As a result of the acquisition of certain of Shearson's assets by Smith
Barney, Harris Upham & Co. Incorporated and The Travelers (formerly Primerica
Corporation), Smith Barney Inc. now serves as co-Sponsor of various Defined
Asset Funds. Prudential Securities Incorporated and its predecessors have been
underwriters of Defined Asset Funds since 1961 and co-Sponsors since 1964, in
which year its predecessor became successor co-Sponsor to the original Sponsor.
Dean Witter Reynolds Inc. and its predecessors have been underwriters of various
Defined Asset Funds since 1964 and co-Sponsors since 1974. PaineWebber
Incorporated and its predecessor have co-Sponsored certain Defined Asset Funds
since 1983.
The Sponsors have maintained secondary markets in these funds for over 20
years. For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds
offer 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 a nest egg for retirement, or
attractive, regular current income consistent with relative protection of
capital.
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There are Defined Funds to meet the needs of just about any investor. Unit
investment trusts are particularly suited for the many investors who prefer to
seek long-term profits by purchasing sound investments and holding them, rather
than through active trading. Few individuals have the knowledge, resources or
capital to buy and hold a diversified portfolio on their own; it would generally
take a considerable sum of money to obtain the breadth and diversity offered by
Defined Funds. Sometimes it takes a combination of Defined Funds to plan for
your objectives.
One of the most important investment decisions an investor faces may be how
you allocate his 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.
The following chart shows the average annual compounded rate of return of
selected asset classes over the 10-year and 20-year periods ending December 31,
1993, compared to the rate of inflation over the same periods. Of course, this
chart represents past performance of these investment categories and is no
guarantee of future results either of these categories or of any Defined Fund.
Defined Funds also have sales charges and expenses, which are not reflected in
the chart.
Stocks (S&P 500)
20 yr 12.76%
10 yr 14.94%
Small-company stocks
20 yr 18.82%
10 yr 9.96%
Long-term corporate bonds
20 yr 10.16%
10 yr 14.00%
U.S. Treasury bills (short-term)
20 yr 7.49%
10 yr 6.35%
Consumer Price Index
20 yr 5.92%
10 yr 3.73%
0 2 4 6 8 10
12 14 16 18
20%
Source: Ibbotson Associates (Chicago).
Used with Permission. All rights reserved.
Instead of having to select individual securities on their own, purchasers
of Defined Funds benefit from the expertise of Defined Asset Funds' experienced
buyers and research analysts. In addition, they gain the advantage of
diversification by investing in Units of a Defined Fund holding securities of
several different issuers. Such diversification can reduce risk, but does not
eliminate it. While the portfolio of a managed fund, such as a mutual fund,
continually changes, defined bond funds offer a defined portfolio and a schedule
of income distributions identified in the prospectus. Investors know, generally,
when they buy, the issuers, maturities, call dates and ratings of the securities
in the portfolio. Of course, the portfolio may change somewhat over time as
additional securities are deposited, as securities mature or are called or
redeemed or as they are sold to meet redemptions and in certain other limited
circumstances. Investors buy bonds for dependability--they know what they can
expect to earn and that principle is distributed as the bonds mature. Investors
also know at the time of purchase their estimated income and current and
long-term returns, subject to credit and market risks and to changes in the
portfolio or the fund's expenses.
Defined Asset Funds offers a variety of fund types. The tax exemption of
municipal securities, which makes them attractive to high-bracket taxpayers, is
offered by Defined Municipal Investment Trust Funds. Municipal Defined Funds
offer a simple and convenient way for investors to earn monthly income free from
regular Federal income tax. Defined Municipal Investment Trust Funds have
provided investors with tax-free
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<PAGE>
income for more than 30 years. Defined Corporate Income Funds, with higher
current returns than municipal or government funds, are suitable for Individual
Retirement Accounts and other tax-advantaged accounts and provide monthly
income. Defined Government Securities Income Funds provide a way to participate
in markets for U.S. government securities while earning an attractive current
return. Defined International Bond Funds, invested in bonds payable in foreign
currencies, offer the potential to profit from changes in currency values and
possibly from interest rates higher than paid on comparable U.S. bonds, but
investors incur a higher risk for these potentially greater returns.
Historically, stocks have offered growth of capital, and thus some protection
against inflation, over the long term. Defined Equity Income Funds offer
participation in the stock market, providing current income as well as the
possibility of capital appreciation. The S&P Index Trusts offer a convenient and
inexpensive way to participate in broad market movements. Concept Series seek to
capitalize on selected anticipated economic, political or business trends.
Utility Stock Series, consisting of stocks of issuers with established
reputations for regular cash dividends, seek to benefit from dividend increases.
Select Ten Portfolios seek total return by investing for one year in the ten
highest yielding stocks on a designated stock index.
EXCHANGE OPTION
ELECTION
Holders may elect to exchange any or all of their Units of this Series for
units of one or more of the series of Funds listed in the table set forth below
(the 'Exchange Funds'), which normally are sold in the secondary market at
prices which include the sales charge indicated in the table. Certain series of
the Funds listed have lower maximum applicable sales charges than those stated
in the table; also the rates of sales charges may be changed from time to time.
No series with a maximum applicable sales charge of less than 3.50% of the
public offering price is eligible to be acquired under the Exchange Option, with
the following exceptions: (1) Freddie Mac Series may be acquired by exchange
during the initial offering period from any of the Exchange Funds listed in the
table. (2) Units of any Select Ten Portfolio, if available, may be acquired
during their initial offering period or thereafter by exchange from any Exchange
Fund Series; units of Select Ten Portfolios may be exchanged only for units of
another Select Ten Series, if available. Units of the Exchange Funds may be
acquired at prices which include the reduced sales charge for Exchange Fund
units listed in the table, subject, however, to these important limitations:
First, there must be a secondary market maintained by the Sponsors in
units of the series being exchanged and a primary or secondary market in
units of the series being acquired and there must be units of the
applicable Exchange Fund lawfully available for sale in the state in which
the Holder is resident. There is no legal obligation on the part of the
Sponsors to maintain a market for any units or to maintain the legal
qualification for sale of any of these units in any state or states.
Therefore, there is no assurance that a market for units will in fact exist
or that any units will be lawfully available for sale on any given date at
which a Holder wishes to sell his Units of this Series and thus there is no
assurance that the Exchange Option will be available to any Holder.
Second, when units held for less than five months are exchanged for
units with a higher regular sales charge, the sales charge will be the
greater of (a) the reduced sales charge set forth in the table below or (b)
the difference between the sales charge paid in acquiring the units being
exchanged and the regular sales charge for the quantity of units being
acquired, determined as of the date of the exchange.
Third, exchanges will be effected in whole units only. If the proceeds
from the Units being surrendered are less than the cost of a whole number
of units being acquired, the exchanging Holder will be permitted to add
cash in an amount to round up to the next highest number of whole units.
Fourth, the Sponsors reserve the right to modify, suspend or terminate
the Exchange Option at any time without further notice to Holders. In the
event the Exchange Option is not available to a Holder at the time he
wishes to exercise it, the Holder will be immediately notified and no
action will be taken with respect to his Units without further instruction
from the Holder.
PROCEDURES
To exercise the Exchange Option, a Holder should notify one of the Sponsors
of his desire to use the proceeds from the sale of his Units of this Series to
purchase units of one or more of the Exchange Funds. If units of the applicable
outstanding series of the Exchange Fund are at that time available for sale, the
Holder may select the series or group of series for which he desires his Units
to be exchanged. Of course, the Holder will be provided with a current
prospectus or prospectuses relating to each series in which he indicates
interest. The exchange transaction will operate in a manner essentially
identical to any secondary market
21
<PAGE>
transaction, i.e., Units will be repurchased at a price equal to the aggregate
bid side evaluation per Unit of the Securities in the Portfolio plus accrued
interest. Units of the Exchange Fund will be sold to the Holder at a price equal
to the bid side evaluation per unit of the underlying securities in the
Portfolio plus interest plus the applicable sales charge listed in the table
below. Units of Equity Income Fund are sold, and will be repurchased, at a price
normally based on the closing sale prices on the New York Stock Exchange, Inc.
of the underlying securities in the Portfolio. The maximum applicable sales
charges for units of the Exchange Funds are also listed in the table. Excess
proceeds not used to acquire whole Exchange Fund units will be paid to the
exchanging Holder.
CONVERSION OPTION
Owners of units of any registered unit investment trust sponsored by others
which was initially offered at a maximum applicable sales charge of at least
3.0% ('Conversion Trust') may elect to apply the cash proceeds of sale or
redemption of those units directly to acquire available units of any Exchange
Fund at the reduced sales charge, subject to the terms and conditions applicable
to the Exchange Option (except that no secondary market is required in
Conversion Trust units). To exercise this option, the owner should notify his
retail broker. He will be given a prospectus of each series in which he
indicates interest of which units are available. The broker must sell or redeem
the units of the Conversion Trust. Any broker other than a Sponsor must certify
to the Sponsors that the purchase of units of the Exchange Fund is being made
pursuant to and is eligible for this conversion option. The broker will be
entitled to two thirds of the applicable reduced sales charge. The Sponsors
reserve the right to modify, suspend or terminate the conversion option at any
time without further notice, including the right to increase the reduced sales
charge applicable to this option (but not in excess of $5 more per unit than the
corresponding fee then charged for the Exchange Option).
THE EXCHANGE FUNDS
An exchange of Units pursuant to the Exchange or Conversion Option for
units of a series of another Fund should constitute a 'taxable event' under the
Code, requiring a Holder to recognize a tax gain or loss, subject to the
limitation discussed below. The Internal Revenue Service may seek to disallow a
loss (or a pro rata portion thereof) on an exchange of units if the units
received by a Holder in connection with such an exchange represent securities
that are not materially different from the securities that his previous units
represented (e.g., both Funds contain securities issued by the same obligor that
have the same material terms). Holders are urged to consult their own tax
advisers as to the tax consequences to them of exchanging units in particular
cases.
A Holder's tax gain (or loss) recognized on an exchange of Units for units
of an Exchange Fund which is also a regulated investment company will increase
(or a Holder's tax loss, if recognized, will decrease) by the lesser of (a) the
sales charge applicable to the Units of this series or (b) the reduction in the
sales charge on the Exchange Fund Units, if the exchange is made within 90 days
of the purchase of the Units of this series. The amount of such increase (or
decrease) will be added to the Holder's basis in his Exchange Units and,
accordingly, will result in a decreased tax gain (or increased tax loss) when
the Exchange Fund Units are sold.
TAX CONSEQUENCES
An exchange of Units pursuant to the Exchange or Conversion Option for
units of a series of another Fund should constitute a 'taxable event' under the
Code, requiring a Holder to recognize a tax gain or loss. However, the Internal
Revenue Service may seek to disallow a loss on an exchange of Units for
substantially similar units in another series of the same type of Exchange Fund
(e.g., an exchange of a GNMA Series of Defined Asset Funds--Government
Securities Income Fund for a different GNMA Series of Defined Asset
Funds--Government Securities Income Fund). Holders are urged to consult their
own tax advisers as to the tax consequences to them of exchanging units in
particular cases.
EXAMPLE
Assume that a Holder, who has three units of a fund with a 5.50% sales
charge in the secondary market and a current price (based on bid side evaluation
plus accrued interest) of $1,100 per unit, sells his units and exchanges the
proceeds for units of a series of an Exchange Fund with a current price of $950
per unit and the same sales charge. The proceeds from the Holder's units will
aggregate $3,300. Since only whole units of an Exchange Fund may be purchased
under the Exchange Option, the Holder would be able to acquire four units in the
Exchange Fund for a total cost of $3,860 ($3,800 for units and $60 for the $15
per unit sales charge) by adding an extra $560 in cash. Were the Holder to
acquire the same number of units at the same time in the regular secondary
market maintained by the Sponsors, the price would be $4,021.16 ($3,800 for the
units and $221.16 for the 5.50% sales charge).
22
<PAGE>
<TABLE>
<CAPTION>
REDUCED
MAXIMUM SALES CHARGE
NAME OF APPLICABLE FOR SECONDARY INVESTMENT
EXCHANGE FUND SALES CHARGE* MARKET** CHARACTERISTICS
- --------------------------------------- --------------- ---------------------- --------------------------------------------------
<S> <C> <C> <C>
DEFINED ASSET FUNDS-- MUNICIPAL
INVESTMENT TRUST FUND
Monthly Payment, State and 5.50%+ $15 per unit long-term, fixed rate, tax-exempt income
Multistate Series
Intermediate Term Series 4.50%+ $15 per unit intermediate-term, fixed rate, tax-exempt income
Insured Series 5.50%+ $15 per unit long-term, fixed rate, tax-exempt income,
underlying securities insured by insurance
companies
AMT Monthly Payment Series 5.50%+ $15 per unit long-term, fixed rate, income exempt from regular
federal income tax but partially subject to AMT
DEFINED ASSET FUNDS--EQUITY INCOME FUND
Utility Common Stock Series 4.50% $15 per 1,000 units*** dividends, taxable income, underlying securities
are common stocks of public utilities
Concept Series 4.00% $15 per 100 units underlying securities constitute a professionally
selected portfolio of common stocks consistent
with an investment idea or concept
Select 10 Portfolios 2.75% $17.50 per 1,000 units 10 highest dividend yielding stocks in a
designated stock index; seeks higher total return
than that stock index; terminates after one year
DEFINED ASSET FUNDS-- MUNICIPAL INCOME
FUND
Insured Discount Series 5.50%+ $15 per unit long-term, fixed rate, tax-exempt current income,
taxable capital gains
DEFINED ASSET FUNDS-- CORPORATE INCOME
FUND
Monthly Payment Series 5.50% $15 per unit long-term, fixed rate, taxable income
Intermediate Term Series 4.75% $15 per unit intermediate-term, fixed rate, taxable income
Cash or Accretion Bond Series and 3.50% $15 per 1,000 units intermediate-term, fixed rate, underlying
SELECT Series securities composed of compound interest
obligations principally secured by collateral
backed by the full faith and credit of the United
States, taxable return, appropriate for IRA's or
tax-deferred retirement plans
Insured Series 5.50% $15 per unit long-term, fixed rate, taxable income, underlying
securities are insured
DEFINED ASSET FUNDS-- INTERNATIONAL
BOND FUND
Multi-Currency Series 5.50% $15 per unit intermediate-term, fixed rate, payable in foreign
currencies, taxable income
Australian and New Zealand Dollar 3.75% $15 per unit intermediate-term, fixed rate, payable in
Bond Series Australian and New Zealand dollars, taxable income
Australian Dollar Bonds Series 3.75% $15 per unit intermediate-term, fixed rate, payable in
Australian dollars, taxable income
Canadian Dollar Bonds Series 3.75% $15 per unit short intermediate-term, fixed rate, payable in
Canadian dollars, taxable income
DEFINED ASSET FUNDS-- GOVERNMENT
SECURITIES INCOME FUND
GNMA Series (other than those 4.25% $15 per unit long-term, fixed rate, taxable income, underlying
below) securities backed by the full faith and credit of
the United States
GNMA Series E or other GNMA Series 4.25% $15 per 1,000 units long-term, fixed rate, taxable income, underlying
having units with an initial face securities backed by the full faith and credit of
value of $1.00 the United States, appropriate for IRA's or tax-
deferred retirement plans
Freddie Mac Series 3.50% $15 per 1,000 units intermediate term, fixed rate, taxable income,
underlying securities are backed by Federal Home
Loan Mortgage Corporation but not by U.S.
Government.
</TABLE>
- ---------------
* As described in the prospectuses relating to certain Exchange Funds,
this sales charge for secondary market sales may be reduced on a
graduated scale in the case of quantity purchases.
** The reduced sales charge for Units acquired during their initial
offering period is: $20 per unit for Series for which the Reduced
Sales Charge for Secondary Market (above) is $15 per unit; $20 per 100
units for Series for which the Reduced Sales Charge for Secondary
Market is $15 per 100 units and $20 per 1,000 units for Series for which
the Reduced Sales Charge for Secondary Market is $15 per 1,000 units.
*** The reduced sales charge for the Sixth Utility Common Stock Series of
Equity Income Fund is $15 per 2,000 units and for prior Utility
Common Stock Series is $7.50 per unit.
+ Subject to reduction depending on the maturities of the underlying
Securities.
23
<PAGE>
Def ined
Asset FundsSM
SPONSORS: EQUITY INCOME FUND
Merrill Lynch, Utility Common Stock Series--15
Pierce, Fenner & Smith Inc. A Unit Investment Trust
Unit Investment Trusts PROSPECTUS PART A
P.O. Box 9051 This Prospectus does not contain all of
Princeton, NJ 08543-9051 the information with respect to the Fund
(609) 282-8500 set forth in its registration statement
Smith Barney Inc. and exhibit relating thereto which have
Unit Trust Department been filed with the Securities and
Two World Trade Center--101st Floor Exchange Commission, Washington, D.C.
New York, NY 10048 under the Securities Act of 1933 and the
(212) 298-UNIT Investment Company Act of 1940, and to
PaineWebber Incorporated which reference is hereby made.
1200 Harbor Boulevard No person is authorized to give any
Weehawken, NJ 07087 information or to make any
(201) 902-3000 representations with respect to the Fund
Prudential Securities Incorporated not contained in this Prospectus; and
One Seaport Plaza any information or representation not
199 Water Street contained herein must not be relied upon
New York, NY 10292 as having been authorized. This
(212) 776-1000 Prospectus does not constitute an offer
Dean Witter Reynolds Inc. to sell, or a solicitation of an offer
Two World Trade Center--59th Floor to buy, securities in any state to any
New York, NY 10048 person to whom it is not lawful to make
(212) 392-2222 such offer in such state.
INDEPENDENT ACCOUNTANTS:
Deloitte & Touche LLP
1633 Broadway
3rd Floor
New York, NY 10019
CO-TRUSTEES:
The First National Bank of Chicago
Investors Bank & Trust Company
P.O. Box 1537
Boston, MA 02205-1537
1-800-338-6019
14232--8/94
