DEFINED ASSET FUNDSSM
--------------------------------------------------------------------------------
EQUITY INCOME FUND The objective of this Defined Fund is current
UTILITY COMMON income and the potential for increasing dividend
STOCK SERIES--15 payments by investing in a diversified portfolio
(A UNIT INVESTMENT of publicly traded common stocks issued by
TRUST) domestic public utility companies.
------------------------------The common stocks included in the Portfolio were
-- MONTHLY INCOME selected for their current dividend yields, record
-- PROFESSIONAL SELECTION of uninterrupted dividend payments and history of
-- DIVERSIFICATION dividend increases. In the opinion of the
-- REINVESTMENT OPTION Sponsors, as of the initial date of deposit, these
stocks had potential for continuing to increase
future dividends.
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
will fluctuate with the value of the common stocks
in the Portfolio.
Minimum purchase in individual transactions: 1,000
Units.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
SPONSORS: HAS THE COMMISSION OR ANY STATE SECURITIES
Merrill Lynch, COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Pierce, Fenner & Smith OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Incorporated CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-221-7771.
Prudential Securities Prospectus dated September 8, 1995.
Incorporated INVESTORS SHOULD READ THIS PROSPECTUS CAREFULLY
Dean Witter Reynolds Inc. AND RETAIN IT FOR FUTURE REFERENCE.
<PAGE>
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Def ined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $100 billion sponsored in the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.
Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.
Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:
o Municipal portfolios
o Corporate portfolios
o Government portfolios
o Equity portfolios
o International portfolios
The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.
----------------------------------------------------------------
Defining Your Portfolio
----------------------------------------------------------------
The Portfolio contains 22 common stocks issued by gas and electric public
utility companies. 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 Defined Asset
Funds research analysts on the initial date of deposit (which was June 4, 1992),
these stocks had potential for continued dividend growth. Investing in the
Portfolio, rather than in only one or two of the underlying common stocks, is a
way to diversify your investment, even though 100% of the Portfolio is invested
in a single industry.
MONTHLY INCOME DISTRIBUTIONS
The Fund pays monthly income, even though the Securities generally pay dividends
quarterly. Monthly distributions of dividends are payable on the 25th of the
month to holders of record on the 10th day of the month. In order to meet
certain tax requirements, a special distribution of income including capital
gains, may be paid to holders of record as of a date in December. Any capital
gain net income will generally be distributed after the end of the year.
It is expected that the proceeds of the sale or redemption of securities will
not be distributed but will be reinvested in additional securities. To the
extent these proceeds are available for distribution, they will be distributed
on the next distribution day.
REINVESTMENT OPTION
You can elect to automatically reinvest your distributions into additional units
of the Portfolio. Reinvesting helps to compound your income for a greater total
return.
TAXES
Distributions which are taxable as ordinary income to Holders will constitute
dividends for Federal income tax purposes and may, subject to certain
limitations, be eligible for the dividends-received deduction for certain
corporations (see Taxes in Part B.)
MANDATORY TERMINATION DATE
The Portfolio will terminate by June 30, 2017. The final distribution will be
made within a reasonable time afterward. The Portfolio may be terminated earlier
if its value is less than 40% of the value of the securities when deposited.
----------------------------------------------------------------
Defining Your Investment
----------------------------------------------------------------
PUBLIC OFFERING PRICE PER 1,000 UNITS $1,038.26
The Public Offering Price as of May 31, 1995, the evaluation date, is based on
the aggregate value of the underlying securities ($298,760,187) and any cash
held to purchase securities, divided by the number of units outstanding
(301,309,482) times 1,000, plus a maximum sales charge of 4.50%. The Public
Offering Price on any subsequent date will vary. The underlying securities are
valued by the Trustee on the basis of their closing sale prices at 4:00 p.m.
Eastern time on every business day.
A-2
<PAGE>
----------------------------------------------------------------
Defining Your Risks
----------------------------------------------------------------
The Portfolio is considered to be 'concentrated' in stocks of gas and electric
public utility companies. (See Risk Factors in Part B.)
Unit price fluctuates with the value of the Portfolio, and the value of the
Portfolio will be affected by changes in the financial condition of the issuers,
changes in the gas and electric public utility industry, general economic
conditions, movements in stock prices generally, the impact of the Sponsors'
purchase and sale of the securities (especially during the primary offering
period of units) and other factors. Further distributions of income on the
underlying securities will generally depend upon the declaration of dividends by
the issuers, 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. Therefore, there is no guarantee that the objective of the Portfolio
will be achieved. Also, the value of equity securities issued by utilities,
because of their higher yields, might be more adversely affected by a reduction
in the dividends-received deduction than equity securities generally.
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsors
receive no management fee. Therefore, the adverse financial condition of an
issuer or any market movement in the price of a security will not necessarily
require the sale of securities from the Portfolio or mean that the Sponsors will
not continue to purchase the Security in order to create additional Units.
Although the Portfolio is regularly reviewed and evaluated and Sponsors may
instruct the Trustee to sell securities under certain limited circumstances,
Securities will not be sold to take advantage of market fluctuations or changes
in anticipated rates of appreciation.
----------------------------------------------------------------
Defining Your Costs
----------------------------------------------------------------
SALES CHARGES
Although the Fund is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay
As a %
of Secondary
Market
Public Amount per
Offering Price 1,000 Units
----------------- --------------
Maximum Sales Charge 4.50% $ 46.72
ESTIMATED ANNUAL FUND OPERATING EXPENSES
Amount per
1,000 Units
---------------
Trustee's Fee $ 0.84
Maximum Portfolio Supervision, Bookkeeping and
Administrative Fees $ 0.45
Other Operating Expenses $ 0.21
---------------
TOTAL $ 1.50
SELLING YOUR INVESTMENT
You may sell or redeem your units at any time prior to the termination of the
Portfolio. Your price will be based on the then current net asset value. The
redemption and secondary market repurchase price as of May 31, 1995 was $991.54
per 1,000 units ($46.72 per 1,000 units less than the Public Offering Price).
A-3
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
UTILITY COMMON STOCK SERIES - 15
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee 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, 1995 and the related
statements of operations and of changes in net assets for the years
ended May 31, 1995 and 1994 and for the period June 5, 1992 to
May 31, 1993. These financial statements are the responsibility of
the Trustee. (See Note 5.) 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, 1995, as shown in such portfolio, were
confirmed to us by The Bank of New York, the Trustee. An audit also
includes assessing the accounting principles used and significant
estimates made by the Trustee, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Defined
Asset Funds - Equity Income Fund, Utility Common Stock Series - 15 at
May 31, 1995 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 LLP
New York, N.Y.
July 21, 1995
D - 1
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
UTILITY COMMON STOCK SERIES - 15
STATEMENT OF CONDITION
AS OF MAY 31, 1995
TRUST PROPERTY:
Investment in marketable securities - at value
(cost $306,177,922) (Note 1).................. $298,760,187
Receivable from securities sold or redeemed..... 708,763
Dividends receivable............................ 2,178,590
______________
Total trust property.................. 301,647,540
LESS LIABILITIES:
Redemptions payable............................. $ 798,605
Advance from Trustee............................ 828,888
____________
Total liabilities..................... 1,627,493
______________
NET ASSETS, REPRESENTED BY:
301,309,482 units of fractional undivided
interest outstanding (Note 3)................. 298,667,570
Undistributed net investment income............. 1,352,477
____________
$300,020,047
==============
UNIT VALUE ($300,020,047/301,309,482 units)....... $.99572
==============
See Notes to Financial Statements.
D - 2
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
UTILITY COMMON STOCK SERIES - 15
<TABLE><CAPTION>
STATEMENTS OF OPERATIONS
June 5,
1992
to
.....Years Ended May 31,...... May 31,
1995 1994 1993
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income..............................$20,003,507 $24,600,150 $11,949,272
Trustee's fees and expenses.................. (301,120) (469,396) (317,551)
Sponsors' fees .............................. 22,774 (141,676)
_________________________________________
Net investment income........................ 19,725,161 23,989,078 11,631,721
_________________________________________
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Realized loss on securities sold or
redeemed...................................(11,580,585) (12,888,292)
Unrealized appreciation (depreciation)
of investments............................. 39,221,444 (64,446,484) 17,807,305
_________________________________________
Net realized and unrealized gain (loss) on
investments................................ 27,640,859 (77,334,776) 17,807,305
_________________________________________
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS..............................$47,366,020 $(53,345,698) $29,439,026
=========================================
</TABLE>
See Notes to Financial Statements.
D - 3
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
UTILITY COMMON STOCK SERIES - 15
<TABLE><CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
June 5,
1992
to
......Years Ended May 31,...... May 31,
1995 1994 1993
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income..........................$ 19,725,161 $ 23,989,078 $ 11,631,721
Realized loss on securities sold
or redeemed................................. (11,580,585) (12,888,292)
Unrealized appreciation (depreciation) of
investments................................. 39,221,444 (64,446,484) 17,807,305
_________________________________________
Net increase (decrease) in net assets resulting
from operations............................. 47,366,020 (53,345,698) 29,439,026
_________________________________________
INCOME DISTRIBUTIONS TO HOLDERS (Note 2)......... (19,986,720) (24,083,793) (10,786,355)
_________________________________________
CAPITAL SHARE TRANSACTIONS:
Issuance of 68,115,294 and 370,231,010 units,
respectively................................ 75,912,360 382,449,612
Redemptions of 95,642,600 and 41,856,119 units,
respectively ............................... (87,250,231) (40,135,287)
_________________________________________
Total capital share tranactions................ (87,250,231) 35,777,073 382,449,612
_________________________________________
NET INCREASE (DECREASE) IN NET ASSETS............ (59,870,931) (41,652,418) 401,102,283
NET ASSETS AT BEGINNING OF PERIOD................ 359,890,978 401,543,396 441,113
_________________________________________
NET ASSETS AT END OF PERIOD......................$300,020,047 $359,890,978 $401,543,396
=========================================
PER UNIT:
Income distributions during period............. $.05862 $.05831 $.05190
=========================================
Net asset value at end of period............... $.99572 $.90664 $1.08322
=========================================
TRUST UNITS OUTSTANDING AT END OF PERIOD......... 301,309,482 396,952,082 370,692,907
=========================================
</TABLE>
See Notes to Financial Statements.
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 301,309,482 units at Date of Deposit................ $329,551,047
Less sales charge........................................... 15,301,583
_______________
Net amount applicable to Holders............................ 314,249,464
Redemptions of units - net cost of 137,498,719 units
redeemed less redemption amounts.......................... 16,304,718
Realized loss on securities sold or redeemed................ (24,468,877)
Net unrealized depreciation of investments.................. (7,417,735)
_______________
Net capital applicable to Holders........................... $298,667,570
===============
4. INCOME TAXES
As of May 31, 1995, net unrealized depreciation of investments, based on
cost for Federal income tax purposes, aggregated $7,417,735, of which
$7,907,573 related to appreciated securities and $15,325,308 related to
depreciated securities. The cost of investment securities for Federal
income tax purposes was $306,177,922 at May 31, 1995.
5 CHANGE OF TRUSTEE
On March 1, 1995, The Bank of New York assumed all of the Trustee
responsibilities from Investors Bank & Trust Company.
D - 5
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
UTILITY COMMON STOCK SERIES - 15
PORTFOLIO
AS OF MAY 31, 1995
<TABLE> <CAPTION>
Current
Annual or
Indicated
Port- Number of Percentage Dividend
folio Shares of of Per
No. Description of Securities Common Stock Value Share(2) Cost(1) Value(1)
______ _________________________ ____________ _________ _________ _________ __________
<S> <C> <C> <C> <C> <C>
1 Carolina Power & Light Co. 560,000 5.600% $1.76 $16,718,610 $16,730,000
2 Central & South West Corp. 586,500 5.055 1.72 17,905,018 15,102,374
3 DPL, Inc. 847,900 6.244 1.24 16,761,896 18,653,800
4 Dominion Resources, Inc. 410,800 5.105 2.58 17,345,765 15,250,950
5 Duke Power Co. 368,100 5.144 1.96 14,230,605 15,368,175
6 FPL Group, Inc. 356,200 4.680 1.76 13,267,510 13,980,850
7 Florida Progress Corp. 457,000 4.876 2.02 15,281,150 14,566,875
8 General Public Utilities 175,000 1.757 1.88 4,932,535 5,250,000
9 Hawaiian Electric Industries, Inc. 289,700 3.467 2.36 11,417,010 10,356,775
10 Ipalco Enterprises, Inc. 473,000 5.185 2.16 17,167,838 15,490,750
11 KU Energy Corp. 542,000 5.012 1.68 15,709,975 14,972,750
12 LG&E Energy Corp. 371,400 4.941 2.15 13,497,668 14,763,150
13 New England Electric System 353,900 4.087 2.36 13,624,907 12,209,550
14 Northern States Power Co. 290,500 4.607 2.64 13,016,025 13,762,438
15 Scana Corp.(3) 665,600 4.957 1.44 14,890,340 14,809,600
16 Southern Co. 267,500 1.981 1.22 4,995,725 5,918,437
17 TECO Energy, Inc. 728,900 5.367 1.06 16,225,225 16,035,800
18 Union Electric Co. 355,500 4.507 2.44 13,772,462 13,464,563
19 Wisconsin Pwr. & Lht. (WPL) holdings 434,500 4.218 1.94 15,028,725 12,600,500
20 Western Resources, Inc. 349,900 3.688 2.02 11,324,320 11,021,850
21 Wisconsin Energy Corp. 498,200 4.793 1.47 13,421,953 14,323,250
22 Wisconsin Public service Corp. 483,000 4.729 1.82 15,642,660 14,127,750
_________ ______________ _____________
TOTAL 100.000% $306,177,922 $298,760,187
========= ============== =============
</TABLE>
Notes to Portfolio.
(1) See Notes to Financial Statements.
(2) Based on the latest quarterly or semiannual declaration.
(3) Includes 2 for 1 stock split
D - 6
<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 The
Bank of New York to pay distributions on my Units as indicated below
(distributions to be reinvested will be paid for my account to The Bank of New
York).
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. 1313 NEW YORK, N.Y. NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
DEFINED ASSET FUNDS--EQUITY INCOME FUND UNITED STATES
UTILITY COMMON STOCK SERIES--15
THE BANK OF NEW YORK
UNIT INVESTMENT TRUST DEPARTMENT
P.O. BOX 974
WALL STREET STATION
NEW YORK, N.Y. 10268-0974
--------------------------------------------------------------------------------
(Fold along this line.)
--------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INCOME FUND UTILITY COMMON STOCK SERIES
FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS OF WRITTEN OR TELEPHONIC REQUEST TO THE TRUSTEE AT THE ADDRESS
AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THIS PROSPECTUS.
INDEX
<TABLE><CAPTION>
PAGE
---------
<S> <C>
FUND DESCRIPTION............................................................. 1
RISK FACTORS................................................................. 3
HOW TO BUY UNITS............................................................. 4
HOW TO SELL UNITS............................................................ 5
INCOME, DISTRIBUTIONS AND REINVESTMENT....................................... 6
FUND EXPENSES................................................................ 7
TAXES........................................................................ 7
RECORDS AND REPORTS.......................................................... 9
TRUST INDENTURE.............................................................. 9
MISCELLANEOUS................................................................ 10
EXCHANGE OPTION.............................................................. 11
SUPPLEMENTAL INFORMATION..................................................... 12
</TABLE>
FUND DESCRIPTION
PORTFOLIO SELECTION
Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Securities for the Portfolio after
considering the Fund's investment objective as well as the quality of the common
stocks, the dividend payment record of the issuers and the prices of the common
stocks Specifically, they 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 had 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
initially 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.
1
<PAGE>
The following illustrates the performance of electric utility stocks
compared to stocks in general and high-grade corporate bonds over the last
twenty years:
COMPARISON OF ANNUAL RETURNS OF UTILITIES, INDUSTRIALS AND BONDS
MOODY'S ELECTRIC STANDARD & POOR'S LONG-TERM
UTILITY AVERAGE 500 INDEX CORPORATE BONDS
---------------- ----------------- ---------------
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%
1994 -16.36% 1.30% -5.76%
1/1/95 to
6/30/95 16.72% 19.98% 16.14%
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 1975 through 6/30/95 were 15.14%
for the Moody's Electric Utility Average, 15.10% for the Standard & Poor's 500
Index and 11.18% for Ibbotson Associates' corporate bond composite. For example,
$1,000 invested on January 1, 1975 in Moody's Electric Utility Average would
have been worth $17,992.34 by June 30, 1995; $1,000 invested in the Standard &
Poor's 500 Index would have been worth $17,852.36; $1,000 in long term corporate
bonds would have been worth $8,774.50 by the end of 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.
The deposit of the Securities in the Portfolio on the initial date of
deposit established a proportionate relationship among the number of shares of
each Security. Following the initial date of deposit the Sponsors may deposit
additional Securities in order to create new Units, maintaining to the extent
possible that original proportionate relationship. The ability to acquire each
Security at the same time will generally depend upon the Security's availability
and any restrictions on the purchase of that Security under the federal
securities laws or otherwise.
---------------
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.
2
<PAGE>
Additional Units may also be created by the deposit of cash (including a
letter of credit) with instructions to purchase additional Securities. This
practice could cause both existing and new investors to experience a dilution of
their investments and a reduction in their anticipated income because of price
fluctuations in the Securities between the time of the cash deposit and the
actual purchase of the additional Securities and because the associated
brokerage fees will be an expense of the Fund. To minimize these effects, the
Fund will try to purchase Securities as close to the Evaluation Time or at
prices as close to the evaluated prices as possible.
Because each Defined Asset Fund is a preselected portfolio, you know the
securities before you invest. Of course, the Portfolio will change somewhat over
time, as Securities are purchased upon creation of additional Units, as
securities are sold to meet Unit redemptions or in other limited circumstances.
PORTFOLIO SUPERVISION
The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. In the event a public tender offer is made for a Security or a
merger or acquisition is announced affecting a Security, the Sponsors may
instruct the Trustee to tender or sell the Security in the open market when in
its opinion it is in the best interests of investors to do so. Although the
Portfolio is not actively managed, it is regularly reviewed and evaluated and
Securities can be sold in case of certain adverse developments concerning a
Security including the adverse financial condition of the issuer, the
institution of legal proceedings against the issuer, a decline in the price or
the occurrence of other market or credit factors that might otherwise make
retention of the Security detrimental to the interest of investors 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 Internal Revenue Code. Securities can also be sold to meet redemption of
Units. 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 additional Securities.
RISK FACTORS
An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline if the financial condition of the
issuers of the Securities becomes impaired or if the general condition of the
stock market worsens and the risk that holders of common stocks 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. Moreover, common stocks do not represent an obligation of
the issuer and therefore do not offer any assurance of income or provide the
degree of protection of capital provided by debt securities. Common stocks in
general may be especially susceptible to general stock market movements and to
volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. 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
Sponsors cannot predict the direction or scope of any of these factors.
The Portfolio is concentrated in gas and electric public utilities.
Concentration may involve additional risk because of the decreased
diversification of economic, financial and market risks. Set forth below is a
brief description of certain risks associated with the Securities. Additional
information is contained in the Information Supplement which is available from
the Trustee at no charge to the investor.
UTILITIES
Payments on utility stocks are dependent on various factors, including the
rates the utilities may charge, the demand for their services and their
operating costs, including expenses to comply with environmental legislation and
other energy and licensing laws and regulations. Utilities are particularly
sensitive to, among other things, the effects of inflation on operating and
construction costs, the unpredictability of future usage requirements, the costs
and availability of fuel and, with certain electric utilities, the risks
associated with the nuclear industry.
LIQUIDITY
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
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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 the Sponsors. 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.
LITIGATION AND LEGISLATION
The Sponsors do not know of any pending litigation as of the initial date
of deposit that might reasonably be expected to have a material adverse effect
on the Fund, although pending litigation may have a material adverse effect on
the value of Securities in the Fund. In addition, at any time after the initial
date of deposit, litigation may be initiated on a variety of grounds, or
legislation may be enacted, affecting the Securities in the Portfolio or the
issuers of the Securities. Changing approaches to regulation may have a negative
impact on certain companies represented in the Portfolio. There can be no
assurance that future litigation, legislation, regulation or deregulation will
not have a material adverse effect on the Portfolio or will not impair the
ability of the issuers of the Securities to achieve their business goals. From
time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. This type of legislation, if enacted into law,
would adversely affect the after-tax return to investors who can take advantage
of the deduction. See Taxes.
LIFE OF THE FUND; FUND TERMINATION
The size and composition of the Portfolio will be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units. The
Portfolio will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Security or upon the consent of investors holding 51% of
the Units. The Portfolio may also be terminated earlier by the Sponsors once its
total assets have fallen below the minimum value specified in Part A of the
Prospectus. A decision by the Sponsors to terminate the Portfolio early will be
based on factors such as the size of the Portfolio relative to its original
size, the ratio of Portfolio expenses to income, and the cost of maintaining a
current prospectus.
Notice of impending termination will be provided to investors and
thereafter units will no longer be redeemable. On or shortly before termination,
the Trustee will seek to dispose of any Securities remaining in the Portfolio
although any Security unable to be sold at a reasonable price may continue to be
held by the Trustee in a liquidating trust pending its final disposition. A
proportional share of the expenses associated with termination, including
brokerage costs in disposing of Securities, will be borne by investors remaining
at that time. This may have the effect of reducing the amount of proceeds those
investors are to receive in any final distribution.
HOW TO BUY UNITS
Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price. The Public Offering Price varies
each Business Day with changes in the value of the Portfolio and other assets
and liabilities of the Fund.
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PUBLIC OFFERING PRICE
Units are charged a maximum sales charge of 4.50% of the public offering
price or for quantity purchases of Fund Units, the following percentage of the
public offering price:
<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
----------------------------------------
AS PERCENT OF
PUBLIC AS PERCENT OF DEALER CONCESSION AS PRIMARY MARKET
OFFERING NET AMOUNT PERCENT OF PUBLIC CONCESSION TO
NUMBER OF UNITS PRICE INVESTED OFFERING PRICE INTRODUCING DEALER
---------------------------------------------- --------------------- ----------------- --------------------- ------------------
<S> <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 primary 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 Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at a reduced initial
sales charge of not less than $5.00 per 1,000 Units.
EVALUATIONS
Evaluations are determined by the Trustee on each Business Day. This
excludes Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. If the Securities are
listed on a national securities exchange or the Nasdaq National Market,
evaluations are generally based on closing sales prices on that exchange or that
system (unless the Trustee deems these prices inappropriate) or, if closing
sales prices are not available, at the mean between the closing bid and offer
prices. If the Securities are not listed or if listed but the principal market
is elsewhere, the evaluation is generally determined based on sales prices of
the Securities on the over-the-counter market or, if sales prices in that market
are not available, on the basis of the mean between current bid and offer prices
for the Securities or for comparable securities or by appraisal or by any
combination of these methods. Neither the Sponsors nor the Trustee guarantee the
enforceability, marketability or price of any Securities.
CERTIFICATES
Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Sell Units--Trustee's Redemption of
Units). Certain Sponsors collect additional charges for registering and shipping
Certificates to purchasers. Lost or mutilated Certificates can be replaced upon
delivery of satisfactory indemnity and payment of costs.
HOW TO SELL UNITS
SPONSORS' MARKET FOR UNITS
You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for over 20 years. Primarily
because of the sales charge and fluctuations in the market value of the
Securities, the sale price may be less than the cost of your Units. You should
consult your financial professional for current market prices to determine if
other broker-dealers or banks are offering higher prices for Units.
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The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons. The Sponsors may reoffer
or redeem Units repurchased.
TRUSTEE'S REDEMPTION OF UNITS
You may redeem your Units by sending the Trustee a redemption request.
Signatures must be guaranteed by an eligible institution. In certain instances,
additional documents may be required such as a certificate of death, trust
instrument, certificate of corporate authority or appointment as executor,
administrator or guardian. If the Sponsors are maintaining a market for Units,
they will purchase any Units tendered at the repurchase price described above.
If they do not purchase Units tendered, the Trustee is authorized in its
discretion to sell Units in the over-the-counter market if it believes it will
obtain a higher net price for the redeeming investor.
By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Securities, declared but unpaid dividends on the Securities, cash and the
value of any other Fund assets; deducting unpaid taxes or other governmental
charges, accrued but unpaid Fund expenses, unreimbursed Trustee advances, cash
held to redeem Units, for purchase of Securities or for distribution to
investors and the value of any other Fund liabilities; and dividing the result
by the number of outstanding Units.
If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Agent for the
Sponsors in a manner designed to maintain, to the extent practicable, the
proportionate relationship among the number of shares of each Security. These
sales are often made at times when the Securities would not otherwise be sold
and may result in lower prices than might be realized otherwise and will also
reduce the size and diversity of the Fund.
Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Securities not reasonably
practicable, or for any other period permitted by the SEC.
INCOME, DISTRIBUTIONS AND REINVESTMENT
INCOME AND DISTRIBUTIONS
The net annual income per Unit will depend primarily upon the amount of
dividends declared and paid by the issuers of the Securities and changes in the
expenses of the Fund and, to a lesser degree, upon the level of purchases of
additional Securities and sales of Securities. There is no assurance that
dividends on the Securities will continue at their current levels or be declared
or paid.
Each Unit receives an equal share of monthly distributions of dividend
income. Because dividends on the Securities are not received at a constant rate
throughout the year, any income distribution may be more or less than the amount
then credited to the Income Account. Dividends payable to the Fund are credited
to an Income Account, as of the date on which the Fund is entitled to receive
the dividends, and other receipts are credited to a Capital Account. A Reserve
Account may be created by withdrawing from the Income and Capital Accounts
amounts considered appropriate by the Trustee to reserve for any material amount
that may be payable out of the Fund. Funds held by the Trustee in the various
accounts do not bear interest. Subject to the Reinvestment Plan, the Monthly
Income Distribution for each investor shall consist of an amount, computed
monthly by the Trustee, substantially equal to one-twelfth of the investor's pro
rata share of the estimated annual income to the Income Account, after deducting
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 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 additional Securities will be held in the Capital Account to be distributed
on the next succeeding distribution day.
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<PAGE>
REINVESTMENT
Income and principal distributions on Units may be reinvested by
participating in the Fund's reinvestment plan. Under the plan, the Units
acquired for investors will be either Units already held in inventory by the
Sponsors 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. Purchases
made pursuant to the Reinvestment Plan will be made without sales charge at the
net asset value for Units of the Fund. Under the Reinvestment Plan, the Fund
will pay the distributions to the Trustee which in turn will purchase for the
investor full and fractional Units of the Fund at the price determined as of the
close of business on the distribution day and will add the Units to the
investor's account and send the investor an account statement reflecting the
reinvestment. The Sponsors reserve the right to amend, modify or terminate the
reinvestment plan at any time without prior notice. Investors holding Units in
'street name' should contact their broker, dealer or financial institution to
determine whether they may participate in the reinvestment plan.
FUND EXPENSES
Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for extraordinary
services, costs of indemnifying the Trustee and the Sponsors, costs of action
taken to protect the Fund and other legal fees and expenses, Fund termination
expenses and any governmental charges. The Trustee has a lien on Fund assets to
secure reimbursement of these amounts and may sell Securities for this purpose
if cash is not available. The Sponsors receive an annual fee of a maximum of
$0.35 per 1,000 Units to reimburse them for the cost of providing Portfolio
supervisory services to the Fund. While the fee may exceed their costs of
providing these services to the Fund, the total supervision fees from all Series
of Equity Income Fund will not exceed their costs for these services to all of
those Series during any calendar year. The Sponsors may also be reimbursed for
their costs of providing bookkeeping and administrative services to the Fund,
currently estimated at $0.10 per 1,000 Units. The Trustee's and Sponsors' fees
may be adjusted for inflation without investors' approval.
Defined Asset Funds can be a cost-effective way to purchase and hold
investments. Annual operating expenses are generally lower than for managed
funds. Because Defined Asset Funds have no management fees, limited transaction
costs and no ongoing marketing expenses, operating expenses are generally less
than 0.25% a year. When compounded annually, small differences in expense ratios
can make a big difference in your investment results.
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 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
Distribution 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
7
<PAGE>
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
will 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.
However, any capital loss on the sale or redemption of a Unit that a Holder has
held for six months or less will be a long-term capital loss to the extent of
any capital gain dividends previously distributed to the Holder by the Fund. The
deduction of capital losses is subject to limitations.
Distributions that 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 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 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 advisors with respect
to the establishment and maintenance of any of these plans. These plans are
offered by brokerage firms, including the Sponsor of this Fund, and other
financial institutions. Fees and charges with respect to such plans may vary.
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<PAGE>
Retirement Plans for the Self-Employed--Keogh Plans. Units of the Fund may
be purchased by retirement plans established for self-employed individuals,
partnerships or unincorporated companies ('Keogh plans'). The assets of a Keogh
plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Keogh plan participants may also establish separate
IRAs (see below) to which they may contribute up to an additional $2,000 per
year ($2,250 in a spousal account).
Individual Retirement Account--IRA, Any individual can make use of a
qualified IRA arrangement for the purchase of Units of the Fund. Any individual
(including one covered by an employer retirement plan) can make a contribution
in 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). Certain transactions which are
prohibited under Section 408 of the Code will cause all or a portion of the
amount in an IRA to be deemed to the distributed and subject to tax at that
time. Unless nondeductible contributions were made in 1987 or a later year, all
distributions from an IRA will be treated as ordinary income but generally are
eligible for tax-deferred rollover treatment. Taxable distributions made before
attainment of age 59 1/2, except in the case of the participant's death or
disability or where the amount distributed is part of a series of substantially
equal periodic (at least annual) payments that are to be made over the life
expectancies of the participant and his or her beneficiary, are generally
subject to a surtax in an amount equal to 10% of the distribution.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan for employees of a corporation may purchase Units of the Fund.
RECORDS AND REPORTS
The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Securities and a copy of the Indenture, which
may be inspected by investors at reasonable times during business hours.
With each distribution, the Trustee includes a statement of the amounts of
income and any other receipts being distributed. Following the termination of
the Fund, the Trustee sends each investor of record a statement summarizing
transactions in the Fund's accounts including amounts distributed from them,
identifying Securities sold and purchased and listing Securities held and the
number of Units outstanding at termination and stating the Redemption Price per
1,000 Units at termination, and the fees and expenses paid by the Fund, among
other matters. Fund accounts may be audited by independent accountants selected
by the Sponsors and any report of the accountants will be available from the
Trustee on request.
TRUST INDENTURE
The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors and the Trustee. This Prospectus summarizes various
provisions of the Indenture, but each statement is qualified in its entirety by
reference to the Indenture.
The Indenture may be amended by the Sponsors and the Trustee without
consent by investors to cure ambiguities or to correct or supplement any
defective or inconsistent provision, to make any amendment required by the SEC
or other governmental agency or to make any other change not materially adverse
to the interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified of the substance of any amendment.
The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The resignation or removal becomes effective upon acceptance of
appointment by a successor; in this case, the Sponsors will use their best
efforts to appoint a successor promptly; however, if upon resignation no
successor has accepted appointment within 30 days after notification, the
resigning Trustee may apply to a court of competent jurisdiction to appoint a
successor.
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Any Sponsor may resign so long as one Sponsor with a net worth of
$2,000,000 remains. 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 fails to perform its duties or becomes incapable of acting or
bankrupt or its affairs are taken over by public authorities, the Trustee may
appoint a successor Sponsor at reasonable rates of compensation, terminate the
Indenture and liquidate the Fund or continue to act as Trustee without a
Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated has been appointed
as Agent for the Sponsors by the other Sponsors.
The Sponsors and the Trustee are not liable to investors or any other party
for any act or omission in the conduct of their responsibilities absent bad
faith, willful misfeasance, negligence (gross negligence in the case of a
Sponsor) or reckless disregard of duty. The Indenture contains customary
provisions limitingthe liability of the Trustee.
MISCELLANEOUS
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.
AUDITORS
The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.
TRUSTEE
The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.
SPONSORS
The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect wholly-
owned subsidiary of The Travelers Inc.; Prudential Securities Incorporated, an
indirect wholly-owned subsidiary of the Prudential Insurance Company of America,
and Dean Witter Reynolds, Inc., a principal operating subsidiary of Dean Witter
Discover & Co. Each Sponsor, or one of its predecessor corporations, has acted
as Sponsor of a number of series of unit investment trusts. 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.
PUBLIC DISTRIBUTION
During the initial offering period and thereafter to the extent additional
Units continue to be offered for sale to the public by means of this Prospectus,
Units will be distributed directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above or to selected
dealers who are members of the National Association of Securities Dealers, Inc.
at a concession not in excess of the maximum sales charge. The Sponsors intend
to qualify Units for sale in all states in which qualification is deemed
necessary through the Underwriting Account and by dealers who are members of the
National Association of Securities Dealers, Inc.. The 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.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters will be entitled to receive sales
charges; each Underwriters' interest in the Underwriting Account will depend on
the number of Units acquired through the issuance of additional Units. The
Sponsors also realize a profit or loss on deposit of the Securities equal to the
difference between the cost of the Securities to the Fund (based on the
aggregate value of the Securities on their date of deposit) and the purchase
price of
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the Securities to the Sponsors plus commissions payable by the Sponsors. In
addition, a Sponsor or Underwriter may realize profits or sustain losses on
Securities it deposits in the Fund which were acquired from underwriting
syndicates of which it was a member. During the initial offering period, the
Underwriting Account also may realize profits or sustain losses as a result of
fluctuations after the initial date of deposit in the Public Offering Price of
the Units. In maintaining a secondary market for Units, the Sponsors will also
realize profits or sustain losses in the amount of any difference between the
prices at which they buy Units and the prices at which they resell these Units
(which include the sales charge) or the prices at which they redeem the Units.
Cash, if any, made available by buyers of Units to the Sponsors prior to a
settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.
PERFORMANCE INFORMATION
Information on the performance of the Fund for various periods, on the
basis of changes in Unit price plus the amount of dividends and capital gains
reinvested, 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 of any series may not be indicative of results of future
series. Fund performance may be compared to the performance of the Dow Jones
Industrial Average, the S&P 500 Composite Price Stock Index, the S&P MidCap 400
Index, or performance data from publications such as Lipper Analytical Services,
Inc., Morningstar Publications, Inc., Money Magazine, The New York Times, U.S.
News and World Report, Barron's, Business Week, CDA Investment Technology, Inc.,
Forbes Magazine or Fortune Magazine. Performance of the Stocks may be compared
in sales literature to performance of the S&P 500 Stock Price Composite Index,
to which may be added by year various national and international political and
economic events, and certain milestones in price and market indicators and in
offerings of Defined Asset Funds. This performance may also be compared for
various periods with an investment in short-term U.S. Treasury securities;
however, the investor should bear in mind that Treasury securities are fixed
income obligations, having the highest credit characterisitics, while the Stocks
involve greater risk because they have no maturities, and income thereon is
subject to the financial condition of, and declaration by, the issuers.
DEFINED ASSET FUNDS
For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio is relatively fixed) and 'hold with confidence'
(because the portfolio is professionally selected and regularly reviewed).
Defined Asset Funds offers an array of simple and convenient investment choices,
suited to fit a wide variety of personal financial goals--a buy and hold
strategy for capital accumulation, such as for children's education or
retirement, or attractive, regular current income consistent with the
preservation of principal. Unit investment trusts are particularly suited for
the many investors who prefer to seek long-term profits by purchasing 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 that Defined Asset Funds offer.
Your investment objectives may call for a combination of Defined Asset Funds.
One of the most important investment decisions you face may be how to
allocate your investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation. From time to time various advertisements, sales literature, reports
and other information furnished to current or prospective investors may present
the average annual compounded rate of return of selected asset classes over
various periods of time, compared to the rate of inflation over the same
periods.
EXCHANGE OPTION
You may exchange Fund Units for units of certain other Defined Asset Funds
subject only to a reduced sales charge or to any of the remaining deferred sales
charge, as applicable. Holders of units of any Select Growth Portfolio,
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Select Ten Portfolio, or any other Defined Asset Fund with a regular maximum
sales charge of at least 3.5%, or of any unaffiliated unit trust with a regular
maximum sales charge of at least 3.0%, may exchange those units for Units of
this Fund at their relative net asset values, subject only to a reduced charge.
To make an exchange, you should contact your financial professional to find
out what suitable exchange funds are available and to obtain a prospectus. You
may acquire units of only those exchange funds in which the Sponsors are
maintaining a secondary market and which are lawfully for sale in the state
where you reside. Except for the reduced sales charge, an exchange is a taxable
event normally requiring recognition of any gain or loss on the units exchanged.
However, the Internal Revenue Service may seek to disallow a loss if the
portfolio of the units acquired is not materially different from the portfolio
of the units exchanged; you should consult your own tax advisor. If the proceeds
of units exchanged are insufficient to acquire a whole number of exchange fund
units, you may pay the difference in cash (not exceeding the price of a single
unit acquired).
As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.
SUPPLEMENTAL INFORMATION
Upon written or telephonic request to the Trustee shown on the back cover
of this Prospectus, investors will receive without charge supplemental
information about the Fund, which has been filed with the SEC. The supplemental
information includes more detailed risk factor disclosure about the types of
securities that may be part of the Portfolio and general information about the
structure and operation of the Fund.
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Defined
Asset FundsSM
SPONSORS: EQUITY INCOME FUND
Merrill Lynch, UTILITY COMMON STOCK SERIES--15
Pierce, Fenner & Smith Incorporated
Defined Asset Funds
P.O. Box 9051 This Prospectus does not contain all of the
Princeton, N.J. 08543-9051 information with respect to the investment
(609) 282-8500 company set forth in its registration
Smith Barney Inc. statement and exhibits relating thereto which
Unit Trust Department have been filed with the Securities and
388 Greenwich Street--23rd Floor Exchange Commission, Washington, D.C. under
New York, NY 10013 the Securities Act of 1933 and the Investment
1-800-223-2532 Company Act of 1940, and to which reference
PaineWebber Incorporated is hereby made.
1200 Harbor Blvd. ------------------------------
Weehawken, N.J. 07087 No person is authorized to give any
(201) 902-3000 information or to make any representations
Prudential Securities Incorporated with respect to this investment company not
One Seaport Plaza contained in its registration statement and
199 Water Street exhibits relating thereto; and any
New York, N.Y. 10292 information or representation not contained
(212) 776-1000 therein must not be relied upon as having
Dean Witter Reynolds Inc. been authorized.
Two World Trade Center--59th Floor ------------------------------
New York, N.Y. 10048 When Units of this Fund are no longer
(212) 392-2222 available this Prospectus may be used as a
TRUSTEE: preliminary prospectus for a future series,
The Bank of New York and investors should note the following:
(a New York Banking Corporation) Information contained herein is subject to
Box 974--Wall Street Station amendment. A registration statement relating
New York, N.Y. 10268-0974 to securities of a future series has been
1-800-221-7771 filed with the Securities and Exchange
Commission. These securities may not be sold
nor may offers to buy be accepted prior to
the time the registration statement becomes
effective.
This Prospectus shall not constitute an offer
to sell or the solicitation of an offer to
buy nor shall there be any sale of these
securities in any State in which such offer
solicitation or sale would be unlawful prior
to registration or qualification under the
securities laws of any such State.
14232--9/95
