<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 15, 1994
REGISTRATION NO. 33-46272
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6
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FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
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A. EXACT NAME OF TRUST:
DEFINED ASSET FUNDS--
EQUITY INCOME FUND
INCOME GROWTH FUND
(1993 SERIES)
(A UNIT INVESTMENT TRUST)
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
UNIT INVESTMENT TRUSTS
POST OFFICE BOX 9051
PRINCETON, N.J.
08543-9051 SMITH BARNEY INC.
TWO WORLD TRADE CENTER
101ST FLOOR
NEW YORK, N.Y. 10048
PAINEWEBBER INCORPORATED PRUDENTIAL SECURITIES DEAN WITTER REYNOLDS INC.
1285 AVENUE OF THE INCORPORATED TWO WORLD TRADE
AMERICAS ONE SEAPORT PLAZA CENTER--59TH FLOOR
NEW YORK, N.Y. 10019 199 WATER STREET NEW YORK, N.Y. 10048
NEW YORK, N.Y. 10292
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. THOMAS D. HARMAN LEE B. SPENCER, JR.
P.O. BOX 9051 388 GREENWICH STREET ONE SEAPORT PLAZA
PRINCETON, N.J. NEW YORK, N.Y. 10013 199 WATER STREET
08543-9051 NEW YORK, N.Y. 10292
COPIES TO:
PHILIP BECKER ROBERT E. HOLLEY PIERRE DE SAINT PHALLE,
130 LIBERTY STREET--29TH 1200 HARBOR BLVD. ESQ.
FLOOR WEEHAWKEN, N.J. 07087 450 LEXINGTON AVENUE
NEW YORK, N.Y. 10006 NEW YORK, N.Y. 10017
The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and has filed the Rule 24f-2 Notice for the most
recent fiscal year in May, 1994.
Check box if it is proposed that this filing will become effective on June 24,
1994 pursuant to paragraph (b) of Rule 485. / x /
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<PAGE>
<PAGE>
DEFINED
ASSET FUNDSSM
EQUITY
INCOME FUND
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Income Growth FundSM
(1993 Series)
A Unit Investment Trust
(HQS)
/ / Monthly Income
/ / Professional Selection
/ / Diversification
/ / Reinvestment Option
PROSPECTUS DATED
JUNE 24, 1994
SPONSORS:
Merrill Lynch,
Pierce, Fenner & Smith Inc.
Smith Barney Inc.
PaineWebber Incorporated
Prudential Securities Incorporated
Dean Witter Reynolds Inc.
This Defined Fund is a portfolio of preselected securities formed for the
purpose of providing potential for growth in dividend income as well as monthly
current income by investing for approximately five years from the Initial Date
of Deposit in a fixed portfolio consisting of publicly-traded common stocks
issued by companies in a variety of industries. The common stocks included in
the Portfolio were selected for their dividend yields and their history of (i)
increasing dividends, (ii) growth in earnings per share and (iii) growth in
sales. In the opinion of the Sponsors as of the Initial Date of Deposit, these
stocks have a strong potential for increasing their dividends. Of course, past
performance should not be considered any assurance of future results, and there
is no assurance that the Fund's objective will be met, because the payment of
dividends depends 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 in individual transactions: 1,000 Units
Minimum purchase for Individual Retirement/Keogh Accounts:
250 Units
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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.
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Read and retain this Prospectus for future reference.
<PAGE>
DEFINED ASSET FUNDSSM is America's oldest and largest family of unit investment
trusts with over $90 billion sponsored since 1970. Each Defined 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.
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.
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CONTENTS
Investment Summary.......................................... A-3
Accountants' Opinion Relating to the Fund................... D-1
Statement of Condition...................................... D-2
Portfolio................................................... D-6
Fund Structure.............................................. 1
Risk Factors................................................ 1
Description of the Fund..................................... 4
Taxes....................................................... 8
Public Sale of Units........................................ 10
Market for Units............................................ 11
Redemption.................................................. 12
Special Redemption, Liquidation and Investment in New
Fund..................................................... 13
Termination................................................. 15
Expenses and Charges........................................ 15
Administration of the Fund.................................. 16
Resignation, Removal and Limitations on Liability........... 19
Miscellaneous............................................... 20
Exchange Option............................................. 22
A-2
<PAGE>
DEFINED ASSET FUNDS--INCOME FUND,
INCOME GROWTH FUND (1993 SERIES)
INVESTMENT SUMMARY AS OF FEBRUARY 28, 1994 (THE EVALUATION DATE)
INITIAL NUMBER OF UNITS++ 18,350,930
FRACTIONAL UNDIVIDED INTEREST IN FUND REPRESENTED BY EACH
UNIT 1/18,350,930th
CALCULATION OF PUBLIC OFFERING PRICE PER 1,000 UNITS
Aggregate value of Securities in Fund+ $ 17,240,454
----------------
Divided by 18,350,930 Units...............................$ 939.49
(times 1,000)
Plus sales charge of 1.50% of Public Offering Price
(1.523% of aggregate value of Securities*)**........... 14.31
----------------
Public Offering Price per 1,000 Units 953.80
----------------
----------------
(Plus the amount
per 1,000 Units
in the Income
Account and
Capital Account
plus applicable
commissions***
(see Administra-
tion of the
Fund--Accounts
and Distribu-
tions))
SPONSORS' REPURCHASE PRICE PER
1,000 UNITS AND REDEMPTION PRICE PER 1,000 UNITS (based on
net asset value of the Fund*)** $ 939.49
(Plus the amount
per 1,000 Units
in the Income
Account and
Capital Account
plus applicable
commissions***
(see Administra-
tion of the
Fund--Accounts
and Distribu-
tions))
MONTHLY INCOME DISTRIBUTIONS
Distributions of income, if any, will be paid on the 25th
day of each month (each a 'Distribution Day') to
Holders of record on the 10th day of each month
(each a 'Record Day').
CAPITAL DISTRIBUTIONS
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).
SPECIAL REDEMPTION AND LIQUIDATION PERIOD
Beginning on March 3, 1998 until no later than March
27, 1998 ('the Special Redemption and Liquidation
Period').
PROCEDURES FOR SPECIAL REDEMPTION, LIQUIDATION AND
INVESTMENT IN NEW FUND
If a Holder (a 'Rollover Holder') so specifies by
March 2, 1998 or another date as determined by the
Sponsors (the 'Rollover Notification Date'), the
Rollover Holder's Units will be redeemed in kind
and the underlying distributed shares will be sold
by the Distribution Agent during the Special
Redemption and Liquidation Period. The proceeds
will be invested as received in the next Income
Growth Fund (the '1998 Series'), if one is then
being offered (see Special Redemption, Liquidation
and Investment in New Fund).
EVALUATION TIME
4:00 P.M., New York Time
TRUSTEE'S ANNUAL FEE AND EXPENSES+++
$1.90 per 1,000 Units (see Expenses and Charges)
PORTFOLIO SUPERVISION FEE++++
Maximum of $.25 per 1,000 Units (see Expenses and
Charges).
MINIMUM VALUE OF FUND
Trust Indenture may be terminated if value of Fund is
less than 40% of the value of the Securities when
deposited in Portfolio. As of the Evaluation Date
the Value of the Fund was 96% of the value of
Securities on the dates of their deposit.
MANDATORY TERMINATION DATE
March 27, 1998. The final distribution will be made
within a reasonable period of time thereafter (see
Termination).
DEFERRED CHARGE PAYMENT DATE
February 10 (or if that day is not a business day, the
next succeeding business day)
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+ On the Initial Date of Deposit (March 4, 1993) the aggregate value of
Securities in the Fund was $283,818.75. Cost of Securities is set forth
under Portfolio.
++ The Sponsors may create additional Units during the life of the Fund.
+++ Of this amount the Trustee receives annually for its services as
Trustee $0.84 per 1,000 Units (calculated monthly based on the
largest number of Units outstanding at anytime during that month) subject
to reduction as the size of the Fund increases. The Trustee's Annual
Fee and Expenses also includes the Portfolio Supervision Fee set
forth herein.
++++ The Sponsors also may be reimbursed for their costs of bookkeeping
and administrative services to the Fund. Portfolio supervision fees
deducted in excess of portfolio supervision expenses may be used for
this reimbursement. Additional deductions for this purpose are
currently estimated not to exceed an annual rate of $0.10 per 1,000
Units.
* Equal to aggregate value of Securities in Fund plus net balance in the
Capital Account deposited for the purchase of Securities.
** The sales charge consists of (i) an initial sales charge at the rate of
1.50% of the Public Offering Price (1.523% of the net amount invested
in the Securities) payable on the date of the purchase of Units and
(ii) deferred sales charges in the amount of $10.00 per 1,000 Units
payable by the Fund on behalf of the Holders out of net asset value of
the Fund on each Deferred Charge Payment Date through 1997. The maximum
aggregate sales charge for a Holder holding Units over the entire life
of the Fund will equal approximately 5.50% of the Public Offering Price
(5.820% of the net amount invested). If a Holder sells or redeems Units
before a Deferred Charge Payment Date, no future deferred sales charges
will be collected from that Holder; this will have the effect of
reducing the rate of sales charges. (See Public Sale of Units.)
*** The amount of applicable commissions (currently estimated to be
approximately $1.04 per 1,000 Units) is added to Units created during a
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. Costs
other than commissions incurred in connection with the acquisition of
Securities not listed on any national securities exchange will be at
the expense of the Fund (see Risk Factors--General). (See Public Sale
of Units--Public Offering Price; Administration of the
Fund--Reinvestment Plan.)
A-3
<PAGE>
INVESTMENT SUMMARY AS OF THE EVALUATION DATE (CONTINUED)
NUMBER OF ISSUES OF COMMON STOCK............................ 29
PERCENTAGE OF AGGREGATE VALUE OF PORTFOLIO CONCENTRATED* IN
CONSUMER PRODUCT
COMPANIES................................................. 25%
NUMBER OF ISSUERS BY INDUSTRY GROUP:
Service Industry Companies.............................. 1
Consumer Product Companies.............................. 7
Medical Technology Companies............................ 3
Manufacturing Companies................................. 5
Retailing Companies..................................... 4
Financial Insitutions................................... 7
Other................................................... 2
OBJECTIVE OF THE FUND--To provide potential for growth in dividend income,
as well as monthly current income, by investing for approximately five years
from the Initial Date of Deposit in a fixed portfolio of common stocks of
companies selected for their dividend yields and history of (i) increasing
dividends, (ii) growth in earnings per share, and (iii) growth in sales. (See
Description of the Fund--Selection Criteria). The Fund is designed for those who
seek income growth to meet increasing personal expenses or to plan for future
income needs, such as retirement or a college education. 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 Securities may appreciate or depreciate in value
(or pay or fail to pay dividends) depending on the full range of economic and
market influences affecting corporate profitability, the financial condition of
issuers and the prices of equity securities in general and the Securities in
particular. Therefore, there can be no assurance that the objective of the Fund
will be achieved.
FUND PORTFOLIO--The common stocks included in the Portfolio were selected
for their dividend yields and annual growth rates in dividends, earnings per
share and sales, from among approximately 29,000 common stocks (including
multiple classes of common stock issued by individual issuers) listed on the
Factset database. In the opinion of the Sponsors, these stocks have potential
for continued dividend growth based, in part, on the fact that each issuer
increased its common stock dividend every year for at least the last ten years,
and had increased sales and earnings per share in at least eight of the 10
fiscal years prior to the Initial Date of Deposit. (See Description of the
Fund--Selection Criteria.) Of course, past performance should not be considered
any assurance of future results, and there can be no assurance that the current
level of dividends will be increased or not reduced by the issuers.
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 (see Market for Units). 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).
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
(especially during the initial offering period of Units of the Fund) and selling
(during the Special Redemption and Liquidation Period--see below) Securities and
other factors. Common stocks may be susceptible to general stock market
fluctuations and to volatile increases and decreases in value as market
confidence in and perceptions about issuers change. Future distributions of
income on the underlying Securities will depend upon the declaration of
dividends by the issuers of the Securities in the Portfolio, which, in turn,
will be affected by 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--General).
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
during limited annual offering periods 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 (when 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) with instructions to purchase Additional
Securities (when additional Units are to be offered to the public), in each
instance maintaining, as closely as practicable, the proportionate relationship
among the number of shares of each Security in the Fund. If cash (or a bank
letter of credit) 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
A-4
<PAGE>
Defined
Asset Funds
INVESTOR'S GUIDE
EQUITY DEFINED EQUITY INCOME FUND
INCOME FUND Our defined portfolios of common stocks offer
- ------------------------------investors a simple and convenient way to
INCOME GROWTH FUNDSM participate in the equity markets. By purchasing
(1993 SERIES) defined equity funds, investors not only avoid the
difficulties of selecting securities by
themselves, but also gain the advantage of
diversification by investing in securities of
several different issuers. Spreading your
investment among different securities and issuers
reduces your risk, but does not eliminate it.
INCOME GROWTH FUND (1993 SERIES)
The Income Growth Fund (1993 Series) is a
convenient way to invest in a professionally
selected portfolio of common stocks diversified
among several different industries and earn
monthly dividend income with a potential for
increased future income.
PROFESSIONAL SELECTION AND QUALITY
The companies in the portfolio were carefully
selected based on their dividend yields and
records of increasing dividends, growth in
earnings per share and growth in sales. Each
security was chosen by professional securities
analysts after thorough research into its
financial performance. You don't have to worry
about selecting 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.
POTENTIAL FOR INCREASING INCOME
Although past performance is not necessarily
indicative of future results, each stock in the
initial portfolio increased its dividend each year
for the ten calendar years prior to the Initial
Date of Deposit. Increasing dividends would
provide you with increasing monthly income.
DIVERSIFICATION
The number of different companies represented in
the Fund's portfolio gives you the broad base that
may be beyond the resources of many individuals.
The stocks represent a variety of issuers within
several major industry groups.
THIS PAGE MAY NOT BE DISTRIBUTED UNLESS INCLUDED IN A CURRENT PROSPECTUS.
INVESTORS SHOULD REFER TO THE PROSPECTUS FOR FURTHER INFORMATION.
<PAGE>
DEFINED SUPERVISION
The Fund is not actively managed. However, each
stock is reviewed regularly and can be sold to
meet redemptions or in the event of developments
that would make their retention detrimental to
holders.
REDUCED RISK
Buying just one or two of these stocks may subject
you to greater investment risk. With this Fund,
your risk is reduced because your capital is
spread among common stocks from various industry
groups. Because the Portfolio will remain
relatively fixed, there are no management fees.
A LIQUID INVESTMENT
Although not legally required to do so, the
Sponsors have maintained a secondary market for
Defined Asset Funds for over 20 years. You can
cash in your Units at any time. Your price is
based on the market value of the Securities in the
Portfolio at that time. Or, you can exchange your
investment for another Defined Fund at a reduced
sales charge. There is never a fee for cashing in
your investment.
DEFERRED SALES CHARGE
With this Fund you defer payment of part of the
sales charge so that more of your money is
invested. The sales charge structure of the Fund
combines initial and deferred sales charges. When
purchasing units, Holders will be charged an
initial sales charge of 1.50% of the Public
Offering Price (approximately $15.00 per 1,000
Units). A deferred sales charge of $10.00 per
1,000 Units will be payable on each Deferred
Charge Payment Date through 1997, as long as the
Holder retains his Units. This deferred sales
charge will be paid on behalf of the Holders out
of the net asset value of the Fund.
A Holder's tax basis in his Units will reflect the
payment of the initial sales charge as well as any
deferred sales charge paid by the Fund on behalf
of the Holder. Thus, a Holder who acquires his
Units for $1,000 (including an initial sales
charge of $15.00) and who holds the Units through
two Deferred Charge Payment Dates will have a tax
basis in the Units equal to $1,020.
REINVESTMENT OPTION
You can elect to automatically reinvest your
monthly income or any distributions of principal
payments in additional units of the Fund with no
initial sales charge. Reinvestment allows you to
increase your overall investment in the Fund and
compound income for a greater total return.
RICK FACTORS
The value of the Units may fluctuate with changes
in the financial condition of the issuers of
stocks held, changes in the industry sectors
represented, the value of stocks generally and the
impact of the Fund's purchase and sale of stocks
(especially during the primary offering and the
special redemption and liquidation periods).
Dividends are subject to the financial condition
of and declaration by the issuers. There can be no
assurance that the Fund will achieve its
objective. Although the Portfolio is monitored, it
is not actively managed and, given the investment
philosophy of the Fund, it is unlikely that the
Portfolio will change during the life of the Fund.
THIS PAGE MAY NOT BE DISTRIBUTED UNLESS INCLUDED IN A CURRENT PROSPECTUS.
INVESTORS SHOULD REFER TO THE PROSPECTUS FOR FURTHER INFORMATION.
<PAGE>
INVESTMENT SUMMARY AS OF THE EVALUATION DATE (CONTINUED)
time any Security is purchased, Units will represent less or more of that
Security and more or less of the other Securities in the Fund. These price
fluctuations in connection with the creation of additional Units will affect the
value of every Holder's Units and the income per Unit received by the Fund. (See
Fund Structure; Administration of the Fund--Portfolio Supervision). 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, costs incurred in
connection with the acquisition of Securities not listed on any national
securities exchange (due to differentials between bid and offer prices for the
Securities) will be at the expense of the Fund and will affect the value of
every Holder's Units.
Although the Portfolio is not actively managed, the Sponsors may instruct
the Trustee to sell Securities under certain limited circumstances and to
reinvest the proceeds in Replacement Securities (See Fund Structure;
Administration of the Fund--Portfolio Supervision). Securities, however, will
not be sold by the Fund to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in particular that the
Securities deposited in the Fund on the Initial Date of Deposit were selected on
the basis of the criteria set forth under Description of the Fund--Selection
Criteria. However, no assurance can be given that any Replacement Securities
would meet all of these criteria. (See Description of the Fund--Selection
Criteria.) The Fund may continue to purchase or hold Securities originally
selected through this process even though the evaluation of the attractiveness
of the Securities may have changed and, if the evaluation were performed again
at that time, the Securities would not be selected for the Fund.
Investors should also be aware that because Securities are sold to pay the
obligations due on the Deferred Charge Payment Dates, they may realize gains or
losses on those sales due to changes in Securities prices between the date on
which the Units are purchased and the Deferred Charge Payment Dates. In
addition, Units purchased shortly before a Deferred Charge Payment Date would
nevertheless incur the full sales charge for that year.
At any time after the date of this prospectus, new litigation, legislation,
regulation or deregulation may be initiated, proposed or enacted which may have
a material adverse effect on the Fund or impair the ability of the issuers of
the Securities to achieve their business goals (for a fuller discussion, see
Risk Factors--Litigation and Legislation).
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) without incurring an initial
sales charge. 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 shortly before or after the end of each 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.
It is anticipated that the proceeds of sale or redemption of Securities
other than recognized capital gains will not be distributed but will be
reinvested in Additional Securities. To the extent that the proceeds of sale or
redemption of Securities are distributed, they will be distributed on the next
succeeding Distribution Day (see Administration of the Fund--Accounts and
Distributions). Capital gains and principal distributions also 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 but will be eligible
for the dividends-received deduction available to certain corporations only to
the extent of dividends received by the Fund from domestic 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 the initial portion of the
sales charge. Units are offered at the Public Offering Price plus a
proportionate share of the amount in the Income Account and the Capital Account
(described under Administration of the Fund--Accounts and Distribution), to the
extent not allocated to the purchase of specific Securities, on the date of
delivery of the Units to the Purchaser, plus (in connection with the creation of
Units) applicable commissions, computed as of the Evaluation Time for all sales
subsequent to the previous evaluation.
The sales charge consists of an initial portion and a deferred portion, the
total of which may equal a maximum of approximately 5.50% of the Public Offering
Price or 5.820% of the net asset value of the Fund, although these percentages
will vary should Units be purchased at a public offering price other than that
set forth on page A-3. For example, a Holder who acquires Units for $1,050.00
(including an initial sales charge of $15.75) and who holds the Units until the
termination of the Fund will pay a total sales charge of $55.75 or 5.31% of the
acquisition price of those Units. At an acquisition price of $950.00 (including
an initial sales charge of $14.25), the Holder would pay a total sales charge of
$54.25 or 5.71% of the acquisition price. The initial portion of the sales
charge is 1.50% of the Public Offering Price (1.523% of the net amount invested
in the Securities), and the deferred portion of the sales charge is $10.00 per
1,000 Units payable on each Deferred Charge Payment Date through 1997. If a
Holder sells or
A-5
<PAGE>
INVESTMENT SUMMARY AS OF THE EVALUATION DATE (CONTINUED)
redeems Units before a Deferred Charge Payment Date, no future deferred sales
charges will be collected from that Holder; this will have the effect of
reducing the rate of sales charge.
The Public Offering Price on the date of this prospectus or on any
subsequent date will vary from the Public Offering Price set forth on page 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.
EXCHANGE OPTION; SPECIAL REDEMPTION, LIQUIDATION AND INVESTMENT IN NEW
FUND--Holders of Units have the right, at a reduced sales charge, to exchange
Units of the Fund for units of other funds sponsored by the Sponsors and listed
under Exchange Option. In addition, subject to any necessary regulatory
approval, Holders of Units of the Fund will have the option of specifying by the
Rollover Notification Date (see page A-3) ('Rollover Holders') to have all of
their Units redeemed in kind and the distributed Securities sold by the
Distribution Agent during the Special Redemption and Liquidation Period. The
proceeds of the redemption will then be invested in units of a new series of
Income Growth Fund (the '1998 Series'), if one is offered, at a reduced sales
charge. Since Rollover Holders will be record holders of Units on February 10,
1998, they will receive any February 25, 1998 Monthly Income Distribution. (See
Redemption; Special Redemption, Liquidation and Investment in New Fund; Exchange
Option.)
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. Replacement
Securities deposited in the Fund will 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. However,
no assurance can be given that such Replacement Securities will meet all of the
criteria used to select the Securities deposited in the Fund on the Initial Date
of Deposit. The Securities on the current list from which these Securities are
to be selected are:
Banc One Corporation
General Electric Corporation
Heinz (H.J.) Company
UNDERWRITING--None of the Sponsors has participated as sole underwriter,
managing underwriter or member of an underwriting syndicate from which any of
the Securities in the Portfolio were acquired.
UNDERWRITING ACCOUNT
The names and addresses of the Underwriters and their several interests in the
Underwriting Account are:
<TABLE>
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith P.O. Box 9051, Princeton, N.J. 08543-9051
Incorporated
Smith Barney Inc. Two World Trade Center--101st Floor, New York, N.Y. 10048
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019
Prudential Securities Incorporated One Seaport Plaza, 199 Water Street, New York, N.Y. 10292
Dean Witter Reynolds Inc. Two World Trade Center--59th Floor, New York,N.Y. 10048
</TABLE>
Each Underwriter's interest in the Underwriting Account will depend upon the
number of Units acquired through the issuance of additional Units.
A-6
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
INCOME GROWTH FUND (1993 SERIES)
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Defined Asset Funds - Equity Income Fund,
Income Growth Fund (1993 Series):
We have audited the accompanying statement of condition of Defined Asset Funds -
Equity Income Fund, Income Growth Fund (1993 Series), including the portfolio,
as of February 28, 1994 and the related statements of operations and of changes
in net assets for the period March 5, 1993 to February 28, 1994. These
financial statements are the responsibility of the Trustee. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial 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
February 28, 1994, as shown in such portfolio, were confirmed to us by Chase
Manhattan Bank, the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Trustee, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Defined Asset Funds - Equity
Income Fund, Income Growth Fund (1993 Series) at February 28, 1994 and the
results of its operations and changes in its net assets for the above-stated
period in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
April 18, 1994
D-1
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
INCOME GROWTH FUND (1993 SERIES)
<TABLE>
STATEMENT OF CONDITION
AS OF FEBRUARY 28, 1994
<S> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
(cost $17,509,380) (Note 1) $17,240,454
Dividends receivable 58,877
Cash 6,169
Total trust property 17,305,500
LESS LIABILITIES:
Accrued expenses $ 1,070
Advance from Trustee 27,153 28,223
NET ASSETS, REPRESENTED BY:
18,350,930 units of fractional undivided
interest outstanding (Note 3) 17,246,623
Undistributed net investment income 30,654 $17,277,277
UNIT VALUE ($17,277,277 / 18,350,930 units) $.94149
See Notes to Financial Statements.
</TABLE>
D-2
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
INCOME GROWTH FUND (1993 SERIES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
March 5, 1993
to
February 28,
1994
<S> <C>
INVESTMENT INCOME:
Dividend income $404,417
Trustee's fees and expenses (23,337)
Sponsors' fee (3,676)
Net investment income 377,404
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Realized loss on securities sold (150,538)
Unrealized depreciation of investments (268,926)
Realized and unrealized loss on investments (419,464)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(42,060)
See Notes to Financial Statements.
</TABLE>
D-3
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
INCOME GROWTH FUND (1993 SERIES)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
March 5, 1993
to
February 28,
1994
OPERATIONS:
Net investment income $ 377,404
Realized loss on securities sold (150,538)
Unrealized depreciation of investments (268,926)
Net decrease in net assets resulting from operations (42,060)
INCOME DISTRIBUTIONS TO HOLDERS (Note 2) (360,354)
CAPITAL SHARE TRANSACTIONS:
Issuance of 18,062,790 additional units 17,395,872
NET INCREASE IN NET ASSETS 16,993,458
NET ASSETS AT BEGINNING OF PERIOD 283,819
NET ASSETS AT END OF PERIOD $17,277,277
PER UNIT:
Income distributions during period $.02303
Net asset value at end of period $.94149
TRUST UNITS OUTSTANDING AT END OF PERIOD 18,350,930
See Notes to Financial Statements.
</TABLE>
D-4
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
INCOME GROWTH FUND (1993 SERIES)
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 market 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 the Prospectus, Part B.
Realized gains or losses on sales of securities are determined using
the first-in, first-out 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 on the twenty-
fifth day of 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 18,350,930 units at Date of Deposit $17,935,142
Less sales charge 269,055
Net amount applicable to Holders 17,666,087
Realized loss on securities sold (150,538)
Net unrealized depreciation of investments (268,926)
Net capital applicable to Holders $17,246,623
4. INCOME TAXES
As of February 28, 1994, net unrealized depreciation of investments, based
on cost for Federal income tax purposes, aggregated ($268,926) of which
$866,109 related to appreciated securities and ($1,135,035) related to
depreciated securities. The cost of investment securities for Federal
income tax purposes was $17,509,380 at February 28, 1994.
D-5
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND,
INCOME GROWTH FUND (1993 SERIES)
PORTFOLIO
AS OF FEBRUARY 28, 1994
<TABLE>
<CAPTION>
Number of Current
Shares of Percentage Annual Cost of
Portfolio No. and Title Common of Dividend Per Securities
of Securities Stock Fund(3) Share(2) to Fund(1) Value(1)
<S> <C> <C> <C> <C> <C>
1 Abbott Laboratories 18,900 3.028% 0.68 $ 491,070 $ 522,112
2 Air Products & Chemicals, Inc. 6,500 1.796 0.92 280,087 309,563
3 American Business Products, Inc. 6,500 0.867 0.80 170,250 149,500
4 American Home Products Corporation 9,450 3.282 2.92 611,554 565,819
5 Anheuser-Busch Companies, Inc. 9,900 2.842 1.44 500,988 490,050
6 Banc One Corporation (4) 22,645 4.466 1.24 911,604 769,954
7 Bruno's, Inc. 32,500 1.508 0.24 320,787 260,000
8 The Clorox Company 19,800 6.130 1.80 987,577 1,056,824
9 Conagra, Inc. 19,800 3.144 0.72 507,450 542,025
10 Dayton Hudson Corporation, Inc. 6,500 2.696 1.68 478,162 464,750
11 Dean Foods Company 13,000 2.375 0.64 326,725 409,500
12 Deluxe Corporation 19,500 3.846 1.44 834,862 663,000
13 EG&G, Inc. 16,250 1.756 0.56 363,031 302,656
14 Fifth Third Bancorp 9,900 2.713 1.08 542,280 467,775
15 General Electric Company 19,800 12.102 2.88 1,842,914 2,086,425
16 Heinz (H.J.) Company 18,900 3.577 1.32 712,545 616,613
17 Hubbell Incorporated, Class B 19,800 6.604 1.64 1,118,039 1,138,500
18 Johnson & Johnson 13,200 3.072 1.04 544,910 529,650
19 Loral Corporation (5) 19,500 4.369 0.56 546,060 753,188
20 Marshall & Ilsley Corporation (6) 19,800 2.469 0.56 475,195 425,700
21 Morgan (J.P.) & Co., Inc. 11,800 4.663 2.72 812,740 803,874
22 Ralston Purina Company 16,500 4.163 1.20 741,374 717,750
23 Sara Lee Corporation 19,500 2.531 0.64 510,338 436,313
24 Super Valu Stores, Inc. 13,200 2.833 0.88 431,785 488,400
25 Torchmark Corporation 6,500 1.621 1.12 369,425 279,500
26 20th Century Industries 6,500 0.980 0.64 195,607 169,000
27 Wachovia Corporation (5) 33,000 6.077 1.20 1,199,037 1,047,750
28 Wallace Computer Services, Inc. 9,900 1.967 0.64 256,564 339,075
29 Weis Markets, Inc. 16,500 2.524 0.72 426,420 435,188
TOTAL $17,509,380 $17,240,454
(1) See Notes to Financial Statements.
(2) Based on latest quarterly declaration.
(3) Based on Value.
(4) Includes 5-for-4 stock split distributed in 1993 and 10% stock dividend distributed in 1994.
(5) Includes 100% stock dividend distributed in 1993.
(6) Includes 200% stock dividend distributed in 1993.
</TABLE>
.
D-6
<PAGE>
DEFINED ASSET FUNDS--EQUITY INCOME FUND
INCOME GROWTH FUND (1993 SERIES)
FUND STRUCTURE
This Series (the 'Fund') of 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. Except
as otherwise indicated under Portfolio (the 'Portfolio'), the Securities so
deposited were represented by purchase contracts assigned to the Trustee
together with an irrevocable letter or letters of credit issued by a commercial
bank or banks in the amount necessary to complete the purchase thereof.
The Portfolio contains different common stocks issued by companies selected
according to a set of financial criteria (see Description of the Fund--Selection
Criteria). As used herein, the term 'Stocks' or 'Securities' means the common
stocks initially deposited in the Fund on the Initial Date of Deposit and
described under Portfolio and any additional common stocks acquired and held by
the Fund pursuant to the provisions of the Indenture.
With the deposit of the Securities in the Fund on the Initial Date of
Deposit, 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 deposited 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 in connection with the sale of Units to the public
during the initial offering period and subsequent annual limited offering
periods, or in connection with the creation of Units pursuant to the
Reinvestment Plan, 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, purchase
requirements, changes in prices, restrictions upon those Securities the Sponsors
may purchase or unavailability of the Securities. In that event, replacement
Securities ('Replacement Securities') may be acquired under specified conditions
(see Administration of the Fund--Portfolio Supervision). Units may be offered
for sale to the public by means of this Prospectus during annual offering
periods that are expected to be limited to a duration of four to six months,
resulting in a potential increase in the number of Units outstanding (see Public
Sale of Units--Public Distribution).
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). Redemptions will be made in cash or in
Securities ('in kind') (see Redemption). 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.
The Fund may be an appropriate medium for investors who desire to
participate in a portfolio of common stocks with greater diversification than
they might be able to acquire individually.
RISK FACTORS
GENERAL
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 about the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government economic,
monetary and fiscal
1
<PAGE>
policies, inflation and interest rates, economic expansion or contraction, and
global or regional political, economic or banking crises. The value of certain
equity securities with higher yields may be more adversely affected by reason of
certain legislative enactment such as a reduction in the dividends-received
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 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 Stock's 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).
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
during limited annual offering periods 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. The Trustee may purchase additional Securities
('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 bank
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 will represent
less or more of that Security and more or less of the other Securities in the
Fund. These price fluctuations in connection with the creation of additional
Units 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 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. (See Fund Structure; Administration of the Fund--Portfolio Supervision).
In addition, costs incurred in connection with the acquisition of Securities not
listed on any national securities exchange (due to differentials between bid and
offer prices for the Securities) will be at the expense of the Fund and will
affect the value of every Holder's Units.
Although the Portfolio is not actively managed, the Sponsors may instruct
the Trustee to sell Securities under certain limited circumstances and to
reinvest the proceeds in Replacement Securities (See Fund Structure;
Administration of the Fund--Portfolio Supervision). Securities, however, will
not be sold by the Fund to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in particular that the
Securities purchased on the Initial Date of Deposit were selected on the basis
of the criteria set forth under Description of the Fund--Selection Criteria.
However, no assurance can be given that such Replacement Securities will meet
all of those criteria. The Fund may continue to purchase or hold Securities
originally selected through this process even though the evaluation of the
attractiveness of the Securities may have changed and, if the evaluation were
performed again at that time, the Securities would not be selected for the Fund.
2
<PAGE>
Investors should also be aware that because Securities are sold to pay the
obligations due on the Deferred Charge Payment Dates, they may realize gains or
losses on those sales due to changes in Securities prices between the date on
which the Units are purchased and the Deferred Charge Payment Dates. In
addition, Units purchased shortly before a Deferred Charge Payment Date would
nevertheless incur the full sales charge for that year.
OTHER RISK FACTORS
The Fund is considered to be concentrated in Stocks of the industries
described below. 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.
Consumer Products Companies. Investment in securities issued by consumer
products companies should be made with an understanding of the many factors
which may have an adverse impact on the credit quality of the particular company
or industry. These include cyclicality of revenues and earnings, changing
consumer demands, regulatory restrictions, products liability litigation and
other litigation resulting from accidents, extensive competition (including that
of low-cost foreign companies), unfunded pension fund liabilities and employee
and retiree benefit costs and financial deterioration resulting from leveraged
buy-outs, takeovers or acquisitions. In general, expenditures on consumer
products will be affected by the economic health of consumers. The recent
recession, collapse of the savings and loan industry and glut in the real estate
market with its consequent effects on consumer credit and spending may have a
continuing adverse effect on the industry. Other factors of particular relevance
to the profitability of the industry are the effects of increasing environmental
regulation on packaging and on waste disposal, the continuing need to conform
with foreign regulations governing packaging and the environment, the outcome of
trade negotiations and their effect on foreign subsidies and tariffs, foreign
exchange rates, the price of oil and its effect on energy costs, inventory
cutbacks by retailers, transportation and distribution costs, health concerns
relating to the consumption of certain products, the effect of demographics on
consumer demand, the availability and cost of raw materials and the ongoing need
to develop new products and to improve productivity.
Manufacturing Companies. Growth in the manufacturing industry is closely
linked to expansion in the domestic and global economies. The recent global
recession with its consequent effect on industrial growth, employment and
consumer spending in addition to any increase in oil prices or in interest rates
may result in a decrease in demand for the products of companies engaged in
manufacturing industrial and automotive products. Also, since the federal
government and many state, local and foreign governments now have a budget
deficit, financial expenditures by these entities on capital improvements may be
extremely limited. The lack of funds currently allocated by public entities to
capital improvement projects may adversely affect manufacturers engaged in the
production of industrial materials used for capital improvements or for the
upgrade of the infrastructure. Indeed, government contracts with certain issuers
may contain unfavorable provisions, including provisions allowing the government
to terminate these contracts without prior notice, or to audit and redetermine
amounts payable to the issuer pursuant to these contracts or to require the
issuer to pay for cost overruns. Additionally, legislation to limit excess
profits on government contracts is introduced in the United States Congress from
time to time. Cutbacks in defense spending by the federal government will also
adversely impact companies engaged in the aerospace and arms/defense sectors of
the manufacturing industry.
Environmental and safety issues increasingly affect the manufacturing
industry. Issuers may experience decreases in profitability as legislative
mandates impose costs associated with compliance with environmental regulations
and manufacturing more environmentally sound and safer equipment. Furthermore,
the cost of product liability insurance and the inability of some manufacturing
companies to obtain this insurance may have an adverse impact on the industry.
Financial Accounting Standard Board regulations with regard to accounting for,
among other things, post retirement benefits may lead to changes in accounting
which could have significant negative effects on reported earnings and reported
long term liabilities and book value of some manufacturing companies. The recent
real estate market glut and the consequent lack of demand for new home and
office construction may have a continuing effect on the demand for certain tools
and industrial machinery products. Inflation, slow growth in personal disposable
income, tighter loan qualification standards, higher downpayments, the lower
rate of job creation, increased cost of vehicle ownership and operation and oil
prices will also affect companies engaged in manufacturing, particularly in the
automotive industry. Shortages of skilled labor, particularly in the machine
tools industry, may become a major problem in the future.
The long-term outlook is largely dependent upon the growth and
competitiveness of the U.S. manufacturing base. Increased consolidation and
merger activity increases competitiveness in general but individual companies
may experience severe financial problems due to this increased competitiveness.
Strong competition from foreign nations, particularly Pacific Rim countries
which have lower labor costs, will severely impact the profitability of the U.S.
manufacturing business. The continuing establishment of manufacturing and sales
facilities abroad to take advantage of international marketing operations is
crucial and the success of these foreign operations will be affected by the
strengthening of the
3
<PAGE>
dollar which could lead to a decrease in demand for U.S. products, the outcome
of trade negotiations which will affect foreign tariffs on U.S. exports abroad
and U.S. taxes on foreign imports to the U.S. and the ability to provide
attractive financing packages to customers in the current tight credit market.
U.S. manufacturers will also experience increased outlays of capital in
their efforts to manufacture products which comply with foreign standards for
certain manufacturing products. Also, since contracts may often be concluded
with entities or governments of unstable foreign nations in, for example,
Eastern Europe, South America or the Middle East, completion of and payment for
certain products and services will be subject to the risks associated with
political instability such as the risk of insurrection, hostilities from the
local population, government policies against businesses owned by non-nationals
and the possibility of expropriation. Certain of these nations may not honor
obligations under contracts when payments are due. Furthermore, it may be more
difficult to enforce a judgment against a foreign contracting party.
LITIGATION AND LEGISLATION
From time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. Enactment into law of a proposal to reduce the
rate 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.
Further, at any, time litigation may be initiated on a variety of grounds, or
legislation may be enacted, with respect to the Securities in the Fund or the
issuers of the Securities. Changing approaches to regulation with respect to
certain industries may have a negative impact on certain companies represented
in the Fund. There can be no assurance that future litigation, legislation,
regulation or deregulation will not have a material adverse effect on the Fund
or will not impair the ability of the issuers of the Securities to achieve their
business goals.
DESCRIPTION OF THE FUND
THE PORTFOLIO
The Portfolio contains different common stocks. As used herein the term
'Stocks' or 'Securities' means the common stocks described under Portfolio and
any Additional Securities or Replacement Securities acquired and held by the
Fund pursuant to the provisions of the Indenture (see Administration of the
Fund--Portfolio Supervision). See Investment Summary for a summary of particular
matters relating to the Portfolio.
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,
Replacement 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 deposited hereunder (or 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 Fund
to cover such purchase are reinvested in Replacement 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 subsequent to
the Initial Date of Deposit, 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, the
aggregate value of the Securities in the Portfolio will vary over time.
Sales charges on Defined 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
4
<PAGE>
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 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. On the Evaluation Date each Unit represented a fractional
undivided interest in the Securities plus net income of the Fund. Thereafter, 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 certain other regular and recurring
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.
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.
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.
SELECTION CRITERIA
In selecting Stocks for deposit into the Fund, the Sponsors through their
agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated ('Merrill Lynch')
screened approximately 29,000 common stocks (including multiple classes of
common stock issued by individual issuers) covered by Factset Data Systems, a
database that specializes in providing financial data to the investment
community. Factset is a privately held company incorporated in Delaware in 1978
with headquarters in Greenwich, Connecticut. These criteria were designed to
identify companies that the Sponsors consider to have a strong potential for
increasing their dividends over the life of the Fund.
The Stocks deposited in the Fund on the Initial Date of Deposit were
selected through a multi-step screening process. First, Merrill Lynch as agent
for the Sponsors ('Agent for the Sponsors'), identified those stocks that met
the following criteria as of five business days prior to the Initial Date of
Deposit: (i) dividend yields equal to or greater than 1.75%;
5
<PAGE>
(ii) annual growth rates of dividends equal to or greater than 5.00% in each of
the last ten years for which information was available as of the Selection Date;
(iii) positive annual growth rates of earnings per share in eight or more of
those ten years; (iv) positive annual growth rates of sales in eight or more of
those ten years and (v) shareholders equity equal to or greater than
$100,000,000. Second, the stocks were further screened to determine whether they
possessed favorable ratings from the Agent for the Sponsors as well as from
other recognized investment professionals. Third, the Agent for the Sponsors
conducted a fundamental financial analysis of the companies to determine their
underlying creditworthiness. Most of the companies selected have long-term debt
to capital ratios of less than 30%. In the opinion of the Sponsors, this should
result in lower risk than more highly leveraged companies. Finally, the Agent
for the Sponsors reviewed the liquidity of the stocks. In addition, the agent
for the Sponsors verified that the Stocks met the above criteria, other than the
criterion described in (i) above, as of one day prior to the Initial Date of
Deposit (the 'Verification Date'). The companies selected were those having the
most consistent records and believed to have significant potential for future
dividend growth. Because of the considerations discussed under Risk Factors
above, there can be no assurance that subsequent to the Verification Date the
Stocks have continued or will continue to meet all of the criteria described
above. In addition, with respect to Additional or Replacement Securities
deposited in the Fund subsequent to the Initial Date of Deposit, there is no
assurance that exactly the same selection criteria will be used, although the
Agent for the Sponsors will use substantially the same selection criteria as far
as practicable (see Administration of the Fund--Portfolio Supervision).
The following chart 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 maintain or increase their dividend rates in
the future.
<TABLE>
<CAPTION>
Annual Dividends
Paid Average Annual
Company Symbol 1982 1993 Dividend Growth
------------------------------------- --------- ----------- ----------- ---------------------
<S> <C> <C> <C> <C>
1. Abbott Laboratories ABT $ 0.101 $ 0.680 18.93%
2. Air Products & Chemicals, Inc. APD 0.200 0.920 14.88
3. American Business Products, Inc. ABP 0.199 0.720 12.40
4. American Home Products Corporation AHP 1.075 2.920 9.51
5. Anheuser-Busch Companies, Inc. BUD 0.230 1.440 18.15
6. Banc One Corporation ONE 0.331 1.130 11.81
7. Bruno's, Inc. BRNO 0.045 0.240 16.44
8. The Clorox Company CLX 0.450 1.800 13.43
9. Conagra, Inc. CAG 0.133 0.720 16.60
10. Dayton Hudson Corporation, Inc. DH 0.563 1.600 9.96
11. Dean Foods Company DF 0.142 0.640 14.67
12. Deluxe Corporation DLX 0.265 1.440 16.63
13. EG&G, Inc. EGG 0.160 0.520 11.31
14. Fifth Third Bancorp FITB 0.217 1.080 15.71
15. General Electric Company GE 0.415 1.260 10.62
16. Heinz (H.J.) Company HNZ 0.253 1.320 16.20
17. Hubbell Incorporated, Class B HUB.B 0.469 1.640 12.05
18. Johnson & Johnson JNJ 0.243 1.040 14.13
19. Loral Corporation LOR 0.190 0.560 10.33
20. Marshall & Ilsley Corporation MRIS 0.201 0.560 9.76
21. Morgan (J.P.) & Co., Inc. JPM 0.869 2.400 9.68
22. Ralston Purina Company RAL 0.390 1.200 10.76
23. Sara Lee Corporation SLE 0.136 0.640 15.12
24. Super Valu Stores, Inc. SVU 0.260 0.880 11.72
25. 20th Century Industries TW 0.031 0.640 31.68
26. Torchmark Corporation TMK 0.375 1.120 10.46
27. Wachovia Corporation WB 0.267 1.200 14.66
28. Wallace Computer Services, Inc. WCS 0.169 0.640 12.87
29. Weis Markets, Inc. WMK 0.225 0.720 11.15
S&P 500 -- -- -- 3.92
Consumer Price Index (Inflation) -- -- -- 3.72
Average Number of Years
</TABLE>
Number of Years Increases
of Consecutive (Moody's)
Dividend
----------------- ----------
1. 67 20
2. 39 11
3. 52 35
4. 74 40
5. 61 18
6. 58 22
7. 20 18
8. 25 16
9. 17 15
10. 28 21
11. 52 20
12. 72 32
13. 41 20
14. 28 19
15. 94 17
16. 82 29
17. 59 32
18. 88 30
19. 18 16
20. 55 19
21. 101 16
22. 60 23
23. 47 21
24. 57 16
25. 21 21
26. 61 20
27. 57 41
28. 60 21
29. 53 19
-- --
-- --
----------------- ---------------
53 22
----------------- ---------------
----------------- ---------------
The first column of the following chart illustrates the 10-year effect
(from January 1, 1983 through December 31, 1993) of inflation on cash. The
purchasing power of $10,000 at the beginning of 1983 equates to the purchase
power of only $6,582.32 at the end of 1993. One way to combat the erosion caused
by inflation has been investing in common stocks. The second column of the
following chart illustrates the growth (adjusted for inflation) of a
hypothetical $10,000
6
<PAGE>
investment in the stocks comprising the S&P 500 Composite Stock Price Index, a
leading indicator of equity performance. Although past performance is no
guarantee of future results, over these 11 years the original investment, with
dividends reinvested, would have grown from $10,000 to $33,018.18 despite
inflation. These figures do not reflect commissions, taxes or the actual results
of any fund. The Fund is subject to sales charges and expenses.
EFFECT OF
INFLATION ON GROWTH OF
PURCHASING S&P 500
POWER OF NET OF
$10,000 INFLATION
--------------- --------------
1983 $ 9,620.00 $ 11,803.30
1984 9,240.01 12,065.87
1985 8,891.66 15,366.59
1986 8,791.19 18,001.49
1987 8,403.49 18,143.08
1988 8,032.06 20,295.85
1989 7,658.57 25,502.03
1990 7,190.63 23,271.89
1991 6,970.60 29,478.03
1992 6,768.45 30,843.12
1993 6,582.32 33,018.18
Source: Ibbotson Associates (Chicago)
FUND PERFORMANCE
Information on percentage changes in the dollar value of Units, on the
basis of changes in Unit price plus the amount of dividends and capital gains
distributed or 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 may not be indicative of future results. The Fund is 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 (with
distributions reinvested) of the Dow Jones Industrial Average, the S&P 500
Composite Price Stock 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, 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 Sections 851-855 of the
United States 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 (net
capital gain is defined as the excess of net long-term capital gain over 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.
7
<PAGE>
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 generally 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 upon such distribution (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 except in the case of a dealer
in securities. A Rollover Holder will recognize gains, if any, on the Special
Redemption and Liquidation of the 1993 Series (see Special Redemption,
Liquidation and Investment). However, the Internal Revenue Service may seek to
disallow a loss (or a pro rata portion thereof) if the 1998 Series units are
acquired within 30 days after the Special Redemption and Liquidation of the 1993
Series Units and if the securities underlying the two funds are substantially
the same (i.e., having the same issuers and 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.
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 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 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.
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.
A Holder's basis in his Units will be equal to the cost of his Units,
including the initial sales charge. When the Fund pays the deferred sales charge
on behalf of a Holder, the Holder will be treated as if the Fund had actually
distributed to the Holder the amount of the deferred sales charge (and will be
taxed in the manner described above) and as if the Holder had paid such charge
directly. A portion of the deferred sales charge deemed paid by the Holder may
be treated as interest which would be deductible by a Holder subject to
limitations on the deduction of investment interest. A Holder who holds Units on
a Deferred Charge Payment Date should increase his tax basis in his Units by the
amount of the deferred
8
<PAGE>
sales charge not treated as interest. Holders should consult their tax advisers
as to the income tax consequences of the deferred sales charge.
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.
RETIREMENT PLANS
This Series of Defined Asset Funds--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 such plan should
review specific tax laws related thereto and should consult their attorneys or
tax advisers with respect to the establishment and maintenance of any such plan.
Such 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 in a Keogh plan. 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 if a spousal account is also established).
Individual Retirement Account--IRA. Any individual (including one covered
by a qualified private or government 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 if a spousal account is also established)
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 end of 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. An employer who has established
a pension or profit-sharing plan for employees may purchase Units of the Fund
for such a plan.
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 thereto the initial portion of the sales charge
(see Public Sale of Units--Underwriters' and Sponsors' Profits). Units are
offered at the Public Offering Price plus a proportionate share of the amount in
the Income Account and the Capital Account (described under Administration of
the Fund-Accounts and Distribution), to the extent not allocated to the purchase
of specific Securities on the date of delivery of the Units to the Purchaser,
plus (in connection with the creation of Units) applicable commissions computed
as of the Evaluation Time for all sales subsequent to the previous evaluation.
The sales charge consists of an initial portion and a deferred portion, the
total of which may equal a maximum of approximately 5.50% of the Public Offering
Price or 5.820% of the aggregate value of Securities, although these percentages
will vary should Units be purchased at a public offering price other than that
set forth on page A-3. For example, a
9
<PAGE>
Holder who acquires Units for $1,050 (including an initial sales charge of
$15.75) and who holds the Units until the termination of the Fund will pay a
total sales charge of $55.75 or 5.31% of the acquisition price on those Units.
At an acquisition price of $950 (including an initial sales charge of $14.25),
the Holder would pay a total sales charge of $54.25 or 5.71% of the acquisition
price. The initial portion of the sales charge is equal to 1.50% of the Public
Offering Price (1.523% of the aggregate value of Securities) and the deferred
portion of the sales charge is $10.00 per 1,000 Units payable by the Fund on
behalf of the Holders out of net asset value of the Fund on each Deferred Charge
Payment Date through 1997. If a Holder sells or redeems Units before a Deferred
Charge Payment Date, no future deferred sales charges will be collected from
that Holder; this will have the effect of reducing the rate of sales charge.
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 initial 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 last reported closing sale prices at the Evaluation Time on
the day the valuation 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
To the extent additional Units are offered for sale to the public during
annual limited offering periods 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. It is expected that the initial
offering period and the subsequent annual offering periods will each be of a
four to six month duration.
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.
UNDERWRITERS' AND SPONSORS' PROFITS
The Underwriters named under Underwriting Account, including the Sponsors,
may receive maximum aggregate sales charges (initial and deferred) per 1,000
Units equal to approximately 5.50% of the Public Offering Price (5.820% of the
net amount invested) (see Public Sale of Units--Public Offering Price). The
initial portion of the sales charge is equal to 1.50% of Public Offering Price
(approximately $15.00 per 1,000) Units payable upon the sale of the Units. The
deferred sales charge will be $10.00 per 1,000 Units payable on each Deferred
Charge Payment Date (set forth under Investment Summary). On each subsequent
deposit of Additional or Replacement Securities (rather than a letter of credit
accompanied by instructions to purchase specified securities) with respect to
the creation of additional Units the Sponsors may realize a profit or loss. This
profit or loss is the difference between the cost of the Securities to the Fund
(which is based on the aggregate value of the Securities on the date of deposit)
and the purchase price of the Securities to the Sponsors. 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 are offered for sale to the public
during the initial offering period and subsequent limited annual offering
periods, 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).
Except as indicated under Portfolio, the Sponsors have not participated as
sole underwriters or managers or members of underwriting syndicates from which
syndicates the Securities in the Portfolio were acquired.
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.
10
<PAGE>
MARKET FOR UNITS
At the present time certain of the Sponsors maintain a secondary market for
units of certain other series of 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 delivery of a request for
redemption, and payment of any relevant tax, without any other fee (Article V).
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.
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 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. 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 (Article V).
The Trustee is empowered to sell Securities at the expense of the Fund in
order to make funds available for redemption (Article V) 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 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.
Holders tendering Units for redemption may request distribution in kind
from the Trustee in lieu of cash redemption. A Holder may request distribution
in kind of an amount and value of Securities per Unit equal to the Redemption
Price per Unit as determined as of the Evaluation Time next following the
tender, provided that the Holder is tendering Units with an aggregate value of
not less than $300,000 and the Holder has elected to redeem prior to the
Rollover Notification Date specified on page A-3. If the Holder can tender this
requisite number of Units, the distribution in kind on redemption of Units will
be held by a distribution agent (the 'Distribution Agent') for the account of,
and for disposition in accordance with the instructions of, the tendering
Holder. The tendering Holder shall be entitled to receive whole shares of each
of the Securities comprising the Portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Holder is entitled. Any
brokerage commissions on sales of the underlying Securities distributed in
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connection with in kind redemptions will be borne by the tendering Holder. In
implementing these redemption procedures, the Trustee and Distribution Agent
shall make any adjustments necessary to reflect differences between the
Redemption Price of the Units and the value of the Securities distributed in
kind as of the date of tender. If funds in the Capital Account are insufficient
to cover the required cash distribution to the tendering Holder, the Trustee may
sell Securities according to the criteria discussed above. The in kind
redemption option may be terminated by the Sponsors on a date other than
Rollover Notification Date specified on page A-3 upon notice to the Holders
prior to the specified date.
To the extent that Securities are redeemed in kind or 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 to the Fund than might otherwise be realized. 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 additional
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, (b) cash on hand in the Fund (other than cash covering
contracts to purchase Securities or credited to a reserve account), (c) declared
but unpaid dividends on the Securities and (d) the aggregate value of all other
assets of the Fund; deducting therefrom the sum of (v) taxes or other
governmental charges against the Fund not previously deducted, (w) accrued but
unpaid expenses of the Fund and accrued Deferred Sales Charges declared but not
yet paid, (x) amounts payable for reimbursement of Trustee advances, (y) cash
held for redemption of Units for distribution to Holders of record as of a date
prior to the evaluation and (z) the aggregate value of all other liabilities of
the Fund; and dividing the result by the number of Units outstanding as of the
date of computation (Article V).
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.
SPECIAL REDEMPTION, LIQUIDATION AND INVESTMENT IN NEW FUND
It is expected that a special redemption and liquidation will be made of
all Units of this Fund held by any Holder (a 'Rollover Holder') who
affirmatively notifies the Trustee in writing that he so desires by the Rollover
Notification Date specified on page A-3.
All Units of Rollover Holders will be redeemed in kind (see Redemption) on
the first day of the Special Redemption and Liquidation Period (as herein
defined) and the underlying Securities will be distributed to the Distribution
Agent on behalf of the Rollover Holders (Article V). During the Special
Redemption and Liquidation Period specified on page A-3, the Distribution Agent
will be required to sell all of the underlying Securities on behalf of Rollover
Holders. The sale proceeds to the Rollover Holders will be net of brokerage
fees, governmental charges or any expenses involved in the sales. The
Distribution Agent will engage the Sponsors as its agents to sell the
distributed Securities.
The Sponsors will attempt to sell the Securities as quickly as is
practicable during the Special Redemption and Liquidation Period without in
their judgment materially adversely affecting the market price of the
Securities, but all of the Securities will in any event be disposed of by the
end of the Special Redemption and Liquidation Period. The Sponsors do not
anticipate that the period will be longer than 20 business days, and it could be
as short as one day, depending upon
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the liquidity of the Security. The liquidity of any Security depends on the
daily trading volume of the Security and the amount that the Sponsors have
available for sale on any particular day.
It is expected (but not required) that the Sponsors will generally follow
the following guidelines in selling the Securities: for highly liquid
Securities, the Sponsors will generally sell Securities on the first day of the
Special Redemption and Liquidation Period; for less liquid Securities, on each
of the first two days of the Special Redemption and Liquidation Period, the
Sponsors will generally sell any amount of any underlying Securities at a price
no less than 1/2 of one point under the closing sale price of those Securities
on the preceding day. Thereafter, the Sponsors intend to sell without any price
restrictions at least a portion of the remaining underlying Securities, the
numerator of which is one and the denominator of which is the total number of
days remaining (including that day) in the Special Redemption and Liquidation
Period.
The Rollover Holders' proceeds of the redemption of the underlying
Securities will be invested as they become available in units of the next Income
Growth Fund Series (the '1998 Series'), if one is then being offered, at daily
prices based on the asset value of those units plus a reduced initial sales
charge, the portfolio of the 1998 Series will be selected pursuant to criteria
which are expected to be substantially similar to the selection criteria used to
select the Securities deposited in this Series. The Sponsors intend to create
1998 Series units as quickly as possible, dependent upon the availability and
reasonably favorable price of the securities to be included in the 1998 Series
portfolio, and it is intended that Rollover Holders will be given first priority
to purchase those units. There can be no assurance, however, as to the exact
timing of the creation of 1998 Series units, the aggregate number of 1998 Series
units that the Sponsors will create or the criteria that may be used to select a
portfolio for the 1998 Series. The Sponsors may at any time, in their sole
discretion, stop creating new units (whether permanently or temporarily),
regardless of whether all proceeds of the Special Redemption and Liquidation
have been invested on behalf of Rollover Holders. Cash proceeds of redemption
not invested on behalf of the Rollover Holders in 1998 Series units will be
distributed at the end of the Special Redemption and Liquidation Period.
However, since the Sponsors may create units by depositing cash (or bank letter
of credit) with instructions to buy securities, the Sponsors anticipate that
sufficient units can be created, although moneys in the 1998 Series may not be
fully invested on the next business day.
The Sponsors believe that the gradual redemption, liquidation and
investment in the 1998 Series will help mitigate any negative market price
consequences stemming from the trading of large volumes of Securities and of the
underlying securities in the 1998 Series in a short, publicized period of time.
The above procedures may, however, be insufficient or unsuccessful in avoiding
such price consequences. In fact, market price trends may make it advantageous
to sell or buy more quickly or more slowly than permitted by these procedures.
Rollover Holders could then receive a less favorable average unit price than if
they bought all their units of the 1998 Series on any given day of the period.
Historically, the prices of securities selected by the Sponsors as good
investments have generally risen over the first few days following the
announcement.
It should also be noted that Rollover Holders may realize taxable capital
gains on the Special Redemption and Liquidation but may not be entitled to a
deduction for certain capital losses and, due to the procedures for investing in
the 1998 Series, no cash would be distributed at that time to pay any taxes (see
Taxes).
In addition, during this period a Holder will be at risk to the extent that
Securities are not sold and will not have the benefit of any stock appreciation
to the extent that monies have not been invested; for this reason, the Sponsors
will be inclined to sell and purchase the Securities in as short a period as
they can without materially adversely affecting the price of the Securities.
Holders who do not inform the Trustee by the Rollover Notification Date
that they wish to have their Units so redeemed and liquidated ('Remaining
Holders') will continue to hold Units of the Fund as described in this
Prospectus until the Fund is terminated. These Remaining Holders will not
realize capital gains or losses due to the Special Redemption and Liquidation,
and will not be charged any additional sales charge subsequent to the Rollover
Notification Date. If a large percentage of Holders become Rollover Holders, the
aggregate size of the Fund will be sharply reduced. As a consequence, expenses,
if any, in excess of the amount to be borne by the Trustee would constitute a
higher percentage amount per Unit than prior to the Special Redemption,
Liquidation and Investment in New Fund. The Fund might also reduce to the
Minimum Value of Fund listed on page A-3 because of the lesser number of Units
in the Fund, and possibly also due to a value reduction, however temporary, in
Units caused by the Sponsors' sales of Securities (see Investment
Summary--Special Redemption, Liquidation and Investment in New Fund); if so, the
Sponsors could then choose to liquidate the Fund without the consent of the
remaining Holders (see Termination). The Securities remaining in the Fund after
the Special Redemption and Liquidation Period will be sold by the Sponsors as
quickly as possible without, in their judgment, materially adversely affecting
the market price of the Securities.
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Holders will only be permitted to exercise the rollover option described
above if the 1998 Series is qualified for sale under the securities laws of the
state in which the investor resides, unless an exemption from qualification is
available. Although the Sponsors expect that the 1998 Series (if offered for
sale by the Sponsors) will be qualified for sale in all jurisdictions, no
assurances can be given that all qualifications will be obtained.
The Sponsors may for any reason, in their sole discretion, decide not to
sponsor the 1998 Series or any subsequent series of the Fund, without penalty or
incurring liability to any Holder. If the Sponsors so decide, the Sponsors shall
notify the Holders before the Special Redemption and Liquidation Period would
have commenced. All Holders will then be Remaining Holders, with rights to
ordinary redemption as before (see Redemption). The Sponsors may modify the
terms of the 1998 Series or any subsequent series of the Fund. The Sponsors may
also modify the terms of the Special Redemption, Liquidation and Investment in
New Fund upon notice to the Holders prior to the Rollover Notification Date
specified on page A-3.
Investors should be aware that the staff of the Division of Investment
Management of the SEC is of the view that the rollover option described in this
Prospectus constitutes an 'exchange offer' for the purposes of Section 11(c) of
the Investment Company Act of 1940, and would therefore be prohibited absent an
exemptive order. The Sponsors have received exemptive orders under Section 11(c)
which they believe permit them to offer the rollover option, but no assurance
can be given that the SEC will concur with the Sponsors' position and additional
regulatory approvals may be required.
TERMINATION
The Indenture will terminate upon the 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 the Investment Summary. The Indenture
may be terminated by the Sponsors if the value of the Fund is less than the
Minimum Value of Fund set forth under the Investment Summary, and may be
terminated at any time by Holders of 51% of the Units (Articles VIII and IX).
The Trustee will deliver written notice of any termination to each Holder within
a reasonable period of time prior to the termination. Within a reasonable period
of time after the termination, the Trustee must sell all of the Securities then
held and distribute to each Holder, after deductions for accrued but unpaid
fees, taxes and governmental and other charges, the Holder's interest in the
Income and Capital Accounts (Article IX). 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.
EXPENSES AND CHARGES
INITIAL EXPENSES
All expenses incurred in establishing the Fund, including the cost of the
initial preparation and printing of documents relating to the Fund, execution of
the Indenture, the initial fees and expenses of the Trustee, advertising and
selling expenses and any other out-of-pocket expenses, are paid by the
Underwriting Account at no charge to the Fund.
FEES
The Trustee's Annual Fee and Expenses and the Sponsors' 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 Sponsors' Portfolio Supervision Fee, which is earned for portfolio
supervisory services, 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'
Portfolio Supervision 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 the
Sponsors 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 (Article VII). 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
(Articles III and VII). 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
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created under the Indenture. The foregoing fees may be adjusted for inflation in
accordance with the terms of the Indenture without approval of Holders (Articles
III, IV and VIII).
OTHER CHARGES
Other charges which may be incurred by the Fund include: (a) fees of the
Trustee for extraordinary services (Article VIII), (b) certain extraordinary
expenses of the Trustee (including legal and auditing expenses) and of counsel
designated by the Sponsors (Article VIII), (c) various governmental charges
(Articles III and VIII), (d) expenses and costs of action taken to protect the
Fund and the rights and interests of Holders (Articles III and VIII), (e)
indemnification of the Trustee for any losses, liabilities and expenses incurred
without gross negligence, bad faith or wilful misconduct on its part (Article
VIII), (f) indemnification of the Sponsors for any losses, liabilities and
expenses incurred without gross negligence, bad faith or wilful misconduct
(Articles III and VIII) (g) expenditures incurred in contacting Holders upon
termination of the Fund (Article IX). 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 (Article VIII).
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 (Articles VII and VIII).
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 Article III of the Indenture, are
credited to a Capital Account (Article III). 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 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 deemed necessary to establish a reserve
for any material amounts that may be payable out of the Fund (Article VIII).
Funds held by the Trustee in the various accounts created under the Indenture do
not bear interest (Article VIII).
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.
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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 among 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 any sales charge, on (or as
soon as possible after) the close of business on the Distribution Date. 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 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 deliver certificates. 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 the 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 (Article III). 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 (Article III). In
general, however, 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 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 shall
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. However, no assurance can be given that Replacement
Securities will meet the selection criteria used to select the Securities
deposited in the Fund on the Initial Date of Deposit. The Indenture also
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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 3.06). The common stocks on the current list 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.
The Indenture also authorizes the Sponsors to increase the size and number
of Units of the Fund by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with instructions
to purchase Additional Securities in exchange for the corresponding number of
additional Units subsequent to the Initial Date of Deposit, provided that the
original proportionate relationship among the number of shares of each Security
established on the Initial Date of Deposit is maintained to the extent
practicable.
With respect to deposits of Additional Securities (or cash or a letter of
credit with instructions to purchase Additional Securities), in connection with
creating additional Units of the Fund, the Sponsors may specify the minimum
numbers in which Additional Securities will be deposited or purchased. If a
deposit is not sufficient to acquire minimum amounts of each Security,
Additional Securities may be acquired in the order of the Security most
under-represented immediately before the deposit when compared to the original
proportionate relationship among the Stocks. If Securities of an issue
originally deposited are unavailable at the time of subsequent deposit, or
cannot be purchased at reasonable prices or their purchase is prohibited or
restricted by law, regulation or policies applicable to the Fund or any of the
Sponsors, the Sponsors may (1) deposit cash or a letter of credit with
instructions to purchase the Security when practicable, or (2) deposit (or
instruct the Trustee to purchase) either Securities of one or more other issues
originally deposited or a Replacement Security that satisfies the conditions for
Replacement Securities that are set forth above.
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 will conduct regular reviews to determine 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 numbers of 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 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 (Article III). 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 (Article VIII).
UNCERTIFICATED UNITS
All Holders are required to hold their Units in uncertificated form. The
Trustee will credit a Holder's account with the number of Units held by the
Holder. This relieves the Holder of the responsibility for safekeeping of
certificates and of the need to deliver certificates upon sale or redemption of
Units. Units are transferable by the Trustee, who shall treat the person in
whose name the Units are registered as the owner of the Units for all purposes.
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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 (Article VI).
The Indenture will terminate upon the 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 (Articles VIII and IX). 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
Account (Article IX). 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.
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. 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
(Article VIII). 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 (Articles VIII and
IX).
SPONSORS
Any Sponsor may resign if one remaining Sponsor maintains a net worth of
$2,000,000 and is agreeable to the resignation (Article VII). 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 (Article VIII). The Agent for the Sponsors has been appointed by the
other Sponsors as agent for purposes of taking action under the Indenture
(Article VIII). 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
Sponsors shall continue to act as Sponsors, then Merrill Lynch, Pierce, Fenner &
Smith Incorporated shall continue to act as sole Sponsor (Article VIII). 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
Sponsors is automatically discharged and the other Sponsors shall act as
Sponsors (Article VIII). 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
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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 (Article VIII). 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
(Article VIII).
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 ('FDIC') and the Board of Governors of the
Federal Reserve System (the 'Federal Reserve')); The Bank of New York, a New
York banking corporation with its Unit Investment Trust Department office at 101
Barclay Street, New York, N.Y., 10286 (which is subject to supervision by the
New York Superintendent of Banks, the FDIC and the Federal Reserve); 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 FDIC and the Federal
Reserve); or (acting as Co-Trustees) Investors Bank & Trust Company, a
Massachusetts trust company with its unit investment trust servicing group at
One Lincoln Plaza, Boston, Massachusetts 02111 (which is subject to supervision
by the Massachusetts Commissioner of Banks, the FDIC and the Federal Reserve)
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 FDIC and the Federal Reserve).
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. Emmet, Marvin & Martin, 48
Wall Street, New York, New York 10005, act as counsel for The Bank of New York,
as Trustee. Bingham, Dana & Gould, 150 Federal Street, Boston, Massachusetts
02110, act as counsel for Investors Bank & Trust Company and the First National
Bank of Chicago, 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 and Merrill Lynch Asset Management, a Delaware
corporation, each of which is a subsidiary of Merrill Lynch & Co., Inc., are
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. 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. PaineWebber Incorporated is engaged
in the investment advisory business and is a wholly-owned subsidiary of
PaineWebber Group Inc. 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.
Each Sponsor (or a predecessor) has acted as Sponsor of various 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
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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. On July 31, 1993, Smith Barney,
Harris Upham & Co. Incorporated ('SBHU'), together with certain of its
affiliates and The Travelers Inc. (formerly Primerica Corporation) acquired the
domestic retail brokerage and asset management businesses of Shearson Lehman
Brothers Holdings Inc. and its subsidiaries. Shearson was combined with the
operations of SBHU and its affiliates and SBHU was renamed Smith Barney
Shearson, Inc. and more recently Smith Barney Inc. 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 Defined Asset Funds for
over 20 years. For decades informed investors have purchased unit investment
trusts for dependability and professional selection of investments. 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 a nest egg for
retirement, or attractive, regular current income consistent with relative
protection of capital. 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, capital or time 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 decisions an investor faces may be how to
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 there is no
guarantee of future results, either of these categories or of Defined Funds.
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
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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 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.
DESCRIPTION OF RATINGS (as described by the rating company itself).
STANDARD & POOR'S CORPORATION
A Standard & Poor's rating on the units of an investment trust (hereinafter
referred to collectively as 'units' and 'funds') is a current assessment of
creditworthiness with respect to the investments held by the fund. This
assessment takes into consideration the financial capacity of the issuers and of
any guarantors, insurers, lessees, or mortgagors with respect to such
investments. The assessment, however, does not take into acount the extent to
which fund expenses will reduce payment to the unit holder of the interest and
principal required to be paid on portfolio assets. In addition, the rating is
not a recommendation to purchase, sell, or hold units, as the rating does not
comment as to market price of the units or suitability for a particular
investor.
AAA--Units rated AAA represent interests in funds composed exclusively of
securities that, together with their credit support, are rated AAA by Standard &
Poor's and/or certain short-term investments. This AAA rating is the highest
rating assigned by Standard & Poor's to a security. Capacity to pay interest and
repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
The ratings may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
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A provisional rating, indicated by 'p' following a rating, assumes the
successful completion of the project being financed by the issuance of the debt
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.
MOODY'S INVESTORS SERVICE
Aaa--Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
'gilt edge'. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Rating symbols may include numerical modifiers 1, 2 or 3. The numerical
modifier 1 indicates that the security ranks at the high end, 2 in the
mid-range, and 3 nearer the low end, of the generic category. These modifiers
are to give investors a more precise indication of relative debt quality in each
of the historically defined categories.
Conditional ratings, indicated by 'Con.', are sometimes given when the
security for the bond depends upon the completion of some act or the fulfillment
of some condition. Such bonds are given a conditional rating that denotes their
probable credit stature upon completion of that act or fulfillment of that
condition.
EXCHANGE OPTION
ELECTION
Holders may elect to exchange any or all of their Units of a Trust 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 and (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
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<PAGE>
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 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
The current return from taxable fixed income securities is normally higher
than that available from tax exempt fixed income securities. Certain of the
Exchange Funds do not provide for periodic payments of interest and are best
suited for purchase by IRA's, Keogh plans, pension funds or other tax-deferred
retirement plans. Consequently, some of the Exchange Funds may be inappropriate
investments for some Holders and therefore may be inappropriate exchanges for
Units of this Series. The table below indicates certain characteristics of each
of the Exchange Funds which a Holder should consider in determining whether each
Exchange Fund would be an appropriate investment vehicle and an appropriate
exchange for Units of this Series.
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, subject to the
following limitation. 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
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<PAGE>
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.
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).
<TABLE>
<CAPTION>
MAXIMUM REDUCED
NAME OF APPLICABLE SALES CHARGE FOR INVESTMENT
EXCHANGE FUND SALES CHARGE* SECONDARY MARKET** CHARACTERISTICS
- ------------------------------------------- --------------- ---------------------- --------------------------------------------
<S> <C> <C> <C>
DEFINED ASSET FUNDS-- GOVERNMENT SECURITIES
INCOME FUND
GNMA Series (other than those below) 4.25% $15 per unit long-term, fixed rate, taxable income,
underlying 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,
having units with an initial face underlying securities backed by the full
value of $1.00 faith and credit of 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
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 Bonds 3.75% $15 per unit intermediate-term, fixed rate, payable in
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--MUNICIPAL INVESTMENT
TRUST FUND
Monthly Payment, State and Multistate 5.50%+ $15 per unit long-term, fixed-rate, tax-exempt income
Series
Intermediate Term Series 4.75%+ $15 per unit intermediate-term, fixed rate, tax-exempt
income
Insured Series 5.50%+ $15 per unit long-term, fixed-rate, tax-exempt current
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 Alternative Minimum Tax.
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
</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 1,000 units for Series
for which the Reduced Sales Charge for Secondary Market (above) is $15 per
1,000 units.
+ Subject to reduction depending on the maturities of the underlying
Securities.
24
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM REDUCED
NAME OF APPLICABLE SALES CHARGE FOR INVESTMENT
EXCHANGE FUND SALES CHARGE* SECONDARY MARKET** CHARACTERISTICS
- ------------------------------------------- --------------- ---------------------- --------------------------------------------
<S> <C> <C> <C>
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--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 Ten Portfolios 2.75% $17.50 per 1,000 units 10 highest dividend yielding stocks in a
(both domestic and international) specified securities Index; seeks higher
total return than that Index; terminates
after one year
</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 Utility Common Stock Series 6 is $15 per 2,000
units and for prior Utility Common Stock Series is $7.50 per unit.
25
<PAGE>
AUTHORIZATION FOR REINVESTMENT
DEFINED ASSET FUNDS--EQUITY INCOME FUND
INCOME GROWTH FUND (1993 SERIES)
/ / 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, Income Growth Fund (1993 Series) and authorize The
Chase Manhattan Bank, N.A. to pay distributions on my Units as indicated below
(distributions to be reinvested will be paid for my accounts to The Chase
Manhattan Bank, N.A.)
INCOME DISTRIBUTIONS (CHECK ONE): / / IN CASH / / REINVESTED
PRINCIPAL DISTRIBUTIONS (CHECK ONE): / / IN CASH / / REINVESTED
Please print or type Name
Address Registered Holder
City State Zip Registered Holder
(Two signatures required if joint
tenancy)
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. 644 NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY IN THE
DEFINED ASSET FUNDS--EQUITY INCOME FUND UNITED STATES
INCOME GROWTH FUND (1993 SERIES)
THE CHASE MANHATTAN BANK, N.A.
UNIT TRUST DEPARTMENT
BOX 2051
NEW YORK, NY 10081
- ------------------------------------------------------------------------------
(Fold along this line.)
- ------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>
Defined
Asset Funds
SPONSORS: EQUITY INCOME FUND
Merrill Lynch, Income Growth Fund (1993 Series)
Pierce, Fenner & Smith Inc. A Unit Investment Trust
Unit Investment Trusts PROSPECTUS
P.O. Box 9051 This Prospectus does not contain all of
Princeton, N.J. 08543-9051 the information with respect to the
(609) 282-8500 investment company set forth in its
Smith Barney Inc. registration statement and exhibits
Unit Trust Department relating thereto which have been filed
Two World Trade Center--101st Floor with the Securities and Exchange
New York, N.Y. 10048 Commission, Washington, D.C. under the
(212) 298-7009 Securities Act of 1933 and the
PaineWebber Incorporated Investment Company Act of 1940, and to
1200 Harbor Blvd. which reference is hereby made.
Weehawken, N.J. 07087 No person is authorized to give any
(201) 902-3000 information or to make any
Prudential Securities Incorporated representations with respect to the
One Seaport Plaza Fund not contained in this Prospectus;
199 Water Street and any information or representation
New York, N.Y. 10292 not contained herein must not be relied
(212) 776-1000 upon as having been authorized. This
Dean Witter Reynolds Inc. Prospectus does not constitute an offer
Two World Trade Center--59th Floor to sell, or a solicitation of an offer
New York, N.Y. 10048 to buy, securities in any state to any
(212) 392-2222 person to whom it is not lawful to make
INDEPENDENT ACCOUNTANTS: such offer in such state.
Deloitte & Touche
One World Trade Center
New York, N.Y. 10048
TRUSTEE:
The Chase Manhattan Bank, N.A.
Unit Trust Department
Box 2051
New York, NY 10081
1-800-323-1508
14426--6/94
<PAGE>
DEFINED ASSET FUNDS--EQUITY INCOME FUND
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet of Form S-6.
The cross-reference sheet (incorporated by reference to the Cross-Reference
Sheet to Post-Effective Amendment No. 4 to the Registration Statement on Form
S-6 of Municipal Investment Trust Fund, One Hundred Sixty-Sixth Monthly Payment
Series, 1933 Act File No. 2-70983).
The Prospectus.
The Signatures.
The following exhibits:
1.1.1--Form of Standard Terms and Conditions of Trust Effective as of
October 21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multi-
state Series--48, 1933 Act File No. 33-50247).
5.1 --Consent of independent accountants.
R-1
<PAGE>
DEFINED ASSET FUNDS--
EQUITY INCOME FUND
INCOME GROWTH FUND
(1993 SERIES)
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
DEFINED ASSET FUNDS--EQUITY INCOME FUND, INCOME GROWTH FUND (1993 SERIES) (A
UNIT INVESTMENT TRUST), CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR
EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE
SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT OR
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW
YORK ON THE 15TH DAY OF JUNE, 1994.
SIGNATURES APPEAR ON PAGES R-3, R-4, R-5, R-6 AND R-7.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Smith Barney Inc.
has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Prudential
Securities Incorporated has signed this Registration Statement or Amendment to
the Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.
A majority of the members of the Board of Directors of Dean Witter Reynolds
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 33-43466
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By
ERNEST V. FABIO
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Prudential Securities have been filed
Incorporated: under Form SE and
the following 1933
Act File Number:
33-41631
ARTHUR H. BURTON, JR.
JAMES T. GAHAN
ALAN D. HOGAN
HOWARD A. KNIGHT
LELAND B. PATON
HARDWICK SIMMONS
By
WILLIAM W. HUESTIS
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons
listed above)
R-4
<PAGE>
SMITH BARNEY INC.
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Inc.: have been filed
under the 1933 Act
File Number:
33-49753 and
33-51607
RONALD A. ARTINIAN
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
ROBERT K. DIFAZIO
ROBERT DRUSKIN
HERBERT DUNN
TONI ELLIOTT
LEWIS GLUCKSMAN
ROBERT F. GREENHILT
THOMAS GUBA
HENRY U. HARRIS
JOHN B. HOFFMAN
A. RICHARD JANIAK, JR.
ROBERT Q. JONES
ROBERT B. KANE
JEFFREY LANE
JACK H. LEHMAN III
ROBERT H. LESSIN
JOEL N. LEVY
THOMAS A. MAGUIRE, JR.
JOHN J. MCATEE, JR.
HOWARD D. MARSH
JOHN F. MCCANN
WILLIAM J. MILLS II
JOHN C. MORRIS
CHARLES O'CONNOR
HUGH J. O'HARE
JOSEPH J. PLUMERI II
JACK L. RIVKIN
A. GEORGE SAKS
BRUCE D. SARGENT
DON M. SHAGRIN
DAVID M. STANDRIDGE
MELVIN B. TAUB
JACQUES S. THERIOT
STEPHEN J. TREADWAY
PAUL UNDERWOOD
PHILIP M. WATERMAN
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
R-5
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Dean Witter Act File Number: 33-17085
Reynolds Inc.:
NANCY DONOVAN
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for
Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-6
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board Form SE and the following 1933 Act
of Directors of PaineWebber File
Incorporated: Number: 33-28452
JOHN A. BULT
PAUL B. GUENTHER
DONALD B. MARRON
JAMES C. TREADWAY
By
ROBERT E. HOLLEY
(As authorized signatory for
PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-7
<PAGE>
Exhibit 5.1
DEFINED ASSET FUNDS--EQUITY INCOME FUND,
INCOME GROWTH FUND
(1993 SERIES)
CONSENT OF INDEPENDENT ACCOUNTANTS
The Sponsors and Trustee of
Defined Asset Funds--Equity Income Fund, Income Growth Fund (1993 Series):
We hereby consent to the use in Post-Effective Amendment No. 1 to Registration
Statement No. 33-46272 of our opinion dated April 18, 1994 relating to the
financial statements of Defined Asset Funds--Equity Income Fund, Income Growth
Fund (1993 Series) and to the reference to us under the heading 'Auditors' in
the Prospectus which is a part of this Registration Statement.
DELOITTE & TOUCHE
New York, N.Y.
June 15, 1994
<PAGE>
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
June 15, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We hereby represent that the Post-Effective Amendments to the registered
unit investment trusts described in Exhibit A attached hereto do not contain
disclosures which would render them ineligible to become effective pursuant to
Rule 485(b) under the Securities Act of 1933.
Very truly yours,
Davis Polk & Wardwell
Attachment
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
1933 ACT 1940 ACT
FUND NAME CIK FILE NO. FILE NO.
- --------- --- -------- --------
<S> <C> <C> <C>
DEFINED ASSET FUNDS-MITF AMT MPS-11 858774 33-38862 811-1777
DEFINED ASSET FUNDS-MITF AMT MPS-18 877294 33-44309 811-1777
DEFINED ASSET FUNDS-GSIF FMS 10 797783 33-46142 811-2810
DEFINED ASSET FUNDS-GSIF GNMA SERIES F 701471 2-76681 811-2810
DEFINED ASSET FUNDS-GSIF GNMA SERIES 1G 781293 33-16381 811-2810
DEFINED ASSET FUNDS-MITF IS-165 803813 33-38963 811-1777
DEFINED ASSET FUNDS-MITF IS-189 803869 33-49319 811-1777
DEFINED ASSET FUNDS-EIF Income Growth Fund 854569 33-46272 811-3044
DEFINED ASSET FUNDS-CIF ITS-36 883647 33-45755 811-2295
DEFINED ASSET FUNDS-CIF ITS-43 883654 33-49343 811-2295
DEFINED ASSET FUNDS-MITF ITS-104 780651 33-19443 811-1777
DEFINED ASSET FUNDS-MITF ITS-124 781271 33-26063 811-1777
DEFINED ASSET FUNDS-MITF ITS-125 781277 33-26606 811-1777
DEFINED ASSET FUNDS-MITF ITS-173 868087 33-38627 811-1777
DEFINED ASSET FUNDS-MITF MSS 1R 775972 33-00105 811-1777
DEFINED ASSET FUNDS-MITF MSS 31 895618 33-49351 811-1777
DEFINED ASSET FUNDS-MITF MSS 5M 836080 33-26502 811-1777
DEFINED ASSET FUNDS-MITF MSS 5N 836081 33-26504 811-1777
DEFINED ASSET FUNDS-MITF MSS 5O 836082 33-26607 811-1777
DEFINED ASSET FUNDS-MITF MSS 5P 836083 33-26708 811-1777
DEFINED ASSET FUNDS-MITF MSS 5Q 836084 33-26843 811-1777
DEFINED ASSET FUNDS-MITF MSS 6U 847185 33-33380 811-1777
DEFINED ASSET FUNDS-MITF MSS 8N 868157 33-39367 811-1777
DEFINED ASSET FUNDS-MITF MSS 8O 868158 33-39368 811-1777
DEFINED ASSET FUNDS-MITF MSS 9Z 881824 33-46273 811-1777
TOTAL: 25 FUNDS
</TABLE>
