EQUITY INCOME FD BLUE CHIP STK SER 3 PREM AMERICAN PORT DAF, 485BPOS, 1997-10-17

EQUITY INCOME FD BLUE CHIP STK SER 3 PREM AMERICAN PORT DAF
485BPOS, 1997-10-17

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997

REGISTRATION NO. 33-61155
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------------------------

AMENDMENT NO. 2
TO
FORM S-6

------------------------------------------

FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2

------------------------------------------

A. EXACT NAME OF TRUST:
EQUITY INVESTOR FUND
BLUE CHIP STOCK SERIES 3
PREMIER AMERICAN PORTFOLIO
DEFINED ASSET FUNDS
(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, SMITH BARNEY INC.
FENNER & SMITH 388 GREENWICH ST.
INCORPORATED 23RD FLOOR
DEFINED ASSET FUNDS NEW YORK, NY 10013
P.O. BOX 9051
PRINCETON, NJ 08543-9051

PAINEWEBBER INCORPORATED PRUDENTIAL SECURITIES DEAN WITTER REYNOLDS INC.
1285 AVENUE OF THE INCORPORATED TWO WORLD TRADE
AMERICAS ONE NEW YORK PLAZA CENTER--59TH FLOOR
NEW YORK, NY 10019 NEW YORK, NY 10292 NEW YORK, NY 10048

D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:

TERESA KONCICK, ESQ. LAURIE A. HESSLEIN ROBERT E. HOLLEY
P.O. BOX 9051 388 GREENWICH ST. 1285 AVENUE OF THE
PRINCETON, NJ 08543-9051 NEW YORK, NY 10013 AMERICAS
NEW YORK, NY 10019

COPIES TO:
LEE B. SPENCER, JR. DOUGLAS LOWE, ESQ. PIERRE DE SAINT PHALLE,
ONE NEW YORK PLAZA DEAN WITTER REYNOLDS INC. ESQ.
NEW YORK, NY 10292 TWO WORLD TRADE 450 LEXINGTON AVENUE
CENTER--59TH FLOOR NEW YORK, NY 10017
NEW YORK, NY 10048

The issuer has registered an indefinite number of Units under the Securities Act
of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice for the most
recent fiscal year on February 13, 1997.

Check box if it is proposed that this filing will become effective on October
24, 1997 pursuant to paragraph (b) of Rule 485. / x /

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<PAGE>
DEFINED ASSET FUNDSSM
- --------------------------------------------------------------------------------

EQUITY INVESTOR FUND This Defined Fund seeks total return through a
BLUE CHIP STOCK combination of capital appreciation and, to a
SERIES 3 lesser extent, dividend income by investing for a
PREMIER AMERICAN period of about two years in a diversified
PORTFOLIO portfolio of relatively high-priced common stocks
(A UNIT INVESTMENT issued primarily by leading American corporations
TRUST) having records of uninterrupted dividend payments
- ------------------------------over a relatively long period of time ('blue chip
/ / QUARTERLY INCOME stocks'). There is no assurance that the Fund's
/ / PROFESSIONAL SELECTION objectives will be met.
/ / DIVERSIFICATION The value of the units will fluctuate with the
/ / REINVESTMENT OPTION value of the common stocks in the Portfolio and no
assurance can be given that the underlying common
stocks will continue to pay dividends or that the
underlying common stocks or the units will
appreciate in value.
Minimum purchase: $250.
No minimum purchase for Retirement Accounts.

-------------------------------------------------
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
SPONSORS: OF THIS DOCUMENT. ANY REPRESENTATION TO THE
Merrill Lynch, CONTRARY IS A CRIMINAL OFFENSE.
Pierce, Fenner & Smith -------------------------------------------------
Incorporated PART A OF THIS PROSPECTUS MAY NOT BE DISTRIBUTED
Smith Barney Inc. UNLESS ACCOMPANIED BY EQUITY INVESTOR FUND
Prudential Securities PROSPECTUS PART B.
Incorporated INQUIRIES SHOULD BE DIRECTED TO THE TRUSTEE AT
Dean Witter Reynolds Inc. 1-800-323-1508.
PaineWebber Incorporated PROSPECTUS PART A DATED OCTOBER 24, 1997.

<PAGE>
- --------------------------------------------------------------------------------

Def ined Asset FundsSM
Defined Asset Funds is America's oldest and largest family of unit investment
trusts, with over $115 billion sponsored over the last 25 years. Each Defined
Asset Fund is a portfolio of preselected securities. The portfolio is divided
into 'units' representing equal shares of the underlying assets. Each unit
receives an equal share of income and principal distributions.

Defined Asset Funds offer several defined 'distinctives'. You know in advance
what you are investing in and that changes in the portfolio are limited - a
defined portfolio. Most defined bond funds pay interest monthly - defined
income. The portfolio offers a convenient and simple way to invest - simplicity
defined.

Your financial professional can help you select a Defined Asset Fund to meet
your personal investment objectives. Our size and market presence enable us to
offer a wide variety of investments. The Defined Asset Funds family offers:

o Municipal portfolios
o Corporate portfolios
o Government portfolios
o Equity portfolios
o International portfolios

The terms of Defined Funds are as short as one year or as long as 30 years.
Special defined bond funds are available including: insured funds, double and
triple tax-free funds and funds with 'laddered maturities' to help protect
against changing interest rates. Defined Asset Funds are offered by prospectus
only.
- ----------------------------------------------------------------
Defining Your Portfolio
- ----------------------------------------------------------------

The 36 stocks represented in the Fund are issued by companies that are among the
oldest, largest or most profitable American companies in their respective
industries with established records of earnings. These are commonly known as
'blue chip' stocks. All but one have paid uninterrupted dividends over a
relatively long period of time. One issuer, Berkshire Hathaway Inc., does not
pay dividends but in the opinion of Defined Asset Funds research analysts
otherwise qualifies as a blue chip stock and trades at a price prohibitive to
most individual investors. Investing in the Portfolio, rather than in only one
or two of the underlying common stocks, is a way to diversify your investment.
This Fund was created August 22, 1995. The information in this Prospectus is as
of July 31, 1997, the evaluation date. Based upon the principal business of each
issuer and current market values, the following industries are represented in
the Portfolio:
APPROXIMATE
PORTFOLIO PERCENTAGE

/ / Aerospace 4.06%
/ / Chemical 9.27%
/ / Consumer Products 18.59%
/ / Drugs/Medical Products 9.48%
/ / Electronics 18.80%
/ / Insurance 6.18%
/ / Petroleum 4.17%
/ / Publishing/Broadcasting 4.17%
/ / Forest Products & Paper 7.29%
/ / Railroads 5.17%
/ / Other 12.82%
- ----------------------------------------------------------------
Defining Your Risks
- ----------------------------------------------------------------

Unit price fluctuates with the value of the Portfolio, and the value of the
Portfolio could be affected by changes in the financial condition of the
issuers, changes in the various industries represented in the Portfolio,
movements in stock prices generally, the impact of the Sponsors' purchase and
sale of the securities (especially during the primary offering period of units)
and other factors. Additionally, equity markets have been at historically high
levels and no assurance can be given that these levels will continue. Therefore,
there is no guarantee that the objective of the Portfolio will be achieved.

The Fund is not considered to be concentrated in any particular category of
securities (see Risk Factors in Part B).

Unlike a mutual fund, the Portfolio is not actively managed and the Sponsors
receive no management fee. Therefore, the adverse financial condition of an
issuer or any market movement in the price of a security will not necessarily
require the sale of securities from the Portfolio or mean that the Sponsors will
not continue to purchase the security in order to create additional Units.
Although the Portfolio is regularly reviewed and evaluated and Sponsors may
instruct the Trustee to sell securities under certain limited circumstances,
securities will not be sold to take advantage of market fluctuations or changes
in anticipated rates of appreciation.

A-2
<PAGE>
- ----------------------------------------------------------------
Defining Your Investment
- ----------------------------------------------------------------

PUBLIC OFFERING PRICE PER 1,000 UNITS $1,785.25

The Public Offering Price as of July 31, 1997, the evaluation date, is based on
the aggregate value of the underlying securities ($142,898,303) divided by the
number of units outstanding (81,677,339) times 1,000, plus the initial sales
charge. An amount equal to principal cash and income cash adjustments is added
to the Public Offering Price. The Public Offering Price on any subsequent date
will vary. The underlying securities, are valued by the Trustee on the basis of
their closing sale prices at 4:00 p.m. Eastern time on every business day.

SALES CHARGES

The total sales charge for this investment combines an initial up-front sales
charge and a deferred sales charge that will be deducted from the net asset
value of the Portfolio quarterly on the 10th of November, February, May and
August.

QUARTERLY INCOME DISTRIBUTIONS

Distributions of income, if any, will be paid on the 25th day of March, June,
September and December of each year to Holders of record on the 10th day of
those months. In order to meet certain tax requirements, a special distribution
of income including capital gains, may be paid to holders of record as of a date
in December. Any capital gain net income will generally be distributed after the
end of the year.

REINVESTMENT OPTION

You can elect to automatically reinvest your distributions into additional units
of the Portfolio subject only to the deferred sales charge remaining at the time
of reinvestment. Reinvesting helps to compound your income for a greater total
return.

TAXES

Distributions which are taxable as ordinary income to Holders will constitute
dividends for Federal income tax purposes and may, subject to certain
limitations, be eligible for the dividends-received deduction for certain
corporations (see Taxes above). Foreign holders should be aware that
distributions from the Fund will generally be subject to information reporting
and withholding taxes.

TAX BASIS REPORTING

The proceeds received when you sell this investment will reflect the deduction
of the deferred sales charge. In addition, the annual statement and the relevant
tax reporting forms you receive at year-end will reflect the actual amount paid
to you (not including the deferred sales charge). Accordingly, you should not
increase your basis in your units by the deferred sales charge.

TERMINATION DATE

The Portfolio will terminate by August 31, 1999. The final distribution will be
made within a reasonable time afterward. The Portfolio may be terminated earlier
if its value is less than 40% of the value of the securities when deposited. On
the evaluation date, the value of the Portfolio was 142% of the value of the
securities when deposited.
- ----------------------------------------------------------------
Taxes
- ----------------------------------------------------------------

Substitute the following for 'Taxes' in Part B.

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 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 investors 90% or more of its taxable
income, excluding its net capital gain (i.e., the excess of its net long-term
capital gain over its net short-term capital loss), it will not be subject to
Federal income tax on the portion of its taxable income (including any net
capital gain) it distributes to investors 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 investors 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
any calendar 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 investors during the calendar year.

DISTRIBUTIONS

Distributions to investors of the Fund's dividend income and net short-term
capital gain in any year will generally be taxable as ordinary income to
investors to the extent of the Fund's taxable income (other than taxable income
attributable to its net capital gain) for that year. Distributions in excess of
the Fund's taxable income will be treated as a return of capital and will reduce
the investor'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 net capital gains will be designated as capital gain dividends and
that the Fund's dividend income and net short-term capital gain will be taxable
as ordinary income to investors.

Distributions that are taxable as ordinry income to investors will constitute
dividends for Federal income tax purposes. Certain corporate investors will be
eligible for the 70% dividends-received deduction to the extent that the
distributions are appropriately designated by the Fund and are attributable to
eligible dividends received by the Fund from domestic issuers with respect to
whose Securities the fund satisfies the requirements for the dividends-received
deduction. Depending upon the particular corporate investor's

A-3
<PAGE>
circumstances, limitations on the availability of the dividends-received
deduction may be applicable. Further, Congress from time to time considers
proposals that would adversely affect the after-tax returns to investors that
can take advantage of the deduction. For example, the recently enacted Taxpayer
Act of 1997 requires the holding period for the dividends-received deduction
(during which the investor's position may not be hedged) to be satisifed
immediately proximate to each ex-dividend date. Investors are urged to consult
their own tax advisers in this regard.

Under the Taxpayer Relief Act of 1997, investors who are individuals and have
held their Units for more than 18 months may be entitled to a 20% maximum
Federal tax rate for gains from the sale of these Units. Prior to the issuance
of relevant regulations, it is not certain whether or how the 20% maximum rate
will be available with respect to capital gain dividends paid by the Fund.
Investors should consult their own tax advisers in this regard.

Distributions of the Fund's net capital gain that are designed as capital gain
dividends by the Fund will be taxable to investors as long-term capital gain,
regardless of the time the investor has held his Units. However, if the Fund
were to terminate in less than one year, the Fund would not distribute any
capital gain dividends. An investor, other than a dealer in securities, will
generally recognize capital gain or loss when the investor disposes of his Units
(by sale, redemption or otherwise). In the case of a distribution of Securities
to an investor upon redemption of his Units, gain or loss will generally be
recognized in an amount equal to the difference between the investor's tax basis
in his Units and the fair market value of the Securities received in redemption.
Net capital gain may be taxed at a lower rate than ordinary income for certain
individuals and other non-corporate taxpayers. Any such capital gain or loss
asset is long-term if the asset is held for more than one year and short-term if
held one year or less. However, any capital loss on the sale or redemption of a
Unit that an investor has held for six months or less will be a long-term
capital loss to the extent of any capital gain dividends previously distributed
to the investor by the Fund. The deduction of capital loss is subject to
limitations.

The investor's basis in his Units will be equal to the cost of his Units,
including the initial sales charge. A portion of the sales charge is deferred
until the termination of the Fund or the redemption of the Units. The proceeds
received by an investor upon such event will reflect deduction of the deferred
amount. The annual statement and the relevant tax reporting forms received by
investors will reflect the actual amounts paid to them, net of the deferred
sales charge. Accordingly, investors should not increase their basis in their
Units by the deferred sales charge amount.

Investors will be taxed in the manner described above regardless of whether
distributions from the Fund are actually received by the investor or are
reinvested pursuant to the reinvestment plan. The Federal tax status of each
year's distributions will be reported to investors and to the Internal Revenue
Service. The Fund intends to report to each investor, no later than January 31,
the amount of distributions to that investor.

The foregoing discussion summarizes only certain U.S. federal income tax
consequences of an investment in Units by investors who are U.S. persons, as
defined in the Code. Foreign investors (including nonresident alien individuals
and foreign corporations) not engaged in U.S. trade or business will generally
be subject to 30% withholding tax (or lower applicable treaty rate) on dividend
distributions (other than capital gain dividends). Investors may be subject to
taxation in New York or in other U.S. or foreign jurisdictions and should
consult their own tax advisers in this regard.

RETIREMENT PLANS

This Series of Equity Investor Fund may be well suited for purchase by
Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for special 5 or
10 year averaging (prior to the year 2000) or tax-deferred rollover treatment.
Investors in IRAs, Keogh plans and other tax-deferred retirement plans should
consult their plan custodian as to the appropriate disposition of distributions.
Investors considering participation in any of these plans should review specific
tax laws related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any of these plans. These plans
are generally offered by brokerage firms, including 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 for self-employed individuals,
partnerships or unincorporated companies ('Keogh plans'). The assets of a Keogh
plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Keogh plan participants may also establish separate
IRAs (see below) to which they may contribute up to an additional $2,000 per
year ($4,000 in a spousal account).

Individual Retirement Account--IRA. Any individual can make use of a qualified
IRA arrangement for the purchase of Units of the Fund. Any individual (including
one covered by an employer retirement plan) can make a contribution in an IRA
equal to the lesser of $2,000 ($4,000 in a spousal account) or 100% of earned
income; such investment must be made in cash. However, the deductible amount of
a contribution by an individual covered by an employer retirement plan will be
reduced if the individual's adjusted gross income exceeds $25,000 (in the case
of a single individual), $40,000 (in the case of a married individual filing a
joint return) or $200 (in the case of a married individual filing a separate
return). Certain transactions which are prohibited under Section 408 of

A-4
<PAGE>
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. Unless nondeductible contributions
were made in 1987 or a later year, all distributions from an IRA will be treated
as ordinary income but generally are eligible for tax-deferred rollover
treatment. Taxable distributions made before attainment of age 59 1/2, except in
the case of the participant's death or disability or where the amount
distributed is part of a series of substantially equal periodic (at least
annual) payments that are to be made over the life expectancies of the
participant and his or her beneficiary, are generally subject to a surtax in an
amount equal to 10% of the distribution. Under the Taxpayer Relief Act of 1997,
the 10% surtax will be waived for withdrawals for certain educational and
first-time homebuyer expenses. The Taxpayer Relief Act also provides, subject to
certain income limitations, for a special type of IRA under which contributions
would be non-deductible but distributions would be tax-free if the account were
held for at least five years and the account holder was aged at least 59 1/2 at
the time of distribution.

Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing plan for
employees of a corporation may purchase Units of the Fund.
- ----------------------------------------------------------------
Defining Your Costs
- ----------------------------------------------------------------

SALES CHARGE

First-time investors pay a 2.00% sales charge when they buy. In addition, a
deferred sales charge of $1.625 per 1,000 units ($6.50 per year) will be
deducted on the 10th day of February, May, August and November. This deferred
method of payment keeps more of your money invested over a longer period of
time. Although this is a unit investment trust rather than a mutual fund, the
following information is presented to permit a comparison of fees and an
understanding of the direct or indirect costs and expenses that you pay.

As a %
of Public Amount per
Offering Price 1,000 Units
----------------- --------------
Maximum Initial Sales Charge 2.75% $ 49.09
Maximum Deferred Sales Charge 0.82% 14.63
----------------- --------------
3.57% $ 63.72
----------------- --------------
----------------- --------------
Maximum Sales Charge Imposed on
Reinvested Dividends 0.82% $ 14.63

ESTIMATED ANNUAL FUND OPERATING EXPENSES

Amount per
1,000 Units
---------------
Trustee's Fee $ 0.81
Portfolio Supervision, Bookkeeping and
Administrative Fees $ 0.45
Organizational Expenses $ 0.61
Other Operating Expenses $ 0.20
---------------
TOTAL $ 2.07

This Portfolio (and therefore the investors) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states, fees of the Portfolio Consultant and the initial audit of the
Portfolio--as is common for mutual funds.

COSTS OVER TIME

As of the evaluation date, July 31, 1997, you would pay the following cumulative
expenses for a $1,000 investment, assuming 5% annual return on the investment
throughout the indicated periods and redemption at the end of the period:

1 Year 2 Years
$37 $46

The example assumes reinvestment of all dividends and distributions and uses a
5% annual rate of return as mandated by SEC regulations applicable to mutual
funds. For purposes of the example, the deferred sales charge imposed on
reinvestment of dividends is not reflected until the year following payment of
the dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment.

The example should not be considered a representation of past or future expenses
or annual rates of return; the actual expenses and annual rates of return may be
more or less than the example.

REDEEMING OR SELLING YOUR INVESTMENT

You may redeem or sell your units at any time prior to the termination of the
Portfolio. Your price will be based on the then current net asset value. The
redemption and secondary market repurchase price as of the evaluation date was
$1,749.55 per 1,000 units ($35.70 per 1,000 units less than the Public Offering
Price). This price reflects deductions of the deferred sales charge which
declines over the life of the Portfolio ($26.00 initially). If you sell your
units before the termination of the Portfolio, no further deferred sales charges
will be deducted.

A-5

<PAGE>

EQUITY INVESTOR FUND, BLUE CHIP STOCK SERIES 3,
PREMIER AMERICAN PORTFOLIO,
DEFINED ASSET FUNDS

REPORT OF INDEPENDENT ACCOUNTANTS

The Sponsors, Trustee and Holders
of Equity Investor Fund, Blue Chip Stock Series 3,
Premier American Portfolio,
Defined Asset Funds:

We have audited the accompanying statement of condition of Equity Investor Fund,
Blue Chip Stock Series 3, Premier American Portfolio, Defined Asset Funds,
including the portfolio, as of July 31, 1997 and the related statements of
operations and of changes in net assets for the year ended July 31, 1997 and the
period August 23, 1995 to July 31, 1996. These financial statements are the
responsibility of the Trustee. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Securities owned at
July 31, 1997, as shown on such portfolio, were confirmed to us by The 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
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Equity Investor Fund, Blue Chip
Stock series 3, Premier American Portfolio, Defined Asset Funds at July 31, 1997
and the results of its operations and changes in its net assets for the above-
stated periods in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, New York
September 30, 1997

D - 1

<PAGE>

EQUITY INVESTOR FUND, BLUE CHIP STOCK SERIES 3,
PREMIER AMERICAN PORTFOLIO,
DEFINED ASSET FUNDS

STATEMENT OF CONDITION
AS OF JULY 31, 1997

<TABLE>
<S> <C> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
(Cost $ 89,854,956) (Note 1)................ $ 142,898,303
Deferred organization costs (Note 5)............ 112,270
Dividends receivable............................. 115,850
Proceeds receivable from securities sold......... 264,442
Income cash...................................... 85,322
-------------
Total Trust Property............................. 143,476,187

LESS LIABILITIES:
Other liabilities (Note 5)..................... $ 201,626
Advance from Trustee............................. 178,347
Redemption payable............................... 132,899
Accrued fees and expenses........................ 23,486 536,358
------------ -------------

NET ASSETS:
Represented by:
81,650,655 units of fractional undivided
interest outstanding (Note 3)............ 142,762,275

Undistributed net investment income.............. 177,554 $ 142,939,829
------------ ==============

UNIT VALUE ($142,939,829 / 81,650,655 units)............. $ 1.75063
==============
</TABLE>

See Notes to Financial Statements.

D - 2

<PAGE>

EQUITY INVESTOR FUND, BLUE CHIP STOCK SERIES 3,
PREMIER AMERICAN PORTFOLIO,
DEFINED ASSET FUNDS

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
August 23,
Year Ended 1995 to
July 31, July 31,
INVESTMENT INCOME: 1997 1996
<S> <C> <C>

Dividend income................................. $ 1,757,569 $ 930,214
Trustee's fees and expenses..................... (89,155) (73,272)
Sponsors' fees.................................. (24,650) (24,215)
----------------------------------------
Net investment income........................... 1,643,764 832,727
----------------------------------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:

Realized gain on securities sold................ 5,583,323 33,216
Net unrealized appreciation of investments...... 45,772,788 7,270,559
-----------------------------------------
Net realized and unrealized gain on investments. 51,356,111 7,303,775
-----------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................................. $ 52,999,875 $ 8,136,502
=========================================
</TABLE>

See Notes to Financial Statements.

D - 3

<PAGE>
EQUITY INVESTOR FUND, BLUE CHIP STOCK SERIES 3,
PREMIER AMERICAN PORTFOLIO,
DEFINED ASSET FUNDS

STATEMENTS OF CHANGES IN NET ASSETS

August 23,
Year Ended 1995 to
July 31, July 31,
1997 1996
<S> <C> <C>

OPERATIONS:
Net investment income............................... $ 1,643,764 $ 832,727
Realized gain on securities sold.................... 5,583,323 33,216
Net unrealized appreciation of investments......... 45,772,788 7,270,559
-----------------------------------------
Net increase in net assets resulting from operations 52,999,875 8,136,502
-----------------------------------------
INCOME DISTRIBUTIONS TO HOLDERS (Note 2).................. (1,646,451) (811,896)
-----------------------------------------
CAPITAL SHARE TRANSACTIONS
Creations of 5,383,298 and 85,884,154 units,
respectively............................... 6,748,804 92,783,471
Redemptions of 10,093,275 units..................... (14,766,158) -
Deferred organizational costs....................... (56,134) (49,629)
Deferred sales charge............................... (571,156) (289,536)
-----------------------------------------
Net capital share transactions...................... (8,644,644) 92,444,306
-----------------------------------------
NET INCREASE IN ASSETS...................................... 42,708,780 99,768,912

NET ASSETS AT BEGINNING OF PERIOD........................... 100,231,049 462,137
-----------------------------------------
NET ASSETS AT END OF PERIOD................................. $ 142,939,829 $ 100,231,049
=========================================
PER UNIT:
Income distributions during period.................. $ 0.01876 $ 0.01210
=========================================
Net asset value at end of period................... $ 1.75063 $ 1.16061
=========================================
Units outstanding at end of period.................. 81,650,655 86,360,632
=========================================
</TABLE>

See notes to financial statements.

D - 4

<PAGE>
EQUITY INVESTOR FUND, BLUE CHIP STOCK SERIES 3,
PREMIER AMERICAN PORTFOLIO,
DEFINED ASSET FUNDS

NOTES TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
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 "How to Sell
Units - Trustee's Redemption of Units" in this Propectus, Part B. Gains or losses on sales
of securities are computed using the first-in, first-out method.

(b) The fund is not subject to income taxes. Accordingly, no provision for such taxes is
required.

2 DISTRIBUTIONS
A distribution of net investment income is made to Holders on the 25th day of
March, June, September, and December. Receipts other than dividends, after deduction for
redemptions and applicable expenses, are distributed as explained in the "Income,
Distributions and Reinvestment - Distributions" in this Prospectus, Part B.

3 NET CAPITAL

Cost of 81,650,655 units at Dates of Deposit $ 88,848,872
Less sales charge 777,632
-------------------
Net amount applicable to Holders 88,071,240
Redemptions of units - net cost of 10,093,275 units redeemed
less redemption amounts (3,863,088)
Realized gain on securities sold 5,616,539
Organization costs (105,763)
Net unrealized appreciation of investments 53,043,347
-------------------

Net capital applicable to Holders $ 142,762,275
===================

4 INCOME TAXES
As of July 31, 1997, net unrealized appreciation of investments, based on cost
for Federal income tax purposes, aggregated $53,043,347, of which
$53,915,590 related to appreciated securities and $872,243 related to
depreciated securities. The cost of the investment securities for Federal
income tax purposes was $89,854,956 at July 31, 1997.

5 DEFERRED ORGANIZATION COSTS
Deferred organization costs are being amortized over the life of the Fund.
Included in "Other liabilities" in the accompanying Statement of Condition is
$201,626 payable to the Trustee for reimbursement of costs related to the
organization of the Trust.
</TABLE>

D - 5

<PAGE>
EQUITY INVESTOR FUND, BLUE CHIP STOCK SERIES 3,
PREMIER AMERICAN PORTFOLIO,
DEFINED ASSET FUNDS

PORTFOLIO AS OF JULY 31, 1997

Number of Current Annual or Cost of
Shares of Percentage Indicated Dividend Per Securities
Common Stock of Fund (3) Share (2) to Fund Value (1)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

1 American Int'l Group, Inc. (4) 57,000 4.25 % $ 0.40 $ 3,415,500 $ 6,070,500
2 Berkshire Hathaway Inc. 296 9.78 9,377,400 13,971,200
3 Boeing Co. (5) 38,000 1.56 1.12 1,431,700 2,234,875
4 Clorox Co. 19,000 1.86 2.56 1,468,675 2,652,875
5 Coca-Cola Company 87,700 4.25 0.56 3,621,361 6,073,225
6 Colgate-Palmolive Co. (5) 76,400 4.05 1.10 2,800,760 5,787,300
7 CSX Corp. 75,600 3.27 1.04 3,346,125 4,668,300
8 Du Pont (E.I.) De Nemours & Co. (5) 76,400 3.58 2.52 2,730,985 5,114,025
9 Emerson Elec. Co.(5) 107,600 4.44 1.08 4,207,028 6,348,400
10 Exxon Corp. (5) 38,200 1.72 1.64 1,502,080 2,454,350
11 General Re Corp. 17,500 2.56 2.20 2,609,775 3,655,312
12 Hewlett- Packard Co. 105,900 5.19 0.56 4,723,267 7,419,619
13 Ikon Office Solution (6) 114,000 2.33 0.16 4,199,618 3,327,375
14 International Paper 76,400 2.99 1.00 2,958,390 4,278,400
15 Johnson & Johnson 68,050 2.97 0.88 2,976,379 4,240,366
16 Kimberly-Clark Corp. (5) 38,200 1.35 0.96 1,396,394 1,936,262
17 Marsh & McLennan Co's., Inc. (5) 38,200 2.07 2.00 1,685,293 2,958,113
18 McGraw-Hill Co., Inc. 38,200 1.81 1.44 1,624,327 2,590,437
19 Medtronic, Inc. 67,100 4.10 0.44 3,727,680 5,854,475
20 Mobil Corp. 38,200 2.05 2.12 2,048,930 2,922,300
21 Monsanto Co. 93,100 3.25 0.64 2,284,026 4,637,544
22 J.P. Morgan & Co. 19,100 1.55 3.52 1,523,255 2,213,213
23 Motorola, Inc. 52,000 2.92 0.48 3,221,862 4,176,250
24 Nike, Inc. Class B (5) 99,600 4.34 0.40 3,763,055 6,206,325
25 Norfolk Southern Corp. 18,900 1.46 2.40 1,486,095 2,093,175
26 Procter & Gamble Co. 19,100 2.03 2.02 1,589,742 2,905,587
27 Texas Instruments, Inc. 34,300 2.76 0.68 2,016,465 3,944,500
28 Textron, Inc. (5) 36,200 1.77 1.00 1,353,255 2,536,263
29 Tribune Company (5) 38,200 1.42 0.64 1,263,805 2,022,213
30 TRW, Inc. (5) 37,500 1.54 1.24 1,490,205 2,193,750
31 Unisource Worldwide (7) 57,000 0.74 0.80 1,002,435 1,061,625
32 United Technologies Corp (5) 63,800 3.78 1.24 3,138,975 5,395,087
33 Warner-Lambert Co. 38,200 3.73 1.52 1,849,883 5,336,062
34 Xerox Corp. 44,000 2.53 1.28 2,020,231 3,619,000
--------- ------------------------------
TOTALS 100.00 % $ 89,854,956 $ 142,898,303
========= ==============================
</TABLE>
(1) See Notes to Financial Statements.
(2) Based on latest quarterly or semi-annual ordinary dividend declared.
(3) Based on value.
(4) Includes 3-for-2 split
(5) Includes 2-for-1 split
(6) Formerly known as Alco Standard
(7) Includes 1-for-2 spin-off

D - 6

<PAGE>
AUTHORIZATION FOR REINVESTMENT
EQUITY INVESTOR FUND
BLUE CHIP STOCK SERIES 3
PREMIER AMERICAN PORTFOLIO
DEFINED ASSET FUNDS
/ / 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 Equity Income Fund, Blue
Chip Stock Series 3, Premier American Portfolio, Defined Asset Funds and
authorize The Chase Manhattan Bank to pay distributions on my Units as indicated
below (distributions to be reinvested will be paid for my account to The Chase
Manhattan Bank).

Income distributions
(check one): / / in cash / / reinvested
Capital
distributions (check
one): / / in cash / / reinvested

Please print or type

Name Registered Holder
Address
Registered Holder
(Two signatures required if
joint tenancy)
City State Zip Code

This page is a self-mailer. Please complete the information above, cut
along the dotted line, fold along the lines on the reverse side, tape, and mail
with the Trustee's address displayed on the outside.

12345678
<PAGE>

BUSINESS REPLY MAIL NO POSTAGE
FIRST CLASS PERMIT NO. 644, NEW YORK, NY NECESSARY
IF MAILED
POSTAGE WILL BE PAID BY ADDRESSEE IN THE
THE CHASE MANHATTAN BANK (MITF) UNITED STATES
RETAIL PROCESSING DEPARTMENT
BOWLING GREEN STATION
P.O. BOX 5179
NEW YORK, NY 10274-5179

- --------------------------------------------------------------------------------
(Fold along this line.)

- --------------------------------------------------------------------------------
(Fold along this line.)
<PAGE>

DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INCOME FUND
FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS BY WRITING OR CALLING THE TRUSTEE AT THE ADDRESS AND
TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF PART A OF THE PROSPECTUS.

INDEX

PAGE
---------
FUND DESCRIPTION..................................................... 1
RISK FACTORS......................................................... 2
HOW TO BUY UNITS..................................................... 6
HOW TO SELL UNITS.................................................... 7
INCOME, DISTRIBUTIONS AND REINVESTMENT............................... 8
FUND EXPENSES........................................................ 8
TAXES................................................................ 9
RECORDS AND REPORTS.................................................. 11
TRUST INDENTURE...................................................... 11
MISCELLANEOUS........................................................ 12
EXCHANGE OPTION...................................................... 14
SUPPLEMENTAL INFORMATION............................................. 14

FUND DESCRIPTION

PORTFOLIO SELECTION

Professional buyers and research analysts for Defined Asset Funds, with
access to extensive research, selected the Securities for the Portfolio after
considering the Fund's investment objective as well as the quality of the
stocks, the dividend payment record of the issuers and the prices of the stocks.
The yield and price of stocks of the type deposited in the Fund are dependent on
a variety of factors, including money market conditions, general conditions of
the corporate bond and equity markets, size of a particular offering and capital
structure of the issuer. While it may not be likely that dividends on any stocks
would be omitted, of course no assurances can be given since earnings available
for dividends, regardless of the size of the company, are subject to numerous
events which are often beyond the issuer's control.

Because each Defined Asset Fund is a preselected portfolio, you know the
securities before you invest. Of course, the Portfolio will change somewhat over
time, as Securities are purchased upon creation of additional Units, as
securities are sold to meet Unit redemptions or in other limited circumstances.

PORTFOLIO SUPERVISION

1
<PAGE>

issuer, the institution of legal proceedings against the issuer, a decline in
the price or the occurrence of other market or credit factors that might
otherwise make retention of the Security detrimental to the interest of
investors or if the disposition of these Securities is necessary in order to
enable the Fund to make distributions of the Fund's capital gain net income or
desirable in order to maintain the qualification of the Fund as a regulated
investment company under the Internal Revenue Code. Securities can also be sold
to meet redemption of Units. In Funds organized as regulated investment
companies, the Sponsors are also authorized to direct the reinvestment of the
proceeds of the sale of Securities, as well as moneys held to cover the purchase
of Securities pursuant to contracts which have failed, in additional Securities.

RISK FACTORS

An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline if the financial condition of the
issuers of the Securities becomes impaired or if the general condition of the
stock market worsens. In addition, holders of common stocks have generally
inferior rights to receive payments from the issuer in comparison with the
rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Moreover, common stocks do not represent an obligation of
the issuer and therefore do not offer any assurance of income or provide the
degree of protection of capital provided by debt securities. Common stocks in
general may be especially susceptible to general stock market movements and to
volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic or banking crises. The
Sponsors cannot predict the direction or scope of any of these factors.

A Portfolio may be concentrated in one or more of the following categories.
Concentration may involve additional risk because of the decreased
diversification of economic, financial and market risks. Set forth below is a
brief description of certain risks associated with certain of the Securities.
Additional information is contained in the Information Supplement which is
available from the Trustee at no charge to the investor.

CONSUMER PRODUCTS COMPANIES

Risk factors 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, 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. A continuing weak
economy with its consequent effect on consumer spending would have an adverse
effect on the industry.

HEALTH CARE

Companies in the health care industry face several risks. Most health care
companies are extensively regulated. All are subject to extreme cost-containment
pressures. As a result they cannot readily raise the prices of their products
and services, and may experience price declines. Most are subject to intense
competition and are required to spend large amounts of capital to keep pace with
technological innovation. Many of the companies also face product obsolescence,
the threat of product liability suits and expensive liability insurance. In
addition, issuers in the health care industry will be affected by health reform
legislation. Proposed federal legislation would significantly reduce Medicare
and Medicaid payments to providers and impose stringent cost controls that would
affect insurance premiums and fees paid to providers; it is impossible to
predict what reforms may be adopted or when reforms might be implemented at the
federal or state level.

MANUFACTURING COMPANIES

Growth in the manufacturing industry is closely linked to expansion in the
domestic and global economies. Since the U.S. 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 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. Cutbacks in
defense spending have adversely impacted many of the companies engaged in the
aerospace and arms/defense sectors of the manufacturing industry. Environmental
and safety issues increasingly affect the manufacturing industry.

2
<PAGE>
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.
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 those with lower labor costs,
will severely impact the profitability of the U.S. manufacturing business.

REAL ESTATE COMPANIES

Investment in securities issued by real estate 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 economic
recession, competitive overbuilding, unusually adverse weather conditions,
changing demographics, changes in government regulations (including tax laws and
environmental, building zoning and sales regulation by various federal, state
and local authorities), increases in real estate taxes or costs of material and
labor, the inability to secure performance guarantees as required and the
unavailability of construction financing or mortgage loans at rates acceptable
to builders and home buyers. Variations in rental income and space availability
and vacancy rates in terms of supply and demand are additional factors affecting
real estate generally and Real Estate Investment Trusts (REITs) in particular.
Performance by individual REITs is dependent on the types of real estate
investments held. For example, the effect of interest rate fluctuations on
mortgage REITs is greater than on equity REITs and the nature of the underlying
assets of a mortgage REIT may be considered less tangible than that of an equity
REIT. In addition, equity REITs may be affected by changes in the value of the
underlying property they own, while mortgage REITs may be affected by the
quality of credit extended.

TECHNOLOGY COMPANIES

Technology companies, such as semiconductor, computer and electronics
manufacturing companies, are rapidly developing and highly competitive, both
domestically and internationally, and tend to be relatively volatile as compared
to other types of investments. Certain of these companies may be smaller and
less seasoned companies with limited product lines, markets or financial
resources and limited management or marketing personnel. These companies are
characterized by a high degree of investment to maintain competitiveness and are
affected by worldwide scientific and technological developments (and resulting
product obsolescence) as well as government regulation, increase in material or
labor costs, changes in distribution channels and the need to manage inventory
levels in line with product demand. Other risk factors include short product
life cycles, aggressive pricing and reduced profit margins, dramatic and often
unpredictable changes in growth rates, frequent new product introduction, the
need to enhance existing products, intense competition from large established
companies and potential competition from small start up companies.

TELECOMMUNICATIONS

Payment on common stocks of companies in the telecommunications industry,
including local, long-distance and cellular service, the manufacture of
telecommunications equipment, and other ancillary services, is generally
dependent upon the amount and growth of customer demand, the level of rates
permitted to be charged by regulatory authorities and the ability to obtain
periodic rate increases, the effects of inflation on the cost of providing
services and the rate of technological innovation. The domestic
telecommunications industry is characterized by increasing competition in all
sectors and extensive regulation by the Federal Communications Commission and
various state regulatory authorities. To meet increasing competition, companies
may have to commit substantial capital, particularly in the formulation of new
products and services using new technology. Companies offering telephone
services are experiencing increasing competition from cellular telephones, and
the cellular telephone industry, because of its limited operating history, faces
uncertainty concerning the future of the industry and demand for cellular
telephones. Telecommunications companies in both developed

3
<PAGE>
and emerging countries are undergoing significant change due to varying and
evolving levels of governmental regulation or deregulation and other factors. As
a result, competitive pressures are intense and the securities of such companies
may be subject to significant price volatility. In addition, all
telecommunications companies in both developed and emerging countries are
subject to the additional risk that technological innovations will make their
products and services obsolete.

UTILITIES

Payments on utility stocks are dependent on various factors, including the
rates the utilities may charge, the demand for their services and their
operating costs, including expenses to comply with environmental legislation and
other energy and licensing laws and regulations. Utilities are particularly
sensitive to, among other things, the effects of inflation on operating and
construction costs, the unpredictability of future usage requirements, the costs
and availability of fuel and, with certain electric utilities, the risks
associated with the nuclear industry.

FOREIGN ISSUERS

Certain of the Securities in a Portfolio may consist of securities of
foreign issuers. An investment in such a Fund involves some investment risks
that are different in some respects from an investment in a fund that invests
entirely in securities of domestic issuers. Those investment risks include
future political and economic developments and the adoption of withholding
taxes, exchange controls or other restrictions which might adversely affect the
payment or receipt of payment of dividends on the relevant Securities. In
addition, there may be less publicly available information than is available
from a domestic issuer and foreign issuers are not necessarily subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic issuers. In addition,
earnings and dividends for foreign companies are in non-U.S. currencies.
Therefore, the U.S. dollar value of the stock and dividends for these issuers
will vary with fluctuations in the U.S. dollar foreign exchange rates for the
relevant currencies. Most foreign currencies have fluctuated widely in value
against the U.S. dollar for many reasons, including supply and demand for the
respective currency, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries.

American Depositary Shares and Receipts. Many of the Securities of foreign
issuers were purchased in ADR form in the United States. ADRs evidence American
Depositary Shares which represent common stock deposited with a custodian in a
depositary. American Depositary Shares (ADSs) and receipts therefor (ADRs) are
issued by an American bank or trust company to evidence ownership of underlying
securities issued by a foreign corporation. These instruments may not
necessarily be denominated in the same currency as the securities into which
they may be converted. Generally, ADSs and ADRs are designed for use in the
United States securities markets. For purposes of this Prospectus, the term ADR
generally includes ADSs.

The terms and conditions of depositary facilities may result in less
liquidity or lower market prices for ADRs than for the underlying shares. For
those Securities that are ADRs, currency fluctuations will also affect the U.S.
dollar equivalent of the local currency price of the underlying domestic share
and, as a result, are likely to affect the value of the ADRs and consequently
the value of the Securities.

THE S&P 500 INDEX AND THE S&P MIDCAP INDEX

The S&P 500 Index is composed of 500 selected common stocks, most of which
are listed in the New York Stock Exchange. This well-known index, originally
consisting of 233 stocks in 1923, was expanded to 500 stocks in 1957 and was
restructured in 1976 to a composite consisting of four major industry sectors:
industrial, utility, financial and transportation. The four major industry
sectors are comprised of eleven regular industry sectors which are further
divided into industry groups. The S&P 500 Index contains a variety of stocks
which are market-value weighted to represent the overall market. The Index
represents approximately 69% of U.S. stock market capitalization. At present,
the mean market capitalization of the companies in the S&P 500 Index is
approximately $3.346 billion.

The S&P MidCap Index is composed of 400 selected common stocks; as of the
initial date of deposit, 279 were listed on the New York Stock Exchange, 9 were
listed on the American Stock Exchange and 112 were quoted on The Nasdaq National
Market. The MidCap Index stocks were chosen for market size, liquidity and
industry group representation. As of December 31, 1994, industrial stocks
accounted for approximately 69.5% of S&P MidCap Index market capitalization,
utilities approximately 14.1%, financial stocks approximately 14.6% and
transportation stocks approximately 1.8%. The capitalizations of individual
companies ranged from about $49

4
<PAGE>
million to over $10,066 million; the mean market capitalization of the companies
in the S&P MidCap Index was approximately $1.156 billion.

The weightings of stocks in the S&P 500 Index and the S&P MidCap Index are
primarily based on each stock's relative total market value; that is, its market
price per share times the number of shares outstanding.

Standard and Poor's only relationship to the Portfolios is the licensing of
the right to use the S&P 500 Index and the S&P MidCap Index as bases for
determining the composition of the Portfolios and to use the related trademarks
and tradenames in the name of the Fund and in the Prospectus and related sales
literature to the extent that the Sponsors deem appropriate or desirable under
Federal and state securities laws and to indicate the source of the Indexes. The
Indexes are determined, comprised and calculated without regard to the Funds.

S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or the S&P MidCap Index or any data included therein and S&P shall have no
liability for any errors, omissions, or interruptions therein. S&P makes no
warranty, express or implied, as to results to be obtained by the sponsors, the
funds, any person or any entity from the use of the S&P index or the S&P MidCap
Index or any data included therein. S&P makes no express or implied warranties,
and expressly disclaims all warranties of merchantability or fitness for a
particular purpose or use, with respect to the S&P 500 Index or the S&P MidCap
Index or any data included therein. Without limiting any of the foregoing, in no
event shall S&P have any liability for any special, punitive, indirect, or
consequential damages (including lost profits), even if notified of the
possibility of such damages.

LIQUIDITY

Whether or not the Securities are listed on a national securities exchange,
the principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the Securities
may depend on whether dealers will make a market in the Securities. There can be
no assurance that a market will be made for any of the Securities, that any
market for the Securities will be maintained or of the liquidity of the
Securities in any markets made. In addition, the Fund may be restricted under
the Investment Company Act of 1940 from selling Securities to the Sponsors. The
price at which the Securities may be sold to meet redemptions and the value of
the Fund will be adversely affected if trading markets for the Securities are
limited or absent.

LITIGATION AND LEGISLATION

The Sponsors do not know of any pending litigation as of the initial date
of deposit that might reasonably be expected to have a material adverse effect
on the Fund, although pending litigation may have a material adverse effect on
the value of Securities in the Fund. In addition, at any time after the initial
date of deposit, litigation may be initiated on a variety of grounds, or
legislation may be enacted, affecting the Securities in the Portfolio or the
issuers of the Securities. Changing approaches to regulation may have a negative
impact on certain companies represented in the Portfolio. There can be no
assurance that future litigation, legislation, regulation or deregulation will
not have a material adverse effect on the Portfolio or will not impair the
ability of the issuers of the Securities to achieve their business goals. From
time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. This type of legislation, if enacted into law,
would adversely affect the after-tax return to investors who can take advantage
of the deduction. See Taxes.

LIFE OF THE FUND; FUND TERMINATION

The size and composition of the Portfolio will be affected by the level of
redemptions of Units that may occur from time to time. Principally, this will
depend upon the number of investors seeking to sell or redeem their Units. The
Portfolio will be terminated no later than the mandatory termination date
specified in Part A of the Prospectus. It will terminate earlier upon the
disposition of the last Security or upon the consent of investors holding 51% of
the Units. The Portfolio may also be terminated earlier by the Sponsors once its
total assets have fallen below the minimum value specified in Part A of the
Prospectus. A decision by the Sponsors to terminate the Portfolio early will be
based on factors such as the size of the Portfolio relative to its original
size, the ratio of Portfolio expenses to income, and the cost of maintaining a
current prospectus.

5
<PAGE>
Portfolio although any Security unable to be sold at a reasonable price may
continue to be held by the Trustee in a liquidating trust pending its final
disposition. A proportional share of the expenses associated with termination,
including brokerage costs in disposing of Securities, will be borne by investors
remaining at that time. This may have the effect of reducing the amount of
proceeds those investors are to receive in any final distribution.

HOW TO BUY UNITS

Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price, which includes the applicable sales
charge -- see Appendix A. The Public Offering Price varies each Business Day
with changes in the value of the Portfolio and other assets and liabilities of
the Fund.

PUBLIC OFFERING PRICE

In the secondary market (after the initial offering period), the Public
Offering Price is based on the next evaluation of the Securities, and includes a
sales charge based (a) on the number of Units of the Fund purchased in the
secondary market on the same day by a single purchaser (see Secondary Market
Sales Charge Schedule in Appendix A). To qualify for a reduced sales charge, the
dealer must confirm that the sale is to a single purchaser or is purchased for
its own account and not for distribution. For these purposes, Units held in the
name of the purchaser's spouse or child under 21 years of age are deemed to be
purchased by a single purchaser. A trustee or other fiduciary purchasing
securities for a single trust or single fiduciary account is also considered a
single purchaser.

Employees of certain Sponsors and Sponsor affiliates and non-employee
directors of Merrill Lynch & Co. Inc. may purchase Units at a reduced initial
sales charge of not less than $5.00 per 1,000 Units.

S&P 500 TRUST 2 AND S&P MIDCAP TRUST. The graduated sales charges shown in
Appendix A will apply on all purchases on any one day (with credit given for
previously purchased Units as described below under Right of Accumulation) by a
single purchaser of Units in one or both Trusts of this Fund only in the amounts
stated. For this purpose purchases will not be aggregated with concurrent
purchases of any other unit trusts sponsored by the Sponsors. However, Units
held in the name of the spouse of the purchaser or in the name of a child of the
purchaser under 21 years of age are deemed to be registered in the name of the
purchaser. The graduated sales charges are also applicable to a trustee or other
fiduciary purchasing securities for a single trust estate or single fiduciary
account. To qualify for the reduced sales charge and concession applicable to
quantity purchases, the dealer must confirm that the sale is to a single
purchaser. The sales charge is lower than sales charges on many other equity
investments.

Right of Accumulation. Reduced sales charges are applicable through a right
of accumulation under which eligible investors are permitted to purchase Units
of either Trust at the offering price applicable to the total of (a) the dollar
amount then being purchased plus (b) an amount equal to the then current net
asset value of the purchaser's holdings of Units of both Trusts. To be eligible
either for this right of accumulation or the reduced sales charge applicable to
purchases of both Trusts on the same day, the purchaser or the purchaser's
securities dealer must notify the Sponsors at the time of purchase that such
purchase qualifies under this accumulation provision and supply sufficient
information to permit confirmation of qualification. Acceptance of the purchase
order is subject to such confirmation. These reduced sales charge provisions may
be amended or terminated at any time without notice.

EVALUATIONS

Evaluations are determined by the Trustee on each Business Day. This
excludes Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. If the Securities are
listed on a national securities exchange or the Nasdaq National Market,
evaluations are generally based on closing sales prices on that exchange or that
system (unless the Trustee deems these prices inappropriate) or, if closing
sales prices are not available, at the mean between the closing bid and offer
prices. If the Securities are not listed or if listed but the principal market
is elsewhere, the evaluation is generally determined based on sales prices of
the Securities on the over-the-counter market or, if sales prices in that market
are not available, on the basis of the mean between current bid and offer prices
for the Securities or for comparable securities or by appraisal or by any

6
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combination of these methods. Neither the Sponsors nor the Trustee guarantee the
enforceability, marketability or price of any Securities.

CERTIFICATES

Certificates for Units may be issued for certain Funds upon request and may
be transferred by paying any taxes or governmental charges and by complying with
the requirements for redeeming Certificates (see How To Sell Units--Trustee's
Redemption of Units). Certain Sponsors collect additional charges for
registering and shipping Certificates to purchasers. Lost or mutilated
Certificates can be replaced upon delivery of satisfactory indemnity and payment
of costs. Units of certain Funds identified in Part A of the Prospectus must be
held in uncertificated form.

HOW TO SELL UNITS

SPONSORS' MARKET FOR UNITS

You can sell your Units at any time without a fee. The Sponsors (although
not obligated to do so) will normally buy any Units offered for sale at the
repurchase price next computed after receipt of the order. The Sponsors have
maintained secondary markets in Defined Asset Funds for the last 25 years.
Primarily because of the sales charge and fluctuations in the market value of
the Securities, the sale price may be less than the cost of your Units. You
should consult your financial professional for current market prices to
determine if other broker-dealers or banks are offering higher prices for Units.

The Sponsors may discontinue this market without prior notice if the supply
of Units exceeds demand or for other business reasons. The Sponsors may reoffer
or redeem Units repurchased.

TRUSTEE'S REDEMPTION OF UNITS

You may redeem your Units by sending the Trustee a redemption request.
Signatures must be guaranteed by an eligible institution. In certain instances,
additional documents may be required such as a certificate of death, trust
instrument, certificate of corporate authority or appointment as executor,
administrator or guardian. If the Sponsors are maintaining a market for Units,
they will purchase any Units tendered at the repurchase price described above.
If they do not purchase Units tendered, the Trustee is authorized in its
discretion to sell Units in the over-the-counter market if it believes it will
obtain a higher net price for the redeeming investor.

By the seventh calendar day after tender you will be mailed an amount equal
to the Redemption Price per Unit. Because of market movements or changes in the
Portfolio, this price may be more or less than the cost of your Units. The
Redemption Price per Unit is computed each Business Day by adding the value of
the Securities, declared but unpaid dividends on the Securities, cash and the
value of any other Fund assets; deducting unpaid taxes or other governmental
charges, accrued but unpaid Fund expenses, unreimbursed Trustee advances, cash
held to redeem Units, for purchase of Securities or for distribution to
investors and the value of any other Fund liabilities; and dividing the result
by the number of outstanding Units.

If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Agent for the
Sponsors based on market and credit factors determined to be in the best
interest of the Fund. These sales are often made at times when the Securities
would not otherwise be sold and may result in lower prices than might be
realized otherwise and will also reduce the size and diversity of the Fund.

Redemptions may be suspended or payment postponed if the New York Stock
Exchange is closed other than for customary weekend and holiday closings, if the
SEC determines that trading on that Exchange is restricted or that an emergency
exists making disposal or evaluation of the Securities not reasonably
practicable, or for any other period permitted by the SEC.

REDEMPTION IN KIND--CONCEPT SERIES, INCOME GROWTH FUND, REAL ESTATE INCOME
FUND, SECOND EXCHANGE SERIES--AT&T SHARES. You may request distribution in kind
from the Trustee instead of cash redemption, provided that you are tendering
Units with a required minimum value. By the seventh calendar day after tender,
an amount and value of Securities per Unit, together with a pro rata portion of
the cash balance in the Fund, equal to the Redemption Price per Unit, will be
paid over to the Trustee, as distribution agent, and either held for your
account or disposed of in accordance with your instructions. Any brokerage
commissions on sales of

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Securities in connection with in-kind redemptions will be borne by you. The
Sponsors may modify or terminate this redemption in kind option at any time
without notice to investors.

INCOME, DISTRIBUTIONS AND REINVESTMENT

INCOME AND DISTRIBUTIONS

The net annual income per Unit will depend primarily upon the amount of
dividends declared and paid by the issuers of the Securities and changes in the
expenses of the Fund and, to a lesser degree, upon the level of purchases of
additional Securities and sales of Securities. There is no assurance that
dividends on the Securities will continue at their current levels or be declared
or paid.

Each Unit receives an equal share of monthly or quarterly distributions of
dividend income. Because dividends on the Securities are not received at a
constant rate throughout the year, any income distribution may be more or less
than the amount then credited to the Income Account. Dividends payable to the
Fund are credited to an Income Account, as of the date on which the Fund is
entitled to receive the dividends, and other receipts are credited to a Capital
Account. A Reserve Account may be created by withdrawing from the Income and
Capital Accounts amounts considered appropriate by the Trustee to reserve for
any material amount that may be payable out of the Fund. Funds held by the
Trustee in the various accounts do not bear interest.

UTILITY STOCK SERIES, SECOND EXCHANGE SERIES--AT&T SHARES, REAL ESTATE
INCOME FUND, INCOME GROWTH FUND. Subject to the Reinvestment Plan, the Monthly
Income Distribution for each investor shall consist of an amount, computed
monthly by the Trustee, substantially equal to one-twelfth of the investor's pro
rata share of the estimated annual income to the Income Account, after deducting
estimated expenses.

ALL OTHER FUNDS: Unless otherwise indicated in Part A, dividend income
received by the Fund and available for distribution and the distributable
balance in the Capital Account (other than capital gains) as of any particular
record day will be distributed on or shortly after the related distribution day
to the holders of record on that record day.

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 generally be distributed shortly
after the end of the year. In order to meet certain tax requirements a Fund may
make a special distribution of income, including capital gains, to holders of
record as of a date in December. Proceeds received from the disposition of any
of the Securities which are not used to make the distribution of capital gain
net income, for redemption of Units or reinvested in additional Securities will
be held in the Capital Account to be distributed on the next succeeding
distribution day.

REINVESTMENT PLAN -- UTILITY STOCK SERIES, INCOME GROWTH FUND, CONCEPT SERIES,
SECOND EXCHANGE SERIES -- AT&T SHARES AND S&P INDEX TRUSTS.

Income and principal distributions on Units may be reinvested by
participating in the Fund's reinvestment plan. Under the plan, the Units
acquired for investors will be either Units already held in inventory by the
Sponsors or new Units created by the Sponsors' deposit of additional Securities,
contracts to purchase additional Securities or cash (or a bank letter of credit
in lieu of cash) with instructions to purchase additional Securities. Purchases
made pursuant to the Reinvestment Plan will be made without sales charge at the
net asset value for Units of the Fund. Under the Reinvestment Plan, the Fund
will pay the distributions to the Trustee which in turn will purchase for the
investor full and fractional Units of the Fund at the price determined as of the
close of business on the distribution day and will add the Units to the
investor's account and send the investor an account statement reflecting the
reinvestment. The Sponsors reserve the right to amend, modify or terminate the
reinvestment plan at any time without prior notice. Investors holding Units in
'street name' should contact their broker, dealer or financial institution to
determine whether they may participate in the reinvestment plan.

FUND EXPENSES

Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's annual fee is payable in monthly installments. The Trustee also
benefits when it holds cash for the Fund in non-interest bearing accounts.
Possible additional charges include Trustee fees and expenses for extraordinary
services, costs of indemnifying the Trustee and the Sponsors, costs of

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<PAGE>
action taken to protect the Fund and other legal fees and expenses, Fund
termination expenses and any governmental charges. The Trustee has a lien on
Fund assets to secure reimbursement of these amounts and may sell Securities for
this purpose if cash is not available. The Sponsors receive an annual fee of a
maximum of $0.35 per 1,000 Units to reimburse them for the cost of providing
Portfolio supervisory services to the Fund. While the fee may exceed their costs
of providing these services to the Fund, the total supervision fees from all
Series of Equity Income Fund will not exceed their costs for these services to
all of those Series during any calendar year. The Sponsors may also be
reimbursed for their costs of providing bookkeeping and administrative services
to the Fund. The Trustee's and Sponsors' fees may be adjusted for inflation
without investors' approval.

Defined Asset Funds can be a cost-effective way to purchase and hold
investments. Annual operating expenses are generally lower than for managed
funds. Because Defined Asset Funds have no management fees, limited transaction
costs and no ongoing marketing expenses, operating expenses are generally less
than 0.25% a year. When compounded annually, small differences in expense ratios
can make a big difference in your investment results.

S&P Index Trusts. The Trusts have entered into license agreements with
Standard & Poor's that permit the Trusts to use the trademarks and tradenames
'S&P 500', 'S&P MidCap 400 Index' and other trademarks and tradenames, to the
extent the Sponsors deem appropriate and desirable under federal and state
securities laws to indicate the source of the Indices as a basis for determining
the composition of the Fund's investment portfolios. As consideration for the
grant of the license, each Portfolio will pay to Standard & Poor's Corporation
an annual fee equal to .02% of the average net asset value of the Portfolio (or,
if greater, $10,000). In addition, the Fund will pay approximately $45,000 per
year for access to independent computer services that track the S&P 500 Index
and the S&P MidCap Index. Computer expenses will be divided between the Trusts
in proportion to their respective assets during the relevant period.

TAXES

TAXATION OF THE FUND--EXCEPT FOR SECOND EXCHANGE SERIES--AT&T SHARES (SEE
PROSPECTUS PART A).

The Fund intends to qualify for and elect the special tax treatment
applicable to 'regulated investment companies' under Section 851-855 of the
Internal Revenue Code of 1986, as amended (the 'Code'). Qualification and
election as a 'regulated investment company' involve no supervision of
investment policy or management by any government agency. If the Fund qualifies
as a 'regulated investment company' and distributes to investors 90% or more of
its taxable income without regard to its net capital gain (i.e., the excess of
its net long-term capital gain over its net short-term capital loss), it will
not be subject to Federal income tax on any portion of its taxable income
(including any net capital gain) distributed to investors 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 investors 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 investors during the
calendar year.

DISTRIBUTIONS

Distribution to investors of the Fund's dividend income and net short-term
capital gain in any year will be taxable as ordinary income to investors 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
investor'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 investors.

Distribution of the Fund's net capital gain (designated as capital gain
dividends by the Fund) will be taxable to investors as long-term capital gain,
regardless of the length of time the Units have been held by an investor. An
investor will recognize a taxable gain or loss if the investor sells or redeems
his Units. Any gain or loss arising from (or treated as arising from) the sale
or redemption of Units will be a capital gain or loss, except in the case of a
dealer in securities. Capital gains are currently taxed at the same rate as
ordinary income, however, the excess of

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<PAGE>
net long-term capital gains over net short-term capital losses may be taxed at a
lower rate than ordinary income for certain noncorporate taxpayers. A capital
gain or loss is long-term if the asset is held for more than one year and
short-term if held for one year or less. However, any capital loss on the sale
or redemption of a Unit that an investor has held for six months or less will be
a long-term capital loss to the extent of any capital gain dividends previously
distributed to the investor by the Fund. The deduction of capital losses is
subject to limitations.

A distribution of Securities to an investor upon redemption of his Units
will be a taxable event to such investor, and that investor will recognize
taxable gain or loss upon such distribution (equal to the difference between
such an investor'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. Investors should consult their own tax
advisers in this regard.

Distributions that are taxable as ordinary income to investors will
constitute dividends for Federal income tax purposes. To the extent that
distributions are appropriately designated by the Fund and are attributable to
dividends received by the Fund from domestic issuers with respect to whose
Securities the Fund satisfies the requirements for the dividends-received
deduction, such distributions will be eligible for the dividends-received
deduction for corporations (other than corporations such as 'S' corporations
which are not eligible for such deduction because of their special
characteristics and other than for purposes of special taxes such as the
accumulated earnings tax and the personal holding company tax). The
dividends-received deduction generally is currently 70%. However, Congress from
time to time considers proposals to reduce the rate, and enactment of such a
proposal would adversely affect the after-tax return to investors who can take
advantage of the deduction. Investors are urged to consult their own tax
advisers.

Sections 246 and 246A of the Code contain additional limitations on the
eligibility of dividends for the corporate dividends-received deduction.
Depending upon the corporate investor'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 an investor from
the Fund which would otherwise qualify for the dividends-received deduction
under the principles discussed above. Accordingly, investors should consult
their own tax advisers in this regard. A corporate investor 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.

Dividends received by the Fund from foreign issuers will in most cases be
subject to foreign withholding taxes. The Fund will not be eligible for, and
therefore does not expect to make, an election that would enable investors to
credit foreign withholding taxes against their federal income tax liability on
distributions by the Fund.

Investors will be taxed in the manner described above regardless of whether
distributions from the Fund are actually received by the investor or are
reinvested pursuant to a Reinvestment Plan.

The Federal tax status of each year's distributions will be reported to
investors 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. investors. Investors 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 investors should consult their own tax advisers in this regard.

RETIREMENT PLANS

Equity Income Funds 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

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distributions. Investors considering participation in any of these plans should
review specific tax laws related thereto and should consult their attorneys or
tax advisors with respect to the establishment and maintenance of any of these
plans. These plans are offered by brokerage firms, including the Sponsor of this
Fund, and other financial institutions. Fees and charges with respect to such
plans may vary.

Retirement Plans for the Self-Employed--Keogh Plans. Units of the Fund may
be purchased by retirement plans established for self-employed individuals,
partnerships or unincorporated companies ('Keogh plans'). The assets of a Keogh
plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Keogh plan participants may also establish separate
IRAs (see below) to which they may contribute up to an additional $2,000 per
year ($2,250 in a spousal account).

Individual Retirement Account--IRA, Any individual can make use of a
qualified IRA arrangement for the purchase of Units of the Fund. Any individual
(including one covered by an employer retirement plan) can make a contribution
in an IRA equal to the lesser of $2,000 ($2,250 in a spousal account) or 100% of
earned income; such investment must be made in cash. However, the deductible
amount an individual may contribute will be reduced if the individual's adjusted
gross income exceeds $25,000 (in the case of a single individual), $40,000 (in
the case of married individuals filing a joint return) or $200 (in the case of a
married individual filing a separate return). Certain transactions which are
prohibited under Section 408 of the Code will cause all or a portion of the
amount in an IRA to be deemed to the distributed and subject to tax at that
time. Unless nondeductible contributions were made in 1987 or a later year, all
distributions from an IRA will be treated as ordinary income but generally are
eligible for tax-deferred rollover treatment. Taxable distributions made before
attainment of age 59 1/2, except in the case of the participant's death or
disability or where the amount distributed is part of a series of substantially
equal periodic (at least annual) payments that are to be made over the life
expectancies of the participant and his or her beneficiary, are generally
subject to a surtax in an amount equal to 10% of the distribution.

Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan for employees of a corporation may purchase Units of the Fund.

RECORDS AND REPORTS

The Trustee keeps a register of the names, addresses and holdings of all
investors. The Trustee also keeps records of the transactions of the Fund,
including a current list of the Securities and a copy of the Indenture, which
may be inspected by investors at reasonable times during business hours.

With each distribution, the Trustee includes a statement of the amounts of
income and any other receipts being distributed. Following the termination of
the Fund, the Trustee sends each investor of record a statement summarizing
transactions in the Fund's accounts including amounts distributed from them,
identifying Securities sold and purchased and listing Securities held and the
number of Units outstanding at termination and stating the Redemption Price at
termination, and the fees and expenses paid by the Fund, among other matters.
Fund accounts may be audited by independent accountants selected by the Sponsors
and any report of the accountants will be available from the Trustee on request.

TRUST INDENTURE

The Fund is a 'unit investment trust' created under New York law (under
Massachusetts law for certain Funds) by a Trust Indenture among the Sponsors and
the Trustee. This Prospectus summarizes various provisions of the Indenture, but
each statement is qualified in its entirety by reference to the Indenture.

The Indenture may be amended by the Sponsors and the Trustee without
consent by investors to cure ambiguities or to correct or supplement any
defective or inconsistent provision, to make any amendment required by the SEC
or other governmental agency or to make any other change not materially adverse
to the interest of investors (as determined in good faith by the Sponsors). The
Indenture may also generally be amended upon consent of investors holding 51% of
the Units. No amendment may reduce the interest of any investor in the Fund
without the investor's consent or reduce the percentage of Units required to
consent to any amendment without unanimous consent of investors. Investors will
be notified of the substance of any amendment.

The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or

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<PAGE>
bankrupt, its affairs are taken over by public authorities, or if under certain
conditions the Sponsors determine in good faith that its replacement is in the
best interest of the investors. The resignation or removal becomes effective
upon acceptance of appointment by a successor; in this case, the Sponsors will
use their best efforts to appoint a successor promptly; however, if upon
resignation no successor has accepted appointment within 30 days after
notification, the resigning Trustee may apply to a court of competent
jurisdiction to appoint a successor.

Any Sponsor may resign so long as one Sponsor with a net worth of
$2,000,000 remains. A new Sponsor may be appointed by the remaining Sponsors and
the Trustee to assume the duties of the resigning Sponsor. If there is only one
Sponsor and it fails to perform its duties or becomes incapable of acting or
bankrupt or its affairs are taken over by public authorities, the Trustee may
appoint a successor Sponsor at reasonable rates of compensation, terminate the
Indenture and liquidate the Fund or continue to act as Trustee without a
Sponsor. Merrill Lynch, Pierce, Fenner & Smith Incorporated has been appointed
as Agent for the Sponsors by the other Sponsors.

The Sponsors and the Trustee are not liable to investors or any other party
for any act or omission in the conduct of their responsibilities absent bad
faith, willful misfeasance, negligence (gross negligence in the case of a
Sponsor) or reckless disregard of duty. The Indenture contains customary
provisions limitingthe liability of the Trustee.

MISCELLANEOUS

LEGAL OPINION

The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.

AUDITORS

The Statement of Condition in Part A of the Prospectus was audited by
Deloitte & Touche LLP, independent accountants, as stated in their opinion. It
is included in reliance upon that opinion given on the authority of that firm as
experts in accounting and auditing.

TRUSTEE

The Trustee and its address are stated on the back cover of the Prospectus.
The Trustee is subject to supervision by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and either the
Comptroller of the Currency or state banking authorities.

SPONSORS

The Sponsors are listed on the back cover of the Prospectus. They may
include Merrill Lynch, Pierce, Fenner & Smith Incorporated, a wholly-owned
subsidiary of Merrill Lynch Co. Inc.; Smith Barney Inc., an indirect
wholly-owned subsidiary of The Travelers Inc.; Prudential Securities
Incorporated, an indirect wholly-owned subsidiary of the Prudential Insurance
Company of America, and Dean Witter Reynolds, Inc., a principal operating
subsidiary of Dean Witter Discover & Co. Each Sponsor, or one of its predecessor
corporations, has acted as Sponsor of a number of series of unit investment
trusts. Each Sponsor has acted as principal underwriter and managing underwriter
of other investment companies. The Sponsors, in addition to participating as
members of various selling groups or as agents of other investment companies,
execute orders on behalf of investment companies for the purchase and sale of
securities of these companies and sell securities to these companies in their
capacities as brokers or dealers in securities.

PUBLIC DISTRIBUTION

During the initial offering period and thereafter to the extent additional
Units continue to be offered for sale to the public by means of this Prospectus,
Units will be distributed directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above or to selected
dealers who are members of the National Association of Securities Dealers, Inc.
at a concession not in excess of the maximum sales charge. The Sponsors intend
to qualify Units for sale in all states in which qualification is deemed
necessary through the Underwriting Account and by dealers who are members of the
National Association of Securities Dealers, Inc..

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The Sponsors do not intend to qualify Units for sale in any foreign countries
and this Prospectus does not constitute an offer to sell Units in any country
where Units cannot lawfully be sold.

UNDERWRITERS' AND SPONSORS' PROFITS

Upon sale of the Units, the Underwriters will be entitled to receive sales
charges; each Underwriters' interest in the Underwriting Account will depend on
the number of Units acquired through the issuance of additional Units. The
Sponsors also realize a profit or loss on deposit of the Securities equal to the
difference between the cost of the Securities to the Fund (based on the
aggregate value of the Securities on their date of deposit) and the purchase
price of the Securities to the Sponsors plus commissions payable by the
Sponsors. In addition, a Sponsor or Underwriter may realize profits or sustain
losses on Securities it deposits in the Fund which were acquired from
underwriting syndicates of which it was a member. During the initial offering
period, the Underwriting Account also may realize profits or sustain losses as a
result of fluctuations after the initial date of deposit in the Public Offering
Price of the Units. In maintaining a secondary market for Units, the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units and the prices at which they resell
these Units (which include the sales charge) or the prices at which they redeem
the Units. Cash, if any, made available by buyers of Units to the Sponsors prior
to a settlement date for the purchase of Units may be used in the Sponsors'
businesses to the extent permitted by Rule 15c3-3 under the Securities Exchange
Act of 1934 and may be of benefit to the Sponsors.

PERFORMANCE INFORMATION

Information on the performance of the Fund for various periods, on the
basis of changes in Unit price plus the amount of dividends and capital gains
reinvested, may be included from time to time in advertisements, sales
literature, reports and other information furnished to current or prospective
Holders. Total return figures are not averaged, and may not reflect deduction of
the sales charge, which would decrease the return. Average annualized return
figures reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.

Past performance of any series may not be indicative of results of future
series. Fund performance may be compared to the performance of the Dow Jones
Industrial Average, the S&P 500 Composite Price Stock Index, the S&P MidCap 400
Index, or performance data from publications such as Lipper Analytical Services,
Inc., Morningstar Publications, Inc., Money Magazine, The New York Times, U.S.
News and World Report, Barron's, Business Week, CDA Investment Technology, Inc.,
Forbes Magazine or Fortune Magazine. Performance of the Stocks may be compared
in sales literature to performance of the S&P 500 Stock Price Composite Index,
to which may be added by year various national and international political and
economic events, and certain milestones in price and market indicators and in
offerings of Defined Asset Funds. This performance may also be compared for
various periods with an investment in short-term U.S. Treasury securities;
however, the investor should bear in mind that Treasury securities are fixed
income obligations, having the highest credit characterisitics, while the Stocks
involve greater risk because they have no maturities, and income thereon is
subject to the financial condition of, and declaration by, the issuers.

DEFINED ASSET FUNDS

For decades informed investors have purchased unit investment trusts for
dependability and professional selection of investments. Defined Asset Funds'
philosophy is to allow investors to 'buy with knowledge' (because, unlike
managed funds, the portfolio is relatively fixed) and 'hold with confidence'
(because the portfolio is professionally selected and regularly reviewed).
Defined Asset Funds offers an array of simple and convenient investment choices,
suited to fit a wide variety of personal financial goals--a buy and hold
strategy for capital accumulation, such as for children's education or
retirement, or attractive, regular current income consistent with the
preservation of principal. Unit investment trusts are particularly suited for
the many investors who prefer to seek long-term profits by purchasing sound
investments and holding them, rather than through active trading. Few
individuals have the knowledge, resources or capital to buy and hold a
diversified portfolio on their own; it would generally take a considerable sum
of money to obtain the breadth and diversity that Defined Asset Funds offer.
Your investment objectives may call for a combination of Defined Asset Funds.

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<PAGE>
relatively high rates of interest income. By purchasing both defined equity and
defined bond funds, investors can receive attractive current income, as well as
growth potential, offering some protection against inflation. From time to time
various advertisements, sales literature, reports and other information
furnished to current or prospective investors may present the average annual
compounded rate of return of selected asset classes over various periods of
time, compared to the rate of inflation over the same periods.

EXCHANGE OPTION

You may be able to exchange Fund Units for units of certain other Defined
Asset Funds subject only to a reduced sales charge or to any remaining deferred
sales charge, as applicable. To make an exchange, you should contact your
financial professional to find out what suitable exchange funds are available
and to obtain a prospectus. You may acquire units of only those exchange funds
in which the Sponsors are maintaining a secondary market and which are lawfully
for sale in the state where you reside. Except for the reduced sales charge, an
exchange is a taxable event normally requiring recognition of any gain or loss
on the units exchanged. However, the Internal Revenue Service may seek to
disallow a loss if the portfolio of the units acquired is not materially
different from the portfolio of the units exchanged; you should consult your own
tax advisor. If the proceeds of units exchanged are insufficient to acquire a
whole number of exchange fund units, you may pay the difference in cash (not
exceeding the price of a single unit acquired).

As the Sponsors are not obligated to maintain a secondary market in any
series, there can be no assurance that units of a desired series will be
available for exchange. The Exchange Option may be amended or terminated at any
time without notice.

SUPPLEMENTAL INFORMATION

Upon writing or calling the Trustee shown on the back cover of Part A of
this Prospectus, investors will receive without charge supplemental information
about the Fund, which has been filed with the SEC. The supplemental information
includes more detailed risk factor disclosure about the types of securities that
may be part of the Portfolio and general information about the structure and
operation of the Fund.

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APPENDIX A
SECONDARY MARKET SALES CHARGE SCHEDULE
UTILITY STOCK SERIES

<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
----------------------------------
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS
PUBLIC OFFERING NET AMOUNT PERCENT OF PUBLIC
AMOUNT PURCHASED PRICE INVESTED OFFERING PRICE
- -------------------------------------------------------------------- ----------------- --------------- -----------------------
<S> <C> <C> <C>
Less than $250,000.................................................. 4.50% 4.712% 2.925%
$250,000-$499,000................................................... 3.75 3.896 2.438
$500,000-$749,000................................................... 2.50 2.564 1.625
$750,000-$999,000................................................... 2.00 2.041 1.300
$1,000,000 or more.................................................. 1.50 1.523 0.975

<CAPTION>
S&P 500 TRUST 2, S&P MIDCAP TRUST

INCOME GROWTH FUND 1993 SERIES
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, if you acquire Units for $1,050 (including
an initial sales charge of $15.75) and hold the Units until the termination of
the Fund, you 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), you 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 investors out of net asset value of the
Fund on each Deferred Charge Payment Date through 1997. If you sell or redeem
Units before a Deferred Charge Payment Date, no future deferred sales charges
will be collected from you; this will have the effect of reducing the rate of
sales charge.
CONCEPT SERIES: BLUE CHIP STOCK SERIES, REAL ESTATE INCOME FUND, HEALTH CARE
TRUST II
The sales charge consists of an initial portion and a deferred portion, the
total of which may equal a maximum of approximately 5.35% of the Public Offering
Price or 5.501% of the net asset value of the Fund over its expected four-year
life. The initial portion of the sales charge is equal to 2.75% of the Public
Offering Price (2.828%) of the net amount invested in the Securities) and the
deferred portion of the sales charge is $1.625 per 1,000 Units ($6.50 per year)
payable by the Fund on behalf of investors out of net asset value of the Fund on
each quarterly Deferred Charge Payment Date until the Fund terminates. If you
sell or redeem Units before a Deferred Charge Payment Date, all future
deductions of deferred sales charges with respect to you will be waived; this
will have the effect of reducing your rate of sales charge.

<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
----------------------------------
AS PERCENT OF AS PERCENT OF DEALER CONCESSION AS
PUBLIC OFFERING NET AMOUNT PERCENT OF PUBLIC
AMOUNT PURCHASED PRICE INVESTED OFFERING PRICE
- -------------------------------------------------------------------- ----------------- --------------- -----------------------
<S> <C> <C> <C>
Less than $250,000.................................................. 2.75% 2.828% 1.788%
$250,000-$499,000................................................... 2.25 2.302 1.463
$500,000-$749,000................................................... 1.75 1.781 1.138
$750,000-$999,000................................................... 1.25 1.266 0.813
$1,000,000 or more.................................................. 1.00 1.010 0.650
</TABLE>

a-1
<PAGE>
SECOND EXCHANGE SERIES--AT&T SHARES

The sales charge for Units of this Trust is 2.25% (2.302% of net amount
invested). There is no reduction for quantity purchases of Units.
CONCEPT SERIES: TELECOMMUNICATIONS TRUST 1, TELE-GLOBAL TRUST,
NATURAL GAS TRUST 2
The sales charge for Units of these Trusts is 2.00% (2.041% of net amount
invested). There is no reduction for quantity purchases of Units.
CONCEPT SERIES: FOOD FUND, NORTHWEST TRUST
The sales charge for Units of this Trust is 1.50% (1.523% of net amount
invested). There is no reduction for quantity purchases of Units.

a-2
<PAGE>

14101--12/95

<PAGE>
DEFINED ASSET FUNDSSM
PROSPECTUS--PART B
EQUITY INCOME FUND
BLUE CHIP STOCK SERIES
PREMIER AMERICAN PORTFOLIO

FURTHER INFORMATION REGARDING THE FUND MAY BE OBTAINED
WITHIN FIVE DAYS OF WRITING OR CALLING THE TRUSTEE AT THE ADDRESS AND
TELEPHONE NUMBER SHOWN ON THE BACK COVER OF THIS PROSPECTUS.

INDEX

PAGE
---------
FUND DESCRIPTION..................................... 1
RISK FACTORS......................................... 2
HOW TO BUY UNITS..................................... 3
HOW TO REDEEM OR SELL UNITS.......................... 4
INCOME, DISTRIBUTIONS AND REINVESTMENT............... 5
FUND EXPENSES........................................ 6
TAXES................................................ 6
RECORDS AND REPORTS.................................. 8
TRUST INDENTURE...................................... 8
MISCELLANEOUS........................................ 9
SUPPLEMENTAL INFORMATION............................. 11

FUND DESCRIPTION

PORTFOLIO SELECTION

Professional buyers for Defined Asset Funds, with access to extensive
research, selected the Securities for the Portfolio after considering the Fund's
investment objective as well as the quality of the common stocks, the position
of the issuers as leaders in their fields, the earning and dividend payment
records of the issuers, the capitalization of the issuers and the prices of the
common stocks. The deposit of the Securities in the Portfolio on the initial
date of deposit established a proportionate relationship among the number of
shares of each Security. Following the initial date of deposit the Sponsors may
deposit additional Securities in order to create new Units, maintaining to the
extent possible that original proportionate relationship. The ability to acquire
each Security at the same time will generally depend upon the Security's
availability and any restrictions on the purchase of that Security under the
federal securities laws or otherwise.

Additional Units may also be created by the deposit of cash (including a
letter of credit) with instructions to purchase additional Securities. This
practice could cause both existing and new investors to experience a dilution of
their investments and a reduction in their anticipated income because of price
fluctuations in the Securities between the time of the cash deposit and the
actual purchase of the additional Securities and because the associated
brokerage fees will be an expense of the Fund. To minimize these effects, the
Fund will try to purchase Securities as close to the Evaluation Time or at
prices as close to the evaluated prices as possible.

1
<PAGE>
PORTFOLIO SUPERVISION

The Fund follows a buy and hold investment strategy in contrast to the
frequent portfolio changes of a managed fund based on economic, financial and
market analyses. In the event a public tender offer is made for a Security or a
merger or acquisition is announced affecting a Security, the Sponsors may
instruct the Trustee to tender or sell the Security in the open market when in
its opinion it is in the best interests of investors to do so. Although the
Portfolio is not actively managed, it is regularly reviewed and evaluated and
Securities can be sold in case of certain adverse developments concerning a
Security including the adverse financial condition of the issuer, the
institution of legal proceedings against the issuer, a decline in the price or
the occurrence of other market or credit factors that might otherwise make
retention of the Security detrimental to the interest of investors or if the
disposition of these Securities is necessary in order to enable the Fund to make
distributions of the Fund's capital gain net income or desirable in order to
maintain the qualification of the Fund as a regulated investment company under
the Internal Revenue Code. Securities can also be sold to meet redemption of
Units. The Sponsors are also authorized to direct the reinvestment of the
proceeds of the sale of Securities, as well as moneys held to cover the purchase
of Securities pursuant to contracts which have failed, in Replacement Securities
which satisfy certain conditions specified in the Indenture.

RISK FACTORS

An investment in the Fund entails certain risks, including the risk that
the value of your investment will decline if the financial condition of the
issuers of the Securities becomes impaired or if the general condition of the
stock market worsens and the risk that holders of common stocks have generally
inferior rights to receive payments from the issuer in comparison with the
rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Moreover, common stocks do not represent an obligation of
the issuer and therefore do not offer any assurance of income or provide the
degree of protection of capital provided by debt securities. Common stocks in
general may be especially susceptible to general stock market movements and to
volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic or banking crises. The
Sponsors cannot predict the direction or scope of any of these factors.

LIQUIDITY

LITIGATION AND LEGISLATION

LIFE OF THE FUND; FUND TERMINATION

2
<PAGE>
will terminate earlier upon the disposition of the last Security or upon the
consent of investors holding 51% of the Units. The Portfolio may also be
terminated earlier by the Sponsors once its total assets have fallen below the
minimum value specified in Part A of the Prospectus. A decision by the Sponsors
to terminate the Portfolio early will be based on factors such as the size of
the Portfolio relative to its original size, the ratio of Portfolio expenses to
income, and the cost of maintaining a current prospectus.

Notice of impending termination will be provided to investors and
thereafter units will no longer be redeemable. On or shortly before termination,
the Trustee will seek to dispose of any Securities remaining in the Portfolio
although any Security unable to be sold at a reasonable price may continue to be
held by the Trustee in a liquidating trust pending its final disposition. A
proportional share of the expenses associated with termination, including
brokerage costs in disposing of Securities, will be borne by investors remaining
at that time. This may have the effect of reducing the amount of proceeds those
investors are to receive in any final distribution.

HOW TO BUY UNITS

Units are available from any of the Sponsors, Underwriters and other
broker-dealers at the Public Offering Price. The Public Offering Price varies
each Business Day with changes in the value of the Portfolio and other assets
and liabilities of the Fund.

PUBLIC OFFERING PRICE

Units are charged a combination of Initial and Deferred Sales Charges
equal, in the aggregate, to a maximum charge of 4.70% of the public offering
price or 4.057% of the net asset value of the Fund over its remaining life. The
initial portion of the sales charge is equal to 2.75% of the Public Offering
Price (2.828%) of the net amount invested in the Securities) and the deferred
portion of the sales charge is $1.625 per 1,000 Units ($6.50 per year) payable
by the Fund on behalf of the investors out of net asset value of the Fund
quarterly until the Fund terminates. If an investor sells or redeems Units
before a quarterly payment date, all future deductions of deferred sales charges
with respect to that investor will be waived; this will have the effect of
reducing the rate of sales charge as to that investor.

The initial portion of the sales charge is reduced on a graduated scale for
sales to any purchaser of at least $250,000 of Units and will be applied on
whichever basis is more favorable to the purchaser. To qualify for the reduced
initial sales charge and concession applicable to quantity purchasers, the
dealer must confirm that the sale is to a single purchaser as defined below or
is purchased for its own account and not for distribution. The initial portion
of the sales charge will be reduced as follows:

SALES CHARGE
(GROSS UNDERWRITING PROFIT)
--------------------------------
AS PERCENT OF AS PERCENT OF MAXIMUM DEALER CONCESSION CONCESSION TO
PUBLIC OFFERING NET AMOUNT DOLLAR AMOUNT DEFERRED AS PERCENT OF INTRODUCING
AMOUNT PURCHASED PRICE INVESTED PER 1,000 UNITS PUBLIC OFFERING PRICE DEALERS
- ---------------------------------- ----------------- ------------- ---------------------- --------------------- -------------
<S> <C> <C> <C> <C> <C>

Less than $250,000................ 2.75% 2.828% $ 26.00 1.788% $ 19.80
$250,000 - $499,999............... 2.25 2.302 26.00 1.463 16.20
$500,000 - $749,999............... 1.75 1.781 26.00 1.138 12.60
$750,000 - $999,999............... 1.25 1.266 26.00 0.813 9.00
$1,000,000 and more............... 1.00 1.010 26.00 0.650 7.20
</TABLE>

The above graduated sales charges will apply on all purchases on any one
day by the same purchaser of Units in this Fund only in the amounts stated. For
this purpose purchases during the primary offering period will not be aggregated
with concurrent purchases of any other unit trusts sponsored by the Sponsors.
Purchases in the secondary market of one or more Series sponsored by the
Sponsors which have the same rates of sales charge will be aggregated. Units
held in the name of the spouse of the purchaser or in the name of a child of the
purchaser under 21 years of age are deemed to be registered in the name of the
purchaser. The graduated sales charges are also applicable to a trustee or other
fiduciary purchasing securities for a single trust estate or single fiduciary
account.

3
<PAGE>
EVALUATIONS

Evaluations are determined by the Trustee on each Business Day. This
excludes Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. If the Securities are
listed on a national securities exchange or the NASDAQ national market system,
evaluations are generally based on closing sales prices on that exchange or that
system (unless the Trustee deems these prices inappropriate) or, if closing
sales prices are not available, at the mean between the closing bid and offer
prices. If the Securities are not listed or if listed but the principal market
is elsewhere, the evaluation is generally determined based on sales prices of
the Securities on the over-the-counter market or, if sales prices in that market
are not available, on the basis of the mean between current bid and offer prices
for the Securities or for comparable securities or by appraisal or by any
combination of these methods. Neither the Sponsors nor the Trustee guarantee the
enforceability, marketability or price of any Securities.

CERTIFICATES

Certificates for Units are issued upon request and may be transferred by
paying any taxes or governmental charges and by complying with the requirements
for redeeming Certificates (see How To Sell Units--Trustee's Redemption of
Units). Certain Sponsors collect additional charges for registering and shipping
Certificates to purchasers. Lost or mutilated Certificates can be replaced upon
delivery of satisfactory indemnity and payment of costs.

HOW TO REDEEM OR SELL UNITS

REDEMPTIONS

Units may be redeemed by the ML Plan by sending the Trustee a redemption
request.

By the seventh calendar day after tender the ML Plan will be wired an
amount equal to the Redemption Price per Unit. Because of market movements or
changes in the Portfolio, this price may be more or less than the cost of the
Units. The Redemption Price per Unit is computed each Business Day by adding the
value of the Securities, declared but unpaid dividends on the Securities, cash
and the value of any other Fund assets; deducting unpaid taxes or other
governmental charges, accrued but unpaid Fund expenses including the
administrative fees, unreimbursed Trustee advances, cash held to redeem Units or
for distribution to the ML Plan and the value of any other Fund liabilities; and
dividing the result by the number of outstanding Units.

If cash is not available in the Fund's Income and Capital Accounts to pay
redemptions, the Trustee may sell Securities selected by the Sponsor in a manner
designed to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each Security. These sales are often made at times
when the Securities would not otherwise be sold and may result in lower prices
than might be realized otherwise and will also reduce the size of the Fund.
Provision is made under the Indenture for the Sponsor to specify the minimum
dollar amount in which blocks of Securities are to be sold in order to obtain
the best price for the Portfolio. While these minimum amounts may vary from time
to time in accordance with market conditions, the Sponsor believes that the
minimum dollar amount which would be specified would be approximately $25,000.

ROLLOVER

Upon termination of the Portfolio the Plan Administrator will redeem Units
held and invest the proceeds in the next Select Ten Retirement Portfolio. The
Plan Administrator may, however, stop offering the Select Ten Retirement
Portfolio as a Plan investment alternative at any time. The Sponsor may, in its
sole discretion and without penalty or liability to investors, decide not to
sponsor any successor Portfolio or decide to modify the terms of the rollover.
Prior notice of any decision would be provided to the Plan Administrator.

The rollover is accomplished by the in-kind redemption of Units followed by
the sale of the underlying Securities by a distribution agent on behalf of
participating investors and the reinvestment of the sale proceeds (net of
brokerage fees, governmental charges and other sale expenses) in units of the
Successor Portfolio.

4
<PAGE>
The Sponsor intends to sell the distributed Securities, on behalf of the
distribution agent, as quickly as practicable and then to create units of the
successor Portfolio as quickly as possible, subject in both cases to the
Sponsor's sensitivity that the concentrated sale and purchase of large volumes
of securities may affect market prices in a manner adverse to the interest of
investors. Accordingly, the Sponsor may, in its sole discretion, undertake a
more gradual sale of the distributed Securities and a more gradual creation of
units of the New Portfolio to help mitigate any negative market price
consequences caused by this large volume of securities trades. There can be no
assurance, however, that this procedure will be successful or might not result
in less advantageous prices than had this procedure not been practiced at all.
Pending the investment of rollover proceeds in the securities to comprise the
new Portfolio, those moneys may be uninvested for up to several days. For those
Securities in the Portfolio that will also be in the new Portfolio, a direct
sale of those securities between the two funds is now permitted pursuant to an
SEC exemptive order. These sales will be effected at the securities' closing
sale prices on the exchanges where they are principally traded, free of any
brokerage costs.

The Division of Investment Management of the SEC is of the view that the
rollover option constitutes an 'exchange offer', for the purposes of Section
11(c) of the Investment Company Act of 1940, and would therefore be prohibited
absent an exemptive order. The Sponsor has received exemptive orders under
Section 11(c) which it believes permit it to offer the rollover, but no
assurance can be given that the SEC will concur with the Sponsor's position and
additional regulatory approvals may be required.

INCOME, DISTRIBUTIONS AND REINVESTMENT

INCOME AND DISTRIBUTIONS

Each Unit receives an equal share of quarterly distributions of dividend
income. Because dividends on the Securities are not received at a constant rate
throughout the year, any income distribution may be more or less than the amount
then credited to the Income Account. Dividends payable to the Fund are credited
to an Income Account, as of the date on which the Fund is entitled to receive
the dividends, and other receipts are credited to a Capital Account. A Reserve
Account may be created by withdrawing from the Income and Capital Accounts
amounts considered appropriate by the Trustee to reserve for any material amount
that may be payable out of the Fund. Funds held by the Trustee in the various
accounts do not bear interest. Subject to the Reinvestment Plan, the Quarterly
Income Distribution for each investor shall consist of an amount, computed
monthly by the Trustee, substantially equal to one-quarter of the investor's pro
rata share of the estimated annual income to the Income Account, after deducting
estimated expenses. There is no assurance that actual distributions will be made
since all dividends received may be used to pay expenses.

An amount equal to any capital gain net income (i.e. the excess of capital
gains over capital losses recognized by the Fund in any taxable year) will be
distributed shortly after the end of the year. In order to meet certain tax
requirements the Fund may make a special distribution of income, including
capital gains, to holders of record as of a date in December. Proceeds received
from the disposition of any of the Securities which are not used to make the
distribution of capital gain net income, for redemption of Units or reinvested
in additional Securities will be held in the Capital Account to be distributed
on the next succeeding distribution day.

REINVESTMENT

Income and principal distributions on Units may be reinvested by
participating in the Fund's reinvestment plan. Under the plan, the Units
acquired for investors will be either Units already held in inventory by the
Sponsors or new Units created by the Sponsors' deposit of additional Securities,
contracts to purchase additional Securities or cash (or a bank letter of credit
in lieu of cash) with instructions to purchase additional Securities. Purchases
made pursuant to the Reinvestment Plan will be made without initial sales charge
at the net asset value for Units of the Fund (but will be subject to
subsequently deducted deferred sales charges). Under the Reinvestment Plan, the
Fund will pay the distributions to the Trustee which in turn will purchase for
the investor full and fractional Units of the Fund at the price determined as of
the close of business on the distribution day and will add the Units to the
investor's account and send the investor an account statement reflecting the
reinvestment. The Sponsors reserve the right to amend, modify or

5
<PAGE>
terminate the reinvestment plan at any time without prior notice. Investors
holding Units in 'street name' should contact their broker, dealer or financial
institution if they wish to participate in the reinvestment plan.

FUND EXPENSES

Estimated annual Fund expenses are listed in Part A of the Prospectus; if
actual expenses exceed the estimate, the excess will be borne by the Fund. The
Trustee's fee shown in Part A of this Prospectus assume that the Portfolio will
reach a size estimated by the Sponsors and is based on a sliding fee scale that
reduces the per 1,000 units Trustee's fee as the size of the Portfolio
increases. The Trustee's annual fee is payable in monthly installments. The
Trustee also benefits when it holds cash for the Fund in non-interest bearing
accounts. Possible additional charges include Trustee fees and expenses for
extraordinary services, costs of indemnifying the Trustee and the Sponsors,
costs of action taken to protect the Fund and other legal fees and expenses,
Fund termination expenses and any governmental charges. The Trustee has a lien
on Fund assets to secure reimbursement of these amounts and may sell Securities
for this purpose if cash is not available. The Sponsors receive an annual fee of
a maximum of $0.35 per 1,000 Units to reimburse them for the cost of providing
Portfolio supervisory services to the Fund. While the fee may exceed their costs
of providing these services to the Fund, the total supervision fees from all
Series of Equity Income Fund will not exceed their costs for these services to
all of those Series during any calendar year. The Sponsors may also be
reimbursed for their costs of providing bookkeeping and administrative services
to the Fund, currently estimated at $0.10 per 1,000 Units. The Trustee's and
Sponsors' fees may be adjusted for inflation without investors' approval.

Expenses incurred in establishing the Fund, including the cost of the
initial preparation of documents relating to the Fund, Federal and State
registration fees, the initial fees and expenses of the Trustee, legal expenses
and any other out-of-pocket expenses are paid by the Fund and amortized over the
life of the Fund. Advertising and selling expenses are paid from the
Underwriting Account at no charge to the Fund. Defined Asset Funds can be a
cost-effective way to purchase and hold investments. Annual operating expenses
are generally lower than for managed funds. Because Defined Asset Funds have no
management fees, limited transaction costs and no ongoing marketing expenses,
operating expenses are generally less than 0.25% a year. When compounded
annually, small differences in expense ratios can make a big difference in your
investment results.

TAXES

TAXATION OF THE FUND

The Fund intends to qualify for and elect the special tax treatment
applicable to 'regulated investment companies' under Section 851-855 of the
Internal Revenue Code of 1986, as amended (the 'Code'). Qualification and
election as a 'regulated investment company' involve no supervision of
investment policy or management by any government agency. If the Fund qualifies
as a 'regulated investment company' and distributes to Holders 90% or more of
its taxable income without regard to its net capital gain (i.e., the excess of
its net long-term capital gain over its net short-term capital loss), it will
not be subject to Federal income tax on any portion of its taxable income
(including any net capital gain) distributed to Holders in a timely manner. In
addition, the Fund will not be subject to the 4% excise tax on certain
undistributed income of 'regulated investment companies' to the extent it
distributes to Holders in a timely manner at least 98% of its taxable income
(including any net capital gain). It is anticipated that the Fund will not be
subject to Federal income tax or the excise tax because the Indenture requires
the distribution of the Fund's taxable income (including any net capital gain)
in a timely manner. Although all or a portion of the Fund's taxable income
(including any net capital gain) for a taxable year may be distributed shortly
after the end of the calendar year, such a distribution will be treated for
Federal income tax purposes as having been received by Holders during the
calendar year.

DISTRIBUTIONS

Distribution to Holders of the Fund's dividend income and net short-term
capital gain in any year will be taxable as ordinary income to Holders to the
extent of the Fund's taxable income (without regard to its net capital gain) for
that year. Any excess will be treated as a return of capital and will reduce the
Holder's basis in his Units and, to the 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.

6
<PAGE>
Distribution of the Fund's net capital gain (designated as capital gain
dividends by the Fund) will be taxable to Holders as long-term capital gain,
regardless of the length of time the Units have been held by a Holder. A Holder
will recognize a taxable gain or loss if the Holder sells or redeems his Units.
Any gain or loss arising from (or treated as arising from) the sale or
redemption of Units will be a capital gain or loss, except in the case of a
dealer in securities. Capital gains are currently taxed at the same rate as
ordinary income, however, the excess of net long-term capital gains over net
short-term capital losses may be taxed at a lower rate than ordinary income for
certain noncorporate taxpayers. A capital gain or loss is long-term if the asset
is held for more than one year and short-term if held for one year or less.
However, any capital loss on the sale or redemption of a Unit that a Holder has
held for six months or less will be a long-term capital loss to the extent of
any capital gain dividends previously distributed to the Holder by the Fund. The
deduction of capital losses is subject to limitations.

A distribution of Securities to a Holder upon redemption of his Units will
be a taxable event to such Holder, and that Holder will recognize taxable gain
or loss (equal to the difference between such Holder's tax basis in his Units
and the fair market value of Securities received in redemption), which will be
capital gain or loss upon such distribution, except in the case of a dealer in
securities. Holders should consult their own tax advisers in this regard.

Distributions that are taxable as ordinary income to Holders will
constitute dividends for Federal income tax purposes. To the extent that
distributions are appropriately designated by the Fund and are attributable to
dividends received by the Fund from domestic issuers with respect to whose
Securities the Fund satisfies the requirements for the dividends-received
deduction, such distributions will be eligible for the dividends-received
deduction for corporations (other than corporations such as 'S' corporations
which are not eligible for such deduction because of their special
characteristics and other than for purposes of special taxes such as the
accumulated earnings tax and the personal holding company tax). The
dividends-received deduction generally is currently 70%. However, Congress from
time to time considers proposals that would adversely affect the after-tax
return to investors who can take advantage of the deduction. For example, on
December 7, 1995, the Clinton Administration proposed reducing the dividends-
received deduction to 50% for dividends paid or accrued after January 31, 1996,
and on March 19, 1996 amended the proposal to provide that such reduction would
apply only to dividends received or accrued after the 30th day after the
enactment of the proposal. Holders are urged to consult their own tax advisers.

Sections 246 and 246A of the Code contain additional limitations on the
eligibility of dividends for the corporate dividends-received deduction.
Depending upon the corporate Holder's circumstances (including whether it has a
45-day holding period for its Units and whether its Units are debt financed),
these limitations may be applicable to dividends received by a Holder from the
Fund which would otherwise qualify for the dividends-received deduction under
the principles discussed above. Accordingly, Holders should consult their own
tax advisers in this regard. A corporate Holder should be aware that the receipt
of dividend income for which the dividends-received deduction is available may
give rise to an alternative minimum tax liability (or increase an existing
liability) because the dividend income will be included in the corporation's
'adjusted current earnings' for purposes of the adjustment to alternative
minimum taxable income required by Section 56(g) of the Code.

Holders will be taxed in the manner described above regardless of whether
distributions from the Fund are actually received by the Holder or are
reinvested pursuant to the Reinvestment Plan.

The Federal tax status of each year's distributions will be reported to
Holders and to the Internal Revenue Service. The foregoing discussion relates
only to the Federal income tax status of the Fund and to the tax treatment of
distributions by the Fund to U.S. Holders. Holders that are not United States
citizens or residents should be aware that distributions from the Fund will
generally be subject to a withholding tax of 30%, or a lower treaty rate, as
well as information reporting, and should consult their own tax advisers to
determine whether investment in the Fund is appropriate. Distributions may also
be subject to state and local taxation and Holders should consult their own tax
advisers in this regard.

RETIREMENT PLANS

This Series of Equity Income Fund may be well suited for purchase by
Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for special 5

7
<PAGE>
or 10 year averaging or tax-deferred rollover treatment. Holders of Units in
IRAs, Keogh plans and other tax-deferred retirement plans should consult their
plan custodian as to the appropriate disposition of distributions. Investors
considering participation in any of these plans should review specific tax laws
related thereto and should consult their attorneys or tax advisors with respect
to the establishment and maintenance of any of these plans. These plans are
offered by brokerage firms, including the Sponsor of this Fund, and other
financial institutions. Fees and charges with respect to such plans may vary.

Retirement Plans for the Self-Employed--Keogh Plans. Units of the Fund may
be purchased by retirement plans established for self-employed individuals,
partnerships or unincorporated companies ('Keogh plans'). The assets of a Keogh
plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Keogh plan participants may also establish separate
IRAs (see below) to which they may contribute up to an additional $2,000 per
year ($2,250 in a spousal account).

Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan for employees of a corporation may purchase Units of the Fund.

RECORDS AND REPORTS

With each distribution, the Trustee includes a statement of the amounts of
income and any other receipts being distributed. Following the termination of
the Fund, the Trustee sends each investor of record a statement summarizing
transactions in the Fund's accounts including amounts distributed from them,
identifying Securities sold and purchased and listing Securities held and the
number of Units outstanding at termination and stating the Redemption Price per
1,000 Units at termination, and the fees and expenses paid by the Fund, among
other matters. Fund accounts may be audited by independent accountants selected
by the Sponsors and any report of the accountants will be available from the
Trustee on request.

TRUST INDENTURE

The Fund is a 'unit investment trust' created under New York law by a Trust
Indenture among the Sponsors and the Trustee. This Prospectus summarizes various
provisions of the Indenture, but each statement is qualified in its entirety by
reference to the Indenture.

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The Trustee may resign upon notice to the Sponsors. It may be removed by
investors holding 51% of the Units at any time or by the Sponsors without the
consent of investors if it becomes incapable of acting or bankrupt, its affairs
are taken over by public authorities, or if under certain conditions the
Sponsors determine in good faith that its replacement is in the best interest of
the investors. The resignation or removal becomes effective upon acceptance of
appointment by a successor; in this case, the Sponsors will use their best
efforts to appoint a successor promptly; however, if upon resignation no
successor has accepted appointment within 30 days after notification, the
resigning Trustee may apply to a court of competent jurisdiction to appoint a
successor.

MISCELLANEOUS

LEGAL OPINION

The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors.

AUDITORS

The Statement of Condition in this Prospectus was audited by Deloitte &
Touche LLP, independent accountants, as stated in their opinion. It is included
in reliance upon that opinion given on the authority of that firm as experts in
accounting and auditing.

TRUSTEE