AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1994
REGISTRATION NO. 33-52141
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-6
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FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
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A. EXACT NAME OF TRUST:
EQUITY INCOME FUND
SELECT TEN PORTFOLIO--1994 SPRING SERIES
DEFINED ASSET FUNDS
B. NAMES OF DEPOSITORS:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY SHEARSON INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
DEAN WITTER REYNOLDS INC.
C. COMPLETE ADDRESSES OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
UNIT INVESTMENT TRUSTS
P.O. BOX 9051
PRINCETON, N.J.
08543-9051 SMITH BARNEY SHEARSON
INC.
TWO WORLD TRADE CENTER--
101ST FLOOR
NEW YORK, N.Y. 10048
PAINEWEBBER INCORPORATED PRUDENTIAL SECURITIES DEAN WITTER REYNOLDS INC.
1285 AVENUE OF THE INCORPORATED TWO WORLD TRADE
AMERICAS ONE SEAPORT PLAZA CENTER--59TH FLOOR
NEW YORK, N.Y. 10019 199 WATER STREET NEW YORK, N.Y. 10048
NEW YORK, N.Y. 10292
D. NAMES AND COMPLETE ADDRESSES OF AGENTS FOR SERVICE:
TERESA KONCICK, ESQ. THOMAS D. HARMAN, ESQ. ROBERT E. HOLLEY
P.O. BOX 9051 388 GREENWICH ST. 1285 AVENUE OF THE
PRINCETON, N.J. NEW YORK, N.Y. 10013 AMERICAS
08543-9051 NEW YORK, N.Y. 10019
COPIES TO:
LEE B. SPENCER, JR. PHILIP BECKER PIERRE DE SAINT PHALLE,
ONE SEAPORT PLAZA 130 LIBERTY STREET--29TH ESQ.
199 WATER STREET FLOOR 450 LEXINGTON AVENUE
NEW YORK, N.Y. 10292 NEW YORK, N.Y. 10019 NEW YORK, N.Y. 10017
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500 (as required by Rule 24f-2)
/ x / Check box if it is proposed that this filing will become effective at 9:30
a.m. on May 6, 1994 pursuant to Rule 487.
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<PAGE>
Def ined
Asset FundsSM
EQUITY This Defined Fund is a portfolio of preselected
INCOME FUND securities, formed to obtain total return through
SELECT TEN PORTFOLIO-- a combination of capital appreciation and current
1994 SPRING SERIES dividend income. The Fund will invest for a period
of about one year in a portfolio of the ten common
stocks in the Dow Jones Industrial Average* having
the highest dividend yield on the day prior to the
date of this Prospectus. Dow Jones & Company, Inc.
is not affiliated with the Sponsors, has not
participated in any way in the creation of the
Fund or in the selection of stocks included in the
Fund and has not reviewed or approved any
information included in this Prospectus.
The value of Units will fluctuate with the value
of the Portfolio of underlying Securities and no
assurance can be given that dividends will be paid
or that the Units will appreciate in value.
Minimum purchase: $1,000.
Minimum purchase for Individual Retirement/Keogh
Accounts: $250.
*The name 'Dow Jones Industrial Average' is the
property of Dow Jones & Company, Inc.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES
SPONSORS: COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Merrill Lynch, OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
Pierce, Fenner & Smith Inc. CONTRARY IS A CRIMINAL OFFENSE.
Smith Barney Shearson Inc. Inquiries should be directed to the Trustee at
PaineWebber Incorporated 1-800-338-6019.
Prudential Securities Prospectus dated May 6, 1994.
Incorporated READ AND RETAIN THIS PROSPECTUS FOR FUTURE
Dean Witter Reynolds Inc. REFERENCE.
<PAGE>
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DEFINED ASSET FUNDSSM is America's oldest and largest family of unit investment
trusts, with over $90 billion sponsored since 1970. Each Defined Fund is a
portfolio of preselected securities. The portfolio is divided into 'units'
representing equal shares of the underlying assets. Each unit receives an equal
share of income and principal distributions.
With Defined Asset Funds you know in advance what you are investing in and that
changes in the portfolio are limited. Most defined bond funds pay interest
monthly and distribute principal as bonds are called, redeemed, sold or as they
mature. Defined equity funds offer preselected stock portfolios with defined
termination dates.
Your financial professional can help you select a Defined Fund to meet your
personal investment objectives. Our size and market presence enable us to offer
a wide variety of investments. Defined Funds are available in the following
types of securities: municipal bonds, corporate bonds, government bonds, utility
stocks, growth stocks, even international securities denominated in foreign
currencies.
The terms of Defined Funds are as short as one year or as long as 30 years.
Special funds are available for investors seeking extra features: insured funds,
double and triple tax-free funds, and funds with 'laddered maturities' to help
protect against rising interest rates. Defined Funds are offered by prospectus
only.
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CONTENTS
Investment Summary.......................................... A-3
Fee Table................................................... A-4
Underwriting Account........................................ A-8
Report of Independent Accountants........................... A-12
Statement of Condition...................................... A-12
Portfolio................................................... A-13
Fund Structure.............................................. 1
Risk Factors................................................ 2
Description of the Fund..................................... 4
Taxes....................................................... 6
Public Sale of Units........................................ 9
Market for Units............................................ 10
Redemption.................................................. 11
Reinvestment Plan........................................... 12
Special Redemption, Liquidation and Investment in New
Fund........................................................ 13
Termination................................................. 15
Expenses and Charges........................................ 16
Administration of the Fund.................................. 16
Resignation, Removal and Limitations on Liability........... 18
Miscellaneous............................................... 19
Exchange Option............................................. 22
A-2
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (THE BUSINESS DAY PRIOR TO THE INITIAL DATE
OF DEPOSIT)(a)
INITIAL NUMBER OF UNITS-- 303,920
FRACTIONAL UNDIVIDED INTEREST IN FUND REPRESENTED BY EACH
UNIT-- 1/303,920th
CALCULATION OF PUBLIC OFFERING PRICE PER 1,000 UNITS
Aggregate value of Securities in Fund and cash held to
purchase Securities(b)..................................$ 300,881.25
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Divided by 303,920 Units..................................$ 990.00
(times 1,000)
Plus maximum sales charge of 2.75%(c) of Public Offering
Price (2.778% of net amount invested in Securities and
cash held to purchase Securities)....................... 27.50
Less Deferred Sales Charge................................ (17.50)
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Public Offering Price per 1,000 Units 1,000.00
Plus the amount per 1,000 Units in the Income Account (see
Administration of the Fund-- Accounts and
Distributions).......................................... 0.00
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Total per 1,000 Units.....................................$ 1,000.00
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SPONSORS' REPURCHASE PRICE AND REDEMPTION PRICE PER 1,000
UNITS...................................................$ 972.50(d)
QUARTERLY INCOME DISTRIBUTIONS
Distributions of income, if any, will be paid on the
25th of July 1994, October 1994, January 1995
and March 1995 (each a 'Distribution Day') to
Holders of record on the 10th of July 1994, Octo-
ber 1994, January 1995 and March 1995, respec-
tively (each a 'Record Day').
SPECIAL REDEMPTION AND LIQUIDATION PERIOD
Beginning on May 10, 1995 until no later than May
31, 1995 (the 'Special Redemption and Liquida-
tion Period').
PROCEDURES FOR SPECIAL REDEMPTION, LIQUIDATION
AND INVESTMENT IN NEW FUND
If a Holder (a 'Rollover Holder') so specifies by
May 9, 1995 or another date as determined by the
Sponsors (the 'Rollover Notification Date'), the
Rollover Holder's Units will be redeemed in kind
and the underlying distributed Securities will be
sold by the Distribution Agent during the Special
Redemption and Liquidation Period. The proceeds
will be invested as received in the '1995 Spring
Series,' if offered (see Special Redemption,
Liquidation and Investment in New Fund).
EVALUATION TIME--4:00 P.M., New York Time
SPONSORS' PROFIT OR (LOSS) ON DEPOSIT-- ($372.50)
TRUSTEE'S ANNUAL FEE AND EXPENSES--$1.31 per
1,000 Units (see Expenses and Charges)(e)
PORTFOLIO SUPERVISION FEE(f)--
Maximum of $.25 per 1,000 Units (see Expenses
and Charges).
MINIMUM VALUE OF FUND
Trust Indenture may be terminated if value of
Fund is less than 40% of the value of the
Securities when deposited in the Portfolio.
MANDATORY TERMINATION DATE
May 31, 1995. The final distribution will be made
within a reasonable time thereafter (see
Termination).
DEFERRED SALES CHARGE PAYMENT DATES
The 1st of each month commencing August 1, 1994
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(a) The Indenture was signed and the initial deposit was made on the date
of this Prospectus.
(b) After deduction of the Deferred Sales Charge then payable (zero on the
date of this Investment Summary).
(c) The sales charge consists of an Initial Sales Charge and a Deferred
Sales Charge. The Initial Sales Charge is computed by deducting the
Deferred Sales Charge ($17.50 per 1,000 Units) from the aggregate sales
charge (a maximum of 2.75% of the Public Offering Price); thus on the
date of this Investment Summary, the maximum Initial Sales Charge is
$10 per 1,000 Units or 1% of the Public Offering Price. The Initial
Sales Charge is deducted from the purchase price at the time of
purchase and is reduced on a graduated basis on purchases of $50,000 or
more (see Public Sale of Units--Public Offering Price). The Deferred
Sales Charge is paid through reduction of the net asset value of the
Fund by $1.75 per 1,000 Units on each Deferred Sales Charge Payment
Date (the 1st day of each month, commencing August 1, 1994). On a
repurchase or redemption of Units before the last Deferred Sales Charge
Payment Date, any remaining Deferred Sales Charge payments will be
deducted from the proceeds. Units purchased pursuant to the
Reinvestment Plan are subject to that portion of the Deferred Sales
Charge remaining at the time of reinvestment (see Reinvestment Plan).
(d) Reflects deductions for remaining Deferred Sales Charge payments
($17.50 initially). In addition, after the initial offering period, the
repurchase and cash redemption prices will be further reduced to
reflect the Fund's estimated costs of liquidating Securities to meet
the redemption, currently estimated at $1.23 per 1,000 Units.
(e) Assumes the Fund will reach a size estimated by the Sponsors; expenses
will vary with the size of the Fund. Of this amount, the Trustee
receives annually for its services as Trustee $0.84 per 1,000 Units,
subject to reduction as the size of the Fund increases, calculated
monthly based on the largest number of Units outstanding at any time
during that month.
(f) In addition to this amount the Sponsors may be reimbursed for
bookkeeping or other administrative expenses not exceeding their
actual costs, currently at a maximum annual rate of $.10 per 1,000 Units.
A-3
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (CONTINUED)
FEE TABLE
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THIS FEE TABLE IS INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE COSTS AND
EXPENSES THAT AN INVESTOR IN THE SERIES WILL BEAR DIRECTLY OR INDIRECTLY. SEE
PUBLIC SALE OF UNITS AND EXPENSES AND CHARGES. ALTHOUGH EACH SERIES HAS A TERM
OF ONLY ONE YEAR, AND IS A UNIT INVESTMENT TRUST RATHER THAN A MUTUAL FUND, THIS
INFORMATION IS PRESENTED TO PERMIT A COMPARISON OF FEES, ASSUMING THE PRINCIPAL
AMOUNT AND DISTRIBUTIONS ARE ROLLED OVER EACH YEAR INTO A NEW SERIES SUBJECT
ONLY TO THE DEFERRED SALES CHARGE.
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<TABLE><CAPTION>
UNITHOLDER TRANSACTION EXPENSES AMOUNT PER
1,000 UNITS
------------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on Purchase (as a percentage of offering price)................ 1.00%(a) $ 10.00
Deferred Sales Charge per Year (as a percentage of original purchase price)......................... 1.75%(b) 17.50
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2.75% $ 27.50
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Maximum Sales Charge Imposed Per Year on Reinvested Dividends....................................... 1.75%(b) $ 17.50
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Trustee's Fee....................................................................................... 0.085% $ 0.84
Portfolio Supervision, Bookkeeping and Administrative Fees.......................................... 0.035% 0.35
Other Operating Expenses............................................................................ 0.012% 0.12
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Total........................................................................................... 0.132% $ 1.31
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</TABLE>
EXAMPLE
<TABLE><CAPTION>
CUMULATIVE EXPENSES PAID FOR PERIOD OF:
----------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming
the 1994 Spring Series estimated operating expense ratio of 0.132% and a 5%
annual return on the investment throughout the periods...................... $ 29.10 $ 69.10 $ 111.62 $ 229.99
</TABLE>
The Example assumes reinvestment of all dividends and distributions and utilizes
a 5% annual rate of return as mandated by Securities and Exchange Commission
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 rate of return; the actual expenses and annual rate of
return may be more or less than those assumed for purposes of the Example.
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(a) The Maximum Initial Sales Charge is actually the difference between 2.75%
and the Deferred Sales Charge ($17.50 per 1,000 Units) and would exceed 1%
if the Public Offering Price exceeds $1,000 per 1,000 Units.
(b) The actual fee is $1.75 per month per 1,000 Units, irrespective of purchase
or redemption price, deducted in each of the last 10 months of each one-year
Portfolio. If a Holder sells Units before all of these deductions have been
made, the balance of the Deferred Sales Charge will be deducted from the
sales proceeds. If Unit price exceeds $1 per Unit, the Deferred Sales Charge
will be less than 1.75%; if Unit price is less than $1 per Unit, the
Deferred Sales Charge will exceed 1.75%.
A-4
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (CONTINUED)
OBJECTIVE OF THE FUND--The objective of the Fund is to provide total return
through capital appreciation and current dividend income. The Fund will invest
for approximately the next twelve (12) months in approximately equal values of
the ten common stocks in the Dow Jones Industrial Average (which is unaffiliated
with any of the Sponsors) having the highest dividend yield one business day
prior to the date of this Prospectus (the 'DJIA Strategy Stocks'). (See
Investment Summary--Special Characteristics of the Fund.) The companies
represented in the Fund are some of the most well-known and highly capitalized
companies in America. Many are household names. An investment in approximately
equal values of the DJIA Strategy Stocks for a period of one year would have, in
15 of the last 20 years, yielded a higher total return than an investment in all
of the stocks comprising the Dow Jones Industrial Average (see Comparison of
Dividends, Appreciation and Total Return on page A-9). Investment in a number of
companies having high dividends relative to their stock prices (usually because
their stock prices are depressed) is designed to increase the Fund's potential
for higher returns. The Securities may appreciate or depreciate in value (or pay
or fail to pay dividends) depending on the full range of economic and market
influences affecting corporate profitability, the financial condition of issuers
and the prices of equity securities in general and the Securities in particular.
Therefore, there is no guarantee that the objective of the Fund will be
achieved.
PORTFOLIO STRUCTURE--The Portfolio contains 10 common stocks issued by
companies engaged primarily in the following industries: 3 petroleum refining
companies (30% of the aggregate value of the Securities in the Fund*), 1
manufacturing company, 1 photographic equipment and supplies manufacturer, 1
pharmaceutical company, 1 retailing company, 1 consumer goods company and 2
financial services companies. Although there are certain risks of price
volatility associated with investment in common stocks (particularly with an
investment in one or two common stocks), your risk is reduced because your
capital is divided among 10 stocks from 7 different industry groups.
MARKET FOR UNITS; DEFERRED SALES CHARGE--Although not obligated to do so,
the Sponsors intend to maintain a market for Units based on the aggregate value
of the underlying Securities. If a market is not maintained, it is unlikely that
a Holder would be able to dispose of his Units other than through redemption
(see Redemption). The Sponsors' Repurchase Price, like the Redemption Price,
will reflect the deduction from the value of the underlying Securities of any
unpaid amount of the Deferred Sales Charge. In addition, after the initial
offering period the repurchase and cash redemption prices will be further
reduced to reflect the Fund's estimated costs of liquidating Securities to meet
the redemption in the amount shown on page A-3. Investors should note that the
Deferred Sales Charge of $1.75 per 1,000 Units will be deducted from assets of
the Fund on the first of each month commencing on the first Deferred Sales
Charge Payment Date shown on page A-3, and to the extent the entire Deferred
Sales Charge has not been so deducted or paid at the time of redemption of the
Units, the remainder will be deducted from the proceeds of redemption or in
calculating an in-kind redemption.
RISK FACTORS--Investment in the Fund should be made with an understanding
that the value of the underlying Portfolio may fluctuate in accordance with
changes in the financial condition of the issuers of the Securities in the
Portfolio, changes in the various industry sectors represented in the Fund, the
value of stocks generally, the impact of the Sponsors' purchase and sale of the
Securities (especially during the primary offering period of Units of the Fund
and during the Special Redemption and Liquidation Period) and other factors.
Common stocks may be susceptible to general stock market fluctuations and to
volatile increases and decreases of value as market confidence in and
perceptions of the issuers change. Any declaration of dividends by the issuers
of the Securities in the Portfolio depends upon several factors including the
financial condition of the issuers and general economic conditions. (See Risk
Factors.) In addition, the Fund is considered to be 'concentrated' in stocks of
companies deriving a substantial portion of their income from the petroleum
refining industry.* Investment in this industry may pose additional risks
including the volatility of oil prices, the impact of oil cartels, continued
political uncertainty in the Middle East and the increasing costs associated
with environmental damage caused by oil companies and compliance with
environmental regulations and legislation (see Risk Factors--Petroleum Refining
Companies).
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 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 the Sponsors may instruct the Trustee to sell
Securities under certain limited circumstances, given the investment philosophy
of the Fund, the Sponsors are not likely to sell Securities (see Administration
of the Fund--Portfolio Supervision). Securities will not be sold by the Fund to
take advantage of market fluctuations or changes in anticipated rates of
appreciation. Investors should note in particular that the Securities were
selected on the basis of the criteria set forth under Objective of the Fund.
These criteria may not necessarily reflect the research recommendations of any
of the Sponsors. The Fund may continue to purchase or hold Securities originally
selected through this process even though the yields on the Securities may have
changed or the Securities may no longer be included in the Dow Jones Industrial
Average.
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* A fund is considered to be 'concentrated' in a particular category when the
securities in that category constitute 25% or more of the aggregate value of
the portfolio (see Risk Factors below).
A-5
<PAGE>
Defined
Asset Funds
INVESTOR'S GUIDE DEFINED EQUITY INCOME FUND
EQUITY INCOME FUND Our defined equity portfolios offer investors a
SELECT TEN simple and convenient way to participate in the
PORTFOLIO-- equity markets. By purchasing defined equity
1994 SPRING funds, investors not only avoid the problem of
SERIES selecting individual securities by themselves, but
also gain the advantage of diversification by
investing in securities of several different
issuers. Spreading your investment among different
securities and issuers reduces your risk, but does
not eliminate it.
SELECT TEN PORTFOLIO
(1994 SPRING SERIES)
The 1994 Spring Series seeks to outperform the Dow
Jones Industrial Average* ('DJIA') by investing
for about one year in its ten highest dividend
yielding stocks ('DJIA Strategy Stocks'). Although
Select Ten Portfolios were not available until
1991, during the last 20 years, the strategy of
investing in approximately equal values of these
stocks each year generally would have yielded a
higher total return than an investment in all 30
stocks which make up the DJIA.
COMPARISON OF TOTAL RETURN
DJIA STRATEGY DOW JONES INDUSTRIAL AVERAGE
STOCKS(2) (DJIA)(1)
YEAR TOTAL RETURN(3) TOTAL RETURN(3)
--------- --------------------- -----------------------------
1974 -8.95% -23.14%
1975 56.73 44.40
1976 34.80 22.72
1977 -0.83 -12.71
1978 0.19 2.69
1979 12.38 10.52
1980 26.37 21.41
1981 7.35 -3.40
1982 25.46 25.79
1983 38.45 25.68
1984 6.89 1.06
1985 28.42 32.78
1986 29.87 26.91
1987 6.97 6.02
1988 21.60 15.95
1989 27.22 31.71
1990 -7.94 -0.57
1991 33.54 23.93
1992 8.26 7.34
1993 27.21 16.7
1/1/4-3/31/94 -6.00 -2.47
(1) AN INDEX OF 30 STOCKS COMPILED BY DOW JONES &
COMPANY, INC.
(2) DJIA STRATEGY STOCKS FOR ANY YEAR OR QUARTER
('PERIOD') WERE SELECTED BY RANKING THE
DIVIDEND YIELDS FOR EACH OF THE STOCKS IN THE
DJIA AS OF THE BEGINNING OF THAT PERIOD, BASED
UPON AN ANNUALIZATION OF THE LAST QUARTERLY OR
SEMI-ANNUAL REGULAR DIVIDEND DISTRIBUTION
(WHICH WOULD HAVE BEEN DECLARED IN THE
PRECEDING PERIOD) DIVIDED BY THAT STOCK'S
MARKET VALUE ON THE FIRST TRADING DAY ON THE
NEW YORK STOCK EXCHANGE.
(3) TOTAL RETURN REPRESENTS THE SUM OF A STOCK'S
APPRECIATION AND ACTUAL DIVIDEND YIELD.
APPRECIATION FOR THE DJIA REPRESENTS THE
PERCENTAGE CHANGE IN VALUE OF THE DJIA FROM
THE FIRST TRADING DAY ON THE NEW YORK STOCK
EXCHANGE IN A GIVEN PERIOD TO THE LAST TRADING
DAY IN THAT PERIOD; APPRECIATION FOR THE DJIA
STRATEGY STOCKS REPRESENTS THE PERCENTAGE
CHANGE IN THE VALUE OF THE DJIA STRATEGY
STOCKS OVER THE SAME PERIOD OF TIME. ACTUAL
DIVIDEND YIELD FOR THE DJIA IS CALCULATED BY
DIVIDING THE TOTAL DIVIDENDS CREDITED TO THE
DJIA BY THE OPENING VALUE OF THE DJIA AS OF
THE FIRST TRADING DAY OF THE PERIOD; ACTUAL
DIVIDEND YIELD ON THE DJIA STRATEGY STOCKS IS
CALCULATED BY ADDING TOTAL DIVIDENDS RECEIVED
IN THAT PERIOD AND DIVIDING THE RESULT BY THE
MARKET VALUE OF THE STOCKS AS OF THE FIRST
TRADING DAY IN THAT PERIOD. TOTAL RETURN DOES
NOT TAKE INTO CONSIDERATION ANY SALES CHARGES,
COMMISSIONS, EXPENSES OR TAXES.
- ------------------
* Dow Jones & Company, Inc. has not participated in any way in the
creation of the Fund or in the selection of the stocks included in the
Fund and has not reviewed or approved any information included in the
prospectus. The name 'The Dow Jones Industrial Average' is the property
of Dow Jones & Company, Inc.
THIS MATERIAL MAY NOT BE DISTRIBUTED UNLESS INCLUDED IN A CURRENT PROSPECTUS.
INVESTORS SHOULD REFER TO THE PROSPECTUS FOR FURTHER INFORMATION.
<PAGE>
PERFORMANCE OF THE STRATEGY
The returns shown on the preceding page represent
past performance and are no guarantee of future
results; they should not be used to predict
returns from the Fund. As indicated, the DJIA
Strategy Stocks underperformed the DJIA in five of
the last 20 years and there can be no assurance
that the Fund will outperform the DJIA over its
one year life or over consecutive rollover
periods, if available. An investor in the Fund may
not realize as high a total return as on a direct
investment in the DJIA Strategy Stocks since the
Fund has sales charges and expenses and may not be
fully invested at all times. Unit price will
fluctuate with the value of the underlying stocks,
and there is no assurance that dividends on these
stocks will be paid or that the Units will
appreciate in value.
INVESTMENT STRATEGY
The objective of this Fund is to provide total
return through a combination of capital
appreciation and current dividend income. The Fund
will invest in some of the most well-known and
highly capitalized companies in America. However,
because return depends on both stock price and
dividend declarations, there can be no assurance
that the Fund will achieve this objective. The
Fund buys approximately equal values of the ten
highest dividend yielding stocks in the Dow Jones
Industrial Average one business day prior to the
Initial Date of Deposit of Securities in the Fund
and holds them for about one year. After this
period, the Fund will terminate. Investors may
choose either to reinvest their proceeds into the
next Spring Series, if available, subject only to
the deferred sales charge, or to receive a cash
distribution.
REDUCED RISK
Buying just one or two of these stocks may subject
you to greater investment risk. With this Fund,
your risk is reduced because your capital is
spread among ten common stocks from various
industry groups. Because the Portfolio will remain
relatively fixed, there are no management fees.
A LIQUID INVESTMENT
Although not legally required to do so, the
Sponsors have maintained a secondary market for
Defined Asset Funds for over 20 years. You can
cash in your Units at any time. Your price is
based on the market value of the Fund's securities
at that time. Or, you can exchange your investment
for another Defined Fund at a reduced sales
charge. There is never a fee for cashing in your
investment.
RISK FACTORS
The value of the Units may fluctuate with changes
in the financial condition of the issuers of
stocks held, changes in the industry sectors
represented, the value of stocks generally and the
impact of the Fund's purchase and sale of stocks
(especially during the primary offering and the
special redemption and liquidation periods).
Dividends are subject to the financial condition
of and declaration by the issuers. There can be no
assurance that the Fund will achieve its
objective. Although the Portfolio is monitored, it
is not actively managed and, given the investment
philosophy of the Fund, it is unlikely that the
Portfolio will change during the life of the Fund.
<PAGE>
VOLUME PURCHASE DISCOUNT
The initial sales charge will be reduced starting
at purchases of $50,000. For purchases of $250,000
or more, only the deferred sales charge is
payable.
DEFERRED SALES CHARGE
Deferring part of the sales charge permits more of
your money to go to work for you. Because payment
of a portion of the sales charge is deferred until
the termination of the Fund, or, in the case of a
Rollover Holder, until redemption, the proceeds
you receive upon such event will reflect deduction
of this amount (the 'Deferred Sales Charge'). The
annual statement and the relevant tax reporting
forms you receive will reflect the actual amount
paid to you, net of the Deferred Sales Charge.
Accordingly, you should not increase your basis in
your units by the Deferred Sales Charge amount.
REINVESTMENT OPTION
You can elect to reinvest your quarterly
distributions automatically in additional units of
the Fund subject only to the remaining portion of
the deferred sales charge. Reinvestment allows you
to increase your overall investment in the Fund
and compound income for a greater total return.
Contact your financial professional to participate
in this Reinvestment Plan.
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (CONTINUED)
Subsequent to the Initial Date of Deposit, the Sponsors may create
additional Units by depositing either additional Securities, contracts to
purchase additional Securities or cash (or a bank letter or letters of credit in
lieu of cash) with instructions to purchase additional Securities if additional
Units are to be offered to the public. (See Administration of the
Fund--Portfolio Supervision). If cash (or a bank letter of credit in lieu of
cash) is deposited with instructions to purchase Securities, to the extent the
price of a Security increases or decreases between the time of deposit and the
time any Security is purchased, Units will represent less or more of that
Security and more or less of the other Securities in the Fund. Price
fluctuations during the period from the time of deposit of cash (or a bank
letter of credit in lieu of cash) to the time the Securities are purchased will
affect the value of every Holder's Units and the income per Unit received by the
Fund. In order to minimize these effects, the Fund will try to purchase
Securities as near as possible to the Evaluation Time or at prices as close as
possible to the prices used to evaluate the Fund at the Evaluation Time. In
addition, brokerage fees incurred in purchasing Securities with cash deposited
with instructions to purchase the Securities will be an expense of the Fund.
Thus, price fluctuations during this period and payment of any brokerage fees by
the Fund will affect the value of every Holder's Units and the income per Unit
received by the Fund. In particular, Holders who purchase Units during the
primary offering period for the Units would experience a dilution of their
investment as a result of any brokerage fees paid by the Fund during subsequent
deposits of additional Securities purchased with cash deposited with
instructions to purchase Securities. (See Fund Structure; Administration of the
Fund--Portfolio Supervision). Because Securities generally will not be sold to
pay the Deferred Sales Charge until after the last Deferred Sales Charge Payment
Date, the Fund may realize a gain or loss on changes in the price of the
Securities between the various deduction dates and the actual sale of Securities
to satisfy this liability.
Investors should be aware that the Fund may not be able to buy each
Security at the same time because of availability of the Security, any
restrictions applicable to the Fund relating to the purchase of the Security by
reason of the federal securities laws or otherwise. Any monies allocated to the
purchase of a Security will generally be held for the purchase of the Security.
If the Fund receives the securities of another issuer as a result of the spinoff
by the issuer of any Security included in the original portfolio, the Fund will
hold those securities as if they were one of the Securities initially deposited
and adjust the original proportionate relationship accordingly for all future
subsequent deposits.
DISTRIBUTIONS--Quarterly Income Distributions of dividends, if any, will be
made in cash on the dates set forth under Investment Summary on page A-3 to
Holders of record on the record days set forth on page A-3 (see Administration
of the Fund--Accounts and Distributions). Alternatively, Holders may elect to
have their Quarterly Income Distributions reinvested as described more fully
below. The Fund will be terminated by the Mandatory Termination Date and the
Portfolio liquidated and the final distribution made as soon thereafter as is
reasonable. Holders who elect to become Rollover Holders will not receive the
final liquidation distribution, but will receive the March 1995 Quarterly Income
Distribution (see Special Redemption, Liquidation and Investment in New Fund).
REINVESTMENT PLAN--Holders electing to participate in the Reinvestment Plan
may purchase additional Units of this Select Ten Portfolio ('Reinvestment
Units') at the net asset value per 1,000 Units, subject only to the remaining
Deferred Sales Charge. For example, Holders electing reinvestment at the time of
the first Quarterly Income Distribution (July 1994) would be subject to a
Deferred Sales Charge of $17.50 per 1,000 Units on their Reinvestment Units (the
full Deferred Sales Charge of $17.50). Holders electing to reinvest their second
Quarterly Income Distribution (October 1994) would be subject to a Deferred
Sales Charge of $12.25 per 1,000 Units on their Reinvestment Units (the full
Deferred Sales Charge of $17.50 minus a total of $5.25 already deducted in
August, September and October 1994). Holders electing to reinvest their
dividends will receive additional Units and therefore will own a greater
percentage of the Fund than Holders who receive their distributions in cash.
(See Administration of the Fund--Reinvestment Plan.)
TAXATION--In the opinion of special counsel to the Sponsors, each Holder
will be considered to have received all of the dividends paid on his pro rata
portion of each Security in the Fund when those dividends are received by the
Fund, even though the dividend payments are used to pay expenses of the Fund.
Under current law, any dividend payments which constitute dividends for Federal
income tax purposes generally will be eligible for the 70% dividends-received
deduction for corporations. (See Taxes.)
PUBLIC OFFERING PRICE--The Public Offering Price per 1,000 Units is based
on the aggregate value of the underlying Securities and any cash held to
purchase Securities, divided by the number of Units outstanding times 1,000 plus
the applicable sales charge. A proportionate share of the amount in the Income
Account and the amount in the Capital Account to the extent not allocated to the
purchase of specific Securities (described under Administration of the
Fund--Accounts and Distributions) on the date of delivery of the Units to the
purchaser is added to the Public Offering Price. The total sales charge consists
of an Initial Sales Charge and a Deferred Sales Charge, the maximum total of
which equals 2.75% of the Public Offering Price or 2.778% of the net asset value
of the Fund. The Initial Sales Charge is computed by deducting the Deferred
Sales Charge ($17.50 per 1,000 Units) from the aggregate sales charge; thus on
the date of the Investment Summary, the maximum Initial Sales Charge is $10 per
1,000 Units or 1% of the Public Offering Price. The Initial Sales Charge is
deducted from the purchase price at the time of purchase. The Initial Sales
Charge will be reduced on a graduated basis on purchases of $50,000 or more. The
Deferred Sales Charge is paid through reduction of the net asset value of the
Fund by
A-6
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (CONTINUED)
$1.75 per 1,000 Units monthly on each Deferred Sales Charge Payment Date
commencing on the first Deferred Sales Charge Payment Date shown on page A-3.
Units purchased pursuant to the Reinvestment Plan are only subject to remaining
deductions of the Deferred Sales Charge (see Reinvestment Plan). If a Holder
redeems or sells his Units to the Sponsors prior to the last Deferred Sales
Charge Payment Date, the Holder is obligated to pay any remaining Deferred Sales
Charge which has not been deducted from the value underlying his Units. Units
are offered at the Public Offering Price computed as of the Evaluation Time for
all sales subsequent to the previous evaluation. The Public Offering Price on
the Initial Date of Deposit, and on subsequent dates, will vary from the Public
Offering Price set forth on page A-3. (See Public Sale of Units--Public Offering
Price.) The minimum purchase is $1,000 ($250 for IRAs and Keogh Accounts).
DESCRIPTION OF SPECIAL REDEMPTION, LIQUIDATION AND INVESTMENT IN NEW
FUND--Holders of Units have the right, subject only to the Deferred Sales
Charge, to exchange Units of the Fund for units of other Select Ten Portfolios
(see Exchange Option). In addition, subject to any necessary regulatory
approval, Holders will have the option of specifying by the Rollover
Notification Date (see page A-3) to have all of their Units redeemed in kind and
the distributed Securities sold by the Distribution Agent during the Special
Redemption and Liquidation Period (as defined under Investment Summary). The
proceeds of the redemption will be invested in units of the 1995 Spring Series,
if offered, subject only to the Deferred Sales Charge. (See Special Redemption,
Liquidation and Investment in New Fund.)
In addition, Holders of units of the 1993 Spring Series can reinvest the
dividends received on those units, as well as the Rollover proceeds, into Units
of this Fund, subject only to the Deferred Sales Charge, if they so specify by
the applicable Rollover Notification Date.
Units of Rollover Holders will be redeemed in kind on the first day of the
Special Redemption and Liquidation Period. By participating in the Special
Redemption and Liquidation, each Rollover Holder will be deemed to have
irrevocably instructed the Distribution Agent to sell his portion of the total
distributed Securities during the Special Redemption and Liquidation Period. The
Distribution Agent will appoint the Sponsors as its agents to determine the
manner, timing and execution of sales of underlying Securities.
For each Rollover Holder who confirms his interest in buying units of the
1995 Spring Series, the proceeds of the redemption of the underlying Securities
(as the proceeds become available) will be invested in 1995 Spring Series units.
The Sponsors may, however, stop creating new units at any time in their sole
discretion without regard to whether all Rollover proceeds have been invested.
The Sponsors are under no obligation to create a 1995 Spring Series, however,
and may modify the terms of the Special Redemption, Liquidation and Investment
in New Fund upon notice to Holders of Units at any time. The Sponsors also
reserve the right to extend the Rollover Notification Date stated herein.
Holders who do not wish to have their Units redeemed as described above may
continue to hold Units of the Fund in accordance with the terms described in
this Prospectus until the Fund is terminated or until the Mandatory Termination
Date listed on page A-3, whichever occurs first. (See Termination.) These
Holders may, of course, redeem their Units at any time as set forth under
Redemption. If these Holders choose to redeem during the Special Redemption and
Liquidation Period, or possibly for some period thereafter, the redemption
proceeds they receive may also be affected by the same negative market price
consequences described in the preceding paragraphs. In addition, any brokerage
commissions on sales of the underlying Securities distributed in connection with
in-kind redemptions will be borne by the redeeming Holder. (See Redemption;
Special Redemption, Liquidation and Investment in New Fund.)
PURCHASE OF UNITS--Units can be purchased by contacting the Sponsors, whose
addresses are listed on the back cover of this Prospectus. The minimum purchase
is $1,000 except that Individual Retirement Accounts and certain other tax
deferred retirement plans may purchase as little as $250 (see Retirement Plans).
SPECIAL CHARACTERISTICS OF THE FUND-- The Fund Portfolio consists of the
ten common stocks in the Dow Jones Industrial Average ('DJIA') having the
highest dividend yield one business day prior to the Initial Date of Deposit.
Dow Jones & Company, Inc., which is not affiliated with the Sponsors, has not
participated in any way in the creation of the Fund or in the selection of the
stocks included in the Fund and has not reviewed or approved any of the
information contained in this Prospectus. The yield for each Security was
calculated by annualizing the last quarterly or semi-annual ordinary dividend
distributed and dividing the result by the market value of the Security one
business day prior to the Initial Date of Deposit. This formula (an objective
determination) served as the basis for the Sponsors' selection of the ten stocks
in the Dow Jones Industrial Average having the highest dividend yield. The
philosophy is simple. The Fund does not require an explanation of 'betas' or
'thetas', just the pure and simple concept of buying a quality portfolio of
attractive equities with high dividend yields in one convenient purchase. The
Securities were selected irrespective of any research recommendation by any of
the Sponsors. Investing in the stocks of the DJIA may be effective as well as
conservative because regular dividends are common for established companies and
dividends have accounted for a substantial portion of the total return on stocks
of the DJIA as a group.
The Dow Jones Industrial Average comprises 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the New York Stock
Exchange and of American industry. The companies are major factors in their
industries and their stocks are widely held by individuals and institutional
investors. Changes in the components of the DJIA are made entirely by the
editors of The Wall Street Journal without consultation
A-7
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (CONTINUED)
with the companies, the stock exchange or any official agency. For the sake of
continuity, changes are made rarely. Most substitutions have been the result of
mergers, but from time to time, changes may be made to achieve a better
representation. The components of the Dow Jones Industrial Average may be
changed at any time for any reason. Any changes in the components in the Dow
Jones Industrial Average after the date of this Investment Summary will not
cause a change in the identity of the common stocks included in the Fund
Portfolio, including any additional Securities deposited in the Fund. There can
be no assurance that any dividends will be declared or paid in the future on the
Securities in the Fund.
Investors should note that the Fund's selection criteria were applied to
the Securities one business day prior to the Initial Date of Deposit. Since the
Sponsors may deposit additional Securities in connection with the sale of
additional Units, the yields on these Securities may change subsequent to the
Initial Date of Deposit or the Securities may no longer be included in the Dow
Jones Industrial Average; however, such subsequent changes will not change the
composition of the Portfolio.
UNDERWRITING--None of the Sponsors has participated as sole underwriter,
managing underwriter or member of an underwriting syndicate from which the
Securities in the Portfolio were acquired but one of the Sponsors may have been
managing underwriter of a public offering of one or more issues of Securities
within the last three years (see Portfolio).
UNDERWRITING ACCOUNT
The names and addresses of the Underwriters are:
<TABLE>
<S> <C>
Merrill Lynch, Pierce, Fenner & SmithP.O. Box 9051, Princeton, N.J. 08543-9051
Incorporated
Smith Barney Shearson Inc. Two World Trade Center--101st Floor, New York, N.Y. 10048
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019
Prudential Securities Incorporated One Seaport Plaza--199 Water Street, New York, N.Y. 10292
Dean Witter Reynolds Inc. Two World Trade Center--69th Floor, New York, N.Y. 10048
</TABLE>
Each Underwriter's interest in the Underwriting Account will depend upon the
number of Units acquired through the issuance of additional Units.
A-8
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (CONTINUED)
The following table compares the actual performance of the Dow Jones
Industrial Average and approximately equal values of the DJIA Strategy Stocks in
each of the past 20 years, as of December 31 in each of these years, and for the
first quarter of 1994. The return on the Fund may not equal that of the DJIA
Strategy Stocks because the total return does not reflect sales charges,
commissions, expenses or taxes, and the Fund may not be fully invested at all
times.
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
<TABLE><CAPTION>
DJIA STRATEGY STOCKS(1) DOW JONES INDUSTRIAL AVERAGE (DJIA)
------------------------------------------------------------- --------------------------------------------
YEAR APPRECIATION(2) ACTUAL DIVIDEND YIELD(3) TOTAL RETURN(4) APPRECIATION(2) ACTUAL DIVIDEND YIELD(3)
- --------- --------------- --------------------------- --------------- --------------- ---------------------------
<S> <C> <C> <C> <C> <C>
1974 -16.32% 7.37% -8.95% -27.57% 4.43%
1975 48.78 7.95 56.73 38.32 6.08
1976 27.70 7.10 34.80 17.86 4.86
1977 -6.75 5.92 -0.83 -17.27 4.56
1978 -6.92 7.11 0.19 -3.15 5.84
1979 3.97 8.41 12.38 4.19 6.33
1980 17.83 8.54 26.37 14.93 6.48
1981 -0.94 8.29 7.35 -9.23 5.83
1982 17.24 8.22 25.46 19.60 6.19
1983 30.20 8.25 38.45 20.30 5.38
1984 0.24 6.65 6.89 -3.76 4.82
1985 21.45 6.97 28.42 27.66 5.12
1986 23.74 6.13 29.87 22.58 4.33
1987 1.87 5.10 6.97 2.26 3.76
1988 15.80 5.80 21.60 11.85 4.10
1989 20.28 6.94 27.22 26.96 4.75
1990 -13.00 5.06 -7.94 -4.34 3.77
1991 28.32 5.22 33.54 20.32 3.61
1992 3.44 4.82 8.26 4.17 3.17
1993 23.00 4.21 27.21 13.72 3.00
1/1/94 to
3/31/94 -7.02 1.02 -6.00 -3.15 .68
</TABLE>
YEAR TOTAL RETURN(4)
- --------- ---------------
1974 -23.14%
1975 44.40
1976 22.72
1977 -12.71
1978 2.69
1979 10.52
1980 21.41
1981 -3.40
1982 25.79
1983 25.68
1984 1.06
1985 32.78
1986 26.91
1987 6.02
1988 15.95
1989 31.71
1990 -0.57
1991 23.93
1992 7.34
1993 16.72
1/1/94 to
3/31/94 -2.47
- ------------------------------------
(1) The DJIA Strategy Stocks for any given year or quarter ('period') were
selected by ranking the dividend yields for each of the stocks in the DJIA
as of the beginning of that period, based upon an annualization of the last
quarterly or semi-annual regular dividend distribution (which would have
been declared in the preceding year) divided by that stock's market value on
the first trading day on the New York Stock Exchange in that period.
(2) Appreciation for the DJIA Strategy Stocks is calculated by subtracting the
market value of these stocks as of the first trading day on the New York
Stock Exchange in a given period from the market value of those stocks as of
the last trading day in that period, and dividing the result by the market
value of the stocks as of the first trading day in that period. Appreciation
for the DJIA is calculated by subtracting the opening value of the DJIA as
of the first trading day in each period from the closing value of the DJIA
as of the last trading day in that period, and dividing the result by the
opening value of the DJIA as of the first trading day in that period.
(3) Actual Dividend Yield for the DJIA Strategy Stocks is calculated by adding
the total dividends received on the stocks in the period and dividing the
result by the market value of the stocks as of the first trading day in that
period. Actual Dividend Yield for the DJIA is calculated by taking the total
dividends credited to the DJIA and dividing the result by the opening value
of the DJIA as of the first trading day of the period.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Return does not take into consideration any sales charges,
commissions, expenses or taxes. Total Return does not take into
consideration any reinvestment of dividend income. From January 1974 through
March 1994, the DJIA Strategy Stocks achieved an average annual total return
of 17.67%, as compared to the average annual total return of the DJIA, which
was 12.25%. These stocks also had a higher average dividend yield in each of
the last 20 years and outperformed the DJIA in 15 of these years. When
viewed for at least three consecutive years, this strategy never lost money.
Although the Fund seeks to outperform the DJIA, there can be no assurance
that the Fund will do so over its one-year life or over consecutive rollover
periods, if available.
A-9
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (CONTINUED)
The returns shown on the preceding page represent past performance and are
no guarantee of future results; they should not be used to predict returns from
the Fund. As indicated, the DJIA Strategy Stocks underperformed the DJIA in
certain of the last 20 years and there can be no assurance that the Fund will
outperform the DJIA over its one year life or over consecutive rollover periods,
if available. Investors in the Fund may not realize as high a total return as on
a direct investment in the DJIA Strategy Stocks since the Fund has sales charges
and expenses and may not be fully invested at all times. Fund Unit price will
fluctuate with the value of the underlying stocks, and there is no assurance
that dividends on these stocks will be paid or that the Units will appreciate in
value.
VALUE OF $10,000 INVESTED ON JANUARY 1, 1974
PERIOD DJIA STRATEGY STOCKS DJIA
- ---------------- --------------------- ------------
1974 $ 9,105.00 $ 7,686.00
1975 14,270.27 11,098.58
1976 19,236.32 13,620.18
1977 19,076.66 11,889.06
1978 19,112.90 12,208.87
1979 21,479.08 13,493.25
1980 27,143.11 16,382.15
1981 29,138.13 15,825.16
1982 36,556.70 19,906.47
1983 50,612.75 25,018.45
1984 54,099.97 25,283.64
1985 69,475.19 33,571.62
1986 90,227.42 42,605.74
1987 96,516.27 45,170.61
1988 117,363.79 52,375.32
1989 149,310.21 68,983.53
1990 137,454.98 68,590.33
1991 183,557.38 85,003.99
1992 198,719.22 91,243.28
1993 252,790.72 106,499.16
1/1/94-3/31/94 269,948.69 103,868.63
The table above represents past performance of the DJIA and the DJIA
Strategy Stocks (but not the Fund or any prior Select Ten Portfolio) and should
not be considered indicative of future results of the Strategy or the Fund. The
table indicates the hypothetical performance of the Strategy as if it had been
employed since 1974. The table assumes that all dividends during a year are
reinvested at the end of that year and does not reflect commissions or taxes.
The DJIA Strategy Stocks underperformed the DJIA in certain of those 20 years,
and there can be no assurance that the Fund will outperform the DJIA over its
one-year life or over consecutive rollover periods, if available. This
performance 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 DJIA Strategy Stocks involve greater risk because
they have no maturities, and income thereon is subject to the financial
condition of, and declaration by, the issuers. In addition, the Fund's
performance will vary from that of the DJIA Strategy Stocks because the Fund has
a sales charge and expenses and it may not be fully invested at all times.
A-10
<PAGE>
INVESTMENT SUMMARY AS OF MAY 5, 1994 (CONTINUED)
The following table illustrates the results of a hypothetical investment of
$10,000 on January 1 of each year in the DJIA Strategy Stocks for 15 years (the
'Investing Period'), rolling over the investment (including dividends received)
at the end of each year; and then at the end of the 15-year period, withdrawing
$50,000 on January 1 of each year for the next seven years (the 'Retirement
Period') while rolling over the remainder. These figures represent past
performance of the DJIA Strategy Stocks and should not be considered indicative
of future results of the stocks or the Fund. The table does not reflect
commissions or the taxes that would be payable from other sources on each year's
income unless the investment was held in a tax-deferred retirement account. Fund
performance will vary from that of the DJIA Strategy Stocks because the Fund has
a sales charge and expenses and may not be fully invested at all times.
<TABLE><CAPTION>
INVESTING PERIOD CUMULATIVE RETIREMENT PERIOD CUMULATIVE
DATE OF ANNUAL VALUE AT DATE OF AMOUNT OF VALUE AT
INVESTMENT INVESTMENT YEAR END WITHDRAWAL WITHDRAWAL END OF PERIOD
---------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
1973 $ 10,000 $ 9,898 1988 $ 50,000 $ 812,859
1974 10,000 18,117 1989 50,000 970,510
1975 10,000 44,068 1990 50,000 847,421
1976 10,000 72,884 1991 50,000 1,064,876
1977 10,000 82,196 1992 50,000 1,098,705
1978 10,000 92,371 1993 50,000 1,334,058
1979 10,000 115,044 1/1/94-
1980 10,000 158,019 3/31/94 50,000 1,207,014
1981 10,000 180,368 Total $ 350,000
1982 10,000 238,836
-----------
-----------
1983 10,000 344,513
1984 10,000 378,939
1985 10,000 499,475
1986 10,000 661,656
1987 10,000 718,470
-----------
Total $ 150,000
-----------
-----------
</TABLE>
GLOBAL DIVERSIFICATION WITH THE SELECT TEN STRATEGY
By investing equal amounts each year in the ten highest dividend yielding
stocks in the Dow Jones Industrial Average, the Hang Seng Index (Hong Kong)+ or
the Financial Times Ordinary Share (FT) Index (United Kingdom)+ an investor
would generally have earned a higher total return over the last 15 years than on
an investment in each index as a whole. The following table compares the total
returns (change in share prices plus dividends reinvested at the end of each
year) and cumulative performance of hypothetical investments of equal amounts of
money in the DJIA Strategy Stocks and the ten highest dividend-yielding stocks
in each of the FT Index ('FT Strategy Stocks') and the Hang Seng Index ('Hang
Seng Strategy Stocks') with an investment of equal amounts in all three (the
'Combined Strategy'). These figures do not reflect commissions or taxes, nor the
performance of any Select Ten Portfolio, which is subject to sales charges and
expenses.
The table presents past performance of the Combined Strategy and should not
be considered indicative of future results of the Combined Strategy or any
Select Ten Portfolio. Both stock prices (which may appreciate or depreciate) and
dividends (which may be increased, reduced or eliminated) will affect the
returns. Also, there are additional risks associated with investments
denominated in foreign currencies. However, the table illustrates that
diversifying an investment among the 10 highest yielding stocks in each of these
three indexes would have produced a substantially higher total return than the
DJIA Strategy Stocks alone, while increasing the volatility in total return only
slightly.
<TABLE><CAPTION>
DJIA STRATEGY FT STRATEGY HANG SENG COMBINED
STOCKS STOCKS STRATEGY STOCKS STRATEGY
TOTAL VALUE OF TOTAL VALUE OF TOTAL VALUE OF TOTAL VALUE OF
YEAR RETURN INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN INVESTMENT
- --------------- ----------- ----------- ----------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 10,000 $ 10,000 $ 10,000 $ 10,000
1978 0.19% 10,019 17.73% 11,773 28.04% 12,804 15.32% 11,532
1979 12.38 11,259 4.76 12,333 82.28 23,339 33.14 15,353
1980 26.37 14,228 30.15 16,052 41.40 33,002 32.64 20,365
1981 7.35 15,274 -6.26 15,047 -3.86 31,728 -0.92 20,177
1982 25.46 19,163 44.03 21,672 -38.97 19,363 10.17 22,229
1983 38.45 26,531 42.06 30,788 -7.48 17,915 24.34 27,641
1984 6.89 28,359 5.50 32,481 65.32 29,617 25.90 34,801
1985 28.42 36,419 78.64 58,024 47.52 43,691 51.53 52,733
1986 29.87 47,297 32.88 77,102 60.49 70,120 41.08 74,396
1987 6.97 50,594 48.10 114,189 3.03 72,245 19.37 88,804
1988 21.60 61,522 11.38 127,183 34.04 96,837 22.34 108,642
1989 27.22 78,269 28.71 163,697 9.41 105,949 21.78 132,305
1990 -7.94 72,054 9.26 178,856 6.11 112,422 2.48 135,582
1991 33.54 96,221 16.57 208,492 48.51 166,959 32.87 180,152
1992 8.26 104,169 4.27 217,395 38.94 231,972 17.16 211,060
1993 27.21 132,513 37.69 299,331 106.99 480,159 57.30 331,991
1/31/94-3/31/94 -6.00 124,562 1.27 303,132 -20.73 380,622 -8.49 303,816
Total Return 1,145.62% 2,931.32% 3,706.22% 2,938.16%
Average Annual Total Return 16.79% 23.36% 25.10% 23.38%
</TABLE>
- ------------------------------------
+ The publishers of these Indexes have not participated in any way in the
creation of the Fund or in the selection of stocks included in the Portfolio
nor reviewed or approved any information included in this prospectus.
A-11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Co-Trustees and Holders of Equity Income Fund,
Select Ten Portfolio--1994 Spring Series, Defined Asset Funds:
We have audited the accompanying statement of condition, including the
portfolio, of Equity Income Fund, Select Ten Portfolio--1994 Spring Series,
Defined Asset Funds as of May 6, 1994. This financial statement is the
responsibility of the Co-Trustees. Our responsibility is to express an opinion
on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. The deposit on May 6,
1994 of an irrevocable letter or letters of credit for the purchase of
securities, as described in the statement of condition, was confirmed to us by
Investors Bank & Trust Company, a Co-Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the
Co-Trustees, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of Equity Income Fund, Select Ten
Portfolio--1994 Spring Series, Defined Asset Funds at May 6, 1994 in conformity
with generally accepted accounting principles.
Deloitte & Touche
New York, N.Y.
May 6, 1994
EQUITY INCOME FUND
SELECT TEN PORTFOLIO--1994 SPRING SERIES
DEFINED ASSET FUNDS
STATEMENT OF CONDITION AS OF INITIAL DATE OF DEPOSIT, MAY 6, 1994
TRUST PROPERTY
Investment in Securities:
Contracts to purchase underlying Securities(1)... $ 300,881.25
--------------
--------------
LIABILITY AND INTEREST OF HOLDERS
Liability--
Payment of deferred portion of sales charge(2)........... $ 5,318.60
--------------
Interest of Holders--
303,920 Units of fractional undivided interest outstanding:
Cost to investors(3)...............................$ 303,920.00
Gross underwriting commissions(4).................. (8,357.35)
--------------
Net amount applicable to investors...........................$ 295,562.65
--------------
Total...................................................$ 300,881.25
==============
- ------------------------------------
(1) Aggregate cost to the Fund of the Securities listed under Portfolio
determined by the Trustee one business day prior to the Initial Date of
Deposit on the basis set forth above under Public Sale of Units--Public
Offering Price. See also the column headed Cost of Securities to Fund under
Portfolio. In connection with contracts to purchase Securities, an
irrevocable letter or letters of credit in the amount of $301,253.75 has
been deposited with the Trustee for the purchase of $300,881.25 aggregate
value of Securities. The letter or letters of credit has been issued by
Bayerische Hypotheken-Und Wechsel Bank Aktiengesellschaft.
(2) Represents the aggregate amount of mandatory distributions of $1.75 per
1,000 Units per month payable on the 1st day of each month from August 1,
1994 through May 1, 1995. Distributions will be made to an account
maintained by the Trustee from which the Holders' Deferred Sales Charge
obligation to the Sponsors will be satisfied. If Units are redeemed prior to
May 1, 1995, the remaining portion of the distribution applicable to such
Units will be transferred to such account on the redemption date.
(3) Aggregate public offering price computed on the basis of the value of the
underlying Securities as of the Evaluation Time on the day prior to the
Initial Date of Deposit.
(4) Assumes the maximum sales charge per 1,000 Units of 2.75% of the Public
Offering Price computed on the basis set forth under Public Sale of
Units--Public Offering Price and Underwriters' and Sponsors' Profits.
A-12
<PAGE>
PORTFOLIO OF EQUITY INCOME FUND
SELECT TEN PORTFOLIO--1994 SPRING SERIES ON THE INITIAL DATE OF DEPOSIT,
DEFINED ASSET FUNDS MAY 6, 1994
<TABLE><CAPTION>
NUMBER OF
PORTFOLIO NO. AND NAME OF TICKER SHARES OF PERCENTAGE OF
ISSUER OF SECURITIES CONTRACTED FOR SYMBOL COMMON STOCK FUND(1)
------------------------------------------------------------ --------- ----------------- --------------
<S> <C> <C> <C> <C>
1. Woolworth Corporation Z 1,800 10.02%
2. Philip Morris Companies, Inc. MO 600 10.37
3. Texaco, Inc. TX 450 9.53
4. Exxon Corporation XON 500 10.10
5. J. P. Morgan & Company JPM 500 10.37
6. Chevron Corporation CHV 350 10.11
7. Merck & Company, Inc. MRK 1,000 9.97
8. Minnesota Mining and Manufacturing Company MMM 600 9.95
9. Eastman Kodak Company EK 650 9.83
10. American Express Company AXP 1,000 9.76
--------------
100.00%
--------------
--------------
</TABLE>
CURRENT ANNUAL PRICE COST OF CURRENT
DIVIDEND PER PER SHARE SECURITIES DIVIDEND
SHARE(2) TO FUND TO FUND(3) YIELD(4)
--------------- ----------- -------------- -----------
1. $ 1.16 $ 16.750 $ 30,150.00 6.93%
2. 2.76 52.000 31,200.00 5.31
3. 3.20 63.750 28,687.50 5.02
4. 2.88 60.750 30,375.00 4.74
5. 2.72 62.375 31,187.50 4.36
6. 3.70 86.875 30,406.25 4.26
7. 1.12 30.000 30,000.00 3.73
8. 1.76 49.875 29,925.00 3.53
9. 1.60 45.500 29,575.00 3.52
10. 1.00 29.375 29,375.00 3.40
--------------
$ 300,881.25
--------------
--------------
- ------------------------------------
NOTES
(1) Based on Cost of Securities to Fund.
(2) Based on the latest quarterly or semi-annual ordinary dividend received.
There can be no assurance that future dividend payments, if any, will be
maintained at the indicated amount.
(3) Valuation by the Trustee made on the basis of closing sale prices at the
Evaluation Time on the day prior to the Initial Date of Deposit.
(4) Current Dividend Yield for each Security was calculated by annualizing the
last quarterly or semi-annual ordinary dividend received on that Security
and dividing the result by that Security's market value as of the close of
trading on May 5, 1994.
---------------------------------------------
The Securities were acquired on May 5, 1994 and are represented entirely by
contracts to purchase the Securities. Any of the Sponsors may have acted as
underwriters, managers or comanagers of a public offering of the Securities in
this Fund during the last three years. Affiliates of the Sponsors may serve as
specialists in the Securities in this Fund on one or more stock exchanges and
may have a long or short position in any of these stocks or in options on any of
these stocks, and may be on the opposite side of public orders executed on the
floor of an exchange where the Securities are listed. An officer, director or
employee of any of the Sponsors may be an officer or director of one or more of
the issuers of the Securities in the Fund. A Sponsor may trade for its own
account as an odd-lot dealer, market maker, block positioner and/or arbitrageur
in any of the Securities or options relating thereto. Any Sponsor, its
affiliates, directors, elected officers and employee benefits programs may have
either a long or short position in any Security or option relating thereto.
A-13
<PAGE>
EQUITY INCOME FUND
SELECT TEN PORTFOLIO--1994 SPRING SERIES
DEFINED ASSET FUNDS
FUND STRUCTURE
This Series (the 'Fund') of Equity Income Fund is a 'unit investment trust'
created under New York law by a Trust Indenture (the 'Indenture') among the
Sponsors and the Trustee. Unless otherwise indicated, when Investors Bank &
Trust Company and The First National Bank of Chicago act as Co-Trustee to the
Fund, references to the Trustee in the Prospectus shall be deemed to refer to
Investors Bank & Trust Company and The First National Bank of Chicago, as
Co-Trustees. To the extent that references in this Prospectus are to articles
and sections of the Indenture, which are hereby incorporated by reference, the
statements made herein are qualified in their entirety by this reference. On the
date of this Prospectus (the 'Initial Date of Deposit') the Sponsors, acting as
managers for the underwriters named under Underwriting Account, deposited the
underlying Securities with the Trustee at a price equal to the aggregate value
of the Securities on that date as determined by the Trustee, and the Trustee
delivered to the Sponsors units of interest ('Units') representing the entire
ownership of the Fund. Except as otherwise indicated under Portfolio (the
'Portfolio'), the Securities so deposited were represented by purchase contracts
assigned to the Trustee together with an irrevocable letter or letters of credit
issued by a commercial bank or banks in the amount necessary to complete the
purchase thereof.
The Portfolio contains common stocks in the Dow Jones Industrial Average
(which is not affiliated with the Sponsors) having the highest dividend yield on
the business day prior to the Initial Date of Deposit (the 'DJIA Strategy
Stocks'). As used herein, the term 'Highest Dividend Yield' means the yield for
each Security calculated by annualizing the last quarterly or semi-annual
ordinary dividend distributed on that Security and dividing the result by the
market value of that Security on the business day prior to the Initial Date of
Deposit. This rate is historical, and there is no assurance that any dividends
will be declared or paid in the future on the Securities in the Fund. As used
herein, the term 'Securities' means the common stocks initially deposited in the
Fund and described under Portfolio and any additional common stocks acquired and
held by the Fund pursuant to the provisions of the Indenture (see Description of
the Fund--The Portfolio; Administration of the Fund-- Portfolio Supervision).
With the deposit of the Securities in the Fund on the Initial Date of
Deposit, the Sponsors established a proportionate relationship among the number
of shares of each stock deposited in the Portfolio. During the 90-day period
following the Initial Date of Deposit, the Sponsors may deposit additional
Securities ('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 in order to create new Units,
maintaining to the extent practicable the original proportionate relationship
among the number of shares of each stock in the Portfolio. It may not be
possible to maintain the exact original proportionate relationship among the
Securities deposited on the Initial Date of Deposit because of, among other
reasons, purchase requirements, changes in prices or unavailability of
Securities. Units may be continuously offered to the public by means of this
Prospectus (see Public Sale of Units--Public Distribution) resulting in a
potential increase in the number of Units outstanding. Deposits of Additional
Securities subsequent to the 90-day period following the Initial Date of Deposit
must replicate exactly the proportionate relationship among the face amounts of
Securities comprising the Portfolio at the end of the initial 90-day period,
subject to certain events as discussed under Administration of the
Fund--Portfolio Supervision.
The holders of record ('Holders') of Units will have the right to have
their Units redeemed (see Redemption) at a price computed as set forth under
'Computation of Redemption Price per Unit' ('Redemption Price per Unit') if they
cannot be sold in the over-the-counter market which the Sponsors propose to
maintain (see Market for Units). Redemptions will be made in cash or in
Securities ('in kind') (see Redemption). On the Initial Date of Deposit each
Unit represented the fractional undivided interest in the Securities and net
income of the Fund set forth under Investment Summary.
The Fund may be an appropriate medium for investors who desire to
participate in a portfolio of common stocks with greater diversification than
they might be able to acquire individually.
1
<PAGE>
RISK FACTORS
An investment in Units of the Fund should be made with an understanding of
the risks inherent in an investment in equity securities, including the risk
that the financial condition of the issuers of the Securities may become
impaired or that the general condition of the stock market may worsen (both of
which may contribute directly to a decrease in the value of the Securities and
thus in the value of the Units) or the risk that holders of common stocks have a
right to receive payments from the issuers of those stocks that is generally
inferior to that of creditors of, or holders of debt obligations issued by, the
issuers and that the rights of holders of common stocks generally rank inferior
to the rights of holders of preferred stock. Common stocks in general and stocks
of petroleum refining companies, in particular, 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.
Holders of common stocks incur more risk than holders of preferred stocks
and debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stocks
issued by the issuer. Holders of common stocks of the type held by the Portfolio
have a right to receive dividends only when and if, and in the amounts, declared
by the issuer's board of directors and to participate in amounts available for
distribution by the issuer only after all other claims on the issuer have been
paid or provided for. By contrast, holders of preferred stocks have the right to
receive dividends at a fixed rate when and as declared by the issuer's board of
directors, normally on a cumulative basis, but do not participate in other
amounts available for distribution by the issuing corporation. Cumulative
preferred stock dividends must be paid before common stock dividends and any
cumulative preferred stock dividend omitted is added to future dividends payable
to the holders of cumulative preferred stock. Preferred stocks are also entitled
to rights on liquidation which are senior to those of common stocks. 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. Indeed, the issuance of debt securities or even
preferred stock will create prior claims for payment of principal, interest,
liquidation preferences and dividends which could adversely affect the ability
and inclination of the issuer to declare or pay dividends on its common stock or
the rights of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. Further, unlike debt securities which typically have
a stated principal amount payable at maturity (whose value, however, will be
subject to market fluctuations prior thereto), common stocks have neither a
fixed principal amount nor a maturity and have values which are subject to
market fluctuations for as long as the stocks remain outstanding. The value of
the Securities in the Portfolio thus may be expected to fluctuate over the
entire life of the Fund to values higher or lower than those prevailing on the
Initial Date of Deposit. Any monies allocated to the purchase of a Security will
generally be held for the purchase of the Security. However, the Fund may not be
able to buy each Security at the same time, because of availability of the
Security, any restrictions applicable to the Fund relating to the purchase of
the Security by reason of the federal securities laws or otherwise.
Investors should note that additional Units may be offered to the public.
This may have an effect upon the value of previously existing Units. To create
additional Units the Sponsors may deposit cash with instructions to purchase
Additional Securities (or a bank letter of credit in lieu of cash). To the
extent the price of a Security increases or decreases between the time cash is
deposited with instructions to purchase the Security and the time the cash is
used to purchase the Security, Units will represent less or more of that
Security and more or less of the other Securities in the Fund. Holders will be
at risk because of price fluctuations during this period since if the price of
shares of a Security increases, Holders will have an interest in fewer shares of
that Security, and if the price of a Security decreases, Holders will have an
interest in more shares of that Security, than if the Security had been
purchased on the date cash was deposited with instructions to purchase the
Security. In order to minimize these effects, the Fund will try to purchase
Securities as close as possible to the Evaluation Time or at prices as close as
possible to the prices used to evaluate the Fund at the Evaluation Time. In
addition, brokerage fees incurred in purchasing Securities with cash deposited
with instructions to purchase the Securities will be an expense of the Fund.
Thus, price fluctuations during this period and payment of any brokerage fees by
the Fund will affect the value of every Holder's Units and the income per Unit
received by the Fund. In particular, Holders who purchase Units during the
primary offering period of the Units would experience a dilution of their
investment as a result of any brokerage fees paid by the Fund during subsequent
deposits of additional Securities purchased with cash deposited with
instructions to purchase Securities.
2
<PAGE>
As it is anticipated that Securities generally will not be sold to pay the
Deferred Sales Charge until after the last Deferred Sales Charge Payment Date,
Holders will be at risk with respect to changes in the market value of
Securities between the accrual of each monthly deferred sales charge and the
actual sale of Securities to satisfy this liability.
PETROLEUM REFINING COMPANIES
The Portfolio is considered to be concentrated in common stocks of
companies engaged in refining and marketing oil and related products. According
to the U.S. Department of Commerce, the factors which will most likely shape the
industry to 1996 and beyond include the price and availability of oil from the
Middle East, changes in United States environmental policies and the continued
decline in U.S. production of crude oil. Possible effects of these factors may
be increased U.S. and world dependence on oil from the Organization of Petroleum
Exporting Countries ('OPEC') and highly uncertain and potentially more volatile
oil prices and a higher rate of growth for natural gas production than for other
fuels.
Factors which the Sponsors believe may increase the profitability of oil
and petroleum operations include increasing demand for oil and petroleum
products as a result of the continued increases in annual miles driven and the
improvement in refinery operating margins caused by increases in average
domestic refinery utilization rates. The existence of surplus crude oil
production capacity and the willingness to adjust production levels are the two
principal requirements for stable crude oil markets. Without excess capacity,
supply disruptions in some countries cannot be compensated for by others.
Surplus capacity in Saudi Arabia and a few other countries and the utilization
of that capacity during the Persian Gulf crisis prevented severe market
disruption. Although unused capacity can contribute to market stability, it
ordinarily creates pressure to overproduce and contributes to market
uncertainty. The likely restoration of a large portion of Kuwait and Iraq's
production and export capacity over the next few years could lead to such a
development in the absence of substantial growth in world oil demand. Formerly,
OPEC members attempted to exercise control over production levels in each
country through a system of mandatory production quotas. Because of the crisis
in the Middle East, the mandatory system has since been replaced with a
voluntary system. Production under the new system has had to be curtailed on at
least one occasion as a result of weak prices, even in the absence of supplies
from Iraq. The pressure to deviate from mandatory quotas, if they are reimposed,
is likely to be substantial and could lead to a weakening of prices.
In the longer term, additional capacity and production will be required to
accommodate the expected increases in world oil demand and to compensate for
expected sharp drops in U.S. crude oil production and exports from the former
Soviet Union. Only a few OPEC countries, particularly Saudi Arabia, have the
petroleum reserves that will allow the required increase in production capacity
to be attained. Given the large-scale financing that is required, the prospect
that such expansion will occur soon enough to meet the increased demand is
uncertain. Moreover, lower consumer demand due to increases in energy efficiency
and conservation, due to gasoline reformulations that call for less crude oil,
due to warmer winters or due to a general slowdown in economic growth in this
country and abroad, could negatively affect the price of oil and the
profitability of oil companies. Cheaper oil could also decrease demand for
natural gas. However, no assurance can be given that the demand for or the price
of oil will increase or that if either anticipated increase does take place, it
will not be marked by great volatility.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and unpredictable
supply disruptions. Increasing sensitivity to environmental concerns will also
pose serious challenges to the industry over the coming decade. Refiners are
likely to be required to make heavy capital investments and make major
production adjustments in order to comply with increasingly stringent
environmental legislation, such as the 1990 amendments to the Clean Air Act. If
the cost of these changes is substantial enough to cut deeply into profits,
smaller refiners may be forced out of the industry entirely.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry or the
environment could have a negative impact on the petroleum product or natural gas
industry. While legislation has been enacted to deregulate certain aspects of
the oil industry, no assurances can be given that new or additional regulations
will not be adopted. Each of the problems referred to could adversely affect the
financial stability of the issuers of any petroleum industry stocks in the Fund.
3
<PAGE>
LITIGATION AND LEGISLATION
From time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. Enactment into law of a proposal to reduce the
rate would adversely affect the after-tax return to investors who can take
advantage of the deduction. Holders are urged to consult their own tax advisers.
Further, at any time after the Initial Date of Deposit, litigation may be
initiated on a variety of grounds, or legislation may be enacted, with respect
to the Securities in the Fund or the issuers of the Securities. Changing
approaches to regulation, particularly with respect to the environment or with
respect to the petroleum industry, may have a negative impact on certain
companies represented in the Fund. There can be no assurance that future
litigation, legislation, regulation or deregulation will not have a material
adverse effect on the Fund or will not impair the ability of the issuers of the
Securities to achieve their business goals.
DESCRIPTION OF THE FUND
THE STRATEGY
The Fund is a fixed diversified portfolio of the ten common stocks in the
Dow Jones Industrial Average having the highest dividend yield one business day
prior to the Initial Date of Deposit.
Simple strategies can sometimes be the most effective. To outperform the
market is more difficult than just outperforming other asset classes. The Fund
seeks a higher total return than the DJIA by acquiring these ten established,
widely held stocks with the highest yield one business day before the Fund is
created, and holding them for about one year. As explained above, there can be
no assurance that the dividend rates will be maintained. Reduction or
elimination of a dividend could adversely affect the stock price as well.
Purchasing a portfolio of these stocks as opposed to one or two can achieve a
more diversified holding. There is only one investment decision instead of ten,
four quarterly dividends instead of 40. An investment in the Fund can be
cost-efficient, avoiding the odd-lot costs of buying small quantities of
securities directly. Investment in a number of companies with high dividends
relative to their stock prices is designed to increase the Fund's potential for
higher returns. The Select Ten Portfolio seeks to outperform the Dow Jones
Industrial Average by following this simple investment strategy based on three
time-tested investment principles: time in the market is more important than
timing the market; the stocks to buy are the ones everyone else is selling; and
dividends can be an important part of total return. The Fund's return will
consist of a combination of capital appreciation and current dividend income.
The Fund will terminate in about one year, when investors may choose to either
receive the distribution in cash or reinvest in the next Spring Series (if
available) at a reduced sales charge.
THE DOW JONES INDUSTRIAL AVERAGE
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks on October
1, 1928. Taking into account a number of name changes, 9 of the original
companies are still in the DJIA today. For two periods of 17 consecutive years
each, there were no changes to the list: March 14, 1939-July 1956 and June 1,
1959-August 6, 1976.
4
<PAGE>
LIST AS OF OCTOBER 1, 1928 CURRENT LIST
- -------------------------------------------- ---------------------------
Allied Chemical Allied Signal
American Can J.P. Morgan & Co. Incorporated
American Smelting Minnesota Mining
American Sugar Du Pont
American Tobacco Eastman Kodak
Atlantic Refining Goodyear
Bethlehem Steel Bethlehem Steel
Chrysler IBM
General Electric General Electric
General Motors General Motors
General Railway Signal McDonald's
Goodrich Chevron
International Harvester Caterpillar
International Nickel Boeing
Mack Trucks Merck
Nash Motors Procter & Gamble
North American American Express
Paramount Publix International Paper
Postum, Inc. Philip Morris
Radio Corporation of America (RCA) United Technologies
Sears Roebuck & Company Sears Roebuck & Company
Standard Oil of New Jersey Exxon
Texas Corporation Texaco
Texas Gulf Sulphur Coca-Cola
Union Carbide Union Carbide
United States Steel Walt Disney
Victor Talking Machine AT&T
Westinghouse Electric Westinghouse Electric
Woolworth Woolworth
Wright Aeronautical Aluminum Co. of America
THE PORTFOLIO
The Fund consists of the Securities (or contracts to purchase the
Securities) listed under Portfolio (including any Additional Securities
deposited in the Fund in connection with the sale of additional Units to the
public as described under Fund Structure above) as long as they may continue to
be held from time to time in the Fund together with accrued and undistributed
income therefrom and undistributed and uninvested cash realized from the
disposition of Securities. Neither the Sponsors nor the Trustee shall be liable
in any way for any default, failure or defect in any of the Securities. However,
should any contract deposited hereunder (or to be deposited in connection with
the sale of additional Units) fail (a 'Failed Security'), the Sponsors are
authorized under the Indenture to acquire replacement Securities. If replacement
Securities are not acquired, the Sponsors shall, on or before the next following
Distribution Day, cause to be refunded the attributable sales charge, plus the
attributable Cost of Securities to Fund listed under Portfolio. (See
Administration of the Fund--Portfolio Supervision.)
The Indenture authorizes the Sponsors to increase the size and the number
of Units of the Fund by the deposit of Additional Securities and the issue of a
corresponding number of additional Units subsequent to the Initial Date of
Deposit; provided that the original relationship among the number of shares of
each of the Securities is maintained subject to certain events. Also, Securities
may be sold under certain circumstances. (See Redemption; Administration of the
Fund--Portfolio Supervision). As a result, the aggregate value of the Securities
in the Portfolio will vary over time.
Because each Defined Fund is a portfolio of preselected securities,
purchasers know in advance what they are investing in. Of course, the Portfolio
will change somewhat over time as Additional Securities are deposited, or as
Securities are sold to meet redemptions and in the limited other circumstances
described below. However, since the Portfolio will remain relatively fixed,
there are no management fees.
5
<PAGE>
Defined equity funds offer investors a simple and convenient way to
participate in the equity markets. By purchasing equity income funds, investors
not only avoid the problem of selecting individual securities by themselves, but
also gain the advantage of diversification by investing in securities of several
different issuers.
Each portfolio is divided into units, representing equal shares of
underlying assets. On the Initial Date of Deposit each Unit represented the
fractional undivided interest in the Securities plus net income of the Fund set
forth under the Investment Summary. Thereafter, if any Units are redeemed by the
Trustee, the aggregate value of Securities in the Fund will be reduced by
amounts allocable to redeemed Units, and the fractional undivided interest
represented by each Unit in the balance will be increased. However, if
additional Units are issued by the Fund, the aggregate value of Securities in
the Fund will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit in the balance will be
decreased. Units will remain outstanding until redeemed upon tender to the
Trustee by any Holder (which may include the Sponsors) or until the termination
of the Indenture (see Redemption; Termination).
INCOME AND DISTRIBUTIONS
The net annual income per Unit that is earned by the Fund is determined by
subtracting from the annual dividend income of the Securities in the Portfolio
the annual expenses (total annual Trustee's, Sponsors' and administrative fees
and expenses) and dividing by the number of Units outstanding. The net annual
income per Unit will depend upon the amount of dividends declared and paid by
the issuers of the Securities and sales of Securities and the purchase of
additional Securities (recognizing, however, that the sale or purchase of
Securities by itself should have a minimal effect on income per Unit because
each Unit will continue to represent a fractional undivided interest in the same
number of shares of Securities of the same issuers except to the extent the
proportionate relationship between shares changes due to liquidation to pay the
deferred portion of the sales charge) and changes in the expenses of the Fund.
There is no assurance that any dividends will be declared or paid in the
future on the Securities in the Fund.
Record Days and Distribution Days are set forth under the Investment
Summary. Dividend income per Unit received by the Fund and available for
distribution as of the next preceding Record Day will be distributed on or
shortly after each Distribution Day to the Holders of record on the preceding
Record Day (see Administration of the Fund--Accounts and Distributions).
Further, because dividends on the Securities are not necessarily received by the
Fund at a constant rate throughout the year or at a time that precedes or
coincides with a Record Day, any distribution may be more or less than the
amount credited to the Income Account as of the Record Day. Holders who roll
over their Units will not receive the final distribution upon termination of the
Fund on the Mandatory Termination Date as set forth under the Investment
Summary. (See Special Redemption, Liquidation and Investment in New Fund.) Upon
receipt of dividend payments, the Trustee will hold the sum in the Income
Account until the following Distribution Day.
TAXES
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsors, under
existing law:
The Fund is not an association taxable as a corporation for Federal
income tax purposes, and income received by the Fund will be treated as
income of the Holders in the manner set forth below.
Each Holder will be considered the owner of a pro rata portion of each
Security in the Fund under the grantor trust rules of Sections 671-679 of
the Internal Revenue Code of 1986, as amended (the 'Code'). The total cost
to a Holder of his Units, including sales charges, is allocated among his
pro rata portion of each Security, in proportion to the fair market values
thereof on the date the Holder purchases his Units, in order to determine
his tax cost for his pro rata portion of each Security.
A Holder will be considered to have received all of the dividends paid
on his pro rata portion of each Security when such dividends are received
by the Fund regardless of whether such dividends are used to pay a portion
of the deferred sales charge. Holders will be taxed in this manner
regardless of whether distributions from the Fund are actually received by
the Holder or are automatically reinvested (see Reinvestment
Options--Reinvestment Plan).
6
<PAGE>
Dividends considered to have been received by a Holder from domestic
corporations which constitute dividends for Federal income tax purposes
will qualify for the dividends-received deduction for corporate Holders
(other than corporations such as 'S' corporations which are not eligible
for such deductions 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). Depending upon the individual corporate
Holder's circumstances (including whether it has a 45-day holding period
for its Units and whether its Units are debt financed), the limitations
contained in Sections 246 and 246A on the availability of the
dividends-received deduction may be applicable to dividends received by a
Holder from the Fund.
The dividends-received deduction is generally 70%. However, Congress
from time to time considers proposals to reduce the rate, and enactment of
such a proposal would adversely affect the after-tax return to investors
who can take advantage of the deduction. Holders are urged to consult their
own tax advisers.
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.
An individual Holder who itemizes deductions will be entitled to deduct
his pro rata share of fees and expenses paid by the Fund only to the extent
that this amount together with the Holder's other miscellaneous deductions
exceeds 2% of his adjusted gross income.
A portion of the deferred sales charge may be treated as interest which
would be deductible by a Holder subject to limitations on the deduction of
investment interest. The deferred sales charge could cause the Holder's
Units to be considered to be debt-financed under Section 246A of the Code
which would result in a small reduction of the dividends-received
deduction. Holders should consult their own tax advisers as to the income
tax consequences of the deferred sales charge.
A distribution of Securities by the Trustee to a Holder (or to his
agent, including the Distribution Agent) upon redemption of Units (or an
exchange of Units for Securities by the Holder with the Sponsor) will not
be a taxable event to the Holder or to other Holders. The redeeming or
exchanging Holder's basis for such Securities will be equal to his basis
for the same Securities (previously represented by his Units) prior to such
redemption or exchange, and his holding period for such Securities will
include the period during which he held his Units. A Holder will have a
taxable gain or loss, which will be a capital gain or loss except in the
case of a dealer or a financial institution, when the Holder (or his agent,
including the Distribution Agent) sells the Securities so received in
redemption for cash, when a redeeming or exchanging Holder receives cash in
lieu of fractional shares, when the Holder sells his Units for cash or when
the Trustee sells the Securities from the Fund. However, to the extent a
Rollover Holder invests his redemption proceeds in units of the 1995 Spring
Series, such Holder generally will not be entitled to a deduction for any
losses recognized upon the disposition of any Securities to the extent that
such Holder is considered the owner of substantially identical securities
under the grantor trust rules described above as applied to such Holder's
ownership of units in the 1995 Spring Series, if such substantially
identical securities were acquired within a period ending 30 days after
such disposition. Capital gains are generally taxed at the same rate as
ordinary income. However, the excess of net long-term capital gains over
net short-term capital losses may be taxed at a lower rate than ordinary
income for certain noncorporate taxpayers. A capital gain or loss is
long-term if the asset is held for more than one year and short-term if
held for one year or less. Therefore, such lower rate will be unavailable
to those noncorporate holders who, as of the Mandatory Termination Date (or
earlier termination of the Fund), have held their units for less than a
year and a day. Similarly, with respect to noncorporate Rollover Holders,
this lower rate will be unavailable if, as of the beginning of the Special
Redemption and Liquidation Period, such Rollover Holders have held their
shares for less than a year and a day. The deduction of capital losses is
subject to limitations.
Under the income tax laws of the State and City of New York, the Fund is
not an association taxable as a corporation and the income of the Fund will
be treated as the income of the Holders in the same manner as for Federal
income tax purposes.
The foregoing discussion relates only to the tax treatment of U.S.
Holders with regard to Federal and certain aspects of New York State and
City income taxes. Holders may be subject to taxation in New York or in
other jurisdictions and should consult their own tax advisors in this
regard. Holders that are not U.S.
7
<PAGE>
citizens or residents ('Foreign Holders') should be aware that dividend
distributions from the fund will generally be subject to a withholding tax
of 30%, or a lower treaty rate, depending on their country of residence.
Pursuant to treaties between the United States and the relevant country of
residence, residents of France, Germany, the Netherlands, the United
Kingdom, Japan, the Republic of Korea and Canada will generally be subject
to a reduced withholding rate of 15% on dividend distributions from the
Fund. Foreign Holders should consult their tax advisors on their
eligibility for the withholding rate under the above mentioned treaties or
under treaties between the United States and countries of residence other
than those referred to herein.
* * *
At the termination of the Fund, the Trustee will furnish to each Holder an
annual statement containing information relating to the dividends received by
the Fund on the Securities, the gross proceeds received by the Fund from the
disposition of any Security (resulting from redemption or the sale by the Fund
of any Security), and the fees and expenses paid by the Fund. The Trustee will
also furnish annual information returns to each Holder and to the Internal
Revenue Service.
RETIREMENT PLANS
This Series of Equity Income Fund may be well suited for purchase by
Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds and other
qualified retirement plans, certain of which are briefly described below.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for special 5 or
10 year averaging or tax-deferred rollover treatment. Holders of Units in IRAs,
Keogh plans and other tax-deferred retirement plans should consult their plan
custodian as to the appropriate disposition of distributions. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan. Such plans are offered by
brokerage firms, including 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 pursuant to Self-Employed
Individuals Tax Retirement Act of 1962 ('Keogh plans') for self-employed
individuals, partnerships or unincorporated companies. Qualified individuals may
generally make annual tax-deductible contributions up to the lesser of 20% of
annual compensation or $30,000 to Keogh plans. The assets of the plan must be
held in a qualified trust or other arrangement which meets the requirements of
the Code. Generally, there are penalties for premature distributions from a plan
before attainment of age 59 1/2, except in the case of a participant's death or
disability and certain other related circumstances. Keogh plan participants may
also establish separate IRAs (see below) to which they may contribute up to an
additional $2,000 per year ($2,250 in a spousal account).
Individual Retirement Account--IRA. Any individual (including one covered
by a qualified private or government retirement plan) can establish an IRA or
make use of a qualified IRA arrangement set up by an employer or union for the
purchase of Units of the Fund. Any individual can make a contribution 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). A married individual filing a
separate return will not be entitled to any deduction if the individual is
covered by an employer-maintained retirement plan without regard to whether the
individual's spouse is an active participant in an employer retirement plan.
Unless nondeductible contributions are made in 1987 or a later year, all
distributions from an IRA will be treated as ordinary income but generally are
eligible for tax-deferred rollover treatment. It should be noted that certain
transactions which are prohibited under Section 408 of the Code will cause all
or a portion of the amount in an IRA to be deemed to be distributed and subject
to tax at that time. A participant's entire interest in an IRA must be, or
commence to be, distributed to the participant not later than the April 1
following the taxable year during which he attains age 70 1/2. Taxable
distributions made before attainment of age 59 1/2, except in the case of the
participant's death or disability, or where the amount distributed is part of a
series of substantially equal periodic (at least annual) payments that are to be
made over the life expectancies of the participant and his beneficiary, are
generally subject to a surtax in an amount equal to 10% of the distribution.
8
<PAGE>
Corporate Pension and Profit-Sharing Plans. An employer who has established
a pension or profit-sharing plan for employees may purchase Units of the fund
for such a plan.
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units is computed by dividing the
aggregate value of the Securities (as determined by the Trustee) and any cash
held to purchase Securities, by the number of Units outstanding and adding
thereto the applicable sales charge. A proportionate share of any cash held by
the Fund in the Capital Account not allocated to the purchase of specific
Securities and net income in the Income Account (described under Administration
of the Fund--Accounts and Distributions) on the date of delivery of the Units to
the purchaser is added to the Public Offering Price. The Public Offering Price
on the date of this Prospectus or on any subsequent date will vary from the
Public Offering Price on the business day prior to the date of this Prospectus
(set forth under the Investment Summary) in accordance with fluctuations in the
aggregate value of the underlying Securities.
The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge ($17.50 per 1,000 Units) from the aggregate sales charge; thus on the
date of the Investment Summary, the maximum Initial Sales Charge is $10 per
1,000 Units or 1% of the Public Offering Price. The Initial Sales Charge is
deducted from the purchase price at the time of purchase. The Deferred Sales
Charge will initially be $17.50 per 1,000 Units but will be reduced each month
by one tenth; the Deferred Sales Charge will be paid through monthly deductions
of $1.75 per 1,000 Units per month commencing on the first Deferred Sales Charge
Payment Date as shown on page A-3. To the extent the entire Deferred Sales
Charge has not been so deducted at the time of repurchase or redemption of the
Units, any unpaid amount will be deducted from the proceeds or in calculating an
in kind distribution. For purchases of $50,000 or more, the Initial Sales Charge
is reduced on a graduated basis as shown below. Units purchased pursuant to the
Reinvestment Plan are subject only to any remaining Deferred Sales Charge
deductions (see Reinvestment Plan).
The following table sets forth the applicable percentages of sales charges,
which are reduced on a graduated scale for sales to any purchaser of at least
$50,000 and will be applied on whichever basis is more favorable to the
purchaser. To qualify for the reduced sales charge applicable to quantity
purchases, a Sponsor must confirm that the sale is to a single purchaser as
defined below or is purchased for its own account and not for distribution.
Sales charges are as follows:
INITIAL OFFERING PERIOD
<TABLE><CAPTION>
SALES CHARGE
(GROSS UNDERWRITING PROFIT)
----------------------------------
AS PERCENT OF AS PERCENT OF
PUBLIC OFFERING NET AMOUNT DOLLAR AMOUNT DEFERRED
AMOUNT PURCHASED PRICE INVESTED PER 1,000 UNITS
- ------------------------------------------------------------------- ------------------- ------------- -----------------------
<S> <C> <C> <C>
Less than $50,000.................................................. 2.75% 2.778% $ 17.50
$50,000 - $99,999.................................................. 2.50 2.519 17.50
$100,000 - $249,999................................................ 2.00 2.001 17.50
$250,000 or more................................................... 1.75 1.750 17.50
</TABLE>
The above graduated sales charges will apply on all purchases on any one
day by the same purchaser of Units only in the amounts stated. For this purpose
purchases during the initial offering period will not be aggregated with
concurrent purchases of any other unit trusts sponsored by the Sponsors other
than Select Ten Portfolios as described in the following paragraph. 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.
The applicable rate of sales charge in the table above will be determined
on the basis of the aggregate number of units of all Select Ten Portfolios
(including International Series) purchased by the same purchaser on the same
day. To be eligible for this reduced sales charge, the purchaser or the
purchaser's securities dealer must notify the Sponsors at the time of purchase
that such purchase qualifies under this reduced sales charge provision and
supply
9
<PAGE>
sufficient information to permit confirmation of qualification. Acceptance of
the purchase order is subject to such confirmation. This reduced sales charge
provision may be amended or terminated at any time without notice.
Employees of certain of the Sponsors and their affiliates and non-employee
directors of Merrill Lynch & Co., Inc. may purchase Units of this Fund subject
only to the Deferred Sales Charge. In addition, Holders of the Select Ten
Portfolio 1993 Spring Series are entitled to purchase Units of the Fund subject
only to the Deferred Sales Charge by notifying the Sponsors of their intention
to exercise the Special Redemption, Liquidation and Investment in New Fund
option.
The value of the Securities is determined on each business day by the
Trustee based on the last reported closing prices at the Evaluation Time on the
day the evaluation is made or, if there are no reported sales or if closing sale
prices are not reported or a Security is not listed on a national securities
exchange or if the principal market therefor becomes other than on an exchange,
taking into account the same factors referred to under Redemption--Computation
of Redemption Price per Unit (Section 4.01). The term 'business day', as used
herein and under 'Redemption', shall exclude Saturdays, Sundays and the
following holidays as observed by the New York Stock Exchange, Inc.: New Year's
Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
PUBLIC DISTRIBUTION
During the primary offering period and thereafter to the extent additional
Units continue to be offered for sale to the public by means of this Prospectus,
Units will be distributed directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above. The Sponsors
intend to qualify Units for sale in all states in the U.S. in which
qualification is deemed necessary through the Underwriting Account and by
dealers who are members of the National Association of Securities Dealers, Inc.
The Sponsors do not intend to qualify Units for sale in any foreign countries
and this Prospectus does not constitute an offer to sell Units in any country
where Units cannot lawfully be sold.
UNDERWRITERS' AND SPONSORS' PROFITS
Assuming no volume discounts, the Sponsor will receive a total maximum
sales charge per 1,000 Units of 2.75% of the Public Offering Price (2.778% of
the net amount invested). The Sponsors also realized a profit or loss on deposit
of the Securities in the Fund in the amount set forth under the Investment
Summary. This profit or loss is the difference between the cost of the
Securities to the Fund (which is based on the aggregate value of the Securities
on the Initial Date of Deposit) and the purchase price of the Securities to the
Sponsors plus commissions payable by the Sponsors. On each subsequent deposit of
Securities with respect to the sale of additional Units to the public the
Sponsors may realize a profit or loss. In addition, the Sponsors or Underwriters
may realize profits or sustain losses in respect of Securities deposited in the
Fund which were acquired by the Sponsors or Underwriters from underwriting
syndicates of which the Sponsors or Underwriters were a member. During the
primary offering period and thereafter to the extent additional Units continue
to be offered for sale to the public, the Underwriting Account also may realize
profits or sustain losses as a result of fluctuations after the Initial Date of
Deposit in the aggregate value of the Securities and hence in the Public
Offering Price of the Units (see the Investment Summary). Cash, if any, made
available by buyers of Units to the Sponsors prior to the settlement date for
purchase of Units may be used in the Sponsors' businesses subject to the
limitations of Rule 15c3-3 under the Securities Exchange Act of 1934 and may be
of benefit to the Sponsors.
Except as indicated under Portfolio, the Sponsors have not participated as
sole underwriters or managers or members of underwriting syndicates from which
syndicates the Securities in the Portfolio were acquired.
In maintaining a market for the Units (see Market for Units), the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units (based on the aggregate value of the
Securities) and the prices at which they resell these Units (which includes the
sales charge) or the prices at which they redeem the Units (based on the
aggregate value of the Securities), as the case may be.
MARKET FOR UNITS
While the Sponsors are not obligated to do so, they intend to maintain a
secondary market for Units of this Series and continuously to offer to purchase
Units of this Series at prices, subject to change at any time, which will be
computed on the basis of the aggregate value of the Securities, taking into
account the same factors referred to in determining the Redemption Price per
Unit (see Redemption). This secondary market provides Holders with a
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<PAGE>
fully liquid investment. They can cash in units at any time without a fee. The
Sponsors may discontinue purchases of Units of this Series at prices based on
the aggregate value of the Securities should the supply of Units exceed demand
or for other business reasons. The Sponsors, of course, do not in any way
guarantee the enforceability, marketability or price of any Securities in the
Portfolio or of the Units. During the primary public offering period or
thereafter, on a given day the price offered by the Sponsors for the purchase of
Units shall be an amount not less than the Redemption Price per Unit, based on
the aggregate value of Securities in the Fund on the date on which the Units are
tendered for redemption (see Redemption).
The Sponsors may redeem any Units they have purchased in the secondary
market if they determine that it is undesirable to continue to hold these Units
in their inventories. Factors which the Sponsors will consider in making this
determination will include the number of units of all series of all funds which
they hold in their inventories, the saleability of the units and their estimate
of the time required to sell the units and general market conditions. For a
description of certain consequences of any redemption for remaining Holders, see
Redemption.
A Holder who wishes to dispose of his Units should inquire of his bank or
broker as to current market prices in order to determine if there exist
over-the-counter prices in excess of the redemption price and the repurchase
price (see Redemption).
REDEMPTION
While it is anticipated that Units in most cases can be sold in the
over-the-counter market for an amount at least equal to the Redemption Price per
Unit (see Market for Units), Units may be redeemed at the office of the Trustee
set forth on the back cover of this Prospectus, on any business day, as defined
under Public Sale of Units--Public Offering Price, upon delivery of a request
for redemption, and payment of any relevant tax, without any other fee (Section
5.02). Holders' signatures must be guaranteed by an eligible guarantor
institution or in some other manner acceptable to the Trustee. In certain
instances the Trustee may require additional documents including, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority.
On the seventh calendar day following the tender (or if the seventh
calendar day is not a business day on the first business day prior thereto), the
Holder will be entitled to receive the proceeds of the redemption in an amount
per Unit equal to the Redemption Price per Unit (see below) as determined as of
the day of tender. The Trustee is authorized in its discretion, if the Sponsors
do not elect to repurchase any Units tendered for redemption or if the Sponsors
tender Units for redemption, to sell the Units in the over-the-counter market at
prices which will return to the Holder a net amount in cash equal to or in
excess of the Redemption Price per Unit for the Units (Section 5.02).
Securities are to be sold from the Portfolio in order to make funds
available for redemption (Section 5.02) if funds are not otherwise available in
the Capital and Income Accounts to meet redemptions (see Administration of the
Fund--Accounts and Distributions). The Securities to be sold will be selected by
the Sponsors in accordance with procedures specified in the Indenture in order
to maintain, to the extent practicable, the proportionate relationship among the
number of shares of each Security. Provision is made in the Indenture under
which the Sponsors may, but need not, specify minimum amounts in which blocks of
Securities are to be sold in order to obtain the best price for the Fund. While
these minimum amounts may vary from time to time in accordance with market
conditions, the Sponsors believe that the minimum amounts which would be
specified would be approximately 100 shares for readily marketable Securities.
Certain Holders tendering Units for redemption may request distribution in
kind from the Trustee in lieu of cash redemption. A Holder may request
distribution in kind of an amount and value of Securities per Unit equal to the
Redemption Price per Unit as determined as of the Evaluation Time next following
the tender, provided that the tendering Holder is entitled to receive at least
$500,000 in total value of Portfolio Securities as part of his distribution and
the Holder has elected to redeem prior to the Rollover Notification Date
specified on page A-3. If the Holder can receive this requisite number of
shares, the distribution in kind on redemption of Units will be held by a
distribution agent (the 'Distribution Agent') for the account of, and for
disposition in accordance with the instructions of, the tendering Holder. The
tendering Holder shall be entitled to receive whole shares of each of the
Securities comprising the Portfolio and cash from the Capital Account equal to
the fractional shares to which the tendering Holder is entitled less any
deferred sales charge payable. Any brokerage commissions on sales of the
underlying Securities distributed in connection with in-kind redemptions will be
borne by the redeeming Holder. In implementing these redemption procedures, the
Trustee and Distribution Agent shall make any adjustments
11
<PAGE>
necessary to reflect differences between the Redemption Price of the Units and
the value of the Securities distributed in kind as of the date of tender. If
funds in the Capital Account are insufficient to cover the required cash
distribution to the tendering Holder, the Trustee may sell Securities according
to the criteria discussed above. The in-kind redemption option may be terminated
by the Sponsors on a date other than the Rollover Notification Date specified on
page A-3 upon notice to the Holders prior to that date.
To the extent that Securities are redeemed in kind or sold, the size and
diversity of the Fund will be reduced but each remaining Unit will continue to
represent approximately the same proportional interest in each Security. Sales
will usually be required at a time when Securities would not otherwise be sold
and may result in lower prices than might otherwise be realized. The price
received upon redemption may be more or less than the amount paid by the Holder
depending on the value of the Securities in the Portfolio at the time of
redemption. In addition, because of the minimum amounts in which Securities are
required to be sold, the proceeds of sale may exceed the amount required at the
time to redeem Units; these excess proceeds will be distributed to Holders (see
Administration of the Fund--Accounts and Distributions).
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange, Inc. is closed other than for
customary weekend and holiday closings or (2) for any period during which, as
determined by the Securities and Exchange Commission ('SEC'), (i) trading on
that Exchange is restricted or (ii) an emergency exists as a result of which
disposal or evaluation of the Securities is not reasonably practicable or (3)
for any other periods which the SEC may by order permit (Section 5.02).
COMPUTATION OF REDEMPTION PRICE PER UNIT
Redemption Price per Unit is computed by the Trustee, as of the Evaluation
Time, on each June 30 and December 31 (or the last business day prior thereto),
on any day on which the New York Stock Exchange is open as of the Evaluation
Time next following the tender of any Unit for redemption, and on any other
business day desired by the Trustee or the Sponsors, by adding (a) the aggregate
value of the Securities, (b) cash on hand in the Fund (other than cash covering
contracts to purchase Securities or credited to a reserve account), (c) declared
but unpaid dividends on the Securities and (d) the aggregate value of all other
assets of the Fund; deducting therefrom the sum of (v) taxes or other
governmental charges against the Fund not previously deducted, (w) accrued but
unpaid expenses of the Fund and accrued Deferred Sales Charges declared but not
yet paid, (x) amounts payable for reimbursement of Trustee advances, (y) cash
held for redemption of Units for distribution to Holders of record as of a date
prior to the evaluation and (z) the aggregate value of all other liabilities of
the Fund; and dividing the result by the number of Units outstanding as of the
date of computation (Section 5.01). After the initial offering period, the
repurchase and cash redemption prices will be reduced to reflect the cost to the
Fund (estimated as shown on page A-3) of liquidating Securities to meet the
redemption.
The aggregate value of the Securities is determined in good faith by the
Trustee in the following manner: if the Securities are listed on a national
securities exchange or the NASDAQ national market system, this evaluation is
generally based on the closing sale prices on that exchange or that system
(unless the Trustee deems these prices inappropriate as a basis for valuation)
or, if there is no closing sale price on that exchange or system, at the mean
between the closing bid and asked prices. If the Securities are not so listed
or, if so listed and the principal market therefor is other than on the
exchange, the evaluation shall generally be based on the current bid price on
the over-the-counter market (unless the Trustee deems these prices inappropriate
as a basis for evaluation). If current bid prices are unavailable, the
evaluation is generally determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or (c) by any combination of the above.
REINVESTMENT PLAN
Quarterly Income Distributions on Units may be reinvested by participating
in the Fund's reinvestment plan (the 'Reinvestment Plan'). Holders of Units held
in 'street name' by their broker, dealer or financial institution should contact
their financial professional if they wish to participate in the Reinvestment
Plan.
Deposits of Additional Securities in connection with the Reinvestment Plan
will be made so as to maintain the proportionate relationship (subject to
adjustment under certain circumstances) among the number of shares of each
Security in the Fund at the time of such deposits (see Administration of the
Fund--Portfolio Supervision). In the event an issuer of a Security has a
shareholder dividend reinvestment plan, a stock purchase plan or a similar plan
under which its shareholders may automatically reinvest their dividends or
invest optional cash
12
<PAGE>
payments in additional shares of the issuer's common or preferred stock without
brokerage commission or service charge or otherwise on a basis favorable to the
shareholder in the opinion of the Sponsors, the Fund (as a shareholder of such
issuer) upon the direction of the Sponsors may participate in such plans to the
extent permitted under the Indenture given the other restrictions on the
purchase of Additional Securities even if such participation results in a
temporary imbalance of the proportionate relationship among the Securities.
Purchases made pursuant to the Reinvestment Plan will be made on (or as
soon as possible after) the close of business on the Distribution Date, at the
net asset value per 1,000 Units, subject to any remaining deductions of the
Deferred Sales Charge. (Reinvestment Units are not subject to the Initial Sales
Charge.) For example, Holders electing reinvestment at the time of the first
Quarterly Income Distribution (July 1994) would be subject to a Deferred Sales
Charge of $17.50 on their Reinvestment Units (the full Deferred Sales Charge of
$17.50). Holders electing to reinvest their second Quarterly Income Distribution
(October 1994) would be subject to a Deferred Sales Charge of $12.25 on their
Reinvestment Units (the full Deferred Sales Charge of $17.50 minus a total of
$5.25 already deducted in August, September and October 1994).
Under the Reinvestment Plan the Fund will pay the distributions to the
brokers, dealers or financial institutions who are holders of record on the
books of the Depository Trust Company; in turn they will purchase for the Holder
Units of the Fund at the price and time indicated above, will add the Units to
the Holder's account, and will send the Holder an account statement reflecting
the reinvestment. These Units may be Units already held in inventory by the
Sponsors (see Market for Units) or new Units created by the Sponsors' deposit of
Additional Securities, contracts to purchase Additional Securities, or cash (or
a bank letter of credit in lieu of cash) with instructions to purchase
additional Securities (see Description of the Fund--The Portfolio). Each
Holder's account will be credited with the number of Units purchased with such
Holder's reinvested distribution. Holders of Units participating in the
Reinvestment Plan will receive confirmation of their reinvestments in their
regular account statements or on a periodic basis.
SPECIAL REDEMPTION, LIQUIDATION AND INVESTMENT IN NEW FUND
It is expected that a special redemption and liquidation will be made of
all Units of this Fund held by any Holder (a 'Rollover Holder') who
affirmatively notifies the Trustee in writing by the Rollover Notification Date
specified on page A-3 that he elects to participate. It should also be noted
that Rollover Holders may realize taxable capital gains on the Special
Redemption and Liquidation but generally will not be entitled to a deduction for
certain capital losses and, due to the procedures for investing in the 1995
Spring Series, no cash would be distributed at that time to pay any taxes (for
the tax consequences of participation in the Special Redemption, Liquidation and
Investment in New Fund, see Taxes).
In addition, holders of units of the Select Ten Portfolio 1993 Spring
Series can reinvest the dividends received on those units into Units of this
1994 Spring Series, subject only to the Deferred Sales Charge, by specifying by
the applicable Rollover Notification Date that they wish to participate in the
reinvestment option.
All Units of Rollover Holders will be redeemed in kind (see Redemption) on
the first day of the Special Redemption and Liquidation Period (as herein under
Investment Summary) and the underlying Securities will be distributed to the
Distribution Agent on behalf of the Rollover Holders (Section 5.03). During the
Special Redemption and Liquidation Period (as described under Investment
Summary--Special Redemption, Liquidation and Investment in New Fund), the
Distribution Agent will be required to sell all of the underlying Securities on
behalf of Rollover Holders. The sale proceeds will be net of brokerage fees,
governmental charges or any expenses involved in the sales.
Rollover Holders may purchase units of a new Select Ten Portfolio (the
'1995 Spring Series') if available, subject only to the Deferred Sales Charge.
Thus, if a Holder of Units so specifies by the Rollover Notification Date,
his Units will be redeemed in kind and the Securities disposed of over the
Special Redemption and Liquidation Period. As long as the Holder confirms his
interest in purchasing units of the 1995 Spring Series and units are available,
the proceeds of the sales (net of brokerage commissions, governmental charges
and any other selling expenses) will be invested in units of the 1995 Spring
Series at daily prices over the Special Redemption and Liquidation Period based
on the asset value per 1995 Spring Series unit plus the applicable sales charge.
It is expected that the terms of the 1995 Spring Series will be substantially
the same as the terms of the Fund described in this Prospectus, and that a
similar procedure for redemption, liquidation and investment in a subsequent
Select Ten Portfolio will be available for each new Fund approximately one year
after the creation of that Fund. The Sponsors are under no obligation to
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<PAGE>
create a 1995 Spring Series, however, and may modify the terms of the Special
Redemption, Liquidation and Investment in New Fund upon notice to Holders at any
time.
Depending on the volume of proceeds to be invested in the 1995 Spring
Series through the Special Redemption, Liquidation and Investment in New Fund
and the volume of other orders for units in the 1995 Spring Series, the Sponsors
may purchase large volumes of the securities for the 1995 Spring Series in a
short period of time. This concentrated buying may tend to raise the market
prices of these securities. The actual market impact of the Sponsors' purchases,
however, is currently unpredictable because the actual volume of securities to
be purchased and the supply and price of those securities are unknown. A similar
problem may occur in connection with the Sponsors' sales of Securities during
the Special Redemption and Liquidation Period. Depending on the volume of sales
required, and the prices of and demand for Securities, sales by the Sponsors may
tend to depress the market prices and the value of Units, and thus reduce the
proceeds to be credited to Rollover Holders for investment in the 1995 Spring
Series.
The Distribution Agent will engage the Sponsors as its agents to sell the
distributed Securities. The Sponsors will attempt to sell the Securities as
quickly as is practicable during the Special Redemption and Liquidation Period
without in their judgment materially adversely affecting the market price of the
Securities, but all of the Securities will in any event be disposed of by the
end of the Special Redemption and Liquidation Period. The Sponsors do not
anticipate that the period will be longer than 10 business days, and it could be
as short as one day, given that the Securities are usually highly liquid. The
liquidity of any Security depends on the daily trading volume of the Security
and the amount that the Sponsors have available for sale on any particular day.
It is expected (but not required) that the Sponsors will generally follow
the following guidelines in selling the Securities: for highly liquid
Securities, the Sponsors will generally sell Securities on the first day of the
Special Redemption and Liquidation Period; for less liquid Securities, on each
of the first two days of the Special Redemption and Liquidation Period, the
Sponsors will generally sell any amount of any underlying Securities at a price
no less than 1/2 of one point under the closing sale price of those Securities
on the preceding day. Thereafter, the Sponsors intend to sell without any price
restrictions at least a portion of the remaining underlying Securities, the
numerator of which is one and the denominator of which is the total number of
days remaining (including that day) in the Special Redemption and Liquidation
Period.
The Rollover Holders' proceeds will be invested in the 1995 Spring Series,
if it is available, the portfolio of which will contain the ten highest yielding
stocks in the Dow Jones Industrial Average as of that time. The proceeds of
redemption available on each day will be used to buy 1995 Spring Series units as
the proceeds become available.
The Sponsors intend to create 1995 Spring Series units as quickly as
possible, dependent upon the availability and reasonably favorable price of the
securities included in the 1995 Spring Series portfolio, and it is intended that
Rollover Holders will be given first priority to purchase 1995 Spring Series
units. There can be no assurance, however, as to the exact timing of the
creation of 1995 Spring Series units or the aggregate number of 1995 Spring
Series units which the Sponsors will create. The Sponsors may, in their sole
discretion, stop creating new units (whether permanently or temporarily) at any
time they choose, regardless of whether all proceeds of the Special Redemption
and Liquidation have been invested on behalf of Rollover Holders. Cash which has
not been invested on behalf of the Rollover Holders in 1995 Spring Series units
will be distributed at the end of the Special Redemption and Liquidation Period.
However, since the Sponsors can create units by depositing cash (or bank letter
of credit) with instructions to buy securities, the Sponsors anticipate that
sufficient units can be created, although moneys in the 1995 Spring Series may
not be fully invested on the next business day.
Any Rollover Holder may thus be redeemed out of the Fund and become a
holder of an entirely different trust, the 1995 Spring Series, with a different
portfolio of securities. The Rollover Holder's Units will be redeemed in kind
and the distributed Securities shall be sold during the Special Redemption and
Liquidation Period. In accordance with the Rollover Holders' offers to purchase
1995 Spring Series units, the proceeds of the sales (and any other cash
distributed upon redemption), less the amount of any deferred sales charge still
unpaid, will be invested in 1995 Spring Series units, at the Public Offering
Price, including the applicable sales charge per unit.
This process of redemption, liquidation, and investment in a new trust is
intended to allow for the fact that the portfolios selected by the Sponsors are
chosen on the basis of growth and income potential only for a year, at which
point a new portfolio is chosen. It is contemplated that a similar process of
redemption, liquidation and
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investment in a new fund will be available for the 1995 Spring Series, and each
subsequent series of the Fund, approximately a year after the creation of that
series.
The Sponsors believe that the gradual redemption, liquidation and
investment in the 1995 Spring Series will help mitigate any negative market
price consequences stemming from the trading of large volumes of Securities and
of the underlying securities in the 1995 Spring Series in a short, publicized
period of time. The above procedures may, however, be insufficient or
unsuccessful in avoiding such price consequences. There can be no assurance that
the procedures will effectively mitigate any adverse price consequences of heavy
volume trading or that the procedures will produce a better price for Holders
than might be obtained on any given day during the Special Redemption and
Liquidation Period. In fact, market price trends may make it advantageous to
sell or buy more quickly or more slowly than permitted by these procedures.
Rollover Holders could then receive a less favorable average unit price than if
they bought all their units of the 1995 Spring Series on any given day of the
period. Historically, the prices of securities selected by the Sponsors as good
investments have generally risen over the first few days following the
announcement.
It should also be noted that Rollover Holders may realize taxable capital
gains on the Special Redemption and Liquidation but generally will not be
entitled to a deduction for certain capital losses and, due to the procedures
for investing in the new Series, no cash would be distributed at that time to
pay any taxes (see Taxes).
In addition, during this period a Holder will be at risk to the extent that
Securities are not sold and will not have the benefit of any stock appreciation
to the extent that monies have not been invested; for this reason, the Sponsors
will be inclined to sell and purchase the Securities in as short a period as
they can without materially adversely affecting the price of the Securities.
Holders who do not inform the Trustee that they wish to have their Units so
redeemed and liquidated ('Remaining Holders') will continue to hold Units of the
Fund as described in this Prospectus until the Fund is terminated or until the
Mandatory Termination Date listed in the Investment Summary, whichever occurs
first. These Remaining Holders will not realize capital gains or losses due to
the Special Redemption and Liquidation, and will not be charged any additional
sales charge. If a large percentage of Holders become Rollover Holders, the
aggregate size of the Fund will be sharply reduced. As a consequence, expenses,
if any, in excess of the amount to be borne by the Trustee would constitute a
higher percentage amount per Unit than prior to the Special Redemption,
Liquidation and Investment in New Fund. The Fund might also reduce to the
Minimum Value of Fund listed on page A-3 because of the lesser number of Units
in the Fund, and possibly also due to a value reduction, however temporary, in
Units caused by the Sponsors' sales of Securities (see Investment Summary--
Special Redemption, Liquidation and Investment in New Fund); if so, the Sponsors
could then choose to liquidate the Fund without the consent of the remaining
Holders. See Description of Fund--Structure. The Securities remaining in the
Fund after the Special Redemption and Liquidation Period will be sold by the
Sponsors as quickly as possible without, in their judgment, materially adversely
affecting the market price of the Securities.
The Sponsors may for any reason, in their sole discretion, decide not to
sponsor the 1995 Spring Series or any subsequent series of the Fund, without
penalty or incurring liability to any Holder. If the Sponsors so decide, the
Sponsors shall notify the Holders before the Special Redemption and Liquidation
Period would have commenced. All Holders will then be Remaining Holders, with
rights to ordinary redemption as before (see Redemption). The Sponsors may
modify the terms of the 1995 Spring Series or any subsequent series of the Fund.
The Sponsors may also modify the terms of the Special Redemption, Liquidation
and Investment in New Fund upon notice to the Holders prior to the Rollover
Notification Date specified on page A-3.
Investors should be aware that the staff of the Division of Investment
Management of the SEC is of the view that the rollover option described in this
Prospectus constitutes an 'exchange offer' for the purposes of Section 11(c) of
the Investment Company Act of 1940, and would therefore be prohibited absent an
exemptive order. The Sponsors have received exemptive orders under Section 11(c)
which they believe permit them to offer the rollover option, but no assurance
can be given that the SEC will concur with the Sponsors' position and additional
regulatory approvals may be required.
TERMINATION
The Indenture will terminate upon the sale, or other disposition of the
last Security held thereunder but in no event is it to continue beyond the
Mandatory Termination Date set forth under the Investment Summary. The Indenture
may be terminated by the Sponsors if the value of the Fund is less than the
Minimum Value of Fund
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set forth under the Investment Summary, and may be terminated at any time by
Holders of 51% of the Units (Sections 8.01(g) and 9.01). The Trustee will
deliver written notice of any termination to each Holder within a reasonable
period of time prior to the termination. Within a reasonable period of time
after the termination, the Trustee must sell all of the Securities then held and
distribute to each Holder, after deductions for accrued but unpaid fees, taxes
and governmental and other charges, the Holder's interest in the Income and
Capital Accounts (Section 9.01). This distribution will normally be made by
mailing a check in the amount of each Holder's interest in these accounts to the
address of the Holder appearing on the record books of the Trustee.
EXPENSES AND CHARGES
INITIAL EXPENSES
All expenses incurred in establishing the Fund, including the cost of the
initial preparation and printing of documents relating to the Fund, the initial
fees and expenses of the Trustee, legal expenses, advertising and selling
expenses and any other out-of-pocket expenses, will be paid by the Underwriting
Account at no charge to the Fund.
FEES
An estimate of the total annual expenses of the Fund is set forth under the
Investment Summary. The Portfolio Supervision Fee is based on the average daily
number of Units outstanding. (Section 3.04). This fee, which is not to exceed
the maximum amount set forth under the Investment Summary, may exceed the actual
costs of providing portfolio supervisory services for this Fund, but at no time
will the total amount they receive for portfolio supervisory services rendered
to all series of Equity Income Fund in any calendar year exceed the aggregate
cost to them of supplying these services in that year (Section 7.06). In
addition, the Sponsors may also be reimbursed for bookkeeping or other
administrative services provided to the Fund in amounts not exceeding their
costs of providing these services (Sections 3.04 and 7.06). The Trustee (or
Co-Trustees, in the case of Investors Bank & Trust Company and the First
National Bank of Chicago) receives for its services as Trustee and for
reimbursement of expenses incurred on behalf of the Fund, payable in monthly
installments, the amount per 1,000 Units set forth under Investment Summary,
which includes the estimated Portfolio Supervision Fee, estimated reimbursable
bookkeeping or other administrative expenses paid to the Sponsors and certain
evaluation, auditing, printing and mailing expenses. The Trustee also receives
benefits to the extent that it holds funds on deposit in the various
non-interest bearing accounts created under the Indenture. The foregoing fees
may be adjusted for inflation in accordance with the terms of the Indenture
without approval of Holders (Sections 4.02, 7.06 and 8.05).
OTHER CHARGES
Other charges which may be incurred by the Fund include: (a) fees of the
Trustee for extraordinary services (Section 8.05), (b) certain extraordinary
expenses of the Trustee (including legal and auditing expenses) and of counsel
designated by the Sponsors (Sections 3.04, 3.10, 8.01(e), 8.03 and 8.05), (c)
various governmental charges (Sections 3.03 and 8.01 (h)), (d) expenses and
costs of action taken to protect the Fund and the rights and interests of
Holders (Sections 7.06 and 8.01(d)), (e) indemnification of the Trustee for any
losses, liabilities and expenses incurred without gross negligence, bad faith or
wilful misconduct on its part (Section 8.05), (f) indemnification of the
Sponsors for any losses, liabilities and expenses incurred without gross
negligence, bad faith or wilful misconduct (Section 7.05(b)) and (g)
expenditures incurred in contacting Holders upon termination of the Fund
(Section 9.02). The amounts of these charges and fees are secured by a lien on
the Fund and, if the balances in the Income and Capital Accounts (see below) are
insufficient, the Trustee has the power to sell Securities to pay these amounts
(Section 8.05).
ADMINISTRATION OF THE FUND
RECORDS
The Trustee keeps a register of the names, addresses and holdings of all
Holders. The Trustee also keeps records of transactions of the Fund, including a
current list of the Securities and a copy of the Indenture, which records are
available to Holders for inspection at the office of the Trustee at reasonable
times during business hours (Sections 8.02 and 8.04).
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ACCOUNTS AND DISTRIBUTIONS
Dividends payable to the Fund are credited by the Trustee to an Income
Account, as of the date on which the Fund is entitled to receive the dividends
as a Holder of record of the Securities. Other receipts, including amounts
received upon the sale of rights pursuant to Section 3.08 of the Indenture, are
credited to a Capital Account (Sections 3.01 and 3.02). The Quarterly Income
Distribution for each Holder as of each Record Day will be made on the following
Distribution Day or shortly thereafter and shall consist of an amount
substantially equal to the Holder's pro rata share of the distributable cash
balance in the Income Account after deducting amounts required to satisfy
estimated expenses computed as of the close of business on the preceding Record
Day. It is anticipated that the deferred sales charge will be collected from the
Capital Account and that amounts in the Capital Account will be sufficient to
cover the cost of the deferred sales charge. Distributions of amounts necessary
to pay the deferred portion of the sales charge will be made to an account
maintained by the Trustee for purposes of satisfying Holders' deferred sales
charge obligations. Although the Sponsors have the right to collect the deferred
sales charge monthly, in order to keep Holders of Units as fully invested as
possible, it is anticipated that no Securities will be sold to pay the deferred
sales charge to the Sponsors until after the Rollover Notification Date set
forth on page A-3. The amount of the Quarterly Income Distribution will change
with fluctuations in the relevant dividend rates and as Securities are sold or
as substitute Securities are purchased.
Proceeds received from the disposition of any of the Securities which are
not used to pay the deferred portion of the sales charge or for redemption of
Units will be held in the Capital Account to be distributed on the final
Distribution Day or following liquidation of the Fund. The first distribution
for persons who purchase Units between a Record Day and a Distribution Day will
be made on the second Distribution Day following their purchase of Units.
A Reserve Account may be created by the Trustee by withdrawing from the
Income or Capital Accounts, from time to time, those amounts as it deems
requisite to establish a reserve for any taxes or other governmental charges
that may be payable out of the Fund (Section 3.03). Funds held by the Trustee in
the various accounts created under the Indenture do not bear interest (Section
8.01).
PORTFOLIO SUPERVISION
The Fund is a unit investment trust which normally follows a buy and hold
investment strategy and is not actively managed. Traditional methods of
investment management for a managed fund (such as a mutual fund) typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The Portfolio of the Fund, however, will not be
actively managed and therefore the adverse financial condition of an issuer or
its failure to maintain its current dividend rate will not necessarily require
the sale of its Securities from the Portfolio. 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
on the open market when in its opinion it is in the best interest of the Holders
of the Units to do so. The Sponsors may also direct the disposition of
Securities upon default in payment of amounts due on any of the Securities,
institution of certain legal proceedings, default under certain documents
materially and adversely affecting future declaration or payment of amounts due,
or decline in price or the occurrence of other market or credit factors that in
the opinion of the Sponsors would make the retention of these Securities
detrimental to the interest of the Holders (Section 3.08). However, given the
investment philosophy of the Fund, the Sponsors are not likely to sell
Securities for any of these reasons; and even though the yield on certain
Securities may have changed subsequent to the Initial Date of Deposit and even
though a stock may no longer be among the ten highest dividend-yielding stocks
in the Dow Jones Industrial Average, the Fund may continue to hold the
Securities and may continue to purchase the Securities in connection with the
issuance of Additional Units or the purchase of Additional Securities.
The Indenture authorizes the Sponsors to increase the size and number of
Units of the Fund by the deposit of Additional Securities, contracts to purchase
Additional Securities or cash or a letter of credit with instructions to
purchase Additional Securities in exchange for the corresponding number of
additional Units during the 90-day period subsequent to the Initial Date of
Deposit, provided that the original proportionate relationship among the number
of shares of each Security established on the Initial Date of Deposit (the
'Original Proportionate Relationship') is maintained to the extent practicable.
(Deposits of Additional Securities subsequent to the 90-day period following the
Initial Date of Deposit must replicate exactly the proportionate relationship
among the share amounts of Securities comprising the Portfolio at the time of
such deposits.)
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With respect to deposits of Additional Securities (or cash or a letter of
credit with instructions to purchase Additional Securities), in connection with
creating additional Units of the Fund during the 90-day period following the
Initial Date of Deposit, the Sponsors may specify the minimum numbers in which
Additional Securities will be deposited or purchased. If a deposit is not
sufficient to acquire minimum amounts of each Security, Additional Securities
may be acquired in the order of the Security most under-represented immediately
before the deposit when compared to the Original Proportionate Relationship. If
Securities of an issue originally deposited are unavailable at the time of
subsequent deposit, or cannot be purchased at reasonable prices or their
purchase is prohibited or restricted by law, regulation or policies applicable
to the Fund or the Sponsors, the Sponsors may (1) deposit cash or a letter of
credit with instructions to purchase the Security when it becomes available
(provided that it becomes available within 110 days after the Initial Date of
Deposit) or (2) deposit (or instruct the Trustee to purchase) Securities of one
or more other issues originally deposited. Any funds held to acquire Additional
Securities which have not been used to purchase Securities at the end of the
90-day period beginning with the Initial Date of Deposit, shall be used to
purchase Securities as described above or shall be distributed to Holders
together with the attributable sales charge.
Voting rights with respect to the Securities will be exercised by the
Trustee in accordance with directions given by the Sponsors.
REPORTS TO HOLDERS
With any distribution, the Trustee will furnish Holders with a statement of
the amounts of income and the amounts of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. Following the
termination of the Fund, the Trustee will furnish to each person who at any time
during the year was a Holder of record, a statement (i) summarizing transactions
in the Income and Capital Accounts, (ii) identifying Securities sold and
purchased and listing Securities held and the number of Units outstanding at
termination, (iii) stating the Redemption Price per 1,000 Units based upon the
computation thereof made at termination and (iv) specifying the amounts
distributed from the Income and Capital Accounts (Section 3.07). The accounts of
the Fund may be audited by independent accountants designated by the Sponsor and
any report of the accountants shall be furnished by the Trustee to Holders upon
request (Section 8.01(e)).
UNCERTIFICATED UNITS
All Holders are required to hold their Units in uncertificated form and in
'street name' by their broker, dealer or financial institution at the Depository
Trust Company ('DTC'). Units are transferable between accounts of brokers,
dealers or financial institutions which are members of DTC.
AMENDMENT
The Sponsors and Trustee may amend the Indenture, without the consent of
the Holders, (a) to cure any ambiguity or to correct or supplement any provision
thereof which may be defective or inconsistent, (b) to change any provision
thereof as may be required by the SEC or any successor governmental agency or
(c) to make any other provisions which do not materially adversely affect the
interest of the Holders (as determined in good faith by the Sponsors). The
Indenture may also be amended in any respect by the Sponsors and the Trustee, or
any of the provisions thereof may be waived, with the consent of the Holders of
51% of the Units, provided that none of these amendments or waivers will reduce
the interest in the Fund of any Holder without the consent of the Holder or
reduce the percentage of Units required to consent to any of these amendments or
waivers without the consent of all Holders (Section 10.01).
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsors. The
Trustee may be removed upon the direction of the Holders of 51% of the Units at
any time or by the Sponsors without the consent of any of the Holders if the
Trustee becomes incapable of acting or becomes bankrupt or its affairs are taken
over by public authorities or if for any reason the Sponsors determine in good
faith that the replacement of the Trustee is in the best interest of the
Holders. The resignation or removal shall become effective upon the acceptance
of appointment by the successor which may, in the case of a resigning or removed
Co-Trustee, be one or more of the remaining Co-Trustees. In case of resignation
or removal, the Sponsors are to use their best efforts to appoint a successor
promptly and if upon resignation of the Trustee no successor has accepted
appointment within thirty
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days after notification, the Trustee may apply to a court of competent
jurisdiction for the appointment of a successor (Section 8.06). The Trustee
shall be under no liability for any action taken in good faith in reliance on
prima facie properly executed documents or for the disposition of monies or
Securities, under the Indenture. This provision, however, shall not protect the
Trustee in cases of wilful misfeasance, bad faith, negligence or reckless
disregard of its obligations and duties. In the event of the failure of the
Sponsors to act, the Trustee may act under the Indenture and shall not be liable
for any of these actions taken in good faith. The Trustee shall not be
personally liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or upon the interest thereon. In addition, the
Indenture contains other customary provisions limiting the liability of the
Trustee (Sections 8.01 and 8.05).
SPONSORS
Any Sponsor may resign if the remaining Sponsor maintains a net worth of
$2,000,000 and is agreeable to the resignation (Section 7.04). A new Sponsor may
be appointed by the remaining Sponsor 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 becomes bankrupt or its affairs are
taken over by public authorities, then the Trustee may (a) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and as
may not exceed amounts prescribed by the SEC, or (b) terminate the Indenture and
liquidate the Fund or (c) continue to act as Trustee without terminating the
Indenture (Section 8.01(e)). The Agent for the Sponsors has been appointed by
the other Sponsors for purposes of taking action under the Indenture (Section
7.01). If the Sponsors are unable to agree with respect to action to be taken
jointly by them under the Indenture and they cannot agree as to which Sponsors
shall continue to act as Sponsors, then Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall continue to act as sole Sponsor (Section 7.02(b)). If one of
the Sponsors fails to perform its duties or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then that
Sponsor is automatically discharged and the other Sponsor shall act as Sponsor
(Section 7.02(a)). The Sponsors shall be under no liability to the Fund or to
the Holders for taking any action or for refraining from taking any action in
good faith or for errors in judgment and shall not be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any Security.
This provision, however, shall not protect the Sponsors in cases of wilful
misfeasance, bad faith, gross negligence or reckless disregard of their
obligations and duties (Section 7.05). The Sponsors and their successors are
jointly and severally liable under the Indenture. A Sponsor may transfer all or
substantially all of its assets to a corporation or partnership which carries on
its business and duly assumes all of its obligations under the Indenture and in
that event it shall be relieved of all further liability under the Indenture
(Section 7.03).
MISCELLANEOUS
TRUSTEE
The Trustee of the Fund is named on the back cover page of this Prospectus
and is either The Bank of New York, a New York banking corporation with its Unit
Investment Trust Department at 101 Broadway, New York, New York 10286 (which is
subject to supervision by the New York Superintendent of Banks, the Federal
Deposit Insurance Corporation ('FDIC') and the Board of Governors of the Federal
Reserve System ('Federal Reserve')); Bankers Trust Company, a New York banking
corporation with its corporate trust office at Four Albany Street, New York, New
York 10015 (which is subject to supervision by the New York Superintendent of
Banks, the FDIC and the Federal Reserve); The Chase Manhattan Bank (National
Association), a banking corporation with its corporate trust office at 1 Chase
Manhattan Plaza-3B, New York, New York 10081 (which is subject to supervision by
the Comptroller of the Currency, the FDIC and the Federal Reserve); or (acting
as Co-Trustees) Investors Bank & Trust Company, a Massachusetts trust company
with its unit investment trust servicing group at One Lincoln Plaza, P.O. Box
1537, Boston, Massachusetts 02205-1537 (which is subject to supervision by the
Massachusetts Commissioner of Banks, the FDIC and the Federal Reserve) and The
First National Bank of Chicago, a national banking association with its
corporate trust office at One First National Plaza, Suite 0126, Chicago,
Illinois 60670-0126 (which is subject to supervision by the Comptroller of the
Currency, the FDIC and the Federal Reserve).
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors. Emmet, Marvin & Martin, 48 Wall Street, New York, New York 10005, act
as counsel for The Bank of New York, as Trustee. Bingham, Dana & Gould, 150
Federal Street, Boston, Massachusetts 02110, act as counsel for The First
National Bank of Chicago and Investors
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Bank & Trust Company, as Co-Trustees. Hawkins, Delafield & Wood, 67 Wall Street,
New York, New York 10005, act as counsel for Bankers Trust Company, as Trustee.
AUDITORS
The Statement of Condition, including the Portfolio of the Fund, included
herein, has been audited by Deloitte & Touche, independent accountants, as
stated in their opinion appearing herein and has been so included in reliance
upon that opinion given on the authority of that firm as experts in accounting
and auditing.
SPONSORS
Each Sponsor is a Delaware corporation and is engaged in the underwriting,
securities and commodities brokerage business, and is a member of the New York
Stock Exchange, Inc., other major securities exchanges and commodity exchanges,
and the National Association of Securities Dealers, Inc. Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Merrill Lynch Asset Management, a Delaware
corporation, each of which is a subsidiary of Merrill Lynch & Co., Inc., are
engaged in the investment advisory business. Smith Barney Shearson Inc., an
investment banking and securities broker-dealer firm, is an indirect
wholly-owned subsidiary of The Travelers Inc. Prudential Securities
Incorporated, a wholly-owned subsidiary of Prudential Securities Group Inc. and
an indirect wholly-owned subsidiary of the Prudential Insurance Company of
America, is engaged in the investment advisory business. PaineWebber
Incorporated is engaged in the investment advisory business and is a wholly-
owned subsidiary of PaineWebber Group Inc. Dean Witter Reynolds Inc., a
principal operating subsidiary of Dean Witter, Discover & Co., is engaged in the
investment advisory business. Each Sponsor, or one of its predecessor
corporations, has acted as a 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.
Each Sponsor (or a predecessor) has acted as Sponsor of various series of
Defined Asset Funds. A subsidiary of Merrill Lynch, Pierce, Fenner & Smith
Incorporated succeeded in 1970 to the business of Goodbody & Co., which had been
a co-Sponsor of Defined Asset Funds since 1964. That subsidiary resigned as
Sponsor of each of the Goodbody series in 1971. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been co-Sponsor and the Agent for the Sponsors of each
series of Defined Asset Funds created since 1971. Shearson Lehman Brothers Inc.
(Shearson) and certain of its predecessors were underwriters beginning in 1962
and co-Sponsors from 1965 to 1967 and from 1980 to 1993 of various Defined Asset
Funds. As a result of the acquisition of certain of Shearson's assets by Smith
Barney, Harris Upham & Co. Incorporated and Primerica Corporation (now the
Travelers Inc), Smith Barney Shearson Inc. now serves as co-Sponsor of various
Defined Asset Funds. Prudential Securities Incorporated and its predecessors
have been underwriters of Defined Asset Funds since 1961 and co-Sponsors since
1964, in which year its predecessor became successor co-Sponsor to the original
Sponsor. Dean Witter Reynolds Inc. and its predecessors have been underwriters
of various Defined Asset Funds since 1964 and co-Sponsors since 1974.
PaineWebber Incorporated and its predecessor have co-Sponsored certain Defined
Asset Funds since 1983.
The Sponsors have maintained secondary markets for Defined Asset Funds for
over 20 years. For decades informed investors have purchased unit investment
trusts for dependability and professional selection of investments. Defined
Asset Funds offers an array of simple and convenient investment choices, suited
to fit a wide variety of personal financial goals--a buy and hold strategy for
capital accumulation, such as for children's education or a nest egg for
retirement, or attractive, regular current income consistent with relative
protection of capital. There are Defined Funds to meet the needs of just about
any investor. Unit investment trusts are particularly suited for the many
investors who prefer to seek long-term profits by purchasing sound investments
and holding them, rather than through active trading. Few individuals have the
knowledge, resources or capital to buy and hold a diversified portfolio on their
own; it would generally take a considerable sum of money to obtain the breadth
and diversity offered by Defined Funds. Sometimes it takes a combination of
Defined Funds to plan for an investor's objectives.
One of the most important investment decisions an investor faces may be how
to allocate his investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high rates of interest income. By purchasing
both defined equity and defined bond funds, investors can receive attractive
current income, as well as growth potential, offering some protection against
inflation.
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The following chart shows the average annual compounded rate of return of
selected asset classes over the 10-year and 20-year periods ending December 31,
1993, compared to the rate of inflation over the same periods. Of course, this
chart represents past performance of these investment categories and there is no
guarantee of future results, either of these categories or of any Defined Fund.
Defined Funds also have sales charges and expenses which are not reflected in
the chart.
Stocks (S&P 500)
20 yr 12.76%
10 yr 14.94%
Small-company stocks
20 yr 18.82%
10 yr 9.96%
Long-term corporate bonds
20 yr 10.16%
10 yr 14.00%
U.S. Treasury bills (short-term)
20 yr 7.49%
10 yr 6.35%
Consumer Price Index
20 yr 5.92%
10 yr 3.73%
0 2 4 6 8 10 12
Source: Ibbotson Associates (Chicago).
Used with permission. All rights reserved.
Instead of having to select individual securities on their own, purchasers
of Defined Funds benefit from the expertise of Defined Asset Funds' experienced
buyers and research analysts. In addition, they gain the advantage of
diversification by investing in units of a Defined Fund holding securities of
several different issuers. Such diversification can reduce risk, but does not
eliminate it. While the portfolio of a managed fund, such as a mutual fund,
continually changes, defined bond funds offer a defined portfolio and a schedule
of income distributions identified in the prospectus. Investors know, generally,
when they buy, the issuers, maturities, call dates and ratings of the securities
in the portfolio. Of course, the portfolio may change somewhat over time as
additional securities are deposited, as securities mature or are called or
redeemed or as they are sold to meet redemptions and in certain other limited
circumstances. Investors also know at the time of purchase their estimated
income and current and long-term returns, subject to credit and market risks and
to changes in the portfolio or the funds expenses.
Defined Asset Funds offers a variety of fund types. The tax exemption of
municipal securities, which makes them attractive to high-bracket taxpayers, is
offered by Defined Municipal Investment Trust Funds. Municipal Defined Funds
offer a simple and convenient way for investors to earn monthly income free from
regular Federal income tax. Defined Municipal Investment trust funds have
provided investors with tax-free income for more than 30 years. Defined
Corporate Income Funds, with higher current returns than municipal or government
funds, are suitable for Individual Retirement Accounts and other tax-advantaged
accounts and provide monthly income. Defined Government Securities Income Funds
provide a way to participate in markets for U.S. government securities while
earning an attractive current return. Defined International Bond Funds, invested
in bonds payable in foreign currencies, offer the potential to profit from
changes in currency values and possibly from interest rates higher than paid on
comparable US bonds, but investors incur a higher risk for these potentially
greater returns. Historically, stocks have offered growth of capital, and thus
some protection against inflation, over the long term. Defined Equity Income
Funds offer participation in the stock market, providing current income as well
as the possibility of capital appreciation. The S&P Index Trusts offer a
convenient and inexpensive way to participate in broad market movements. Concept
Series seek to capitalize on selected anticipated economic, political or
business trends. Utility Stock Series, consisting of stocks of issuers with
established reputations for regular cash dividends, seek to benefit from
dividend increases. Select Ten Portfolios seek total return by investing for one
year in the ten highest yielding stocks on a designated stock index.
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
21
<PAGE>
time in advertisements, sales literature and reports to current or prospective
Holders. Total return figures are not averaged, and may not reflect deduction of
the sales charge, which would decrease the return. Average annualized return
figures reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.
Past performance may not be indicative of future results. The Fund is not
actively managed. Unit price and return fluctuate with the value of the common
stocks in the portfolio, so there may be a gain or loss when Units are sold.
Fund performance may be compared to the performance on the same basis 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. As with other
performance data, performance comparisons should not be considered
representative of the Fund's relative performance for any future period.
Information on the performance of the 10 highest yielding stocks in the Dow
Jones Industrial Average contained in this Prospectus, as further updated, may
also be included from time to time in such material.
Deferred Sales Charge Tax Example-- The Fund allows you to defer part of
the payment of the sales charge so that more of your money is invested. Of
course, the basis of your Units and the proceeds you will receive for tax
purposes when you liquidate your Units will reflect the payment of the sales
charge. For example, if you purchase your Units for $1,000 (including a $10.00
sales charge when purchased) subject to a $17.50 deferred sales charge, your tax
basis for your Units would be $1,017.50 (less any portion of the $17.50 treated
as interest (see Taxes)). To the extent that liquidation proceeds received
reflect deduction of the deferred sales charge, you will be deemed to have
received the gross amount (without this deduction) as proceeds. If you receive
$1,050 when you liquidate your Units, you would be deemed to have received
$1,067.50 for tax-reporting purposes (i.e., $1,050 plus $17.50 of deferred sales
charge).
EXCHANGE OPTION
ELECTION
Holders may elect to exchange any or all of their Units of this Series for
units of one or more Select Ten Portfolios of Equity Income Fund. Holders of
other series of Funds listed in the table set forth below (the 'Exchange
Funds'), which normally are sold at prices which include the sales charge
indicated in the table may elect to exchange any or all of their units of those
Series for Units of this Series. Certain series of the Funds listed have lower
maximum applicable sales charges than those stated in the table; also the rates
of sales charges may be changed from time to time. No series with a maximum
applicable sales charge of less than 3.50% of the public offering price is
eligible to be exchanged under the Exchange Option, with the following
exceptions: (1) Freddie Mac Series may be acquired by exchange during the
initial offering period from any of the Exchange Funds listed in the table and
(2) Units of this Fund may be acquired at the exchange fee listed in the table
by holders of any other Select Ten Portfolios of Equity Income Fund which units
normally have an aggregate sales charge of 2.75%. Units of the Exchange Funds
may be acquired at prices which include the reduced sales charge for Exchange
Fund units listed in the table, subject, however, to these important
limitations:
First, there must be a secondary market maintained by the Sponsors in
units of the series being exchanged and a primary or secondary market in
units of the series being acquired and there must be units of the
applicable Exchange Fund lawfully available for sale in the state in which
the Holder is resident. There is no legal obligation on the part of the
Sponsors to maintain a market for any units or to maintain the legal
qualification for sale of any of these units in any state or states.
Therefore, there is no assurance that a market for units will in fact exist
or that any units will be lawfully available for sale on any given date at
which a Holder wishes to sell his Units of this Series and thus there is no
assurance that the Exchange Option will be available to any Holder.
Second, when units subject to a deferred sales charge are exchanged for
units subject to a front-end sales charge, the sales charge will be the
greater of (a) the reduced sales charge set forth in the table below or (b)
the difference between sales charges paid with respect to the units being
exchanged and the regular sales charge for the quantity of units being
acquired, determined as of the date of the exchange. When units held for at
least eight months are exchanged for units of a fund with a deferred sales
charge, the exchange fee of $15 per 1,000 Units will be collected from the
proceeds of the exchange and the units acquired will be subject to any
continuing deferred sales charge.
22
<PAGE>
Third, exchanges will be affected in whole units only. If the proceeds
from the Units being surrendered are less than the cost of a whole number
of units being acquired, excess cash insufficient to purchase an additional
whole unit will be returned to the exchanging Holder.
Fourth, the Sponsors reserve the right to modify, suspend or terminate
the Exchange Option at any time without further notice to Holders. In the
event the Exchange Option is not available to a Holder at the time he
wishes to exercise it, the Holder will be immediately notified and no
action will be taken with respect to his Units without further instruction
from the Holder.
PROCEDURES
To exercise the Exchange Option, a Holder should notify one of the Sponsors
of his desire to use the proceeds from the sale of his Units of this Series to
purchase units of one or more of the Exchange Funds. If units of the applicable
outstanding series of the Exchange Fund are at that time available for sale, the
Holder may select the series or group of series for which he desires his Units
to be exchanged. Of course, the Holder will be provided with a current
prospectus or prospectuses relating to each series in which he indicates
interest. The exchange transaction will operate in a manner essentially
identical to any secondary market transaction, i.e., Units will be repurchased
at a price equal to the aggregate bid side evaluation per Unit of the Securities
in the Portfolio plus accrued interest. Units of the Exchange Fund will be sold
to the Holder at a price equal to the bid side evaluation per 1,000 units of the
underlying securities in the Portfolio plus interest plus the applicable sales
charge listed in the table below. Units of The Equity Income Fund are sold, and
will be repurchased, at a price normally based on the closing sale prices on the
New York Stock Exchange, Inc. of the underlying securities in the Portfolio. The
maximum applicable sales charges for units of the Exchange Funds are also listed
in the table. Excess proceeds not used to acquire whole Exchange Fund units will
be paid to the exchanging Holder.
THE EXCHANGE FUNDS
The current return from taxable fixed income securities is normally higher
than that available from tax exempt fixed income securities. Certain of the
Exchange Funds do not provide for periodic payments of interest and are best
suited for purchase by IRA's, Keogh plans, pension funds or other tax-deferred
retirement plans. Consequently, some of the Exchange Funds may be inappropriate
investments for some Holders and therefore may be inappropriate exchanges for
Units of this Series. The table below indicates certain characteristics of each
of the Exchange Funds which a Holder should consider in determining whether each
Exchange Fund would be an appropriate investment vehicle and an appropriate
exchange for Units of this Series.
TAX CONSEQUENCES
An exchange of Units pursuant to the Exchange Option for units of a series
of another Fund should constitute a 'taxable event' under the Code, requiring a
Holder to recognize a tax gain or loss, subject to the following limitation. The
Internal Revenue Service may seek to disallow a loss (or a pro rata portion
thereof) on an exchange of Units if the units received by a Holder in connection
with such an exchange represent securities that are not materially different
from the securities that his previous units represented (e.g., both Funds
contain securities issued by the same obligor that have the same material
terms). Holders are urged to consult their own tax advisers as to the tax
consequences to them of exchanging units in particular cases.
EXAMPLE
Assume that a Holder, who has three units of a fund with a 5.50% sales
charge and a current price (offering side evaluation plus accrued interest) of
$1,100 per unit, sells his units and exchanges the proceeds for units of a
series of an Exchange Fund with a current price of $950 per unit and the same
sales charge. The proceeds from the Holder's units will aggregate $3,300. Since
only whole units of an Exchange Fund may be purchased under the Exchange Option,
the Holder would be able to acquire three units in the Exchange Fund for a total
cost of $2,895 ($2,850 for units and $45 for the $15 per unit sales charge) and
would receive $405 in cash. Were the Holder to acquire the same number of units
at the same time in the regular secondary market maintained by the Sponsors, the
price would be $3,006.75 ($2,850 for the units and $156.75 for the 5.50% sales
charge).
23
<PAGE>
<TABLE><CAPTION>
REDUCED
MAXIMUM SALES CHARGE
NAME OF APPLICABLE FOR SECONDARY INVESTMENT
EXCHANGE FUND SALES CHARGE* MARKET** CHARACTERISTICS
- --------------------------------------- --------------- ---------------------- --------------------------------------------------
<S> <C> <C> <C>
DEFINED ASSET FUNDS-- MUNICIPAL
INVESTMENT TRUST FUND
Monthly Payment, State and 5.50%+ $15 per unit long-term, fixed rate, tax-exempt income
Multistate Series
Intermediate Term Series 4.50%+ $15 per unit intermediate-term, fixed rate, tax-exempt income
Insured Series 5.50%+ $15 per unit long-term, fixed rate, tax-exempt income,
underlying securities insured by insurance
companies
AMT Monthly Payment Series 5.50%+ $15 per unit long-term, fixed rate, income exempt from regular
federal income tax but partially subject to
Alternative Minimum Tax
DEFINED ASSET FUNDS--EQUITY INCOME FUND
Utility Common Stock Series 4.50% $15 per 1,000 units*** dividends, taxable income, underlying securities
are common stocks of public utilities
Concept Series 4.00% $15 per 100 units underlying securities constitute a professionally
selected portfolio of common stocks consistent
with an investment idea or concept
Select Ten Portfolios 2.75% $17.50 per 1,000 units underlying securities represent 10 highest
yielding stocks in a specified stock index as of
date of creation of Fund
DEFINED ASSET FUNDS-- GOVERNMENT
SECURITIES INCOME FUND
GNMA Series (other than those 4.25% $15 per unit long-term, fixed rate, taxable income, underlying
below) securities backed by the full faith and credit of
the United States
GNMA Series E or other GNMA Series 4.25% $15 per 1,000 units long-term, fixed rate, taxable income, underlying
having units with an initial face securities backed by the full faith and credit of
value of $1.00 the United States, appropriate for IRA's or
tax-deferred retirement plans
Freddie Mac Series 3.50% $15 per 1,000 units intermediate term, fixed rate, taxable income,
underlying securities are backed by Federal Home
Loan Mortgage Corporation but not by U.S.
Government.
DEFINED ASSET FUNDS-- MUNICIPAL INCOME
FUND
Insured Discount Series 5.50%+ $15 per unit long-term, fixed rate, insured, tax-exempt income,
taxable capital gains
DEFINED ASSET FUNDS-- CORPORATE INCOME
FUND
Monthly Payment Series 5.50% $15 per unit long-term, fixed rate, taxable income
Intermediate Term Series 4.75% $15 per unit intermediate-term, fixed rate, taxable income
Cash or Accretion Bond Series and 3.50% $15 per 1,000 units intermediate-term, fixed rate, underlying
SELECT Series securities composed of compound interest
obligations principally secured by collateral
backed by the full faith and credit of the United
States, taxable return, current distributions of
new units in lieu of principal or interest with
option to sell new units for cash income,
appropriate for IRA's or tax-deferred retirement
plans
Insured Series 5.50% $15 per unit long-term, fixed rate, taxable income, underlying
securities are insured
DEFINED ASSET FUNDS-- INTERNATIONAL
BOND FUND
Multi-Currency Series 5.50% $15 per unit intermediate-term, fixed rate, payable in foreign
currencies, taxable income
Australian and New Zealand Dollar 3.75% $15 per unit intermediate-term, fixed rate, payable in
Bond Series Australian and New Zealand dollars, taxable income
Australian Dollar Bonds Series 3.75% $15 per unit intermediate-term, fixed rate, payable in
Australian dollars, taxable income
Canadian Dollar Bonds Series 3.75% $15 per unit short intermediate-term, fixed rate, payable in
Canadian dollars, taxable income
</TABLE>
- ---------------
* As described in the prospectuses relating to certain Exchange Funds, this
sales charge for secondary market sales may be reduced on a graduated scale
in the case of quantity purchases.
** Higher charges will generally apply on exchanges of Fund Units. See
Election--Second above. The reduced sales charge for Units acquired during
their initial offering period is: $20 per unit for Series for which the
Reduced Sales Charge for Secondary Market (above) is $15 per unit; $20 per
100 units for Series for which the Reduced Sales Charge for Secondary Market
is $15 per 100 units and $20 per 1,000 units for Series for which the
Reduced Sales Charge for Secondary Market is $15 per 1,000 units.
*** The reduced sales charge for the Sixth Utility Common Stock Series of The
Equity Income Fund is $15 per 2,000 units and for prior Utility Common Stock
Series is $7.50 per unit.
+ Subject to reduction depending on the maturities of the underlying
Securities.
24
<PAGE>
Def ined
Asset FundsSM
SPONSORS: EQUITY INCOME FUND
Merrill Lynch, SELECT TEN PORTFOLIO--
Pierce, Fenner & Smith Incorporated 1994 Spring Series
Unit Investment Trusts (A Unit Investment Trust)
P.O. Box 9051 PROSPECTUS
Princeton, N.J. 08543-9051 This Prospectus does not contain all of
(609) 282-8500 the information with respect to the
Smith Barney Shearson Inc. investment company set forth in its
Unit Trust Department registration statement and exhibits
Two World Trade Center relating thereto which have been filed
101st Floor with the Securities and Exchange
New York, N.Y. 10048 Commission, Washington, D.C. under the
1-800-298-UNIT Securities Act of 1933 and the
PaineWebber Incorporated Investment Company Act of 1940, and to
1200 Harbor Blvd. which reference is hereby made.
Weehawken, N.J. 07087 No person is authorized to give any
(201) 902-3000 information or to make any
Prudential Securities Incorporated representations with respect to this
One Seaport Plaza investment company not contained in
199 Water Street this Prospectus; and any information or
New York, N.Y. 10292 representation not contained herein
(212) 776-1000 must not be relied upon as having been
Dean Witter Reynolds Inc. authorized. This Prospectus does not
Two World Trade Center constitute an offer to sell, or a
59th Floor solicitation of an offer to buy,
New York, NY 10048 securities in any state to any person
(212) 392-2222 to whom it is not lawful to make such
INDEPENDENT ACCOUNTANTS: offer in such state.
Deloitte & Touche
1633 Broadway
3rd Floor
New York, N.Y. 10019
CO-TRUSTEES:
The First National Bank of Chicago
Investors Bank & Trust Company
P.O. Box 1537
Boston, MA 02205-1537
1-800-338-6019
14852--5/94
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositors is incorporated by
reference to the SEC filings
indicated and made a part of this Registration Statement.
SEC FILE OR
IDENTIFICATION
NUMBER
--------------------
I. Bonding Arrangements and Date of Organization of the
Depositors filed pursuant to Items A and B of
Part II of the Registration Statement on Form
S-6 under the Securities Act of 1933:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 2-52691
Smith Barney Shearson Inc. ..................... 33-29106
PaineWebber Incorporated........................ 2-87965
Prudential Securities Incorporated.............. 2-61418
Dean Witter Reynolds Inc. ...................... 2-60599
II. Information as to Officers and Directors of the
Depositors filed pursuant to Schedules A and D
of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 8-7721
Smith Barney Shearson Inc. ..................... 8-8177
PaineWebber Incorporated........................ 8-16267
Prudential Securities Incorporated.............. 8-12321
Dean Witter Reynolds Inc. ...................... 8-14172
III. Charter documents of the Depositors filed as
Exhibits to the Registration Statement on Form
S-6 under the Securities Act of 1933 (Charter,
By-Laws):
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 2-73866, 2-77549
Smith Barney Shearson Inc. ..................... 33-20499
PaineWebber Incorporated........................ 2-87965, 2-87965
Prudential Securities Incorporated.............. 2-86941, 2-86941
Dean Witter Reynolds Inc. ...................... 2-60599, 2-86941
B. The Internal Revenue Service Employer Identification
Numbers of the Sponsors and Trustee are as
follows:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 13-5674085
Smith Barney Shearson Inc. ..................... 13-1912900
PaineWebber Incorporated........................ 13-2638166
Prudential Securities Incorporated.............. 13-6134767
Dean Witter Reynolds Inc. ...................... 94-0899825
The First National Bank of Chicago,
Co-Trustee...................................... 36-0899825
Investors Bank & Trust Company, Co-Trustee...... 04-3086138
II-1
<PAGE>
SERIES OF EQUITY INCOME FUND AND MUNICIPAL INVESTMENT TRUST FUND
DESIGNATED PURSUANT TO RULE 487 UNDER THE SECURITIES ACT OF 1933
SEC
SERIES NUMBER FILE NUMBER
- --------------------------------------------------------------------------------
Equity Income Fund, Investment Philosophy Series 1991
Selected Industrial Portfolio................... 33-39158
Municipal Investment Trust Fund, Multistate Series-48....... 33-50247
CONTENTS OF REGISTRATION STATEMENT
The Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference from the
Cross-Reference Sheet of the Registration Statement of The Equity Income Fund,
Sixth Utility Common Stock Series, 1933 Act File No. 2-86836).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
Consent of independent public accountants.
The following exhibits:
1.1 --Form of Trust Indenture (incorporated by reference to Exhibit 1.1 of
the Registration Statement of Equity Income Fund, Select Ten
Portfolio--1994 Winter Series, 1933 Act File No. 33-51049).
1.1.1 --Form of Standard Terms and Conditions of Trust Effective as of October
21, 1993 (incorporated by reference to Exhibit 1.1.1 to the
Registration Statement of Municipal Investment Trust Fund, Multistate
Series-48, 1933 Act File No. 33-50247).
1.2 --Form of Master Agreement Among Underwriters (incorporated by reference
to Exhibit 1.2 to the Registration Statement under the Securities Act
of 1933 of The Corporate Income Fund, One Hundred Ninety-Fourth
Monthly Payment Series, 1933 Act File No. 2-90925).
3.1 --Opinion of counsel as to the legality of the securities being issued
including their consent to the use of their names under the headings
'Taxes' and 'Miscellaneous'--'Legal Opinion' in the Prospectus.
R-1
<PAGE>
SIGNATURES
The registrant hereby identifies the series numbers of Equity Income Fund and
Municipal Investment Trust Fund listed on page R-1 for the purposes of the
representations required by Rule 487 and represents the following:
1) That the portfolio securities deposited in the series as to which the
registration statement is being filed do not differ materially in type
or quality from those deposited in such previous series;
2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information
for, the series with respect to which this registration statement is
being filed, this registration statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK AND STATE OF NEW YORK ON THE 6TH DAY OF MAY,
1994.
SIGNATURES APPEAR ON PAGE R-3, R-4, R-5, R-6 AND R-7.
A majority of the members of the Board of Directors of Merrill Lynch,
Pierce, Fenner & Smith Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Smith Barney
Shearson Inc. has signed this Registration Statement or Amendment to the
Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.
A majority of the members of the Executive Committee of the Board of
Directors of PaineWebber Incorporated has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of Attorney
authorizing the person signing this Registration Statement or Amendment to the
Registration Statement to do so on behalf of such members.
A majority of the members of the Executive Committee of the Board of
Directors of Prudential Securities Incorporated has signed this Registration
Statement or Amendment to the Registration Statement pursuant to Powers of
Attorney authorizing the person signing this Registration Statement or Amendment
to the Registration Statement to do so on behalf of such members.
A majority of the members of the Board of Directors of Dean Witter
Reynolds Inc. has signed this Registration Statement or Amendment to the
Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement or Amendment to the Registration Statement
to do so on behalf of such members.
R-2
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Board of Directors of Merrill Form SE and the following 1933 Act
Lynch, Pierce, File
Fenner & Smith Incorporated: Number: 33-43466
HERBERT M. ALLISON, JR.
BARRY S. FREIDBERG
EDWARD L. GOLDBERG
STEPHEN L. HAMMERMAN
JEROME P. KENNEY
DAVID H. KOMANSKY
DANIEL T. NAPOLI
THOMAS H. PATRICK
JOHN L. STEFFENS
DANIEL P. TULLY
ROGER M. VASEY
ARTHUR H. ZEIKEL
By
ERNEST V. FABIO
(As authorized signatory for Merrill Lynch, Pierce,
Fenner & Smith Incorporated and
Attorney-in-fact for the persons listed above)
R-3
<PAGE>
SMITH BARNEY SHEARSON INC.
DEPOSITOR
By the following persons, who constitute a majority of Powers of Attorney
the Board of Directors of Smith Barney Shearson Inc.: have been filed
under
the following 1933
Act File Numbers:
33-49753 and
33-51607
RONALD A. ARTINIAN
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
ROBERT K. DIFAZIO
JAMES DIMON
ROBERT DRUSKIN
HERBERT DUNN
TONI ELLIOTT
LEWIS GLUCKSMAN
ROBERT F. GREENHILL
THOMAS GUBA
HENRY U. HARRIS
JOHN B. HOFFMAN
A. RICHARD JANIAK, JR.
HERBERT B. KANE
ROBERT Q. JONES
JEFFREY LANE
JACK H. LEHMAN III
ROBERT H. LESSIN
JOEL N. LEVY
THOMAS A. MAGUIRE, JR.
HOWARD D. MARSH
JOHN F. MCCANN
WILLIAM J. MILLS II
JOHN C. MORRIS
CHARLES O'CONNOR
HUGH J. O'HARE
JOSEPH J. PLUMERI II
JACK L. RIVKIN
A. GEORGE SAKS
BRUCE D. SARGENT
DON M. SHAGRIN
DAVID M. STANDRIDGE
MELVIN B. TAUB
JACQUES S. THERIOT
STEPHEN J. TREADWAY
PAUL UNDERWOOD
PHILIP M. WATERMAN
By
KEVIN KOPCZYNSKI
(As authorized signatory for
Smith Barney Shearson Inc. and
Attorney-in-fact for the persons listed above)
R-4
<PAGE>
PAINEWEBBER INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under
the Executive Committee of the Board Form SE and the following 1933 Act
of Directors File
of PaineWebber Incorporated: Number: 33-28452
JOHN A. BULT
PAUL B. GUENTHER
DONALD B. MARRON
JAMES C. TREADWAY
By
ROBERT E. HOLLEY
(As authorized signatory for PaineWebber Incorporated
and Attorney-in-fact for the persons listed above)
R-5
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form SE and the following 1933
the Board of Directors of Act File Number: 33-41631
Prudential Securities Incorporated:
JAMES T. GAHAN
ALAN D. HOGAN
HOWARD A. KNIGHT
GEORGE A. MURRAY
LELAND B. PATON
HARDWICK SIMMONS
By
RICHARD R. HOFFMANN
(As authorized signatory for Prudential Securities
Incorporated and Attorney-in-fact for the persons listed above)
R-6
<PAGE>
DEAN WITTER REYNOLDS INC.
DEPOSITOR
By the following persons, who constitute Powers of Attorney have been filed
a majority of under Form
the Board of Directors of Dean Witter SE and the following 1933 Act File
Reynolds Inc.: Number:
33-17085
NANCY DONOVAN
CHARLES A. FIUMEFREDDO
JAMES F. HIGGINS
STEPHEN R. MILLER
PHILIP J. PURCELL
THOMAS C. SCHNEIDER
WILLIAM B. SMITH
By
MICHAEL D. BROWNE
(As authorized signatory for Dean Witter Reynolds Inc.
and Attorney-in-fact for the persons listed above)
R-7
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Sponsors and Co-Trustees of Equity Income Fund, Select Ten Portfolio--1994
Spring Series, Defined Asset Funds:
We hereby consent to the use in this Registration Statement No. 33-52141 of our
opinion dated May 6, 1994, relating to the Statement of Condition of Equity
Income Fund, Select Ten Portfolio--1994 Spring Series, Defined Asset Funds and
to the reference to us under the heading 'Auditors' in the Prospectus which is a
part of this Registration Statement.
DELOITTE & TOUCHE
New York, N.Y.
May 6, 1994
R-8
EXHIBIT 3.1
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
MAY 6, 1994
EQUITY INCOME FUND,
SELECT TEN PORTFOLIO--1994 SPRING SERIES
DEFINED ASSET FUNDS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SMITH BARNEY SHEARSON INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
C/O MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
UNIT INVESTMENT TRUSTS
P.O. BOX 9051
PRINCETON, N.J. 08543-9051
(609) 282-8500
Dear Sirs:
We have acted as special counsel for you, as sponsors (the 'Sponsors') of
Equity Income Fund, Select Ten Portfolio--1994 Spring Series of Defined Asset
Funds (the 'Fund'), in connection with the issuance of units of fractional
undivided interest in the Fund (the 'Units') in accordance with the Trust
Indenture relating to the Fund (the 'Indenture').
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents and instruments as
we have deemed necessary or advisable for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that (i) the execution and
delivery of the Indenture and the issuance of the Units have been duly
authorized by the Sponsors and (ii) the Units, when duly issued and delivered by
the Sponsors and the Co-Trustees in accordance with the Indenture, will be
legally issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 3.1 to the
Registration Statement relating to the Units filed under the Securities Act of
1933 and to the use of our name in such Registration Statement and in the
related prospectus under the headings 'Taxes' and 'Miscellaneous--Legal
Opinion.'
Very truly yours,
DAVIS POLK & WARDWELL
