DEFINED ASSET FUNDS[SM]
Select Ten Portfolio
A Defined Strategy for Retirement
An important concern for most people is planning for retirement. One
of the best ways to work toward this goal is to begin investing for long-term
total return. After all, long-term results are what's important, not the
day-to-day changes in the market. The Select Ten Portfolio follows a Strategy
which seeks attractive total return, by investing in the ten highest
dividend-yielding stocks in the Dow Jones Industrial Average (DJIA)(1) and
holding them for one year. After one year, you can roll your investment into
the next Portfolio of the new ten highest dividend-yielding stocks. This may
be a good way to build a retirement nest egg and continue to enjoy the
investment's potential appreciation.
- ----------------
(1) The name "Dow Jones Industrial Average" is the property of Dow Jones &
Company, Inc., and has not participated in any way in the creation of any
Select Ten Portfolio or the selection of its stocks and is unaffiliated with
the Portfolio.
[A mountain chart, entitled "The Investment Period"(2), illustrates the stocks
performance from 1976 to 1990 if an investor put $10,000 in the fund each year
for 10 years. The y axis reflects years and the x axis reflects dollars in
$50,000 increments. The initial value is $10,000 and the ending value is
$550,518. A box in the upper right hand corner reads "For example, if starting
in January 1976, you invested $10,000 each year for 15 years, your total
investment of $150,000 would have grown to $550,518."]
- ------------
(2) This shows hypothetical results (price changes plus dividends reinvested at
the end of each year) of investing each year in the ten highest
dividend-yielding stocks in the DJIA (the "Strategy"). Figures reflect
deduction of 2,75% in the first year of each investment and 1.75% per year
thereafter (equivalent to the sales charge on the Portfolio) and .193% a year
(similar to Portfolio expenses), but not commissions or taxes.
The Retirement Period(3)
Date of Amount of Cumulative Value
Withdrawal Withdrawal at Year-End
1/1/91 $50,000 $657,826
1/1/92 $50,000 $646,599
1/1/93 $50,000 $745,624
1/1/94 $50,000 $709,182
1/1/95 $50,000 $886,856
Total $250,000
- -----------
(3) This shows hypothetical results (price changes plus dividends reinvested at
the end of each year) of investing each year in the ten highest
dividend-yielding stocks in the DJIA (the "Strategy"). Figures reflect
deduction of 2,75% in the first year of each investment and 1.75% per year
thereafter (equivalent to the sales charge on the Portfolio) and .193% a year
(similar to Portfolio expenses), but not commissions or taxes.
The charts and tables in this brochure represent past performance of the DJIA
and the Strategy (but not any Portfolio) and should not be considered
indicative of future results. The performance of the Strategy is a
hypothetical example of how the Select Ten Portfolio could have performed if
its Strategy had been employed since 1976. There can be no assurance that the
Portfolio will outperform the DJIA or the S&P 500(1) over its one-year life or
over consecutive rollover periods, if available. Actual performance of a
Portfolio will differ from that of the "Strategy Stocks" as reflected in this
brochure because of sales charges, brokerage commissions and expenses; not all
of the stocks may be weighted equally, and the Portfolio may not be fully
invested because Strategy performance figures are annualized based ont he
closing sale prices on December 31, while the Portfolios are offered on
different dates. Performance information for Select Ten Portfolios since 1991
(inception) is available upon request. Investors should note that they are
purchasing a unit investment trust with a one year life. We recommend this
investment as a long-term strategy but there can be no assurance that future
Select Ten Portfolios will be available.
In this hypothetical example of how Strategy works during retirement, if you
retired in 1991, it would have been possible to withdraw from your account
$50,000 each year thereafter, without dramatically effecting your balance.
Here's how: if $50,000 was withdrawn in 1991 from the account balance of
$550,518, the total investment would be $500,518. But because the investment
continues to work without additional contributions, the effects of withdrawal
were minimal. The year-end value would have be $657,826. So, if you continued
to withdraw $50,000 for the next 4 years, you could have withdrawn $250,000
and still had over $886,856 to draw upon the future years.
Defining the Illustrations
For more complete information, including charges and expenses, on any
Equity Income Fund - Select Ten Portfolio, ask your financial professional for
a free prospectus. Please read it carefully before investing.
TIME-TESTED TRACK RECORD
Comparison of growth of $10,000 since 1976(4)
The past 20 years were a period of turbulent economic and political
times in the United States and abroad. Many companies increased their market
share while other companies, as well as several foreign governments, folded.
Through it all, the Strategy of buying the ten highest yielding stocks in the
DJIA, holding them for about one year and then rolling into the new top ten
stocks would have outpaced the two major common stock indices, the S&P 500 and
DJIA. As you can see by the chart below, an above-average performance has
prevailed through all these years.
- -----------------
(4)This compares performance of the Strategy with the DJIA as a whole and the
S&P 500 Stock Price Composite Index (S&P 500 is a trademark of the Standard &
Poor's Company). The Strategy would have outperformed the DJIA in 14 of the
last 20 years and the S&P 500 in 14 years. Figures reflect price changes and
reinvestment of dividends, but not sales charges, expenses, commissions or
taxes.
See "Defining Illustrations" on page 1.
Time-Tested Investment Principles
1) Time in the market is more important than timing in the market.
2) The stocks to buy are the ones everyone else is selling.
3) Dividends can be an important part of total return.
Michael O'Higgins - "Beating the Dow"
[A mountain chart, compares the cumulative annual performance from 1976 to
1995 of the Strategy Stocks, S&P 500 Stock Index and Dow Jones Industrial
Average. A box to the left of the chart indicates the components of the chart.
The x axis reflects dollar amounts in $25,000 increments; the y axis reflects
years. The initial value of each is $10,000; the ending values are as follows:
$261,132 (Strategy Stocks); $146,512 (S&P 500 Stock Index); $137,445 (Dow
Jones Industrial Average.
The chart highlights events from 1971 and 1976 to 1995 using pictures
and descriptions. 1971: First Municipal Investment Trust Fund - Monthly
Payment Series offered. 1976: North and South Vietnam are reunited as one
country; The U.S. celebrates its Bicentennial. 1977:Oil flows through the 800
miles trans-Alaska pipeline; The U.S. Department of Energy is established.
1978:Trading on the NYSE has a record single day volume 63.5 million shares on
April 17; Worldwide population stands about 4.4 billion persons with 200,000
being added daily. 1979:Jimmy Carter and Leonid Brezhnev sign SALT 2 arms
limitation treaty; Margaret Thatcher becomes conservative Prime Minister of
Britain. 1980:Equity Income Fund Utility Common Stock Series 1 offered; Gold
tops $850 an ounce. 1981:First female U.S. Supreme Court Judge, Sandra Day
O'Connor appointed; The first U.S. space shuttle, "Columbia" makes its maiden
flight; IBM launches its "home" or "personal computer." 1982: The U.S. and
U.K. return 18.5 tons of Czechoslovakian gold held since World War 2. Its
current value, $250 million. 1983: First UIT S&P 500 Index Fund; Martin Luther
King, Jr.'s birthday is made a national holiday. 1984: Reagan is re-elected;
Apple Macintosh microcomputer with mouse is introduced. 1985: U.S. becomes
world's largest debtor nation with $130 billion deficit. 1986: An oil surplus
forces its price below $10 a barrel; GM surpasses Exxon as the largest company
in the U.S. 1987: President Reagan announces the nation's first trillion
dollar budget; "Black Monday" Dow Jones Industrial Average falls 508 points
(-23%). 1988: Canada and U.S. sign a comprehensive free trade agreement. 1989:
Berlin wall comes down; Equity Income Fund 14th Utility Series offered. 1990:
Iraq invades Quwait; Van Vogh's "Portrait of Dr. Gachet is sold for a record
$82 million. 1991: First Equity Income Fund Select Ten Portfolio offered.
1992: Equity Income Fund 14th Utility Series reaches $450,000,000 in market
value; Bill Clinton is elected 42nd U.S. President. 1993: U.S. House and
Senate approves NAFTA (North American Free Trade Agreement); Nelson Mandela &
F.W. de Klerk win Noble Peace Prize. 1994: GOP wins control of Congress for
the first time since 1954.]
U.S. Treasury Notes versus The Strategy(5)
This illustrates your return if you had invested $100,000 in 1976
using the Strategy versus a three-year U.S. Treasury Note at then-prevailing
rates. Each year, only your principal was reinvested in the Strategy. Every
three years, your principal investment in the Treasury Note was reinvested
into a new three-year note. The figures do not reflect the performance of any
actual portfolio.
- -----------------
(5)This compares income, principal value changes and total return of the
Strategy with 3-year U.S. Treasury Notes. Income is treated as distributed
(not reinvested). Strategy results (but not U.S. Treasury Notes) reflect
deduction of 2.75% in the first year and 1.75% a year thereafter (equivalent
to the sales charges on the Portfolio) and .193% a year (similar to Portfolio
expenses). None of the figures reflect commissions or taxes. There can be no
assurance that additional Portfolios will be offered to continue the Strategy
in future years.
As you can see, over the twenty-year period, the Strategy would have
enabled investors to earn higher annual income while their principal was
generally growing. In contrast, not only was the Treasury Note income less,
but the $100,000 principal value did not change.
U.S. Treasury Notes are fixed income obligations having the highest
credit characteristics. If held to maturity the principal value remains
relatively stable, although principal value is subject to fluctuation. Common
stocks, like those in the Strategy, incur more risk because they have no
maturities and their dividends are subject to the financial condition of, and
declaration by, the issuers. Stock prices and principal value, also fluctuate
more widely.
[A bar graph, compares income, principal value changes and total return of the
Strategy with the 3-year U.S. Treasury Notes for the period of 1/1/76 to
12/31/95. The y axis is dollar amounts in $100,000 increments. Total return
for the Strategy was $859,806 and for three-year U.S. Treasury Notes was
$274,900; principal: $595,967 and $100,000, respectively; income: $265,839 and
$174,900, respectively.]
Strategy Treasury Note Strategy
Year Income Income Principal Value
1976 $6,929 $6,770 $124,940
1977 $7,158 $6,770 $114,320
1978 $7,898 $6,770 $104,386
1979 $8,579 $9,710 $106,672
1980 $8,906 $9,710 $123,825
1981 $10,177 $9,710 $120,494
1982 $9,674 $12,920 $139,158
1983 $11,201 $12,920 $178,776
1984 $11,547 $12,920 $176,881
1985 $11,991 $9,640 $212,099
1986 $22,523 $9,640 $258,781
1987 $12,704 $9,640 $259,092
1988 $14,507 $8,260 $295,261
1989 $19,957 $8,260 $350,180
1990 $17,050 $8,260 $298,528
1991 $14,983 $6,820 $377,370
1992 $17,016 $6,820 $384,426
1993 $15,450 $6,820 $465,002
1994 $18,084 $6,270 $455,981
1995 $17,505 $6,270 $595,967
Totals $263,839 $174,900 $595,967
Defining Your Investment
You can get started for as little as about $250 for regular or IRA
accounts.
Defining Your Risk
The Portfolio is designed for investors able and willing to assume
the risks generally associated with equity investments. It may not be
appropriate for investors seeking preservation of capital or high current
income. The "Strategy Stocks" may have higher yields because they or their
industry are experiencing financial difficulty or are out of favor. There can
be no assurance that the market factors that caused these relatively low
prices and high yields will change, or that the Portfolio or Strategy will
meet its objective. The value of your stock investment will fluctuate with
the price of the underlying stocks.
