Defined Asset Funds
The Select S&P Industrial Portfolio
1997 Series B
Take the indexing to a new level...
Merrill Lynch
Indexing--it's a strategy that many investors choose to mirror the returns of
major indices. Why not go a step beyond Indexing? Defined Asset Funds(sm) can
help.
For Dividends...
For Potential Capital Appreciation...
For Total Return...
A Step Beyond Indexing
Instead of simply replicating an index, the Select S&P Industrial Portfolio
takes indexing to a new level by attempting to single out stocks within the
index for a combination of values, capital appreciation and current dividend
income. The Portfolio seeks total return through a contrarian strategy of
selecting 15 stocks from the S&P Industrial Index* that have high dividend
yield.
The Selection Process
The Select S&P Industrial Portfolio looks for potential values in the equity
market by investing in companies in the S&P Industrial Index that may be
currently out of favor. It does this by employing a disciplined four-part
screening process:
1. Defining the Universe: We begin with the S&P Industrial Index, which is a
sub-set of the S&P 500* that includes only industrial stocks. Defined Asset
Funds then removes any stocks that are a part of the Dow Jones Industrial
Average* (DJIA).
*"Standard & Poor's," "S&P," and "S&P 500" are trademarks of The McGraw-
Hill Companies, Inc. and have been licensed for use by Defined Asset Funds. The
Portfolio is not sponsored, managed, sold or promoted by Standard & Poor's. The
name "Dow Jones Industrial Average" is the property of Dow Jones & Company,
Incorporated.
2. Quality Screen: Only stocks that are ranked A+ or A by Standard & Poor's are
included. Standard & Poor's determines these rankings of stocks using a
computerized system, which focuses primarily on the growth and stability of
per-
share earnings and dividends. It then assigns a symbol to each stock, which
ranges from A+ for the most highly esteemed stocks to D for those stocks which
Standard & Poor's considers to be the most speculative. These rankings are not
intended to predict stock price movements.
3. Market Capitalization: The stocks are then ranked by their market
capitalization from highest to lowest, and the top 75% are retained. This
allows the Portfolio to avoid smaller, less liquid issues.
4. Highest Dividend Yield: Finally, the remaining stocks are ranked according
to dividend yield, which identifies companies whose prices may have declined.
The 15 highest-yielding stocks are selected for the Portfolio.
The Defined Asset Funds Select Strategy
Like each Portfolio in the Defined Asset Funds Select Series, the S&P
Industrial Portfolio employs a "buy and hold" style of investing for
approximately one year following a disciplined investment strategy. At the
end of one year, the screening process is reapplied and a new Portfolio is
selected. You can reinvest your earn
ings into the new Portfolio, if available, or you can redeem your investment.
The research is done for you. There are no buy or sell decisions to make.
Although the Select Portfolios are one year investments, we recommend staying
with the Strategy for at least three to five years.
Defining the Portfolio
At Defined Asset Funds, we believe in giving our investors the facts they need
to make informed choices. It is important to note that when a stock has a
relatively high dividend yield, it can be an indication that the company or
the industry may be currently out of favor.
<TABLE>
Select S&P Industrial Portfolio -- Series 1997 B
<CAPTION>
Current
COMPANIES Ticker Symbol Dividend Yield**
<S> <C> <C>
1. UST, INC. UST 5.00%
2. ROYAL DUTCH PETROLEUM COMPANY+ RD 3.26%
3. ALLTEL CORPORATION AT 3.18%
4. INTERNATIONAL FLAVORS & IFF 3.12%
FRAGRANCES, INC.
5. GENUINE PARTS COMPANY GPC 3.11%
6. WINN DIXIE STORES, INC. WIN 3.04%
7. SBC COMMUNICATIONS, INC. SBC 3.03%
8. GENERAL MILLS, INC. GIS 2.95%
9. HEINZ (H.J.) COMPANY HNZ 2.80%
10 THE LIMITED, INC. LTD 2.67%
11 MAY DEPARTMENT STORES COMPANY MAY 2.61%
12 PITNEY BOWES, INC. PBI 2.59%
13 AMERICAN HOME PRODUCTS AHP 2.51%
CORPORATION
14 BRISTOL-MYERS SQUIBB COMPANY BMY 2.34%
15 KELLOGG COMPANY K 2.33%
<FN>
** Current Dividend Yield for each stock was calculated by annualizing the last
quarterly or semi-annual ordinary dividend received on the stock and dividing
the results by its market value on the close of trading on February 21, 1997.
+ This issuer is located in The Netherlands; the current semi-annual dividend
per share will be subject to withholding taxes of the Netherlands.
</TABLE>
<TABLE>
Time In The Market
Annual Total Returns
(Periods ending December 31)
<CAPTION>
Strategy S&P
Year Stocks Industrial DJIA
<S> <C> <C> <C>
1977 -4.34% -8.20% -12.71%
1978 8.04% 7.50% 2.69%
1979 28.18% 18.40% 10.52%
1980 20.04% 32.98% 21.41%
1981 9.64% -6.69% -3.40%
1982 27.59% 20.14% 25.79%
1983 26.45% 22.79% 25.68%
1984 14.22% 4.09% 1.06%
1985 31.64% 30.08% 32.78%
1986 32.24% 18.54% 26.91%
1987 4.53% 9.13% 6.02%
1988 43.56% 15.80% 15.95%
1989 39.07% 29.30% 31.71%
1990 3.00% -0.84% -0.57%
1991 28.73% 30.39% 23.93%
1992 13.36% 5.63% 7.34%
1993 4.29% 8.90% 16.72%
1994 13.28% 3.75% 4.95%
1995 38.25% 34.26% 36.48%
1996 14.10% 22.70% 28.57%
Average++ 19.05% 14.21% 14.27%
<FN>
++ Average annual total returns represent the annual rate of price appreciation
plus dividends reinvested at the end of each year. Neither the average annual
return of 17.49%, nor any of the other figures listed, are any guarantee of
future performance.
</TABLE>
Avoid the teachings of speculators
whose judgments are not confirmed by experience.
L E O N A R D O D A V I N C I
A Time Tested Track Record
We analyzed the hypothetical historical returns of $10,000 invested over 20
years in the S&P Industrial "Strategy Stocks" as compared to the Index and the
DJIA. While past performance is no guarantee of future results, the Strategy
Stocks would have offered impressive returns, as you can see from the chart
below.
[A mountain chart, captioned "Hypothetical Growth of $10,000 invested in 1977
through 12/31/96", compares the cumulative annual performance from 1977
through 1996 between the Strategy
Stocks (yellow), the S&P Industrial (green), and the Dow Jones Industrial
Average (pink). A box in the upper left quadrant indicates the components of
the chart. The y axis reflects years in 5 and 6 year increments. The values
are as follows: $326,968 (Strategy Stocks); $142,587 (S&P Industrial); $143,997
(DJIA); $188,717 (S&P 500).]
The charts above compare hypothetical performance of the Select Standard &
Poor's Strategy Stocks (not any actual Portfolio) with the actual performance
of the S&P Industrial Index and the DJIA. The results shown assume that all
dividends during each year are reinvested at the end of that year, and do not
reflect sales charges, commissions, expenses or taxes. Hypothetically, if the
Portfolio sales charges and expenses were deducted, the Strategy stocks would
have underperformed the S&P Industrial Index in 7 out of the last 20 years and
the DJIA in 8 out of the last 20 years. There can be no assurance that any
Portfolio will outperform these indices. Actual performance will also differ
from the Strategy stocks because Portfolios are established and liquidated at
different times during the year, they normally purchase and sell stocks at
prices different from the closing prices used in determining Portfolio unit
price, Portfolios are not fully invested at all times and stocks may not be
weighted equally.
About Standard & Poor's
STANDARD & POOR'S is a leading financial information and investment research
company. Since 1860, they have provided investors with financial research,
benchmarks, and market data. Their most notable benchmark the S&P 500
Composite Stock Price Index, features utility, financial, transportation and
industrial stocks. The S&P Industrial Index, a sub-set of the S&P 500,
includes only highly capitalized industrial stocks.
Defining Your Cost
Low Initial Sales Charge/Reduced Charge for Rollovers
All investors pay a deferred sales charge of $1.75 per 1,000 units, deducted
in each of the last ten months of the Portfolio ($17.50 total). First-time
investors also pay a sales charge of approximately 1% when they buy.
<TABLE>
<CAPTION>
As of % of
Initial
Public Amount per
Amount Purchased Offering Price 1,000 Units
- -----------------------------------------------------------------
<S> <C> <C>
Initial Sales Charge 1.00% $10.00
Deferred Sales Charge 1.75% $17.50
===============================
Maximum Sales Charge 2.75% $27.50
</TABLE>
If you sell before termination, the remaining deferred sales charges are
deducted, along with the estimated costs of selling Portfolio securities. If
you roll over into a successor Portfolio, if available, the initial charge is
waived. You only pay the $17.50 deferred fee on that Portfolio.
Volume Purchase Discounts
For larger purchases, the overall sales charges are reduced to put more of
your investment dollars to work for you.
<TABLE>
<CAPTION>
Total Sales
Deferred Sales Charge as a % of
Charge per the Public
- -------------------------------------------------------------------
<S> <C> <C>
Amount Purchased 1,000 units Offering Price
Less than $50,000 $17.50 2.75%
$50,000 to $99,999 $17.50 2.50%
$100,000 to $249,999 $17.50 2.00%
$250,000 to $999,999 $17.50 1.75%
$1,000,000 or more $10.00 1.00%
- -------------------------------------------------------------------
</TABLE>
Defining Your Risks
The Select S&P Industrial Portfolio is designed for investors able and
willing to assume the risks generally associated with equity investments,
and may not be appropriate for those seeking preservation of capital or
high current income. The value of this investment will fluctuate with the
value of the underlying stocks and the sale price may be more or less than
the original cost. There can be no assurance that dividend rates will be
maintained or that stock prices will not decrease.
Tax Reporting
The proceeds received when you sell this investment will reflect the
deduction of the deferred sales charge and the charge for organizational
expenses. In addition, the annual statement and the relevant tax reporting
forms you receive at year-end will reflect the actual amount paid to you
(net of the deferred sales charge and the charge for organizational
expenses). Accordingly, you should not increase your basis in your units
by the deferred sales charge and the charge for organizational expenses.
Select Now!
You can get started with the Select S&P Industrial Portfolio with as little
as $250. Call your financial professional for a free prospectus containing
more complete information including all charges and expenses. Please read
the prospectus carefully before investing.
Information contained herein is subject to amendment. A registration
statement relating to the next Series of the S&P Industrial Portfolio has
been filed with the Securities and Exchange Commission. The securities of
the new offering may not be sold, nor may offers to buy be accepted prior
to the time the registration statement becomes effective. This brochure
shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of those securities in any state in which
such an offer, solicitation, or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
Select Stories
Select Ten Portfolio
(DJIA)
Hong Kong Portfolio
(Hang Seng Index)
United Kingdom Portfolio
(Financial Times Index)
Select Growth Portfolio
Select S&P Intrinsic Value Portfolio
Equity Income Funds
Concept Series
Health Care Trust II
Natural Gas Trust 2
Real Estate Income Fund 3
Premier American Portfolio
Tele-Global Trust 2
Equity Income Funds
Utility Series
15th Utility Common Stock Series
Equity Income Funds
Index Series
S&P 500 Index Trust 2
S&P MidCap Index Trust
Other Defined Asset Funds
Municipal Income Funds
Corporate Income Funds
Government Securities Income Funds
International Bond Funds
