Defined Asset Funds
Select Ten Portfolio
1998
Series
1
[ML lOGO] Merrill Lynch
SELECTING INVESTMENTS FOR YOUR PORTFOLIO CAN BE COMPLICATED -- UNLESS YOU HAVE
A STRATEGY.
The Select Ten Strategy
The Portfolio seeks total return by holding the ten highest dividend-yielding
stocks of the Dow Jones Industrial Average DJIA)* for about one year (the
"Strategy").
The Portfolio looks for potential values in the equity market by investing in
established companies whose prices may be depressed. It consists of
approximately equal values of the tens stocks in the DJIA with the highest
dividend yields at the time of the offering.
Each year, we intend to reapply the screening process to select a new
Portfolio. You can reinvest in the next Portfolio, if available, at a reduced
sales charge, or you can redeem your investment. Although each Portfolio is a
one-year investment, we recommend you stay with the Strategy for at least
three to five years for more consistent results.
It's Convenient
Invest in a fixed Portfolio of widely held stocks with just one purchase and
enjoy the advantages of:
o Low cost. The minimum investment is about $250.
o Quarterly dividends. You will receive four consolidated checks
per year, not 40 for the 10 stocks.
o Reinvestment. You may choose to reinvest your dividends at a
reduced sales charge to compound your income.
o No sell decisions. You are buying and holding for about a year, a
Portfolio of established companies with relatively high dividend
yields.
[CHART]
Select Ten Portfolio -- 1998 Series 1(1)
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Name of Issuer Ticker Current
Symbol Dividend
Yield(2)
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1. Philip Morris Companies, Inc. MO 3.68%
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2. J.P. Morgan & Company, Inc. JPM 3.18
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3. Chevron Corporation CHV 3.01
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4. General Motors Corporation GM 2.90
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5. Eastman Kodak Company EK 2.68
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6. Minnesota Mining & Manufacturing Company MMM 2.58
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7. Exxon Corporation XON 2.57
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8. AT&T Corporation T 2.17
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9. International Paper Company IP 2.14
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10. Du Pont (E.I.) De Nemours & Company DD 2.06
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The Portfolio does not reflect the research opinions or any buy or sell
recommendations of any of the Sponsors.
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(1) Initial date of deposit -- March 1, 1998.
(2) 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 its market value as of the close of
trading on February 27, 1998. There can be no assurance that future
dividends, if any, will be maintained at the indicated rates.
Past performance of Prior Select Ten Portfolios
The chart below shows average annual total returns for the following Series,
which assume annual "rollovers" into the next Portfolio. We've also included
returns for the most recently completed Portfolio of each Series.
<TABLE>
<CAPTION>
Series from Inception Through 12/31/97 Most Recently Completed Portfolio
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Inception Return Period Return
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<S> <C> <C> <C> <C> <C>
5/17/91 Series B 16.90% 5/20/96-6/27/97 Series B 27.54%
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1/3/92 Series A 16.58% 1/18/96-2/28/97 Series A 31.27%
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9/1/92 Series C 20.21% 9/17/96-10/24/97 Series C 28.52%
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7/22/96 Series 3 27.46% 7/22/96-8/29/97 Series 3 33.68%
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11/1/96 Series 5 21.11% 11/1/96-12/12/97 Series 5 25.85%
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</TABLE>
Past performance is no guarantee of future results. Average annual total
returns represent price changes plus dividends reinvested, divided by the
initial public offering price, and reflect maximum sales charges and expenses.
Returns for Series From Inception differ from Most Recently Completed
Portfolio because they reflect a reduced sales charge on rollovers and
different performance periods.
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(*) Dow Jones & Company, Inc., owner of the name "Dow Jones Industrial
Average," is unaffiliated with, and did not participate in the creation of
the Portfolio or the selection of its stocks, and has neither reviewed nor
approved any information in this brochure or the prospectus relating to the
Portfolio. "S&P 500" is a trademark of The McGraw-Hill Companies, Inc.
[LOGO] Select Ten Portfolio DJIA
The Dow Jones Industrial Average
The Dow Jones Industrial Average consists of 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the New York Stock
Exchange and of American industry. These companies are highly capitalized and
their stocks are widely held by both individual and institutional investors.
Currently, the companies are:
Allied Signal
Aluminum Co. of America
American Express
AT&T
Boeing
Caterpillar
Chevron
Coca-Cola
Walt Disney
Du Pont
Eastman Kodak
Exxon
General Electric
General Motors
Goodyear
Hewlett-Packard
IBM
International Paper
Johnson & Johnson
McDonald's
Merck
Minnesota Mining & Manufacturing
J.P. Morgan & Co.
Philip Morris
Procter & Gamble
Sears Roebuck & Co.
Travelers Group
Union Carbide
United Technologies
Wal-Mart Stores
Hypothetical Past Performances of the Strategy (not any Portfolio)
Growth of $10,000 invested 1/1/73 through 12/31/97
[A mountain chart compares the cumulative annual performance from 1/1/73
through 12/31/97 of the Strategy(3) (blue), the Dow Jones Industrial Average
(DJIA) (pink), and the S&P 500 Index(*) (green). A blue box in the upper
left quadrant indicates the components of the Strategy performance section
of the chart ("net of sales charges and expenses"). The horizontal (X)
axis compares the cumulative annual performance by year, from 1/1/73
through 12/31/97. The vertical (Y) axis reflects the dollar amount value
for each index from 1/1/73 through 12/31/97. The initial value of each
investment is $10,000. Throughout the period from 1/1/73 through 12/31/97,
increases in each investment builds towards the Y axis. At the end of this
period, the Y axis reflects the ending value of the Strategy ($416,360),
the ending value of the DJIA ($212,619), and the ending value of the S&P
500 Index ($205,563).
Since stocks in the Portfolio were chosen solely by applying the Strategy, we
analyzed the Strategy to see how it could have performed. Past performance of
the Strategy is no guarantee of future results of any Portfolio. The Strategy
would have underperformed the DJIA in 12 and the S&P 500 Index in 11 of the
last 25 years. There can be no assurance that any Portfolio will outperform
either index.
Annual Total Returns
Strategy returns are net of sales charges and expenses(3).
<TABLE>
<CAPTION>
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Year Strategy DJIA S&P 500 Year Strategy DJIA S&P 500
Index Index
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<S> <C> <C> <C> <C> <C> <C> <C>
1973 -3.99% -13.12% -14.66% 1986 32.60 26.91 18.37
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1974 -2.28% -23.14 -26.47 1987 5.00 6.02 5.67
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1975 55.05 44.40 36.92 1988 22.17 15.95 16.58
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1976 32.84 22.72 23.53 1989 25.33 31.71 31.11
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1977 -2.80 -12.71 -7.19 1990 -9.91 -0.57 -3.20
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1978 -1.81 2.69 6.39 1991 31.40 23.93 30.51
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1979 10.38 10.52 18.02 1992 6.35 7.34 7.67
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1980 24.40 21.41 31.50 1993 24.95 16.72 9.97
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1981 5.50 -3.40 -4.83 1994 1.92 4.95 1.30
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1982 23.49 25.79 20.26 1995 34.51 36.48 37.10
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1983 36.49 25.68 22.27 1996 25.97 28.57 22.69
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1984 5.37 1.06 5.95 1997 19.62 24.78 33.10
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1985 26.66 32.78 31.43 Average 16.09% 13.01% 12.85%
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</TABLE>
Average Annual Total Returns
For Periods ending 12/31/97
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3 year 5 year 10 year 15 year 20 year 25 year
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Strategy 26.24% 20.69% 17.31% 18.36% 16.70% 16.09%
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DJIA 29.85% 21.81% 18.41% 18.21% 16.33% 13.01%
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S&P 500 30.82% 20.06% 17.89% 17.37% 16.41% 12.85%
Index
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The results shown are hypothetical past performance of the Strategy (not any
Portfolio) and are no guarantee of future results. Returns represent price
changes plus dividends reinvested at each year end, divided by the initial
public offering price and do not reflect the deduction of any commissions or
taxes. Portfolio performance will differ from the Strategy because of
commissions, Portfolios are established and liquidated at different times
during the year, they normally purchase and sell stocks at prices different
from those used in determining Portfolio unit price, they are not fully
invested at all times and stocks may not be weighted equally.
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(3) Net of Portfolio sales charges (2.75% for the first year, 1.75% for each
subsequent year) and estimated expenses.
Defining Your Risks
The following are important facts to keep in mind when considering this
investment. Please read them carefully. Your financial professional will be
happy to answer any questions you may have.
o The Portfolio is designed for investors willing and able to assume the risks
associated with equity investments. It may not be appropriate for investors
seeking capital preservation. Equity markets have been at historically high
levels and no assurance can be given that these levels will continue.
o The value of your investment will fluctuate with the prices of the underlying
stocks. There can be no assurance that dividend rates will be maintained or
that stock prices will not decrease.
o These stocks may have higher yields because they or their industries are
experiencing financial difficulties or are out of favor. There can be no
assurance that the market factors which caused these relatively low prices and
high yields will change.
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 be based on the amount paid to you, net of the
deferred sales charge and the charge for organizational expenses.
Accordingly, you should not increase the tax basis in your units by these
sales charges and expenses.
Generally, dividends and any gains will be subject to tax each year. Capital
gains, if any, on assets held over a year will be taxed up to the maximum
federal tax rate of 28%. However, on rollovers of future Portfolios, if
available, investors will defer recognition of gains and losses on stocks that
are contributed in kind to the new Portfolio. Investors may also be eligible
for a 20% maximum federal tax rate on gains from those stocks when they are
sold.
Defining Your Costs
First-time investors pay an initial sales charge of about 1% when they buy.
All investors pay a deferred sales charge of $17.50 per 1,000 units, about
1.75%, deducted over the last ten months of the Portfolio.
If you sell your units before termination, the remaining balance of your
deferred sales charge will be deducted, along with the estimated costs of
selling Portfolio securities from the proceeds you receive. If you roll over
to a successor Portfolio, if available, the initial charge will be waived.
You will only pay the deferred sales charge and operating expenses.
As a % of Public Amount Per 1,000
Offering Price Units
Initial Sales Charge 1.00% $10.00
Deferred Sales Charge 1.75% $17.50
================================
Maximum Sales Charge 2.75% $27.50
Estimated Annual Operating 0.18% $1.88
Expenses (as a % of net assets)
Volume Purchase Discounts
For larger purchases, the overall sales charges are reduced to put more of
your investment dollars to work for you.
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Amount Purchased Total Sales Charge as a % of Public
Offering Price
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Less than $50,000 2.75%
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$50,000 to $99,999 2.50%
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$100,000 to $249,999 2.00%
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$250,000 to $999,999 1.75%
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$1,000,000 or more 1.00%
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Don't Delay
Call your financial professional for a free prospectus containing more complete
information, including all charges and expenses. Read the prospectus carefully
before you invest.
Additional Select Ten Portfolios containing the then-highest dividend-yielding
stocks may be offered in the future. Information contained herein is subject
to amendment. A registration statement relating to the securities of the next
Portfolio has been filed with the Securities and Exchange Commission. The
securities of that Portfolio 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 these 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 such state.
[Recycling logo] Printed on Recycled Paper
11342BR-3/98
[ML logo] 1998 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
[SIDE JACKET]
Other Select Ten Portfolios
Hong Kong Portfolio
(Hang Seng Index)
Japan Portfolio
(Nikkei Index)
United Kingdom Portfolio
(Financial Times Index)
Other Select Series
Select Growth Portfolio
Select S&P Industrial Portfolio
Select S&P Intrinsic Value Portfolio
Select S&P Industry Turnaround Portfolio
Equity Investor Funds Concept Series
Premier American Portfolio
Premier World Portfolio
Real Estate Income Fund 2
Tele o Global Trust 3
Equity Investor Funds Index Series
S&P 500 Index Trust 2
S&P MidCap Index Trust
Other Defined Asset Funds
Corporate Income Funds
Government Securities Income Funds
International Bond Funds
Municipal Investment Trusts
