IRA Ideal!
DEFINED ASSET FUNDS[sm]
Select Ten Portfolio
1998
Series 2
A Defined
Strategy For
Total Return
Merrill Lynch
[LOGO]
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SELECTING INVESTMENTS FOR YOUR PORTFOLIO CAN BE
COMPLICATED -- UNLESS YOU HAVE A STRATEGY
The Select Ten Strategy
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The Portfolio seeks total return by holding the ten highest dividend-yielding
stocks of the Dow Jones Industrial Average (DJIA)(1) 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 ten 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 potentially more consistent results.
It's Convenient
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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.
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(1) 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..
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Select Ten Portfolio 1998 Series 2 (2)
Name of Issuer Ticker Current
Symbol Dividend Yield(3)
1. Philip Morris Companies, Inc. MO 4.25%
2. General Motors Corporation GM 2.92
3. Chevron Corporation CHV 2.82
4. J.P. Morgan & Company, Inc. JPM 2.81
5. Eastman Kodak Company EK 2.39
6. Minnesota Mining & Manufacturing Company MMM 2.32
7. AT&T Corporation T 2.17
8. Exxon Corporation XON 2.17
9. International Paper Company IP 1.90
10. Du Pont(E.I.)De Nemours & Company DD 1.86
The Portfolio does not reflect the research opinions or any buy or sell
recommendations of any of the Sponsors.
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(2) Initial date of deposit - May 4, 1998
(3) 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 May 1,
1998. There can be no assurance that future dividends, if any, will be
maintained at the indicated rates.
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Past Performance of Prior Select Ten Portfolios
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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.
Series From Inception Most Recently
Through 3/31/98 Completed Portfolio
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Inception Return Period Return
- --------- ------ ------ ------
5/17/91 Series B 17.74% 5/20/96- Series B 27.54%
6/27/97
1/3/92 Series A 17.21% 1/27/97- Series A 18.90%
2/27/98
9/1/92 Series C 21.33% 9/17/96- Series C 28.52%
10/24/97
7/22/96 Series 3 29.77% 7/22/96- Series 3 33.68%
8/29/97
11/1/96 Series 5 24.43%
11/1/96- Series 5 25.85%
1/2/97 Series J 18.68% 12/12/97
2/25/97 Series 1 14.07% 1/2/97- Series J 12.87%
1/30/98
2/25/97- Series 1 19.38%
3/27/98
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 the
former figures reflect a reduced sales charge on rollovers and different
performance periods, and Portfolios may not be fully invested at all times.
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The Dow Jones Industrial Average
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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. The
current companies are:
Allied Signal
Aluminum Co. of America
American Express
AT&T
Boeing
Caterpillar
Chevron SELECT TEN PORTFOLIO
Coca-Cola DJIA
Du Pont [LOGO]
Eastman Kodak
Exxon
General Electric
General Motors
Goodyear
Hewlett-Packard
IBM
International Paper
Johnson & Johnson
J.P. Morgan & Co.
McDonald's
Merck
Minnesota Mining & Manufacturing (3M)
Philip Morris
Procter & Gamble
Sears Roebuck & Co.
Travelers Group
Union Carbide
United Technologies
Wal-Mart Stores
Walt Disney
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[A mountain chart, captioned "Hypothetical Growth of $10,000 invested 1/1/73
Through 3/31/98," compares the cumulative annual performance from 1973 through
3/31/98 of the Strategy (ochre), the DJIA (pink) and the S&P 500 Index (blue).
An ochre box in the upper left quadrant indicates the components of the Strategy
performance section of the chart. The horizontal or (Y) axis compares the
cumulative annual performance by YEAR from 1973 through 3/31/98. The vertical or
(X) axis reflects DOLLAR AMOUNT value for each index from 1973 ending 3/31/98.
The initial value of each investment is $10,000. Throughout the period from 1973
through March 31, 1998, increases in each investment build towards the right
vertical or (X) axis. At the end of this period, the right vertical or (X) axis,
reflects the ending value of the STRATEGY ($463,801), the ending value of the
DJIA ($237,538) and the ending value of the S&P 500 Index ($234,178).]
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
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Strategy returns are net of sales charges and expenses.4
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<TABLE>
Year Strategy DJIA S&P 500 Year Strategy DJIA S&P 500
Index Index
<S> <C> <C> <C> <C> <C> <C> <C>
1973 -4.08 -13.12 -14.66 1986 32.96 26.91 18.37
1974 -2.40 -23.14 -26.47 1987 5.06 6.02 5.67
1975 55.65 44.40 36.92 1988 22.44 15.95 16.58
1976 33.25 22.72 23.53 1989 25.65 31.71 31.11
1977 -2.90 -12.71 -7.19 1990 -10.14 -0.57 -3.20
1978 -1.91 2.69 6.39 1991 31.81 23.93 30.51
1979 10.48 10.52 18.02 1992 6.44 7.34 7.67
1980 24.69 21.41 31.50 1993 25.30 16.72 9.97
1981 5.51 -3.40 -4.83 1994 1.95 4.95 1.30
1982 23.78 25.79 20.26 1995 34.97 36.48 37.10
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(4) Net of Portfolio sales charges (2.75% for the first year, 1.75% for
each subsequent year) and estimated expenses.
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
1983 36.93 25.68 22.27 1996 26.34 28.57 22.69
1984 5.41 1.06 5.95 1997 19.92 24.78 33.10
1985 27.00 32.78 31.43 3/31/98 7.44 11.72 13.92
Average 16.41% 13.37% 13.30%
</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
Strategy 26.61% 20.98% 17.52% 18.57% 16.89% 16.25%
DJIA 29.85% 21.81% 18.41% 18.21% 16.33% 13.01%
S&P 500 30.82% 20.06% 17.89% 17.37% 16.41% 12.85%
Index
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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Defining Your Risks
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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 who can assume the risks associated
with equity investments. It may not be appropriate for those seeking capital
preservation. U.S. equity markets have been at historically high levels and no
assurance can be given that these levels will continue.
o There can be no assurance that the Portfolio will meet its objective.
o The value of your investment will fluctuate with the prices of the underlying
stocks. There can be no assurance that dividend rates or stock prices will be
maintained over the life of the portfolio.
o These stocks may have higher yields because they or their industries are
experiencing financial difficulties or are out of favor because of weak
performance, poor earnings forecast, negative publicity or
litigation/legislation. There can be no assurance that the market factors which
caused these relatively low prices and high yields will change.
Tax Reporting
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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
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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.
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As a % of Public Offering Amount per
Price 1,000 Units
Initial Sales Charge 1.00% $10.00
Deferred Sales Charge 1.75% $17.50
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Maximum Sales Charge 2.75% $27.50
Estimated Annual 0.186% $1.84
Operating Expenses (as a
% of net assets)
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.
Volume Purchase Discounts
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For larger purchases, the overall sales charges are reduced to put more of your
investment dollars to work for you.
Total Sales Charge
as a % of
Amount Purchased Public Offering Price
Less than $50,000 2.75%
$50,000 to $99,999 2.50%
$100,000 to $249,999 2.00%
$250,000 to $999,999 1.75%
$1,000,000 or more 1.00%
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Other Select Ten Portfolios
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Hong Kong Portfolio (Hang Seng Index)
Japan Portfolio (Nikkei Index)
United Kingdom Portfolio (Financial Times Index)
Other Select Series
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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
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Premier American Portfolio
Premier World Portfolio
Real Estate Income Fund 2
Tele-Global Trust 3
Equity Investor Funds Index Series
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S&P 500 Index Trust 2
S&P MidCap Index Trust
Other Defined Asset Funds
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Corporate Income Funds
Government Securities Income Funds
International Bond Funds
Municipal Investment Trusts
Don't Delay.
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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
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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.
11342BR-5/98
(C) 1998 Merrill Lynch, Pierce, Fenner & Smith Incorporated, Member SIPC.
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