IRA Ideal!
Defined Asset Funds[SM]
Select Ten Portfolio
1998
Series 3
A Defined
Strategy for
Total Return
[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 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
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.
- ------------
(*) 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.
Select Ten Portfolio-- 1998 Series 3(1)
Ticker Current Dividend
Name of Issuer Symbol Yield(2)
1. Philip Morris Companies, Inc. MO 3.65%
2. J.P. Morgan & Company, Inc. JPM 3.02
3. Chevron Corporation CHV 2.95
4. Minnesota Mining & Manufacturing MMM 2.94
Company
5. General Motors Corporation GM 2.77
6. Caterpillar Inc. CAT 2.47
7. Exxon Corporation XON 2.34
8. Du Pont (E.I.) De Nemours & Company DD 2.26
9. International Paper Company IP 2.24
10. AT&T Corporation T 2.18
The Portfolio does not reflect the research opinions or any buy or sell
recommendations of any of the Sponsors.
(1) Initial date of deposit -- August 3, 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 July 31, 1998. There can be no assurance that future
dividends, if any, will 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.
Series From Inception Through 6/30/98 Most Recently Completed Portfolio
5/17/91 Series B 16.24% 5/27/97-6/30/98 Series B 11.29%
1/3/92 Series A 16.33 1/27/97-2/27/98 Series A 18.90
9/1/92 Series C 20.21 9/17/96-10/24/97 Series C 28.52
7/22/96 Series 3 24.27 7/22/96-8/29/97 Series 3 33.68
11/1/96 Series 5 19.25 11/1/96-12/12/97 Series 5 25.85
1/2/97 Series J 14.26 1/2/97-1/30/98 Series J 12.87
2/25/97 Series 1 10.26 2/25/97-3/27/98 Series 1 19.38
4/28/97 Series 2 16.77 4/28/97-6/5/98 Series 2 24.49
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.
[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.
The current companies are:
Allied Signal
Aluminum Co. of America
American Express
AT&T
Boeing
Caterpillar
Chevron
Coca-Cola
Du Pont
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
Hypothetical Past Performance of the Strategy (not any Portfolio)
Growth of $10,000 Invested 1/1/73 Through 6/30/98
[A mountain chart compares the cumulative annual performance from 1/1/73
through 6/30/98 of the Strategy(3) (ochre), the DJIA (pink) and the S&P
500 Index(*) (purple). An ochre 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 1998. The vertical (Y)
axis reflects the dollar amount value for each index from 1/1/73 through
6/30/98. The initial value of each investment is $10,000. Throughout the
period from 1/1/73 through 6/30/98, increases in each investment build
towards the Y axis. At the end of this period, the Y axis reflects the
ending value of the Strategy ($458,377), the ending value of the DJIA
($242,620) and the ending value of the S&P 500 Index ($241,866).
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.
<TABLE>
<CAPTION>
Annual Total Returns
Strategy returns are net of sales charges and expenses(3)
S&P 500 S&P 500
Year Strategy DJIA Index Year Strategy DJIA Index
<S> <C> <C> <C> <C> <C> <C> <C>
1973 -4.08% -13.12% -14.66% 1987 5.06 6.02 5.67
1974 -2.40 -23.14 -26.47 1988 22.44 15.95 16.58
1975 55.65 44.40 36.92 1989 26.65 31.71 31.11
1976 33.25 22.72 23.53 1990 -10.14 -0.57 -3.20
1977 -2.90 -12.71 -7.19 1991 31.81 23.93 30.51
1978 -1.91 2.69 6.39 1992 6.44 7.34 7.67
1979 10.48 10.52 18.02 1993 25.30 16.72 9.97
1980 24.69 21.41 31.50 1994 1.95 4.95 1.30
1981 5.51 -3.40 -4.83 1995 34.97 36.48 37.10
1982 23.78 25.79 20.26 1996 26.34 28.57 22.69
1983 36.93 25.68 22.27 1997 19.92 24.78 33.10
1984 5.41 1.06 5.95 6/30/98 6.18 14.11 17.66
1985 27.00 32.78 31.43
1986 32.96 26.91 18.37 Average 16.18% 13.32% 13.31%
</TABLE>
Average Annual Total Returns
For periods ending 12/31/97
<TABLE>
3 year 5 year 10 year 15 year 20 year 25 year
<S> <C> <C> <C> <C> <C> <C>
Strategy(3) 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 Index 30.82% 20.06% 17.89% 17.37% 16.41% 12.85%
</TABLE>
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.
- -----------
(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 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 price 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, after the primary offering period, 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 charges.
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 20%. However, on rollovers of future Portfolios, if
available, investors will defer recognition of gains and losses on stocks that
are transferred to the new Portfolio.
Defining Your Costs
First-time investors pay an initial sales charge of about 1% when they buy.
In addition, 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.
As a % of Public Amount Per
Offering Price 1,000 Units
--------------------------------------------------------------------------
Initial Sales Charge 1.00% $10.00
Deferred Sales Charge 1.75% $17.50
===================================
Maximum Sales Charge 2.75% $27.50
Estimated Annual Expenses 0.189% $1.87
(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
For larger purchases, the overall sales charges are reduced to put more of
your investment dollars to work for you.
Amount Total Sales Charge as a % of
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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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.
Defined Asset Funds[SM]
Buy With Knowledge o Hold With Confidence
Other Select Series
United Kingdom Portfolio
(Financial Times Index)
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-Global Trust 4
Utility Portfolio
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
Municipal Investment Trusts
[Recycling logo] Printed on Recycled Paper 11342BR-8/98
[Copyright logo] 1998 Merrill Lynch, Pierce, Fenner & Smith
Incorporated. Member SIPC.
