An Ideal IRA Choice!
Defined Asset Funds [SM]
Select Ten Portfolio
Sometimes, simple strategies can be the most effective.
[ML logo] Merrill Lynch
Our Select Ten Portfolio -- it's simple.
Maybe you've heard of "The Dow Ten" or even "The Dogs of the Dow." However
you refer to it, this contrarian strategy of investing each year in the ten
highest dividend-yielding stocks of the Dow Jones Industrial Average [*]
(DJIA) looks for equity value by investing in established companies whose
prices may be depressed. After all, to a contrarian investor, bad news can be
good news, and unfavorable developments may create special opportunities.
The Select Ten Portfolio
The Select Ten Portfolio employs a simple strategy of investing in the ten
highest dividend-yielding stocks in the DJIA, and holding them for about one
year. When a Portfolio ends, you may choose to reinvest your proceeds into
the next Portfolio of the then-current strategy, if available, or you can
redeem your investment. Although this is a one-year investment, we recommend
you stay with the Strategy for a minimum of three to five years.
Past Performance of Prior Select Ten Portfolios
The chart below shows average annual total returns for the following Series,
which assume an annual "rollover" into the next Portfolio. We've also included
returns for the most recently completed Portfolio of each Series:
Series From Inception through 12/31/97 Most Recently Completed Portfolio
Inception Return Period Return
5/17/91 Series B 16.90% 5/20/96-6/27/97 27.54%
1/3/92 Series A 16.58% 1/18/96-2/28/97 31.27%
9/1/92 Series C 20.21% 9/17/96-10/24/97 28.52%
7/22/96 Series 3 27.46% 7/22/96-8/29/97 33.68%
11/1/96 Series 5 21.11% 11/1/96-12/12/97 25.85%
Past performance is no guarantee of future results. Average annual total
returns represent fair price changes plus dividends reinvested, divided by the
initial public offering price, and reflect maximum sales charges and expenses.
Returns for Series From Inception and Most Recently Completed Portfolio will
differ because Series From Inception figures reflect a reduced sales charge
for consecutive rollovers. Also, the returns will differ because the
performance period of the Most Recently Completed Portfolio is different.
Returns for Series From Inception will differ from Most Recently Completed
Portfolio because the former assume annual rollovers and reflect reduced sales
charges on rollovers, and the performance periods differ.
Hypothetical Results
We analyzed the Strategy of investing in the ten highest dividend-yielding
stocks to see how it compared to the DJIA and the S&P 500 Index[*]. 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 if sales charges and expenses were
deducted and would have produced a loss in 5 of those years. But, as you can
see from the chart below, the results are compelling.
Defining Your Risks
Select Ten Portfolios are designed for investors willing and able to assume the
risks generally associated with equity investments, and may not be appropriate
for those seeking preservation of capital. The value of the investment will
fluctuate with the prices of the underlying stocks and the price when you sell
your units may be more or less than their cost. Equity markets have been at
historically high levels, and no assurance can be given that these levels will
continue. There can be no assurance that dividend rates will be maintained or
that the stock prices will not decrease. 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%.
[Insert graph]
[A mountain chart compares the cumulative annual performance from 1973
through 12/31/97 of the Strategy (blue), the 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 1973 through 12/31/97. The vertical (Y) axis
reflects the dollar amount of performance for each index from 1973 through
12/31/97. The initial value of each investment is $10,000. Throughout the
aforementioned period, 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 DJIA ($212,619), and the S&P 500 Index ($205,563).]
There can be no assurance that any Portfolio will outperform either index.
Results shown represent price changes plus dividends reinvested at each year
end, and do not reflect commissions or taxes. Only Strategy performance
reflects the deduction of Portfolio sales charges (2.75% for the first year,
1.75% for each subsequent year) and estimates expenses (about 0.21% a year).
Portfolio performance will differ from the Strategy 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. For a more complete discussion
of Strategy and Portfolio performance, please speak to your financial
professional.
- ------------
* 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 stock, and has neither reviewed nor approved any
information in the prospectus relating to the Portfolio. "S&P 500" is a
trademark of Standard & Poor's Corporation.
Act Now!
You can get started with the Select Ten Strategy right now with as little as
$250. Simply return the attached coupon to receive a free copy of our
brochure. Ask your financial professional for a free prospectus containing
more complete information on the Select Ten Portfolio, including all sales
charges and expenses. Be sure to read the prospectus carefully before you
invest.
Yes! I would like more information on the Select Ten DJIA Portfolio from
Defined Asset Funds.
15360NI-1/98
[Copyright logo] 1998 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
