IRA Ideal!
Defined Asset Funds[SM]
The Select S&P Industrial Portfolio
1998 Series B
Take indexing to another level. . .
[LOGO] Merrill Lynch
Indexing -- it's a strategy to mirror the returns of major indices. Why not
take a step beyond?
The S&P Industrial Portfolio takes indexing to another level.
Instead of simply replicating an index, the Select S&P Industrial Strategy
attempts to single out stocks within the index for a combination of value,
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* with high dividend yields and potential
value.
The Strategy
Like most Portfolios in the Select Series, the Select S&P Industrial Portfolio
employs a "buy and hold" style of investing which follows a disciplined
strategy. 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.
Select S&P Industrial Portfolio -- 1998 Series B+
Current
Name of Issuer Ticker Symbol Dividend Yield(++)
-------------- ------------- ------------------
1. GENUINE PARTS COMPANY GPC 2.69%
2. ALLTEL CORPORATION AT 2.61%
3. ROYAL DUTCH PETROLEUM COMPANY Section RD 2.58%
4. ANHEUSER-BUSCH COMPANIES, INC. BUD 2.19%
5. HEINZ (H.J.) COMPANY HNZ 2.15%
6. SBC COMMUNICATIONS, INC. SBC 2.12%
7. KELLOGG COMPANY K 2.06%
8. MAY DEPARTMENT STORES COMPANY MAY 2.05%
9. CONAGRA, INC. CAG 2.00%
10. AMERICAN HOME PRODUCTS CORPORATION AHP 1.90%
11. EMERSON ELECTRIC COMPANY EMR 1.80%
12. PITNEY BOWES, INC. PBI 1.77%
13. WINN-DIXIE STORES, INC. WIN 1.75%
14. BEST FOODS, INC. BFO 1.56%
15. TEXTRON, INC. TXT 1.50%
The Portfolio does not reflect the research opinions or any buy or sell
recommendations of any of the Sponsors or Standard & Poor's.
+ Initial date of deposit -- March 23, 1998
++ Current dividend yield for each stock was calculated by annualizing the
last monthly, quarterly or semi-annual ordinary dividend received on that
stock and dividing the result by its market value as of the close of trading
on March 20, 1998. There can be no assurance that future dividends, if any,
will be maintained at the indicated rates.
Section This issuer is located in The Netherlands. The current semi-annual
dividend per share will be subject to withholding taxes of The Netherlands.
Past Performance of the Prior Select S&P Industrial Portfolio
The chart below shows the average annual total return for Series A
Most Recently Completed Portfolio
Period Return
1/22/97-3/13/98 Series A 31.43%
Past performance is no guarantee of future results. Average annual total
return represents price changes plus dividends reinvested, divided by the
initial public offering price, and reflects maximum sales charges and expenses.
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 through a disciplined four-part screening
process:
1. Defining the Universe: We begin with the S&P Industrial Index, a sub-set
of the S&P 500 Index(*), which includes only industrial stocks. Defined
Asset Funds then removes any stocks that are a part of the Dow Jones
Industrial Average(*) (DJIA).
2. Quality Screen: We include only stocks that are ranked A+ or A by Standard
& Poor's(*). Standard & Poor's determines these stock rankings 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 highest ranked 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: We then rank the stocks by their market
capitalization from highest to lowest, and eliminate the lowest 25%. This
allows the Portfolio to avoid smaller, less liquid issues.
4. Highest Dividend Yield: Finally, we rank the remaining stocks according to
dividend yield which identifies companies whose prices may have declined.
From that group, we select the 15 highest-yielding stocks for the
Portfolio.
*"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, Inc.
Avoid the teachings of speculators whose judgments are not confirmed by
experience.
LEONARDO DA VINCI
Hypothetical Growth of $10,000 invested 1/1/73 through 12/31/97
[A mountain chart, captioned "Hypothetical Growth of $10,000 invested
1/1/73 through 12/31/97 " compares the cumulative annual performance from
1973 through 12/31/97 of the Strategy (ochre), the Dow Jones Industrial
Average (DJIA) (pink), the S&P 500 Index (purple) and the S&P Industrial Index
(green). 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
12/31/97. The vertical or (X) axis reflects DOLLAR AMOUNT value for each index
from 1973 ending 12/31/97. The initial value of each investment is $10,000.
Throughout the period from 1973 through December 31, 1997, 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 ($420,296), the ending value of the DJIA ($212,619), the ending value
of the S&P 500 Index ($205,563) and the ending value of the S&P Industrial
Index ($196,165).]
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 10, the S&P 500 Index in 10, and the S&P
Industrial Index in 8 of the last 25 years. There can be no assurance that any
Portfolio will outperform these indices.
Annual Total Returns
<TABLE>
<CAPTION>
S&P S&P
S&P 500 Industrial S&P 500 Industrial
Year Strategy* DJIA Index Index Year Strategy* DJIA Index Index
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1973 -19.64% -13.12% -14.66% -14.61% 1986 28.46% 26.91 18.37 18.54
1974 -5.14 -23.14 -26.47 -26.54 1987 2.55 6.02 5.67 9.13
1975 40.21 44.40 36.92 36.78 1988 41.58 15.95 16.58 15.80
1976 30.55 22.72 23.53 22.59 1989 35.01 31.71 31.11 29.30
1977 -6.32 -12.71 -7.19 -8.20 1990 1.02 -0.57 -3.20 -0.84
1978 6.06 2.69 6.39 7.50 1991 26.75 23.93 30.51 30.39
1979 26.20 10.52 18.02 18.40 1992 11.38 7.34 7.67 5.63
1980 18.06 21.41 31.50 32.98 1993 2.31 16.72 9.97 8.90
1981 7.66 -3.40 -4.83 -6.69 1994 11.30 4.95 1.30 3.75
1982 25.61 25.79 20.26 20.14 1995 36.27 36.48 37.10 34.26
1983 24.47 25.68 22.27 22.79 1996 12.12 28.57 22.69 22.70
1984 12.24 1.06 5.95 4.09 1997 32.95 24.78 33.10 30.80
1985 29.66 32.78 31.43 30.08 Average 16.13% 13.01% 12.85% 12.64%
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
For periods ending 12/31/97 3 year 5 year 10 year 15 year 20 year 25 year
<S> <C> <C> <C> <C> <C> <C>
Strategy 26.34% 18.03% 20.13% 19.75% 18.89% 16.13%
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%
S&P Industrial Index 29.16% 19.48% 17.41% 17.12% 16.25% 12.64%
</TABLE>
The results shown above 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.
- ----------
* 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, and may not be appropriate for those seeking
capital preservation or high current income. 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.
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 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 Offering Amount per
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 Operating Expenses
(as a % of net assets) .231% $2.29
- ---------------------------------------------------------------------------
Volume Purchase Discounts
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 the Public
Amount Purchased 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%
- ---------------------------------------------------------------
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 you invest.
Other Select Series
Select Growth Portfolio
Select S&P Industry Turnaround Portfolio
Select S&P Intrinsic Value Portfolio
Select Ten Portfolios
Select Ten Portfolio (DJIA)
Hong Kong Portfolio (Hang Seng Index)
Japan Portfolio (Nikkei Index)
United Kingdom Portfolio (Financial Times Index)
Equity Investor Funds Concept Series
Premier American Portfolio
Premier World Portfolio
Real Estate Income Fund 2
Tele-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 Investments Trusts
Additional Select S&P Industrial 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
stocks of the next Portfolio has been filed with the Securities and Exchange
Commission. The stocks 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 stocks 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.
11579BR - 3/98
[Copyright]1998 Merrill Lynch, Pierce, Fenner & Smith Incorporated, Member
SIPC.
