IRA Ideal!
Defined Asset Funds (SM)
SELECT SERIES
Standard & Poor's
Intrinsic Value Portfolio
1998
SERIES
A
A Value Approach
to Selecting
Mid to Large Cap
Growth Stocks
[LOGO] Merrill Lynch
A Value Approach to
Selecting Mid to Large Cap
Growth Stocks
AT ONE TIME, it was thought that intrinsic value and "book" or liquidation
value were the same. Intrinsic Value, however, looks beyond these
traditional measurements in search of real earnings value. The screening
process asks what is the company's business worth? What is its future
earnings potential? Standard & Poor's(1), our Portfolio Consultant, seeks
by analysis to determine if the current market price justifies the purchase
of a stock. The goal is to identify those stocks whose intrinsic value is
higher than the current market price.
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(1) Standard & Poor's is a trademark of The McGraw-Hill Companies,
Inc. and has been licensed for use by Defined Asset Funds. The Portfolio
is not sponsored, managed, sold or promoted by Standard & Poor's.
Determining Intrinsic Value
Standard & Poor's has developed a proprietary analytical process using a
combination of fundamental and valuation measurements which seeks to
identify stocks with growth potential. This process uses a quantitative
analysis and a series of screens to select the stocks that are eligible for
inclusion in the Intrinsic Value Portfolio.
The Standard & Poor's Intrinsic Value Portfolio
The Portfolio seeks capital appreciation by investing, for about one year, in
stocks believed to have potential for growth based on a combination of
fundamental and valuation measurements. After one year, you may roll your
investment into the new Portfolio, if available. Although this is a one year
investment, we recommend staying with the Strategy for at least three to five
years for more consistent results.
Is this right for you?
This Portfolio is designed for investors who seek potentially higher returns
and are willing and able to withstand above average price volatility
associated with growth stocks.
Value
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Intrinsic Value Portfolio - The Screening Process
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Free Cash Flow greater than $20 Companies with High Free Cash Flow
million Free Cash Flow of more than $20
Compustat Database:10,400 Stocks million for the last year. This measure
is calculated by adding a company's
net income, depreciation and
amortization, and then subtracting its
capital expenditures. This is intended
to identify companies with high
positive cash flows.
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Net Margins of 15% or more Profitability
1,313 Stocks Net Profit Margins of 15% or more for
the last year. This represents net
income, divided by sales. It measures
a company's franchise value.
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Return on equity of 20% or more Return on Equity of more than 20%
235 Stocks for the last year.
Return on equity is net income as a
percentage of common equity. This is
intended to measure how efficiently
the company is using its capital.
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Market Acceptance Market Acceptance
123 Stocks
Good value of reinvested earnings.
To pass this screen, growth in market
capitalization must exceed the growth
in retained earnings of the company
over the last five years. This screen
selects companies that have been able
to add more than a dollar of market
value for every additional dollar of
earnings retained. This measures
market acceptance and momentum.
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Eliminate Overpriced Stocks Eliminate Overpriced Stocks
59 Stocks
Stock trades below Intrinsic Value.
Only stocks whose current price is
below the present value of their
estimated free cash flow, as calculated
by Standard & Poor's, will be
included.
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Defined Funds Liquidity Screen Liquidity
Intrinsic Value Portfolio
32 Stocks Defined Asset Funds reviews the
remaining stocks for market
capitalization, liquidity and other
factors. Only the stocks that pass all
of the screens are included in the
Intrinsic Value Portfolio.
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<TABLE>
<CAPTION>
SELECT S&P INTRINSIC VALUE PORTFOLIO - 1998 SERIES A
COMPANY SYMBOL DESCRIPTION % OF
PORTFOLIO
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<S> <C> <C> <C>
ELECTRONIC COMPONENTS/SEMICONDUCTORS 24%
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Applied Materials, Inc. AMAT Develops, manufactures, markets and
services wafer fabrication equipment
and related spare parts for the
semiconductor industry worldwide.
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GenRad, Inc. GEN Manufactures and sells computer
controlled test and development
equipment. Its products are sold in the
U.S. and Europe.
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Gentex Corporation GNTX Designs, develops, manufactures and
markets products using electro-optic
technology. Its products include smoke
detectors, signaling appliances and
automatic rearview mirrors.
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Intel Corporation INTC Worldwide manufacturer and vendor of
micro-computer components and related
products.
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Linear Technology LLTC Designs, manufactures and markets
Corporation linear integrated circuits for use in
automotive, industrial, multi-media,
satellite and telecommunications
applications.
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Maxim Integrated MXIM Manufactures and sells linear and
Products, Inc. mixed-signal integrated circuits.
Provides key technology for
communications and portable electronic
markets.
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PMC-Sierra, Inc. PMCS A wholly owned subsidiary of Sierra
Semiconductor which provides high
speed internetworking component
solutions. They are headquartered in
Canada.
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Xilinx, Inc. XLNX Largest supplier of programmable logic
devices and computer chips that can be
custom-programmed by the user.
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MEDICAL/HEALTH CARE 16%
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Amgen, Inc. AMGN One of the world's largest bio-
technology companies develops,
manufactures and markets drugs based
on advanced molecular and cellular
biology.
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Bristol-Myers Squibb BMY A leading manufacturer of prescription
Co. and non-prescription drugs, healthcare
products and beauty aids.
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ICN Pharmaceuticals, ICN Manufactures and markets a variety of
Inc. prescription and over-the-counter drugs,
diagnostic products and research
chemicals sold in over 60 countries.
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Lincare Holdings, Inc. LNCR Operating over 260 centers, Lincare
supplies oxygen and other vital
respiratory therapy services to in-home
patients.
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Sofamor Danek Group, SDG Develops, manufactures and markets
Inc. devices, instruments, computer-assisted
surgery products and biomaterials used
in the treatment of spinal and cranial
disorders.
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COMPUTER SOFTWARE 13%
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BMC Software, Inc. BMCS Develops and sells systems software
solutions to help manage databases,
applications and networks.
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Cadence Design CDN Provides software tools and professional
Systems, Inc. services for semiconductor, computer
systems, networking,
telecommunications and consumer
electronics companies.
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Compuware Corporation CPWR With offices across North America and
Europe Compuware provides software
products and services that help
information technology professionals
develop, implement and support their
mainframe and client/server systems.
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Parametric Technology PMTC World leader in developing, marketing
Co. and supporting a large variety of
software products for the automation of
the mechanical design process.
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FINANCIAL SERVICES 9%
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Franklin Resources, Inc. BEN Franklin specializes in mutual fund
operations, insurance products, and also
manages real estate.
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Imperial Credit ICII The diversified company offers a wide
Industries, Inc. variety of financial services and
investment products through its
subsidiaries.
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MGIC Investment MTG One of the leading providers of
Corporation mortgage insurance to lenders.
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TELECOMMUNICATIONS 9%
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BellSouth Corporation BLS Provides telecommunications services
in nine southeastern states. Other
services include directory advertising
and mobile communications.
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Tekelec TKLC Provides diagnostic systems and
network switching solutions that enable
rapid delivery of communication
products and services.
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Tellabs, Inc. TLAB Designs, manufactures, markets and
services data, video and voice signals.
Tellabs sells its products to phone
companies, cable operators,
corporations and government agencies.
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CHEMICAL-DIVERSIFIED 4%
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Hercules, Inc. HPC Manufactures and produces specialty
chemicals (flavors and fragrances),
electronic aerospace equipment,
polypropylene films and carbon fibers.
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INSURANCE 4%
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Exel Limited(2) XL Provides property and casualty
insurance to industrial, commercial and
professional service firms and other
enterprises on a worldwide basis.
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COMPUTER MEMORY DEVICES 3%
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EMC Corporation EMC Develops and markets new computer
memory devices for information storage
and retrieval.
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COSMETICS/TOILETRIES 3%
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International Flavors & IFF Produces flavors and fragrances that are
Fragrances, Inc. sold worldwide to manufacturers of
soap, cosmetics, perfumes, soft drinks
and other products.
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MULTIMEDIA 3%
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Gannett Co., Inc. GCI A national news information company.
Gannett publishes 87 daily newspapers
including USA Today, as well as 20
major market television stations and a
cable division serving five states.
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NETWORKING PRODUCTS 3%
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Cisco Systems, Inc. CSCO Top supplier of multi-protocol
internetworking systems.
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OIL & GAS 3%
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Tidewater, Inc. TDW Tidewater supplies support services to
the oil and gas industry both
domestically and internationally. It's
fleet of ships tows mobile drilling rigs
and supports pipe laying and drilling
activities.
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PRINTING/RELATED PRODUCTS 3%
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Zebra Technologies ZBRA A globally distributed manufacturer of
Corporation thermal transfer demand label printers
used in bar code applications, related
supplies, and software.
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RECREATION/GOLF 3%
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Callaway Golf Company ELY Largest manufacturer of golf clubs also
produces golf equipment and
accessories.
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(2) This is a Bermuda corporation. The current annual dividends per
share, if any will not be subject to Bermuda withholding tax.
</TABLE>
Past Performance of the Prior Standard & Poor's Intrinsic Value Portfolio
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The chart below shows average annual total returns for the following
Series, which assumes annual "rollovers" into the next Portfolio. We've
also included the returns for the most recently completed Portfolio of the
Series:
Series From Inception through Most Recently Completed
3/31/98 Portfolio
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Inception Return Period Return
11/21/96 Series 21.48% 11/21/96-12/19/97 7.08%
C
Past performance is no guarantee of future results. Average annual total
returns represents 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.
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
generally associated with equity investments with above-average price
volatility.
o The Portfolio consists of 43% technology stocks.
o The Portfolio is not appropriate for investors seeking preservation of
capital or current income.
o U.S. equity markets are at historic highs. There can be no assurance that
these levels will continue, or that the Portfolio or Strategy will meet their
objectives.
o The value of your investment will fluctuate with the prices of the
underlying stocks. There can be no assurance that the stock market prices
will not decrease or that dividend rates will be maintained.
Tax Efficiency
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 to future Portfolios, if available, investors will defer
recognition of gains and losses on stocks that are distributed in kind to
the new Portfolio. Investors may also be eligible for 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 !% when they buy.
All investors pay a deferred sales charge of $17.50 per 1,000 units, about
1.75%, deducted over the last 10 months of the Portfolio.
<TABLE>
<S> <C> <C>
As a % of Public Amount Per 1,000 Units
Offering Price
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Initial Sales Charge 1.00% $10.00
Deferred Sales Charge 1.75% $17.50
============================================
Maximum Sales Charge 2.75% $27.50
Estimated Annual 0.473% $4.68
Operating Expenses
(as a % of net assets)
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If you sell your units before termination, the deferred sales charges are
deducted, along with the estimated costs of selling Portfolio securities. If
you roll over to a successor Portfolio, if available, the initial charge is
waived. You only pay the $17.50 deferred fee 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.
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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.
Units of the next Series are not yet available. Information herein is
subject to amendment. A registration statement relating to these
securities has been filed with the Securities and exchange Commission.
These securities may not be sold nor may offers to buy be accepted prior to
the time the registration statement becomes effective. This document shall
not constitute 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
Buy With Knowledge Hold With Confidence
Other Select Series
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(DJIA)
Select S&P Industrial Portfolio
Select S&P Industry Turnaround Portfolio
Select Growth Portfolio
Hong Kong Portfolio
(Hang Sang 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 Investment Trusts
11571BR-4/98
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