IRA Ideal!
Defined Asset Funds(SM)
The Select S&P Industrial Portfolio
Performance Summary 2nd Quarter o 1998
Take indexing to another level. . .
Salomon Smith Barney
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SELECT S&P INDUSTRIAL PORTFOLIO o 2ND QUARTER PERFORMANCE SUMMARY o 1998
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 potential 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 other Portfolios in the Select Series, the Select S&P Industrial Portfolio
employs a "buy and hold" style of investing following a disciplined strategy.
Each year, we intend to reapply the screening process to select a new
Portfolio. At the end of one year, you can reinvest in the next Portfolio, if
available, at a reduced sales charge, or you can redeem your investment. You
will defer recognition of gains and losses on stocks contributed to successor
portfolios. 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.
Past Performance of Prior Select S&P Industrial Portfolio.
Past Performance is no guarantee of future results.
Series From Inception Through 6/30/98
Inception Return(1)
1/22/97 Series A 20.52%
2/24/97 Series B 20.98%
4/21/97 Series C 29.85%
6/9/97 Series D 17.26%
Most Recently Completed Portfolio
Period Return(1)
1/22/97-3/13/98 Series A 31.43%
2/24/97-4/24/98 Series B 22.96%
4/21/97-5/22/98 Series C 35.59%
(1) Average annual total return represents price changes plus dividends
reinvested, divided by the initial public offering price, and reflects 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.
Hypothetical Past Performance of the Strategy (not any Portfolio)
[INSERT CHART]
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 8, the S&P 500 Index in 9 and S&P
Industrial Index in 8 of the last 25 years. There can be no assurance that any
Portfolio will outperform these indices.
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(2) 26.63% 18.21% 20.34% 19.94% 19.07% 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%
S&P Industrial Index 29.16% 19.48% 17.41% 17.12% 16.25% 12.64%
</TABLE>
The results 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.
(*) "Standard & Poor's," "S&P," "S&P 500" and the "S&P Industrial Index" 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.
(2) Net of Portfolio sales charges (2.75% for the first year, 1.75% for each
subsequent year) and estimated expenses.
Annual Total Returns
S&P S&P
500 Industrial
Year Strategy(2) DJIA Index Index
1973 -20.13% -13.12% -14.66% -14.61%
1974 -5.35 -23.14 -26.47 -26.54
1975 40.63 44.40 36.92 36.78
1976 30.89 22.72 23.53 22.59
1977 -6.53 -12.71 -7.19 -8.20
1978 6.06 2.69 6.39 7.50
1979 26.47 10.52 18.02 18.40
1980 18.23 21.41 31.50 32.98
1981 7.67 -3.40 -4.83 -6.69
1982 25.87 25.79 20.26 20.14
1983 24.72 25.68 22.27 22.79
1984 12.34 1.06 5.95 4.09
1985 29.98 32.78 31.43 30.08
1986 28.78 26.91 18.37 18.54
1987 2.52 6.02 5.67 9.13
1988 42.04 15.95 16.58 15.80
1989 35.40 31.71 31.11 29.30
1990 0.96 -0.57 -3.20 -0.84
1991 27.06 23.93 30.51 30.39
1992 11.50 7.34 7.67 5.63
1993 2.28 16.72 9.97 8.90
1994 11.41 4.95 1.30 3.75
1995 36.68 36.48 37.10 34.26
1996 12.25 28.57 22.69 22.70
1997 33.34 24.78 33.10 30.80
6/30/98 6.64 14.11 17.66 18.72
Average 16.20% 13.32% 13.31% 13.14%
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 Standard & Poor's ranked
A+ or A. 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. From that group, we select the 15
highest-yielding stocks for the Portfolio.
Defined Asset Funds
Buy With Knowledge o Hold With Confidence
Salomon Smith Barney is a service mark of Smith Barney Inc. Smith Barney Inc.
and Salomon Brothers Inc. are affiliated but separately registered broker
dealers under common control of Salomon Smith Barney Holdings Inc. Salomon
Brothers Inc. and Salomon Smith Barney Holdings Inc. have been licensed to use
the Salomon Smith Barney service mark.
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
investors seeking capital preservation or high current income. 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
will be maintained or that stock prices will not decrease.
o These stocks may have higher yields because they or their industries
are experiencing financial difficulties or are out of favor. There
can be no assurance that the market factors which caused these
relatively low prices and high yields will change.
o Generally, dividends (except to a limited extend on rollovers) and
any gains will be subject to tax each year.
Select Now(!)
You can get started with the Select S&P Industrial Portfolio with just $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.
Additional S&P Industrial Portfolios 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.
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