IRA Ideal!
Defined
Asset Funds
The Select
S&P Industrial
Portfolio
1998 Series
For Dividends . . .
For Capital Appreciation . . .
For Total Return . . .
[ML logo] Merrill Lynch
If your goal is total return,
choosing appropriate stocks
can be challenging.
Defined Asset Funds[SM] can help.
The Portfolio
The Defined Asset Funds[SM] Select S&P Industrial Portfolio is a sensible and
straightforward approach for seeking total return. The Portfolio follows a
contrarian strategy by selecting 15 stocks from the S&P Industrial Index(*)
that have high dividend yields. These stocks are selected to provide a
combination of value, capital appreciation potential and current dividend
income.
The Selection Process
The Select S&P Industrial Portfolio looks for potential values in the equity
market by investing in leading companies in the S&P Industrial Index that may
be currently out of favor. We do this by employing a disciplined four-part
screening process:
1. Defining the Universe: We begin with the S&P Industrial Index, and remove
any stocks that are in the Dow Jones Industrial Average(*) (DJIA).
2. Quality Screen: Only stocks that are ranked A+ or A by Standard & Poor's
are included.
3. Market Capitalization: The remaining stocks are ranked by their market
capitalizations from highest to lowest, and the lowest 25% are eliminated.
4. Highest Dividend Yield: The remaining stocks are ranked according to
dividend yield. The 15 highest-yielding stocks are selected for the Portfolio.
The Defined Asset Funds Select Strategy
Like each Portfolio in the Defined Asset Funds Select Series, the Select S&P
Industrial Portfolio employs a "buy and hold" style of investing for a set
period of time, following a disciplined investment strategy--in this case, one
year. Each year, the screening process is reapplied and a new Portfolio is
selected. You can reinvest in the new Portfolio, if available, or you can
redeem your investment. The research is done for you. There are no buy or
sell decisions to make. It's that straightforward.
Although the Select S&P Industrial Portfolio is a one-year investment, we
recommend staying with the Strategy for at least three to five years.
Hypothetical Results
We analyzed the hypothetical returns of $10,000 invested over the last 25
years in the Strategy (not any Portfolio) compared to the DJIA, the S&P 500
Index(*) and the S&P Industrial Index. 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 these years.
Hypothetical Past Performance of the Strategy (not any Portfolio)
Growth of $10,000 invested in 1973 through 12/31/97
[A mountain chart compares the cumulative annual performance from 1973
through 12/31/97 of the Strategy [1] (ochre), the Dow Jones Industrial
Average (DJIA) (pink), the S&P 500 Index (blue) 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 ("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 value 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 ($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).]
There can be no assurance that any Portfolio will outperform these indices.
Returns shown represent price changes plus dividends distributed (reinvested at
each year end in chart and averages) and do not reflect commissions or taxes.
Portfolio performance will differ from the Strategy performance 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.
* "Standard & Poor's," "S&P" and "S&P 500" are trademarks of The McGraw-
Hill Companies 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, Incorporated.
(1) Net of Portfolio sales charges (2.75% for the first year, 1.75% for each
subsequent year) and estimated expenses.
Annual Total Returns
Year Strategy(1) DJIA S&P 500 S&P
Index Industrial
Index
1973 -19.64% -13.12% -14.66% -14.61%
1974 -5.14 -23.14 -26.47 -26.54
1975 40.21 44.40 36.92 36.78
1976 30.55 22.72 23.53 22.59
1977 -6.32 -12.71 -7.19 -8.20
1978 6.06 2.69 6.39 7.50
1979 26.20 10.52 18.02 18.40
1980 18.06 21.41 31.50 32.98
1981 7.66 -3.40 -4.83 -6.69
1982 25.61 25.79 20.26 20.14
1983 24.47 25.68 22.27 22.79
1984 12.24 1.06 5.95 4.09
1985 29.66 32.78 31.43 30.08
1986 28.46 26.91 18.37 18.54
1987 2.55 6.02 5.67 9.13
1988 41.58 15.95 16.58 15.80
1989 35.01 31.71 31.11 29.30
1990 1.02 -0.57 -3.20 -0.84
1991 26.75 23.93 30.51 30.39
1992 11.38 7.34 7.67 5.63
1993 2.31 16.72 9.97 8.90
1994 11.30 4.95 1.30 3.75
1995 36.27 36.48 37.10 34.26
1996 12.12 28.57 22.69 22.70
1997 32.95 24.78 33.10 30.80
Average 16.13% 13.01% 12.85% 12.64%
A History of
Tracking Quality:
Standard & Poor's
Ranking System
For decades, the Standard & Poor's Earnings and Dividend Rankings have been
helping investors and financial professionals to assess a stock's history of
quality.
The Ranking System primarily reflects Standard & Poor's appraisal of a stock's
past growth and stability of earnings and dividends. These Rankings should not
be confused with Ratings, which are published separately by Standard & Poor's
and pertain to perceived credit worthiness of a company's bonds and other debt.
Standard & Poor's determines the relative quality of stocks using a
computerized ranking system, based on per-share earnings and dividends records
for the most recent ten years. Standard & Poor's also looks at a company's
products, industry position, corporate resources and financial policy. It
then assigns a symbol to each stock, which ranges from A+ for the most highly
esteemed stocks and D for those stocks which Standard & Poor's considers to be
the most speculative.
About Standard & Poor's
STANDARD & POOR'S is a leading financial information, analysis and investment
research company. Since 1860, it has provided investors and financial
institutions with financial research and market data. Its most notable
benchmark, the S&P 500 Stock Composite Index, features utility, financial,
transportation and industrial stocks. The S&P Industrial Index, a sub-set of
the S&P 500, includes only industrial stocks.
Defining Your Cost
Low Initial Sales Charge/Reduced Charge for Rollovers
First-time investors pay a sales charge of approximately 1% when they buy.
Deferring sales charges keeps more of your money invested. All investors pay a
deferred sales charge of 1.75% per 1,000 units, deducted in each of the last
ten months of the Portfolio ($17.50 total).
Amount Per As a % of
1,000 Units Public
Offering Price
Initial Sales Charge $10.00 1.00%
Deferred Sales Charge $17.50 1.75%
==================================
Maximum Sales Charge $27.50 2.75%
Estimated Annual Operating Expenses
(based on $1,000 offering price) $2.50 0.25%
If you sell before termination, the remaining deferred sales charges are
deducted, along with the estimated cost of selling Portfolio stocks. If you
roll over into a successor Portfolio, if available, the initial charge is
waived. You only pay the $17.50 deferred fee and operating expenses for that
Portfolio.
Defining Your Risks
The Select S&P Industrial Portfolio is designed for investors able and willing
to assume the risks generally associated with equity investments, and may not
be appropriate for those seeking preservation of capital or high current
income. The value of the investment will fluctuate with the value 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 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%. However, on rollovers to future series
(if available), investors will defer recognition of gains and losses on stocks
that are contributed in kind to the new series (and may be eligible for a 20%
maximum federal tax rate on gains from stocks that are sold).
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 sales charges and expenses. Please read the
prospectus carefully before investing.
Information contained herein is subject to amendment. A registration statement
relating to the next Series of the Select S&P Industrial Portfolio 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 brochure shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of
those 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 any such state.
[Recycling logo] Printed on Recycled Paper 11578SJ-1/98
[Copyright logo] 1998 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
