Defined Asset Funds(sm)
Select Ten Portfolio
For your retirement...
Tax-Deferred Accounts
IRA Roth & Traditional
[LOGO] Merrill Lynch
How do you envision your retirement years?
Maybe you'll travel off the beaten path, start a new career or buy a
small business. Or perhaps your vision is sitting in a comfortable home with
your grandchildren playing at your feet.
No matter your idea of retirement, it all starts with this: a
disciplined, long-term plan. The Defined Asset Funds(sm) Select Ten Portfolio
can help.
The Discipline You Want
The Select Ten Portfolio is designed to be a sound choice as part of your
retirement plan. It follows a disciplined strategy for total return by
choosing the ten highest dividend-yielding stocks of the Dow Jones Industrial
Average (DJIA)1 and holding them for about one year (the "Strategy"). The
Portfolio looks for potential values in the equity market by investing in
established companies whose prices may be depressed. At the end of each year,
the Strategy may be reapplied. You can choose to roll your investment into the
next Select Ten Portfolio, if available, at a reduced sales charge, or you can
redeem your investment.
Although each Select Ten Portfolio is a one-year investment, this Strategy is
designed for the long-term. We recommend you stay with the Select Ten Strategy
for at least three to five years for potentially more consistent results.
The Growth Potential You Need
A critical part of retirement planning is determining how much money you need
for the quality of life you want. Another key ingredient to your plan may be
to start saving as early as possible.
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1 The name Dow Jones Industrial Average is the property of Dow Jones
& Company, Inc., which has not participated in the creation of any Select Ten
Portfolio, or the selection of its stocks and is unaffiliated with the
Portfolio.
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The charts that follow show the growth potential of a long-term investment
following the Strategy. Based on hypothetical past performance of the
Strategy, the first chart illustrates what could have happened if, starting at
age 45, you had invested $2,000 each year-the maximum allowable contribution
in one year to all IRAs2 for any individual. The investment shown is for 20
years following the Select Ten Strategy. At age 64, this $40,000 investment
could have grown to $296,519.
The second chart illustrates how the Strategy works hypothetically during
retirement. If you had retired in 1994, it would have been possible to
withdraw $25,000 from your account each year without significantly reducing
your principal. There can be no assurance that the rising stock prices,
reflected in these figures, will continue.
[Graph]
The results shown above represent hypothetical past performance of the
Strategy (not any Portfolio) from 1974 through 1993, and are no guarantee of
future results of any Select Ten Portfolio. Figures reflect reinvestment of
dividends and deduction of Portfolio sales charges (2.75% for the first year,
1.75% each subsequent year) and estimated expenses, but not brokerage
commissions or taxes. Actual Portfolio performance will differ from the
hypothetical illustration above 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.
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2 Roth IRA first available in 1998.
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<TABLE>
Assume at Age 65, You Begin Withdrawing $25,000 Per Year
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Balance
Beginning Withdrawals After Earnings On Year-End
Balance Per Year Withdrawal Balance Value
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<S> <C> <C> <C> <C> <C>
1/1/94 $296,519 $25,000 $271,519 $ 5,756 $277,275
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1/1/95 277,275 $25,000 252,275 87,565 339,840
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1/1/96 339,840 $25,000 314,840 82,394 397,234
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1/1/97 397,234 $25,000 372,234 73,777 446,011
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1/1/98 446,011 $25,000 421,011 36,207 457,218
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1/1/99 457,218 $25,000 432,218 0 432,218(3)
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</TABLE>
Roth Or Traditional IRAs: What's The Difference?
The signing of The Taxpayer Relief Act of 1997 may revolutionize the way
Americans save for retirement. It ushered in the Roth IRA-a powerful new tool
for your tax-sheltered retirement contributions.
Many taxpayers may be eligible for the new Roth IRA. To be eligible, your
modified adjusted gross income must be under $150,000 for married couples
filing jointly, or $95,000 for an individual.
The key difference between a traditional and Roth IRA is that, with a
traditional IRA, contributions may be tax-deductible up front, but you may be
taxed when you withdraw later. With a Roth IRA, while your contributions are
not deductible, your tax savings come when you're ready to make a withdrawal.
Tax-Free Withdrawals
With the Roth IRA, all distributions after age 59 1/2 are completely tax-free
if the Roth has been held for five years. And no matter your age, after five
years investors in a Roth IRA can take a qualified distribution of up to
$10,000 to purchase a first-time home for your-self, spouse, child or other
family member, or to meet higher-education expenses. To determine if the Roth
IRA can work for you, consult your tax advisor.
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3 As of 12/31/98
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The Select Ten Portfolio And Your Roth IRA
While the Roth IRA option has only been available for a short time, imagine
what it could have meant to your IRA savings. The chart below illustrates an
investment in an actual Select Ten Portfolio placed in a Roth IRA, if the Roth
IRA option had been available before 1998. In addition to what you could have
earned on your investment in the Select Ten, your distribution after five
years would have been completely tax-free. That could have been a tax savings
of $3,100, based on a 1998 federal income tax rate of 31% for married
taxpayers with adjusted gross incomes of less than $150,000. Past performance
of the illustrated Select Ten Portfolio is no guarantee of future results.
Actual Select Ten Portfolio Performance, Series A Since Inception, If Invested
In A Roth IRA4
Year Annual Contribution Year-End Value
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1/3/92-1/4/93 $2,000 $ 4,021
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1/4/93-1/5/94 2,000 7,010
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1/5/94-1/9/95 2,000 8,926
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1/9/95-1/18/96 2,000 13,739
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1/18/96-1/27/97 2,000 20,050
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1/27/97-1/28/98 2,000 25,086
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1/28/98-12/31/98 2,000 28,947
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Your Qualified Tax-Free Distribution After
Five Taxable Years $10,000
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The Ending Value Of Your Select Ten Portfolio
Series A $18,947
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Your Federal Tax Savings
(Based on a 1998 federal income tax rate of 31%) $ 3,100
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The chart above assumes an initial $2,000 investment and a $2,000 contribution
at the beginning of each period thereafter.
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4 Based on results, including rollovers of Series A from inception
through 12/31/98 with dividends reinvested and the deduction of sales charges
of 2.75% the first year and 1.75% on each annual rollover Portfolio, expenses
and commissions.
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About Defined Asset Funds-Time In The Market
We believe that the disciplined strategy of buying and holding securities with
long-term view can help in meeting our investors' needs. For income, for
growth or for total return, time in the market can be an effective strategy
for growing your portfolio. This philosophy is the cornerstone of Defined
Asset Funds.
In addition to the Select Ten Portfolio, you can choose from a family of
Defined Equity and Fixed-Income portfolios to meet your retirement and other
investment goals.
Defining Your Risks
The following are important facts to keep in mind when considering this
investment.
o The Portfolio is designed for investors who can assume the risks
associated with equity investments. It may not be appropriate for
investors seeking capital preservation.
o There can be no assurance that the Portfolio will meet its objective,
that dividend rates will be maintained or that stock prices will not
decrease.
o The value of your investment will fluctuate with the prices of the
underlying stocks. Stock prices can be volatile.
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 Owning units of this Portfolio may result in annual federal, state
and local taxes, much of which can be deferred by rolling over into
the next portfolio. Consult your tax advisor concerning your personal
situation.
The Time To Start Is Now!
You can get started with the Select Ten Portfolio right now with about $250
for traditional or Roth IRAs. Your financial professional can provide you with
the latest quarterly performance figures for each Select Ten Portfolio, and a
free prospectus containing more complete information, including risks, sales
charges and expenses. Please read the information carefully before you invest
or send money.
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(C) 1999 Merrill, Lynch, Pierce, Fenner & Smith Incorporated. Member SIPC.
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