IRA Ideal!
Defined Asset Funds[SM]
The Select S&P Industrial Portfolio
Performance Summary
1st Quarter o 1999
Take Indexing to Another Level
[ML Logo] Merrill Lynch
Select S&P Industrial Portfolio
Performance Summary 1st Quarter o 1999
Indexing -- it's a strategy to mirror the returns of major indices. Why not
take it to another level?
The Defined Asset Funds(SM)
Select S&P Industrial Portfolio can help.
Instead of simply replicating an index, the Select S&P Industrial Portfolio
singles out stocks within the S&P Industrial Index(1) 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 index with high dividend yields and potential value.
Past Performance of Prior Select S&P Industrial Portfolios
Past performance is no guarantee of future results.
Series From Inception Through 3/31/99
(including annual rollovers)
Inception Series Return
- -------------------------------------
1/22/97 A 13.34%
2/24/97 B 13.90
4/21/97 C 21.24
6/9/97 D 12.05
7/21/97 E 9.78
9/8/97 F 12.00
10/20/97 G 5.89
12/2/97 H 5.41
1/8/98 J 4.39
- ------------
(1) "Standard & Poor's," "S&P," "S&P 500 Index" 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.
Most Recently Completed Portfolio
Period Series Return
- ------------------------------------------
2/9/98-3/19/99 A 5.92%
2/24/97-4/24/98 B 22.96
4/21/97-5/22/98 C 35.59
6/9/97-7/17/98 D 19.39
7/21/97-8/21/98 E 8.25
9/8/97-10/2/98 F 9.95
10/20/97-12/4/98 G 14.22
12/2/97-1/8/99 H 17.47
1/8/98-2/8/99 J 10.13
The chart above shows average annual total returns which represent 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 annual rollovers and
different performance periods.
Hypothetical Past Performance of the Strategy (not any Portfolio)
Growth of $10,000 Invested Over 25 Years -- 1/1/74 Through 3/31/99
Strategy(2).............$575,998 S&P 500 Index(1)................$324,504
DJIA(1).................$309,021 S&P Industrial Index(1).........$321,853
Growth of $10,000 Invested Over 26 Years -- 1/1/73 Through 3/31/99
[A mountain chart compares the hypothetical past performance of the Strategy
(ochre) from 1/1/73 through 3/31/99, 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 ("net of sales charges and expenses"). The
horizontal (X) axis compares the cumulative annual performance by year, from
1/1/73 through 3/31/99. The vertical (Y) axis reflects the dollar amount
value. 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 ($464,983), the ending value of the DJIA ($268,478), the ending value
of the S&P 500 Index ($276,932) and the ending value of the S&P Industrial
Index ($274,831).]
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
(with Portfolio sales charges and expenses deducted) would have underperformed
the DJIA in nine, the S&P 500 Index(1) in ten, and the S&P Industrial Index in
nine of the last 26 years. There can be no assurance that any Portfolio will
outperform these indices.
Average Annual Total Returns
For periods ending 3 year 5 year 10 year 15 year 20 year 25 year
12/31/98
Strategy(2) 19.52% 21.06% 17.83% 19.29% 19.57% 17.91%
DJIA 23.71% 22.08% 18.62% 17.71% 17.71% 14.40%
S&P 500 Index 27.97% 23.82% 19.03% 17.74% 17.50% 14.71%
S&P Industrial Index 28.89% 24.43% 19.09% 17.77% 17.51% 14.67%
- ------------
(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
1998 15.10 18.00 28.34 33.43
3/31/99 -6.28 7.01 4.97 5.00
Average 15.75% 13.35% 13.49% 13.45%
Returns shown represent price changes plus dividends reinvested at year ends,
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.
The Strategy
The Select S&P Industrial Portfolio employs a disciplined "buy and hold"
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.
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 it through a disciplined four-part screening
process:
1. Defining the Universe: We begin with the S&P Industrial Index, a subset of
the S&P 500 Index, which includes only industrial stocks. Defined Asset Funds
then removes any stocks included in 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 differ from
credit-worthiness rankings of bonds, and are not intended to predict stock
price movements.
3. Market Capitalization: We then rank the stocks by 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 this group, we select the 15 highest dividend-yielding
stocks for the Portfolio whose prices may be undervalued.
Defined Asset Funds
Buy with Knowledge o Hold with Confidence
Defining Your Risks
Please keep in mind the following factors when considering this investment.
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.
o There can be no assurance that the Portfolio will meet its objective,
that dividend rates will be maintained, that stock prices will not
decrease or that the Portfolio will outperform the indices.
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 the Portfolio may result in annual federal, state
and local taxes, only some of which can be deferred by rolling over
into the next portfolio, if available. Please consult your tax
advisor.
Go to Another Level
You can get started with the Select S&P Industrial Portfolio for about $250.
Call your financial professional for a free prospectus containing more
complete information, including sales charges, expenses and risks. Please read
it carefully before you invest or send money.
The information in this brochure is not complete and may be changed. We may
not sell the securities of the next Portfolio until the registration statement
filed with the Securities and Exchange Commission is effective. This brochure
is not an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where their offer or sale is not permitted.
[recycling logo] Printed on Recycled Paper
70110SJ-4/99
(Copyright logo) 1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
