Defined Asset Funds(sm)
2nd Quarter
1999
IRA Ideal!
The Select
S&P Industrial
Portfolio
Take Indexing
to Another Level...
[ML Logo] Merrill Lynch
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 Index1, for a combination of value,
capital appreciation potential and current dividend income. Although each
Portfolio is about 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
Stocks in the Portfolio are selected through a disciplined process:
1. Defining the Universe: We begin with the S&P Industrial Index and remove any
stocks that are also in the Dow Jones Industrial Average1 (DJIA).
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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.
<PAGE>
2. Quality Screen: We only consider stocks that are ranked A+ or A by Standard &
Poor's1. This ranking system, focused on growth and stability of earnings and
dividends, predicts neither creditworthiness nor stock price movements.
3. Market Capitalization: We then rank the stocks by market capitalization and
eliminate the lowest 25%.
4. 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.
Past Performance of Prior Select S&P Industrial Portfolios
Past performance is no guarantee of future results.
Series From Inception Through 6/30/99
(including annual rollovers)
- ------------------------------------------
Inception Series Return
- ------------------------------------------
1/22/97 A 15.32%
- ------------------------------------------
2/24/97 B 15.78
- ------------------------------------------
4/21/97 C 18.13
- ------------------------------------------
6/9/97 D 11.08
- ------------------------------------------
7/21/97 E 11.39
- ------------------------------------------
9/8/97 F 15.53
- ------------------------------------------
10/20/97 G 9.76
- ------------------------------------------
12/2/97 H 8.74
- ------------------------------------------
1/8/98 J 8.11
- ------------------------------------------
Most Recently Completed Portfolio
- ----------------------------------------------
Period Series Return
- ----------------------------------------------
2/9/98-3/19/99 A 5.92%
- ----------------------------------------------
3/23/98-4/23/99 B 6.13
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<PAGE>
- ----------------------------------------------
4/27/98-6/4/99 C 12.29
- ----------------------------------------------
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 Results
We analyzed the hypothetical returns of $10,000 invested over 26 years based on
the Strategy compared to various benchmarks. The Strategy (with Portfolio sales
charges and expenses deducted) would have underperformed the DJIA in 9, the S&P
500 Index1 in 10 and the S&P Industrial Index in 9 of the last 26 years, and
would have produced a loss in only three years.
Defining Your Risks
Before investing, please consider:
o There are risks associated with equity investments. The Portfolio is not
appropriate for investors seeking capital preservation or high current
income.
o There can be no assurance 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. Their yields may be higher
because they or their industries are out of favor.
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<PAGE>
o Owning units of this Portfolio may result in annual federal, state and local
taxes, 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.
Simply return the attached coupon to receive a free copy of our brochure. Ask
your financial professional for a free prospectus containing more complete
information on the Select S&P Industrial Portfolio, including sales charges,
expenses and risks. Please read it carefully before you invest or send money.
Hypothetical Past Performance of the Strategy (not any Portfolio)
Growth of $10,000 Invested Over 25 Years -- 1/1/74 Through 6/30/99
Strategy................$613,317 S&P 500 Index......................$347,257
DJIA....................$347,602 S&P Industrial Index...............$345,272
Growth of $10,000 Invested Over 26 Years -- 1/1/73 Through 6/30/99
[A mountain chart compares the hypothetical past performance from 1/1/73 through
6/30/99 of the Strategy (ochre), 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
6/30/99. 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 ($495,109), the
ending value of the DJIA ($301,997), the ending value of the S&P 500 Index
($296,349) and the ending value of the S&P Industrial Index ($294,828).]
Past performance of the Strategy is no guarantee of future results of any
Portfolio. Results shown represent price changes plus dividends reinvested at
year ends, and do not reflect deduction of any commissions or taxes. Only
Strategy performance reflects the deduction of Portfolio sales charges (2.75%
for the first year, 1.75% for each subsequent year) and estimated expenses.
Portfolio performance will differ from the Strategy because of commissions,
Portfolios are established and
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<PAGE>
liquidated at different times during the year, they normally purchase and sell
stocks at prices different from those used in determining Portfolio unit price,
Portfolios are not fully invested at all times and stocks may not be weighted
equally. The Portfolio does not reflect the research opinions or any buy or sell
recommendations of any of the Sponsors or Standard & Poor's.
Yes! I would like more information on the Select S&P Industrial Portfolio from
Defined Asset Funds.
The information in this mailer 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 mailer 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
11584NI-7/99
(Copyright logo) 1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
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