Defined Asset Funds (SM)
Select 1999 Series 3
Income & Growth Quantitative Research
IRA Ideal!
Select Ten Portfolio
A Defined Strategy
for Total Return
[ML LOGO] Merrill Lynch
Selecting investments for your portfolio can be complicated -- a strategy can
help.
The Strategy
The Select Ten Portfolio seeks total return by holding the ten highest
dividend-yielding stocks of the Dow Jones Industrial Average* (DJIA) for about
one year (the "Strategy").
The Portfolio looks for potential values through a contrarian approach of
investing in companies whose stocks show the highest yields, indicating that
their prices may be depressed. Because we limit the field of potential stocks
to those in the DJIA, the Portfolio is selected from a group of large,
well-established companies whose financial strength makes it possible for them
to recover from these low prices. This basic strength is essential to the
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.
It's Convenient
Invest in a fixed Portfolio of widely held stocks with just one purchase and
enjoy the advantages of:
o Quarterly Dividends. You will receive four consolidated checks per year, not
40 for the ten stocks.
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o Reinvestment. You may choose to reinvest your distributions at a reduced
sales charge to compound your income.
o Cost. Investments start at about $250, with sales charge discounts available
for purchases of $50,000 or more.
o Buy and Hold. You are buying and holding, for about a year, a portfolio of
established companies with relatively high dividend yields.
o Tax-Efficiency. On rollovers to future Portfolios, if available, you will
defer recognition of gains and losses on stocks that are transferred to the
new Portfolio.
Select Ten Portfolio -- 1999 Series 3+
Name of Issuer Ticker Symbol Current
Dividend Yield++
1. Philip Morris Companies, Inc. MO 4.94%
2. General Motors Corporation GM 3.33
3. J.P. Morgan & Company, Inc. JPM 3.22
4. Chevron Corporation CHV 2.55
5. Eastman Kodak Company EK 2.48
6. Minnesota Mining & Manufacturing Company MMM 2.34
7. Sears Roebuck & Company S 2.25
8. Caterpillar, Inc. CAT 2.25
9. Goodyear Tire & Rubber Company GT 2.24
10. Exxon Corporation XON 2.04
The Portfolio does not reflect the research opinions or any buy or sell
recommendations of any of the Sponsors.
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+ Initial date of deposit -- August 9, 1999.
++ Current dividend yield for each security was calculated by annualizing the
last monthly, quarterly or semi-annual ordinary dividend received on that
security and dividing the result by its market value as of the close of
trading on August 6, 1999. There can be no assurance that future dividends,
if any, will be maintained at the indicated rates.
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Past Performance of Prior Select Ten Portfolios
Past performance is no guarantee of future results.
Series From Inception Through 6/30/99 Most Recently Completed Portfolio
(including annual rollovers)
Inception Series Return Period Series Return
5/17/91 B 15.45% 5/27/97-6/30/98 B 11.29%
1/3/92 A 15.88 1/28/98-3/5/99 A 5.33
9/1/92 C 19.65 9/22/97-10/23/98 C 6.79
7/22/96 3 21.38 7/28/97-8/28/98 3 1.59
11/1/96 5 16.48 11/10/97-12/18/98 5 6.66
1/2/97 J 14.40 1/6/98-2/8/99 J 8.80
2/25/97 1 13.50 3/2/98 - 4/9/99 1 2.65
4/28/97 2 14.18 5/4/98 - 6/4/99 2 2.47
9/3/97 4 14.83 9/3/97-10/2/98 4 2.02
The chart above shows average annual total returns which represent price
changes plus dividends reinvested, divided by the initial public offering
price, and reflect 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.
[logo] Select Ten Portfolio,
DJIA
The Dow Jones Industrial Average
The Dow Jones Industrial Average consists of 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the New York Stock
Exchange and of American industry. These companies are highly capitalized,
and their stocks are widely held by both individual and institutional
investors.
The current companies are:
Alcoa
Allied Signal
American Express
AT&T
Boeing
Caterpillar
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Chevron
Citigroup
Coca-Cola
Du Pont
Eastman Kodak
Exxon
General Electric
General Motors
Goodyear
Hewlett-Packard
IBM
International Paper
Johnson & Johnson
J.P. Morgan
McDonald's
Merck
Minnesota Mining & Manufacturing (3M)
Philip Morris
Procter & Gamble
Sears Roebuck
Union Carbide
United Technologies
Wal-Mart Stores
Walt Disney
Hypothetical Past Performance of the Strategy (not any Portfolio)
Growth of $10,000 Invested Over 25 Years -- 1/1/74 Through 6/30/99
StrategyS.......$546,225 DJIA......$347,602 S&P 500 Index*......$347,257
Growth of $10,000 Invested Over 26 Years --
1/1/74 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), and the S&P 500 Index (purple). 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")S.. The horizontal (X) axis
compares the cumulative annual performance by year, from 1/1/74 through
6/30/99. The vertical (Y) axis reflects the dollar amount value for each index
from 1/1/74 through 6/30/99. The
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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 ($529,378),
the ending value of the DJIA ($301,997), and the ending value of the S&P 500
Index ($296,349).]
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 13 and the S&P 500 Index in 12 of the last 26 years. There can be
no assurance that any Portfolio will outperform either index.
Portfolio results of this equally-weighted value-oriented Strategy may differ
from the capitalization-weighted DJIA for various reasons. For example, the
DJIA performance may be driven by stocks not held in the Portfolio, such as
growth stocks.
Annual Total Returns
Strategy returns are net of sales charges and expenses.S
<TABLE>
S&P 500 S&P 500
Year StrategyS DJIA Index Year StrategyS DJIA Index
- ---- --------- ---- ------- ---- --------- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1973 -4.08% -13.12% -14.66% 1987 5.06 6.02 5.67
1974 -2.40 -23.14 -26.47 1988 22.44 15.95 16.58
1975 55.65 44.40 36.92 1989 25.65 31.71 31.11
1976 33.25 22.72 23.53 1990 -10.14 -0.57 -3.20
1977 -2.90 -12.71 -7.19 1991 31.81 23.93 30.51
1978 -1.91 2.69 6.39 1992 6.44 7.34 7.67
1979 10.48 10.52 18.02 1993 25.30 16.72 9.97
1980 24.69 21.41 31.50 1994 1.95 4.95 1.30
1981 5.51 -3.40 -4.83 1995 34.97 36.48 37.10
1982 23.78 25.79 20.26 1996 26.34 28.57 22.69
1983 36.93 25.68 22.27 1997 19.92 24.78 33.10
1984 5.41 1.06 5.95 1998 8.55 18.00 28.34
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1985 27.00 32.78 31.43 6/30/99 12.97 20.37 12.33
1986 32.96 26.91 18.37 Average 16.16% 13.72% 13.64%
</TABLE>
Average Annual Total Returns
For periods ending 12/31/98
<TABLE>
3 year 5 year 10 year 15 year 20 year 25 year
------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
StrategyS 17.73% 17.51% 16.12% 16.74% 17.49% 16.78%
DJIA 23.71% 22.08% 18.62% 17.71% 17.14% 14.40%
S&P 500 Index 27.97% 23.82% 19.03% 17.74% 17.50% 14.71%
</TABLE>
Returns shown represent price changes plus dividends reinvested at year ends,
divided by the initial public offering price and do not reflect deduction of
any commissions or taxes. Portfolio performance will differ from the Strategy
because 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, stocks may not be weighted equally and Strategy returns do not reflect
deduction of commissions.
Defined Asset Funds (SM)
Buy With Knowledge. Hold With Confidence
EQUITY INVESTOR FUNDS
Other Select Series
United Kingdom Portfolio
(Financial Times Index)
Institutional Holdings Portfolio
Select Growth Portfolio
Select Large-Cap Growth Portfolio
Select S&P Industrial Portfolio
Select Standard & Poor's Industry Turnaround Portfolio
Select Standard & Poor's Intrinsic Value Portfolio
Concept Series
Baby Boom Economy Portfolios (SM)
Health Care Trust
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<PAGE>
Premier American Portfolio
Premier World Portfolio
Real Estate Income Fund
Tele-Global Trust
Utility Portfolio
Index Series
S&P 500 Trust
S&P MidCap Trust
FIXED-INCOME FUNDS
Corporate Funds
Government Funds
Municipal Funds
Defined Asset Funds -- Our Philosophy
At Defined Assets Funds, we are ever mindful that behind every investment
dollar lies something infinitely more important--your investment goal. This is
why we offer a full range of defined investments designed to meet a variety of
objectives.
We are committed to providing our investors with some of today's most
attractive equity and fixed-income investments, within the convenient "buy and
hold" structure of a unit investment trust. For income, for growth or for total
return, we believe that time in the market can be an effective strategy for
growing your portfolio.
At Defined Asset Funds, we set the foundation for all of our portfolios in this
way, because we too have an important goal in mind--yours.
Select Today!
You can get started today with the Select Ten 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.
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.
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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 or high current income.
o There can be no assurance that the Portfolio will meet its objective, that
dividend rates will be maintained, that stock or unit prices will not decrease
over the life of the Portfolio 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 contributed to these relatively low
prices and high yields will change.
A Tax-Efficient Structure
When seeking capital appreciation, managing tax liability on capital gains can
be vital to your over-all return. By holding this Fund for more than one year,
individuals may be eligible for favorable federal tax rates on net long-term
capital gains (currently no more than 20%).
Generally, dividends and any gains will be subject to tax each year whether or
not reinvested. However, on rollovers to future Portfolios, if available,
investors will defer recognition of gains and losses on stocks that are
transferred to the new Portfolio. Please consult your tax advisor concerning
state and local taxation.
Defining Your Costs
First-time investors pay an initial sales charge of about 1% when they buy. In
addition, all investors pay a deferred sales charge of $17.50 per 1,000 units,
about 1.75%, deducted over the last ten months of the Portfolio.
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As a % of
Public Amount Per
Offering Price 1,000 Units
-------------- -----------
Initial Sales Charge 1.00% $10.00
Deferred Sales Charge 1.75% $17.50
Maximum Sales Charge 2.75% $27.50
Estimated Annual Operating Expenses
(as a % of net assets) 0.151% $1.49
Estimated Organization Costs $0.62
If you sell your units before the termination date, the remaining balance of
your deferred sales charge will be deducted, along with the estimated costs of
selling Portfolio securities, from the proceeds you receive. If you roll over
to a successor Portfolio, if available, the initial sales charge on that
Portfolio will be waived. You will only pay the deferred sales charge.
Volume Purchase Discounts
For larger purchases, the overall sales charges are reduced to put more of your
investment dollars to work for you.
Amount Total Sales Charge as a % of
Purchased Public Offering Price
--------- ---------------------
Less than $50,000 2.75%
$50,000 to $99,999 2.50%
$100,000 to $249,999 2.00%
$250,000 to $999,999 1.75%
$1,000,000 or more 1.00%
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.
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[recycle logo] Printed on Recycled Paper
11342BR-8/99
[copyright logo] 1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
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*Dow Jones & Company, Inc., owner of the name "Dow Jones Industrial Average,"
is unaffiliated with, and did not participate in the creation of the Portfolio
or the selection of its stocks, and has neither reviewed nor approved any
information in this brochure or the prospectus relating to the Portfolio. "S&P
500 Index" is a trademark of The McGraw-Hill Companies, Inc.
SNet of Portfolio sales charges (2.75% for the first year, 1.75% for each
subsequent year) and estimated expenses.
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