Defined Asset Funds [SM]
Select Series
3rd Quarter
1999
IRA deal!
The Select S&P Industrial Portfolio
Take Indexing to Another Level...
[logo] Merrill Lynch
Indexing -- it's a strategy to mirror the returns of major indices. Why not take
a step beyond?
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* for a combination of capital
appreciation potential and current dividend income. 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
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 Average* (DJIA).
2. Quality Screen: We only consider stocks that are ranked A+ or A by Standard
& Poor's.* This ranking system, focused on growth and stability of earnings
and dividends, predicts neither credit-worthiness nor stock price
movements.
3. Market Capitalization: We then rank the stocks by market capitalization and
eliminate the lowest 25%.
<PAGE>
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. Their prices may be undervalued.
Past Performance of Prior Select S&P Industrial Portfolios
Past performance is guarantee of future results.
1/22/97 A 8.08% 2/9/98-3/19/99 A 5.92%
2/24/97 B 7.81 3/23/98-4/23/99 B 6.13
4/21/97 C 9.63 4/27/98-6/4/99 C 12.29
6/9/97 D 2.03 6/15/98-7/23/99 D 7.93
7/21/97 E 1.48 7/27/98-8/27/99 E 1.39
9/8/97 F 5.06 9/8/97-10/2/98 F 9.95
10/20/97 G 2.86 10/20/97-12/4/98 G 14.22
12/2/97 H 0.74 12/2/97-1/8/99 H 17.47
1/8/98 J -0.14 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
reflect maximum sales charges and expenses. Returns from 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 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 Index* 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:
2
<PAGE>
o There are risks associated with equity investments. The Portfolio 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 prices will not decrease or that
the Portfolio will outperform the Indices.
Hypothetical Past Performance of the Strategy (not any Portfolio)
Growth of $10,000 Invested over 25 Years -- 1/1/74 Through 9/30/99
Strategy.............................$546,229
DJIA.................................$329,092
S&P 500 Index........................$325,772
S&P Industrial Index.................$330,252
Growth of $10,000 Invested Over 26 Years - 1/1/73 Through 9/30/99
[A mountain chart compares the hypothetical past performances of the Strategy
(ochre) from 1/1/74 through 9/30/99, 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
1/1/74 through 9/30/99. The vertical (Y) axis reflects the dollar amount value
for each index from 1/1/74 through 9/30/99. 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 ($440,951), the ending value of the DJIA
($285,915), the ending value of the S&P 500 Index ($278,013) and the S&P
Industrial Index ($282,002).]
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 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 Portfolio does not reflect the research
opinions or any buy or sell recommendations of any of the Sponsors or Standard &
Poor's.
3
<PAGE>
* "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.
o The value of your investment will fluctuate with the prices of the underlying
stocks. Stock prices can be volatile. These stocks may have relatively low
prices because they or their industries are out of favor. There can be no
assurance that the market factors causing these low prices will change.
o Owning units of the Portfolio may result in annual federal, state and local
taxes. Please consult your tax advisor.
Take a Step Beyond!
You can get started today with the Select S&P Industrial Portfolio for about
$250. Simply return the attached coupon to receive a free copy of our brochure.
Call 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.
Yes!
I would like more information on the Select S&P Industrial Portfolio from
Defined Asset Funds.
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City
- --------------------------------------------------------------------------------
State Zip
- --------------------------------------------------------------------------------
Home Phone
4
<PAGE>
- --------------------------------------------------------------------------------
Business Phone
- --------------------------------------------------------------------------------
E-Mail Address
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.
11584NI-10/99
[Copyright] 1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
5
