Select Series 1999
Capital Appreciation
Quantitative
Defined Asset Funds[SM]
Standard & Poor's Industry Turnaround Portfolio
A New Direction For Industry Investing
[logo]Merrill Lynch
STANDARD AND POOR'S INDUSTRY TURNAROUND PORTFOLIO
Some of the best investments may be found in industries no one else wants to
buy. The challenge is to find an industry as it turns the corner of recovery .
. . and once you've found it, begin searching for promising stocks. Defined
Asset FundsSM offers you a convenient way to invest in a portfolio that puts
this contrarian approach into action . . .
Standard & Poor's Industry Turnaround Portfolio
Past Performance of Prior Industry Turnaround Portfolios
Past performance is no guarantee of future results.
Series from Inception Through 9/30/99
Inception Series Cumulative Return
11/21/97 1 7.32%
4/3/98 2 -24.94
9/16/98 3 -0.79
The chart above shows the cumulative total return (not average) which
represents price changes plus dividends reinvested, divided by the initial
public offering price, and reflects maximum sales charges and expenses.
Teaching an Old "Dog" a New Trick
The well-known "Dog" investment strategies seek out undervalued stocks of
major indices, buy them and then hold them for a set period of time. The Select
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Industry Turnaround Portfolio applies a similar contrarian strategy. Instead of
seeking out undervalued "Dog" stocks, the Select Industry Turnaround Strategy
looks for out-of-favor industries, potentially ready for a comeback. It then
goes on to identify promising stocks from within these industry groups.
The Power of the Turnaround Strategy
Since the Industry Turnaround Portfolio is based on our back-testing of the
Turnaround Strategy, we looked at what could have been earned with a
hypothetical investment using the Strategy. The figures below illustrate how
well the Strategy could have performed over two-year rolling periods, as
compared to the S&P 500 Index.(1) While the Strategy would have underperformed
the Index in 11 of the 26 periods, these figures show the potential of
following Industry Turnaround Strategy. Of course, hypothetical past
performance is no guarantee of future results of any Portfolio.
Hypothetical Past Performance of the Strategy (not any Portfolio)
Strategy (net of sales charges and expenses)
S&P 500 Index
[A bar graph compares the cumulative annual performance from 1973 through 1997
(1) of the Strategy (ochre) and the S&P 500 Index (blue). 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 1973 through
1997. The vertical (Y) axis reflects the percentage value, ranging from -40% to
160%, of each index from 1973 through 1997.]
The table and chart above compare the hypothetical performance of the
Turnaround Strategy (not any Portfolio) with the performance of the S&P 500.
Returns shown represent price changes plus dividends received and do not
reflect commissions or taxes. Only the Strategy figures reflect the deduction
of Portfolio sales charges (4.50% for the first 2 two-year periods, 3.50% for
each subsequent two-year period) 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 the closing prices used in
determining Portfolio unit price, Portfolios are not fully invested at all
times, and stocks may not be weighted equally.
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(1)"Standard & Poor's" and "S&P 500" 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.
(2) 1/1/98 through 9/30/99.
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Total Returns for Two-Year Periods
Strategy Returns are net of sales charges and expenses.
Periods
1/1-12/31 Strategy S&P 500 Index
1973-74 -23.74% -36.01%
1974-75 27.30 -0.08
1975-76 150.45 68.00
1976-77 31.95 15.10
1977-78 -15.07 -1.50
1978-79 54.00 24.77
1979-80 56.20 53.53
1980-81 55.16 25.37
1981-82 21.03 13.53
1982-83 45.38 45.97
1983-84 -12.32 29.30
1984-85 14.08 37.45
1985-86 50.39 54.47
1986-87 21.60 25.02
1987-88 25.41 22.32
1988-89 58.02 51.44
1989-90 0.26 27.23
1990-91 26.82 24.89
1991-92 74.01 39.38
1992-93 38.82 17.81
1993-94 -4.31 11.31
1994-95 55.32 37.82
1995-96 79.98 67.52
1996-97 53.55 62.49
1997-98 41.17 70.23
1998-99(2) 14.22 35.15
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A Dual Screening Process
Industry Direction
Turnaround Industries
Analyze approximately 100 industries of the S&P 500 Index, and target those
industries that have underperformed the Index over the past 12 months. Select
those industries that have been broken above their nine-month average of
relative annual returns. We believe these industries may have the momentum to
turn around.
The Contrarian Advantage
Rank the remaining industries in order of their 12-month relative price
performance, as compared to the S&P 500. The five industries with the weakest
relative performance are then selected for the Select Series Standard & Poor's
Industry Turnaround Portfolio.
Stock Selection
Rank for Quality
Within each of the five chosen industries, list all companies in order of their
respective Standard & Poor's Quality Ranking.
Finding Large-Cap Quality Stocks
Select either the four companies with the highest Standard & Poor's Quality
Rankings, or, if the industry has four or fewer stocks, select all the stocks.
In the event of a tie, the stock with the larger market capitalization is
selected.
Stay with the Strategy
Like other portfolios in the Defined Asset Funds Select Series, the Industry
Turnaround Portfolio employs a contrarian "buy and hold" philosophy. This means
the Portfolio follows a disciplined investment strategy of choosing stocks from
industries that are currently out of favor, then holds them for a set period of
time--in this case, two years. At the end of that period, we may reapply the
screening process to select a new Industry Turnaround Portfolio. You can roll
your proceeds into new Portfolio, if available, or you can redeem your
investment. Although the Industry Turnaround Portfolio is a two-year
investment, we recommend you stay with this Strategy for at least four to six
years for potentially more consistent results.
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A Defined Portfolio
Company Symbol
Banks (Money Center) BAC
Bank of America Corporation
This holding company for Bank of America and NationsBank provides retail
banking services, asset management, financial products, corporate finance,
specialized finance, capital markets and financial services throughout the U.S.
Chase Manhattan Corporation CMB
This bank holding company conducts domestic and international financial
services through various bank and non-bank subsidiaries. It provides corporate
finance, wholesale banking and investment services.
First Union Corporation FTU
A multi-bank holding company operating in the eastern U.S., it provides a wide
range of commercial and retail banking and trust services, as well as mortgage
banking, credit card, leasing, and securities brokerage services.
J.P. Morgan & Company, Inc. JPM
Offering a variety of financial services to businesses, governments and
individuals, this company provides advice, raises capital and trades financial
instruments. It also manages investment assets for business enterprises,
governments, financial institutions and private clients.
Beverages (Non-Alcoholic)
Coca-Cola Company KO
This company manufacturers, markets and distributes soft drink concentrates and
syrups. It also distributes and markets juice and juice-drink products (under
brand names such as Coca-Cola, Minute Maid and Sprite) to retailers and
wholesalers in the U.S. and internationally.
Coca-Cola Enterprises, Inc. CCE
Operating in the U.S., Canada and portions of Europe, this company markets,
produces and distributes products of the Coca-Cola Company. It provides non-
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alcoholic refreshments, including sparkling waters, juices, isotonics, teas and
sodas, and distributes several other brands including Dr. Pepper.
PepsiCo., Inc. PEP
With soft drink, juice and snack food businesses worldwide, this company
manufacturers, sells and distributes beverages such as Pepsi-Cola, Slice and
Tropicana Pure Premium, as well as snack foods such as LAY'S potato chips,
DORITOS tortilla chips and Rold Gold pretzels.
Chemicals (Diversified)
Engelhard Corporation EC
Engelhard develops, manufactures and markets technology-based performance
products and engineered materials for a wide spectrum of industrial customers
throughout the world. It also provides services to precious and base metals
customers, as well as marketing energy-related services.
FMC Corporation(3) FMC
Operating more than 100 manufacturing facilities and mines around the world,
this corporation produces chemicals and machinery for industry and agriculture.
Its five business segments are: industrial chemicals, specialty chemicals,
energy systems, food and transportation systems and agricultural products.
Monsanto Company MTC
This global life sciences company applies biological science to an integrated
system of agriculture, food and human health. It manufactures and sells
agricultural products, pharmaceuticals and food ingredients.
PPG Industries, Inc. PPG
PPG supplies products for the manufacturing, construction, automotive, chemical
processing and other industries worldwide. This company makes protective and
decorative coatings, flat glass, fabricated glass products, continuous-strand
fiberglass products and industrial and specialty chemicals.
Lodging-Hotels
Carnival Corporation CCL
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This company's cruise lines operate under the following names: Carnival Cruise
Lines, Holland America Line, Windstar Cruises, Cunard Line, Seabourn Cruise
Line, Costa Crociere S.p.A. and Airtours' Sun Cruises. It also holds interests
in several tour companies.
Hilton Hotels Corporation HLT
With properties located in the U.S., Canada and Mexico, this company owns,
manages and franchises hotels under the Hilton, Hilton Garden Inn, and Hilton
Suites names.
Marriott International, Inc. (Class A) MAR
This world-wide operator and franchisor of hotels and senior living communities
is also a provider of food distribution services. The company franchises
lodging facilities and vacation timesharing resorts under various brand names.
Oil & Gas (Refining & Marketing)
Ashland, Inc. ASH
Ashland conducts operations in specialty chemical production, chemicals and
plastics distribution, motor oil and car care products and highway
construction. Its consumer products include Valvoline motor oils, Zerek
antifreeze, Eagle One automotive appearance products and Pyroil automotive
chemicals.
Sunoco, Inc. SUN
In addition to refining and marketing petroleum, this company also transports
crude oil and refined products. The company's petroleum products include fuels,
lubricants, and petrochemicals. Its operations are conducted principally in the
eastern half of the U.S.
Tosco Corporation TOS
Tosco refines and markets petroleum products in the U.S., operating primarily
on the East and West Coasts. Its refineries process crude oil, feedstocks and
blendstocks into various petroleum products. The company also undertakes
related commercial activities throughout the U.S. and internationally.
(3)This security currently does not pay a dividend.
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Defined Asset Funds[SM]
Buy With Knowledge - Hold with Confidence
EQUITY INVESTOR FUNDS
Other Select Series
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United Kingdom Portfolio
(Financial Times Index)
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Multinational Portfolio
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Select Large-Cap Growth Portfolio
Select S&P Industrial Portfolio
Select Standard & Poor's Intrinsic Value Portfolio
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Defined Asset Funds--
Our Philosophy
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At Defined Asset 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 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 with the Select Standard & Poor's Industry Turnaround
Portfolio for about $250. Call your financial professional for a free
prospectus containing more complete information, including sale 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.
o The Portfolio is designed for investors who can assume the risks
associated with equity investments, and with an investment in stocks
from industries that are currently depressed. It may not be
appropriate for investors seeking capital preservation or high current
income.
o There can be no assurance that the prices of these stocks (and
therefore the Portfolio price) will increase or not decline further,
during the Portfolio's two-year life. The Strategy may underperform
the related index when Portfolio stocks are chosen for characteristics
at odds with those of the stocks driving the market at a given time.
o The value of your investment will fluctuate with the value of the
underlying stocks, and the price you receive when you sell may be more
or less than your cost. Stock prices can be volatile.
Tax Reporting
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Generally, dividends and any gains will be subject to tax each year, whether or
not reinvested. Capital gains, if any, on assets held over a year will be taxed
up to the maximum federal tax rate of 20% for non-corporate taxpayers. 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
You will pay an initial sales charge of approximately 1% the first time you
buy. In addition, you'll pay a deferred sales charge of seven monthly payments
of $2.50 per 1,000 units, deducted from the Portfolio's net asset value in each
year of the Portfolio's two-year life.
As a % of Amount per 1,000 Units
Public Offering Price
Initial Sales Charge 1.00% $10.00
Deferred Sales Charge Year 1 1.75% $17.50
Deferred Sales Charge Year 2 1.75% $17.50
----- ------
Maximum Sales Charge 4.50% $45.00
Estimated Annual Operating Expenses
(as a % of net assets)
0.218% $2.16
Estimated Organization Costs $2.84
If you sell your investment before the final deferred sales charge installment
in either year, the remaining deferred sales charges for that year will be
deducted, along with the estimated cost of selling Portfolio securities. If you
roll over into a successor Portfolio, if available, the initial charge on that
Portfolio will be waived.
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Volume Purchase Discounts
For larger purchases, the overall sales charges are reduced to put more of your
investment dollars to work for you.
Amount Purchased Total Two-Year Sales Charge
as a % of Public Offering Price
Less than $50,000 4.50%
$50,000 to $99,999 4.25%
$100,000 to $249,999 3.75%
$250,000 to $999,999 3.50%
$1,000,000 or more 2.75%
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.
[logo]Printed on Recycled Paper
11373BR-12/99
[Copyright]1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated. Member
SIPC.
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