At Defined Asset Funds, we believe that knowledge and discipline are essential to sound investment planning. For this reason, our unit investment trusts provide the information to help you invest appropriately, and the discipline to help you stay on course.

We've found that diversity and drive can be key to uncovering compelling investments. To this end, our experienced team of research analysts and securities traders searches Wall Street and beyond, creating portfolios for strong potential. Our equity funds seek to capitalize on vibrant economic sectors, innovative quantitative strategies and thorough fundamental analysis. Our fixed-income funds offer the regular income and stability to help balance and diversify your investment assets. 

At Defined Asset Funds, we set the foundation for each of our portfolios in this way, because we have a very important goal in mind -- yours.

The Select S&P Portfolio singles out stocks from the S&P Industrial Index* for a combination of capital appreciation potential and current dividend income. This value-oriented Portfolio seeks total return through a contrarian strategy of selecting 15 Index stocks with high dividend yields, and holding them for about one year. 

The Selection Process

The Select S&P Industrial Portfolio looks for potential values in the equity market by investing in companies from the S&P Industrial Index that may be currently out of favor. It does this 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* that includes only industrial stocks. We then 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*. Standard & Poor's determines these stock rankings using a computerized system that focuses primarily on the growth and stability of per-share earnings and dividends. 

3. Market Capitalization: We then rank the stocks by market capitalization, and eliminate the lowest 25%. This allows the Portfolio to avoid smaller, less-liquid issues. 

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. 

Long-Term Investing 

The Select S&P Industrial Portfolio is based on a disciplined strategy. Each year, we intend to reapply the screening process to select a new Portfolio. At that time, you can roll your proceeds into 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. 

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. 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.

Generally, dividends and any gains will be subject to tax each year, whether or not reinvested. However, on rollovers to future Portfolios, if available, certain investors may 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.