COHEN & STEERS
[logo] Merrill Lynch Defined Assets Funds[Registered]
Buy With Knowledge - Hold With Confidence
Realty Majors[SM]
The Realty Majors[SM] Portfolio December 31, 1999
The Realty Majors Portfolio
The Equity Investor Fund Cohen & Steers Realty Majors[SM] Portfolio is a
Defined Asset Fund[Registered] with investments in many of the leading Real
Estate Investment Trusts ("REITs") in the U.S. The Portfolio is broadly
diversified by both geographic region and property type and is designed to
provide a total investment return from both current income and the potential
for capital appreciation.
Investment Overview
The Fund posted positive returns during the fourth quarter as REIT share prices
rallied in December. Although past performance is no guarantee of future
results, the Fund's focus on the nation's leading real estate companies also
enabled it to outperform general real estate benchmarks for the year and since
inception. REITs, however, underperformed the broader stock markets as investor
sentiment continued to favor technology and Internet related companies. Looking
forward, Cohen & Steers believes the environment for REITs remains positive.
The economy continues to grow at a substantial pace, occupancy levels are high,
and there is strong demand for space in most major real estate markets. REIT
share prices, meanwhile, are as cheap as they have ever been, based on nearly
every valuation measure including price/cash flow multiple, dividend yield and
price in relation to the actual value of the underlying real estate. Cohen &
Steers believes that REITs offer investors significant value today given their
high and secure dividends, earnings predictability and stable growth.
Realty Majors in the News Fourth Quarter 1999
* Crescent Real Estate Equities announced a new strategic plan, including a
$500 million share repurchase and a commitment to maintain the current
dividend, designed to maximize shareholder value.
* Equity Office Properties Trust announced a joint venture with Australian real
estate investor LendLease, whereby LendLease will pay Equity Office Properties
$534 million for partial interests in seven office properties. The Company will
use part of the $480 million in net proceeds to fund a $250 million share
repurchase program.
* First Industrial Realty Trust announced that it will sell up to $500 million
in industrial properties and exit eight of its existing markets and reinvest
the proceeds in Miami, San Diego, Seattle and San Francisco.
* Health Care Property Investors closed its merger with American Health
Properties, increasing its asset base to $2.6 billion as well as further
diversifying its tenant base and health care property types. The company
announced a $40 million repurchase program of common stock and other
securities.
* Highwoods Properties announced that it will initiate an asset sale program of
$1 billion in 2000. Proceeds will be used to fund development, pay down debt,
and to fund a 10 million share repurchase program.
* Kimco Realty received final bankruptcy court approval to acquire 63 retail
locations formerly occupied by Hechingers, a bankrupt retailer for $175
million. Of the 63 properties, Kimco has already found retailers to occupy 40
locations.
* Public Storage declared a special dividend of $84 million, payable either as
$0.62 per share in cash or as $0.65 per share in a new Series A Equity stock
with a dividend rate of 12.25%.
<PAGE>
* Reckson Service Industries has been renamed FrontLine Capital Group in
conjunction with its focus on investing in business-to-business, e-commerce
companies. Onsite Access, which is 42% owned by FrontLine Capital, filed with
the SEC for a $200 million initial public offering.
* Simon Property Group announced programs designed to integrate Internet
technology into its regional mall portfolio. The initiatives include
YourSherpa.com, which offers the shopper the ability to scan goods in the mall
and have them delivered to the home, and TenantConnect, which offers mall
tenants access to an enhanced broadband Internet network.
* Vornado Realty Trust increased its ownership in Alexander's, Inc., a
NYSE-listed REIT, to 32% and made a $50 million loan to Alexander's, Inc. to
fund a major mixed-use development in mid-town Manhattan.
* The President signed the REIT Modernization Act, which will allow REITs to
own a taxable corporation that can generate non-rental income. These
subsidiaries would enable REITs to generate up to 25% of their revenues from
tenant services such as telecommunications, energy, advertising, and from other
non-rental real estate activities.
* Fourth quarter 1999 Funds from Operations (cash flow) growth averaged 10.1%
for the companies in the Realty Majors Portfolio.
Geographic Diversification as of 12/31/99
[A map represents the geographic location of REITs, their proportions as part
of the overall Portfolio as follows:
5% North West Central 20% Pacific 8% Mountain 10% South West Central 14% North
East Central 3% New England 16% Mid-Atlantic 21% South Atlantic 3% South East
Central]
Portfolio Highlights as of 12/31/99
Symbol RMP001
Number of Holdings 28
Total Net Assets $391 million
NAV per Unit $0.79252
Termination Date April, 2001
Investment Consultant Cohen & Steers Capital Management
Total Returns(*)
Past performance is no guarantee of future returns.
4th ONE YEAR ANNUALIZED
QUARTER 12/31/98-12/31/99 SINCE 4/23/98
Realty Majors Portfolio 1.8% -2.0% -6.5%
Dow Jones REIT Index (+) -1.3% -4.3% -10.6%
S&P REIT (+) Index -1.3% -5.9% -13.2%
DJIA (+) 11.6% 27.2% 16.5%
S&P 500 Index (+) 14.9% 21.0% 19.1%
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<PAGE>
(*) Change in stock prices plus dividends reinvested divided by initial price.
The Portfolio reflects deduction of ongoing expenses of .348 annually. While
most holders purchased units without any sales charge, a 2% sales charge (not
reflected in these figures) is currently deducted on secondary market
purchases.
(+) The Dow Jones Equity REIT Total Return Index reflects both price changes
and dividend payouts of 118 equity REIT stocks. The S&P REIT Index is a
capitalization-weighted index of 100 REIT stocks. The Dow Jones Industrial
Average is a price-weighted index of 30 large-cap common stocks chosen as
representative of American industry. The S&P 500 Stock Price Composite Index
(S&P 500 Index) is a capitalization weighted index of 500 large-cap common
stocks. The names "Dow Jones Industrial Average" and "Dow Jones REIT Index" are
the property of Dow Jones & Company, Inc. "S&P REIT Index" and "S&P 500 Index"
are trademarks of The McGraw-Hill Companies, Inc.
Dividend Review
Twenty-four of the Realty Majors increased their dividends by an average 18.2%
since the inception of the Fund (see reverse for details).
Dividends are paid monthly or can be reinvested in additional units of the
Fund.
Sector Diversification as of 12/31/99
[A pie chart shows sector diversification of the Portfolio, sections as
follows:
6% Shopping Centers
13% Regional Malls
4% Self Storage
8% Office/Industrial
13% Industrial
23% Apartments
6% Diversified
4% Health Care
23% Office]
[Copyright] 2000 Merrill Lynch, Pierce, Fenner & Smith Incorporated. Member
SIPC. Defined Asset Funds is a registered service mark of Merrill Lynch & Co.,
Inc.
This material is authorized for client distribution only to existing
shareholders.
Dividend Changes since inception - 4/23/98 through 12/31/99
Twenty-four companies have announced dividend increases averaging 18.2% (since
inception).
% Change
Company New Dividend Since 4/23/98
Public Storage Inc. $1.50 70.5%
Crescent Real Estate Equities Co. 2.20 44.7
Kimco Realty Corp. 2.64 37.5 [++]
Equity Office Properties Trust 1.68 31.3
Duke-Weeks Realty Corp. 1.56 30.0
AvalonBay Communities Inc. 2.08 23.8
Vornado Realty Trust 1.92 20.0
Reckson Associates Realty Corp. 1.49 18.8
ProLogis Trust 1.34 17.5
First Industrial Realty Trust, Inc. 2.48 17.0
Mack-Cali Realty Corp. $2.32 16.0%
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<PAGE>
% Change
Company New Dividend Since 4/23/98
Equity Residential Properties Trust 3.04 13.4
Archstone Communities Trust 1.54 13.2
Health Care Property Investors, Inc. 2.84 10.9
The Macerich Company 2.04 10.9
Highwoods Properties, Inc. 2.22 8.8
Post Properties Inc. 2.80 7.7
Nationwide Health Properties, Inc. 1.80 7.1
The Rouse Company 1.20 7.1
Spieker Properties Inc. 2.44 7.0
Developers Diversified Realty Corp. 1.40 6.9
Manufactured Home Communities, Inc. 1.55 6.9
Arden Realty Inc. 1.78 6.0
Taubman Centers Inc. 0.98 4.3
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[++] Excludes $0.05 Special Dividend
The Realty Majors Portfolio as of 12/31/99
<TABLE>
Current
Price Annual Dividend Market Cap.
Company Symbol Per Share Dividend Yield(ss) ($ in Millions) Property Sector
<S> <C> <C> <C> <C> <C> <C>
Archstone Communities Trust ASN $20.500 $1.54 7.5% $2,858 Apartment
Arden Realty Inc. ARI 20.063 1.78 8.9 1,271 Office
AvalonBay Communities Inc. AVB 34.625 2.08 6.0 2,276 Apartment
CarrAmerica Realty Corp. CRE 21.375 1.85 8.7 1,428 Office
Crescent Real Estate Equities Co. CEI 18.375 2.20 12.0 2,211 Office
Developers Diversified Realty Corp. DDR 12.875 1.40 10.9 769 Retail
Duke-Weeks Realty Corp. DRE 19.500 1.56 8.0 2,442 Office/Industrial
Equity Office Properties Trust EOP 24.625 1.68 6.8 6,210 Office
Equity Residential Properties Trust EQR 42.688 3.04 7.1 5,396 Apartment
First Industrial Realty Trust, Inc. FR 27.438 2.48 9.0 1,045 Industrial
Health Care Property Investors, Inc. HCP 23.875 2.84 11.9 1,230 Health Care
Highwoods Properties, Inc. HIW 23.625 2.22 9.4 1,458 Office
Kimco Realty Corp. KIM 33.875 2.64 7.8 2,057 Retail
The Macerich Company MAC 20.813 2.04 9.8 709 Retail
Mack-Cali Realty Corp. CLI 26.063 2.32 8.9 1,522 Office
Manufactured Home Communities, Inc. MHC 24.313 1.55 6.4 585 Manufactured Homes
Nationwide Health Properties, Inc. NHP 13.750 1.80 13.1 635 Health Care
Post Properties Inc. PPS 38.250 2.80 7.3 1,483 Apartment
ProLogis Trust PLD 19.250 1.34 7.0 3,111 Industrial
Public Storage Inc. PSA 22.688 1.50(") 6.6 2,935 Self Storage
Reckson Associates Realty Corp. RA 20.500 1.49 7.2 828 Office/Industrial
Reckson Service Industries Inc.(#) RSII 62.375 0.00 0.0 1,708 Services & Technology
The Rouse Company RSE 21.250 1.20 5.6 1,529 Retail
Simon Property Group Inc. SPG 22.938 2.02 8.8 3,979 Retail
Spieker Properties Inc. SPK 36.438 2.44 6.7 2,314 Office/Industrial
Taubman Centers Inc. TCO 10.750 0.98 9.1 573 Retail
Vornado Operating Co.** VOO 6.000 0.00 0.0 24 Services & Technology
Vornado Realty Trust VNO 32.500 1.92 5.9 2,793 Diversified
</TABLE>
(ss) Calculated by annualizing the latest quarterly or semi-annual ordinary
dividend declared and dividing the result by its market value as of the close
of trading on December 31, 1999. (") Includes $0.62 per share special dividend
declared in November 1999.
(#) Reckson Service Industries, Inc. was spun off from Reckson Associates
Realty Corp. in June 1998.
(**) Vornado Operating Co. was spun off from Vornado Realty Trust in October
1998.
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<PAGE>
The Fund is subject to special risk considerations similar to those associated
with the direct ownership of real estate due to its policy of concentration in
the securities of real estate companies. Real estate valuations may be subject
to factors such as changing general and local economic, financial, competitive
and environmental conditions.
70137 IN-1/00
COHEN & STEERS
[logo] Merrill Lynch Defined Assets Funds[Registered]
Buy With Knowledge - Hold With Confidence
Realty Majors[SM]
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