Defined Asset Funds (SM)
Select Series
1999
4
IRA Ideal!
Principled Values Portfolio(SM)
Social investing is the systematic incorporation of ethical values and
objectives in the investment decision making process.
A Principled Way to Invest.
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Why Socially Responsible Investing?
Investing with principles can be a personally rewarding experience. But you
also need investments that can reward you with performance. Socially
responsible investing can be practical, as well as fulfilling. Attention to
diversity and social values may lead to greater productivity and increased
profitability.
Recognizing Diversity
One of our country's greatest assets is the diversity of our people and their
combined strengths. This Portfolio highlights companies that have recognized
the value of a diverse workforce. Merrill Lynch is proud to offer the
Principled Values Portfolio.
At Merrill Lynch, we believe that many investors may be concerned about the
principles of the companies in which they invest. That's why Defined Assets
Funds(SM) is proud to offer the Principled Values Portfolio(SM).
Invest with Principles
The Principled Values Portfolio gives you a convenient way to invest in a
socially responsible portfolio with an emphasis on diversity. The Portfolio
features stocks of companies that have made strides in promoting diversity in
the workplace and have also passed a broad range of screens for social
responsibility. These companies consider their principles and practices to be
an important part of their bottom line.
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The Portfolio
The stocks included in the Principled Values Portfolio were chosen through a
unique three-part screening process. First, we examined the Domini 400 Social
Index(SM)(1), an index modeled after the S&P 500 Index(1), that reflects the
financial performance of 400 companies which have passed multiple, broad-based
social screens. Then, Kinder, Lydenberg, Domini & Co. (KLD), the Consultant for
this Portfolio, applied its criteria to these stocks to identify companies that
have made efforts toward diversity in the workforce. Finally, Merrill Lynch
applied a screening process to determine investment merit. The result is a
one-year Portfolio that seeks capital appreciation.
The Strategy
Like other Portfolios in the Defined Asset Funds Select Series, the Principled
Values Portfolio employs a "buy and hold" strategy. That means it follows a
disciplined investment style of choosing stocks based on rigorous criteria, and
then holds them for a set period of time -- in this case, about one year. At
the end of that period, the selection criteria will be reapplied, and you can
reinvest in a new Portfolio, if available, or redeem your investment. Although
the Principled Values Portfolio is about a one-year investment, we recommend
you stay with this Strategy for at least three to five years for potentially
more consistent results.
The Principled Values Portfolio -- 1999 Series 4
Stocks Symbol
TECHNOLOGY
Adaptec, Inc. ADPT
Hewlett-Packard Company HWP
PE Biosystems Group PEB
Solectron Corp. SLR
Sun Microsytems, Inc. SUNW
Texas Instruments, Inc. TXN
FINANCIAL SERVICES/BANKS
Aetna, Inc. AET
J.P. Morgan & Company, Inc. JPM
Wells Fargo Company WFC
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(1) The "Domini 400 Social Index" is a service mark of its publisher,
Kinder, Lydenberg, Domini & Co., Inc. "S&P 500" is a registered trademark of
the McGraw-Hill Companies, Inc.
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FOOD
Quaker Oats Company OAT
SUPERVALU, Inc. SVU
HOME FURNISHINGS
Maytag Corp. MYG
Whirlpool Corp. WHR
RETAIL
J.C. Penney Company, Inc. JCP
The Limited, Inc. LTD
CHEMICALS
Praxair, Inc. PX
COSMETICS/PERSONAL CARE
Kimberly-Clark Corp. KMB
DISTRIBUTION/WHOLESALE
Genuine Parts Company GPC
FOREST PRODUCTS & PAPER
Westvaco Corp. W
HAND/MACHINE TOOLS
Stanley Works SWK
HEALTHCARE
Allergen, Inc. AGN
HOUSEHOLD PRODUCTS/WARE
Avery Dennison Corp. AVY
MACHINERY-diversified
Applied Materials, Inc. AMAT
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TRANSPORTATION
FDX Corp. FDX
TELEPHONE
Telephone and Data Systems, Inc. TDS
A Quest for Principle and Value
Social investing is the systematic incorporation of ethical values and
objectives in the investment decision-making process. Companies chosen for the
Principled Values Portfolio had to first undergo a stringent social investment
screening applied by KLD. These screens range from simple exclusionary
policies, to subtle evaluations of corporate behavior. Once screened by KLD,
each remaining company was reviewed by Defined Asset Funds for investment
merit.
Part 1: Screening for Principle
Our universe of stocks began with the Domini 400 Social Index. This index
represents stocks that have been screened on a broad range of issues, such as
the environment, community involvement, product safety and other concerns.
Companies in the Domini 400 Social Index derive little or no revenue from the
manufacturing of tobacco or alcohol products, gambling activities or military
contracting, and have no ownership in nuclear power.
Part II: A Commitment to Diversity
Next, KLD selected companies that possessed at least one strength in areas such
as:
CEO: The company's chief executive officer is a woman or a member of a
minority group.
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Promotion: The company has made notable progress in the promotion of women
and minorities.
Board of Directors: Women, minorities and/or disabled persons have a
significant presence on the board of directors.
Family Concerns: The company has outstanding employee benefits or other
programs addressing work and modern family concerns, such as child and
elder care, as well as flexible working schedules.
Women and Minority-Owned Businesses: The company maintains at least 5% of
its subcontracts with women or minority-owned businesses.
Employment of the Disabled: The company has implemented innovative hiring
programs, or other creative human resource programs for disabled persons.
A stock may be sold if the Portfolio Consultant determines that it no longer
meets the above criteria.
Part III: Investment Merit
Stocks that passed the previous screens were then reviewed using the Defined
Asset Funds proprietary selection process, which includes criteria such as
recent price performance, price to earnings ratio and dividend yield. From the
universe of stocks meeting the criteria, 25 stocks were finally chosen for the
Portfolio.
Past Performance of Prior Principled Values Portfolios
Past Performance is no guarantee of future results.
Series From Inception Through 6/30/99
(including annual rollovers)
Inception Series Return
1/8/98 1 25.01%
Most Recently Completed Portfolio
Period Series Return
1/8/98-2/19/99 1 20.47%
The chart above shows the average annual total returns for Series 1 which
represents price changes plus dividends reinvested, divided by the initial
public offering price, and relects 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.
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Principled Investing
The chart below compares a leading measure of socially responsible investing --
the Domini 400 Social Index (since its inception in 1990) -- to the S&P 500
Index. This chart shows that socially responsible investing has compared well
to the S&P 500, and that practicing socially responsible investing need not
require a sacrifice of investment returns. Of course, past performance is no
guarantee of future results.
Total Return(2) Comparison
Domini 400 S&P 500
Year Social Index Index
5/1/90-12/31/90 1.46% 2.37%
1991 37.84 30.55
1992 12.09 7.67
1993 8.52 9.99
1994 0.18 1.31
1995 38.20 37.43
1996 23.70 23.07
1997 38.26 33.36
1998 34.53 28.58
6/30/99 12.34 12.38
Average 21.76% 19.77%
Source for S&P 500 Total Return figures: Ibbotson
Our Portfolio Consultant
Kinder, Lydenberg, Domini & Co.'s (KLD) founders are prominent authorities on
social investing. Established in 1990, KLD has been providing research and
analysis to its clients who integrate social criteria into their investment
decisions. KLD is also the publisher of the Domini 400 Social Index.
Defined Asset Funds -- Our Philosophy
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(2) The returns above represent price changes plus dividends reinvested,
divided by the initial public offering. While the Domini 400 Social Index is
one of several screens used in choosing stocks for the Portfolio, these other
screens, as well as deduction of Portfolio sales charges and expenses on
investments in a portfolio, would have materially affected results. Therefore,
Index performance is no indication of future Portfolio results. The Domini 400
Social Index has not seen a down year since its inception.
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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 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.
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 may not be appropriate for investors seeking
capital preservation or high current income.
o The stocks in this Portfolio were selected for a combination of social
reasons and economic criteria, and there can be no assurance that the
Portfolio will perform better or worse than stocks selected solely on economic
criteria.
o The value of your investment will fluctuate with the prices of the underlying
stocks. Stock prices can be volatile.
Tax Reporting
The proceeds received when you sell this investment will reflect the deduction
of the deferred sales charge and, after the initial offering period, the charge
for organization costs.
In addition, the annual statement and the relevant tax reporting forms you
receive at year-end will be based on the amount paid to you, net of the
deferred sales charge and, after the initial offering period, the charge for
organization costs. Accordingly, you should not increase the tax basis in your
units by these charges.
Generally, dividends and any gains will be subject to tax each year. Net
capital gains, if any, on assets held over a year may qualify for a favorable
federal tax rate (currently no more than 20%) for individuals. However, on
rollovers to
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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.
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
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Maximum Sales Charge 2.75% $27.50
Estimated Annual Operating Expenses
(as a % of net assets) 0.316% $3.13
Estimated Organization Costs $1.87
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 will be
waived. You will only pay the deferred sales charge.
Institutional Volume Purchase Discounts
The following volume discounts have been developed to encourage socially
responsible investing while making the Portfolio especially attractive to
institutions, pension plans, foundations and other public or private investment
organizations.
Amount Total Sales Charge as a % of
Purchased Public Offering Price
Less than $50,000 2.75%
$50,000-$99,999 2.25%
$100,000-$499,999 1.75%
$500,000-$999,999 1.00%
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$1,000,000-$4,999,999 0.75%
$5,000,000 or more 0.60%
Is This Portfolio Right for You?
If you're saving for a long-term goal, such as a new home, child's education or
retirement, the Principled Values Portfolio may be a smart choice. This
Portfolio is not appropriate for investors who are seeking capital
preservation, high current income or who are unable or unwilling to assume the
risks associated with equity investing.
Invest With Principle Today!
You can invest in the Principled Values Portfolio for about $250 for regular or
IRA accounts. Call your Merrill Lynch Financial Consultant for a free prospectus
containing more complete information, including sales charges, expenses and
risks. Please read it carefully before you invest or send money.
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.
DEFINED ASSET FUNDS
Buy with knowledge o Hold With Confidence
FIXED-INCOME FUNDS
Corporate Funds
Government Funds
Municipal Funds
EQUITY INVESTOR FUNDS
Other Selected Series
Select Ten Portfolio (DJIA)
Select United Kingdom Portfolio (Financial Times Index)
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
Defined Technology Portfolio(SM)
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Institutional Holdings Portfolio
Merrill Lynch
Researched-Based Funds
1999 Year-Ahead Domestic Portfolio
1999 Year-Ahead International Portfolio
Biotechnology Portfolio
European Monetary Union Portfolio
Financial Portfolio
Concept Series
Baby Boom Economy Portfolios(SM)
Health Care Trust (Pharmaceutical & Biotechnology Portfolio)
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
[logo] Printed on Recycled Paper 11382BR-7/99
(C)1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated. Member SIPC.
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