Defined Asset Funds(R)
SELECT SERIES
1999
C
Capital Appreciation
Quantitative Research
IRA Ideal!
Standard & Poor's
Intrinsic Value
Portfolio
A Value Approach to
Selecting Growth Stocks
[ML LOGO] Merrill Lynch
At one time, it was thought that intrinsic value was the same as "book" or
liquidation value. Intrinsic value, however, goes beyond these traditional
measurements -- seeking instead to assess a stock's earnings value. This
evaluation is concerned with a company's business worth and its earnings
potential. Now, Defined Asset Funds(R) offers you an opportunity to invest in
stocks with potentially high relative intrinsic values, with our...
Standard & Poor's* Intrinsic Value Portfolio
The Portfolio
The Standard & Poor's Intrinsic Value Portfolio seeks capital appreciation by
investing in stocks believed to have the potential for growth, based on a
combination of fundamental and valuation measurements. After about a year, we
intend to reapply the screening process to select a new Portfolio. At that
time, you may roll your proceeds into the new Portfolio, if available, or
redeem your investment. Although this 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.
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* "Standard & Poor's" is a trademark 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.
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Determining Intrinsic Value
As our Portfolio Consultant, Standard & Poor's uses this approach (illustrated
at right) to determine whether a stock's current market price justifies its
purchase. The goal is to identify stocks with intrinsic values higher than
their current market prices. Toward this end, Standard & Poor's developed a
proprietary analytical process that uses a combination of fundamental and
valuation measurements to identify stocks believed to have growth potential.
The process uses a quantitative analysis and a series of screens to select the
Portfolio stocks.
Free Cash Flow greater than $20 million
Compustat Database 10,158 Stocks
Net Margins of 15% or more
1,491 Stocks
Return on Equity of 15% or more
229 Stocks
Market Acceptance
88 Stocks
Eliminate Overpriced Stocks
50 Stocks
Defined Asset Funds Liquidity Screen
27 Stocks
Intrinsic Value Portfolio
The Screening Process
Companies with High Free Cash Flow
Free Cash Flow of more than $20 million for the last year. This measure is
calculated by adding a company's net income, depreciation and amortization, and
then subtracting its capital expenditures. This is intended to identify
companies with high positive cash flows.
Profitability
Net Profit Margins of 15 % or more for the last year. This represents net
income, divided by sales. It measures a company's franchise value.
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Return on Equity of more than 15 % for the last three fiscal years and the last
four quarters. Return on equity is net income as a percentage of common equity.
This is intended to measure how efficiently the company is using its capital.
Market Acceptance
Good Value of reinvested earnings. To pass this screen, growth in market
capitalization must exceed growth in retained earnings of the company over the
last five years. This screen selects companies that have been able to add more
than a dollar of market value for every additional dollar of earnings retained.
This measures market acceptance and momentum.
Eliminate Overpriced Stocks
Stock trades below Intrinsic Value. Only stocks whose current price is lower
than the present value of their estimated free cash flow, as calculated by
Standard & Poor's, will be included.
Liquidity
Defined Asset Funds reviews the remaining stocks for market capitalization,
liquidity and other factors. Only the stocks that pass all of the screens are
included in the Standard & Poor's Intrinsic Value Portfolio.
A DEFINED PORTFOLIO
% of
Company Symbol Portfolio
Technology: Semiconductors/Software 18%
Altera Corporation ALTR
Designs, manufactures and markets programmable logic devices and associated
development tools.
Cognos, Inc.+ COGN
Supplies business intelligence software and develops software tools for
application development.
Compuware Corporation CPWR Provides software products and professional services
to information technology businesses using mainframe and client/server systems.
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Gentex Corporation GNTX
Designs, makes and markets electro-optic technology products worldwide.
Intel Corporation INTC
Designs, manufactures and sells computer components and related products.
Medical-Drugs/Health Care 15%
Abbott Laboratories ABT
Discovers, develops, manufactures and sells a broad line of health-care
products and services.
Biovail Corporation Internationals+ BVF Formulates, clinically tests, registers
and manufactures drug products using advanced drug delivery technologies.
Lincare Holdings, Inc. LNCR
Supplies oxygen and other vital respiratory therapy services to in-home
patients.
Techne Corporation TECH
Manufactures and distributes biological products through Research and
Diagnostic Systems, Inc.
Investment Management/Technology 15%
Franklin Resources, Inc. BEN
Offers investment management, marketing, distribution and other services to
investment companies and individuals.
Investment Technology Group, Inc. ITG
Provides technology-based equity trading services and transaction research to
institutional investors and brokers.
The John Nuveen Company JNC Provides investment advisory services, specializing
in mutual funds, exchange-traded funds and unit trusts, as well as investment
banking and asset management services.
T. Rowe Price Associates, Inc. TROW
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An investment advisor to T. Rowe Price Mutual Funds, other sponsored investment
products and private accounts.
Loans/Mortgage 11%
AmeriCredit Corporation ACF
Specializes in purchasing, securitizing and servicing automobile loans using
strategic alliances with select auto groups and banks.
MGIC Investment Corporation MTG
Provides private mortgage insurance to lending institutions in the U.S., as well
as related underwriting and contract services.
SLIM Holding Corporation SLIM
Commonly known as Sallie Mae, provides financing and services to the U.S.
higher education credit market.
Building Products 7%
Centex Construction Products, Inc. CXP
Produces and sells cement, aggregates, ready-mix concrete and gypsum
wallboard for construction purposes in the U.S.
Southdown, Inc. SDW
Manufactures cement and ready-mix concrete; mines, processes and sells
construction aggregates and specialty mineral products.
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% of
Company Symbol Portfolio
Commercial Services 7%
Pre-Paid Legal Services, Inc. PPD
Develops, underwrites and markets legal service plans. The company's plans
provide for or reimburse will preparation, traffic violation defense and other
legal services across the U.S.
Viad Corporation VVI
Markets payment services, convention and event services
and airline catering to retail and financial locations throughout the U.S.
Insurance 7%
Brown & Brown, Inc. BRO
Markets and sells property and casualty insurance products and services.
Mutual Risk Management Limited+ MM
Provides risk-management services for clients who need an alternative to
commercial insurance.
Instruments-Scientific 4%
Dionex Corporation DNEX
Develops, manufactures, markets and sells chromatography systems for
chemical analysis.
Machinery 4%
Dover Corporation DOV
Makes a variety of specialized industrial products and manufacturing
equipment.
Metal Processors 4%
Kaydon Corporation KDN
Designs, manufactures and sells custom-engineered products including filters,
shaft seals, bearing systems and components.
Multimedia 4%
Gannett Company, Inc. GCI
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Publishes various daily newspapers, including USA Today, and magazines.
Also operates television stations and cable systems throughout the U.S.
Telecommunications 4%
Plantronics, Inc. PLT
Manufactures, markets and provides communication headset products to
telephone companies and businesses worldwide.
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+ This is a foreign corporation. The current annual dividends, if any may
be subject to withholding tax.
Past Performance of Prior Standard & Poor's Intrinsic Value Portfolios
Past performance is no guarantee of future results.
Series From Inception
Through 9/30/9
(including annual rollovers) Most Recently Completed Portfolio
Inception Series Return Period Series Return
11/21/96 C 11.03% 12/3/97-1/15/99 C 13.15%
4/2/97 A 17.97 4/13/98-5/21/99 A 16.95
8/6/97 B 3.16 8/10/98-9/10/99 B 27.02
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 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.
Defined Asset Fund(R)
Buy With Knowledge o Hold With Confidence
EQUITY INVESTOR FUNDS
Other Select Series
Select Ten Portfolio (DJIA)
United Kingdom Portfolio (Financial Times Index)
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Institutional Holdings Portfolio
Multinational Portfolio
Select Growth Portfolio
Select Large-Cap Growth Portfolio
Select S&P Industrial Portfolio
Select Standard & Poor's Industry Turnaround Portfolio
Concept Series
Baby Boom Economy Portfolios[SM]
Energy Portfolio
Financial Services Portfolio
Health Care Trust
Internet 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
FIXED-INCOME FUNDS
Corporate Funds
Government Funds
Municipal Funds
Defined Asset Funds--
Our Philosophy
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.
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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 Standard & Poor's Intrinsic Value Portfolio for
about $250. Call your financial professional for a free prospectus containing
more complete information, including sales 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 having above-average price volatility. It may not be
appropriate for investors seeking capital preservation or current income.
o There can be no assurance that the Portfolio will meet its objective, that
stock prices will not decrease or that the Portfolio will outperform general
market indices, especially during periods of sharply rising stock prices.
o The value of your investment will fluctuate with the prices of the underlying
stocks. Stock prices can be volatile.
A Tax-Efficient Structure
When seeking capital appreciation, managing tax liability on capital gains can
be vital to your overall return. By holding this Portfolio for more than one
year, individuals may be eligible for favorable federal tax rates on net
long-term capital gains (currently no more than 20%).
Generally, dividends and any gains will be subject to tax each year, whether or
not reinvested. 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 about 1% the first time you buy. In
addition, you'll pay a deferred sales charge of $17.50 per 1,000 units, about
1.75%, deducted over the last ten months of the Portfolio.
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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 Expenses
(as a % of net assets) 0.211% $2.09
Estimated Organization Costs $2.74
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 on that
Portfolio will be waived. You will only pay the deferred sales charge.
Volume Purchase Discounts
For larger purchases, the overall sales charges are reduced to put more of your
investment dollars to work for you.
Total Sales Charge
Amount as a % of
Purchased Public Offering Price
Less than $50,000 2.75%
$50,000 to $99,999 2.50%
$100,000 to $249,999 2.00%
$250,000 to $999,999 1.75%
$1,000,000 or more 1.00%
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 the offer or sale is not permitted.
11571BR-12/99
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[RECYCLED LOGO] Printed on Recycled Paper
(C)1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated. Member SIPC.
Defined Asset Funds is a registered service mark of Merrill Lynch & Co., Inc.
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