Defined Asset Funds [SM]
Concept Series
1999
D
Capital Appreciation
Fundamental Research
IRA Ideal!
Internet Portfolio
The Internet and its technology have transformed our world, carving out new
channels of communication, connection and opportunity.
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As flagship for the information age, the Internet has come a great distance in
just a few short years. Though still young, the medium and its technology have
already transformed our world, carving out new channels of communication,
connection and opportunity. With so many developments at such a fast pace,
making investment decision in this new frontier can challenge even experienced
investors. Now, defined Asset Funds[SM] offers you a professionally selected
portfolio for investing in the potential of the Internet with our new . . .
Internet Portfolio
Defined Asset Funds - Our Philosophy
As 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.
The Internet: Today and Beyond
What will shape the next decade of the Internet era? Will today's star
performers continue their success? Will they even remain in the competition?
The rapid evolution of this industry has left many investors wondering which
trends will dominate the coming years. Although day to day market performance
can vary widely, we believe certain trends have begun to emerge. While there can
be no guarantee of results, the industry and its investors may potentially
benefit from:
* Universal Access - The ability to access any information, over any network,
from any device, is on the way and will affect the system worldwide.
* Internet Appliances - These products go beyond desktop PCs, to include
Internet-connected telephones, televisions, pagers, hand-held games,
personal planners and other devices, as well as the software, hardware,
content and service providers to support them.
* e-Commerce - Ever more consumers are purchasing goods and services online,
and new providers are springing up to meet this demand.
The Portfolio
The Internet Portfolio seeks capital appreciation by investing in 33 leading
companies from the Internet industry, including service providers, e-commerce,
equipment/networking and software firms. Selected by the Defined Asset Funds
Research Group, these companies are significant in this industry, providing
computers, peripheral components, software and hardware to support
Internet-related commerce and communications. Portfolio stocks come from
companies with market capitalizations of $700 million to over $100 billion, and
each reported positive earnings in 1998.
The Portfolio will hold its stocks for about one year. At the end of that time,
you can choose to either redeem your investment, or roll your proceeds into the
next Portfolio, if available, at a reduced sales charge.
The Sectors
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Software products will likely experience strong earnings growth as Internet
Service Providers (ISPs) continually upgrade their services, new applications
improve accessibility and companies outsource data-intensive operations such as
billing.
Equipment/Networking firms are gearing up to meet the rising demand for faster
and better Internet connectivity and the technologies that support it.
Networking companies will benefit from the need to link geographically dispersed
networks to a single infrastructure, and computer makers will continue to refine
their products to become more user-friendly and economical.
Internet Service Providers derive the bulk of their revenue from customers'
monthly fees for Internet access and from online advertising fees. As the
Internet experiences exceptional growth, it is changing the lives of millions of
users and creating opportunities for creative service providers around the
globe.
e-Commerce is still in its infancy, but is expected to grow enormously over the
next two years as individuals and corporations increasingly buy and sell
products and services online. Improved transaction security has added to this
remarkable growth.
A Defined Portfolio
Company Symbol
Internet Software
Adobe Systems, Inc.(*) ADBE
Adobe provides graphic design, publishing and imaging software for Web and print
production, and is the fourth largest U.S.-based personal software company in
the world.
Check Point Software Technologies, Ltd.(+) CHKP
Check Point develops, markets and supports solutions for secure and reliable
business-to- business communications over any Internet Protocol (IP) network.
i2 Technologies, Inc. ITWO
i2 delivers solutions that enable electronic Business Process Optimization
(eBPO) - a new layer of decision intelligence for planning and optimizing across
multiple enterprises.
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Legato Systems, Inc. LGTO
Legato Systems is a leader in the enterprise storage management software market.
It develops, markets and supports network storage management software products.
Macromedia, Inc. MACR
Macromedia develops, markets and supports software and services for Web
publishing and Web learning. Its shockwave.com operation designs, develops and
markets products and services for online entertainment on the Web.
Mercury Interactive Corporation MERQ
Mercury Interactive develops, markets and supports a comprehensive suite of
automated software testing solutions. It helps companies build better
applications, from e- business/Internet transaction systems to enterprise
resource planning and other client/server applications.
Microsoft Corporation MSFT
Microsoft, the world's largest personal computer software company, develops,
produces and markets a wide range of software for business and personal use. We
anticipate Microsoft's earnings growth to continue as it introduces new products
to meet its customers' evolving needs.
Oracle Corporation ORCL
Oracle is a major vendor of database software and information management
services. Its Oracle Exchange is an e-business solution for corporate buyers and
sellers of goods and services.
Pegasus Systems, Inc. PEGS
Pegasus Systems provides electronic commerce and transaction processing services
to the hotel industry worldwide through its Electronic Distribution and
TravelWeb services (www.travelweb.com).
Rational Software Corporation RATL
Rational Software helps organizations develop and deploy e-business, Web,
enterprise-wide, technical and embedded software through a combination of tools,
services and software engineering best practices.
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RSA Security, Inc. RSAS
RSA Security is a provider of enterprise network, application and data security
solutions and technologies. RSA helps customers from a range of industries to
conduct business securely, protect corporate information assets and facilitate
business-to-business electronic commerce.
Siebel Systems, Inc. SEBL
Siebel Systems designs, develops, markets and supports a leading Web-based
application software product family designed to meet the sales, marketing and
customer service information system requirements of large multinational
organizations.
Internet Equipment/Networks
Broadcom Corporation (Class A) BRCM
Broadcom is a leading developer of highly integrated silicon solutions that
enable broadband digital data transmission.
Cisco Systems, Inc. CSCO
Cisco is the world-wide leader in networking for the Internet. Cisco products
include routers, LAN and ATM switches, dial-up access servers and network
management software.
3Com Corporation COMS
3Com is a global networking company with an installed base representing over 200
million network connections. It offers a broad range of global data networking
solutions.
Dell Computer Corporation DELL
Dell is a leading direct marketer of computer systems, and a major computer
vendor. It designs, develops, manufactures, markets, services and supports a
wide range of computer systems.
EMC Corporation EMC
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EMC designs, manufactures, markets and supports a wide range of storage-related
hardware, software and service products for the mainframe, open systems and
network computer storage markets worldwide.
Gateway, Inc. GTW
Gateway is a direct marketer of PCs and related products and services. The
company sells its products directly to customers through three distribution
channels - phone sales, Internet Web site and its Gateway Country stores.
Lucent Technologies, Inc.(*) LU
Lucent Technologies is the largest provider of telecommunications equipment in
the world. It manufactures Internet Protocol (IP)-based data networking
products.
Network Appliance, Inc. NTAP
Network Appliance is a leading provider of network storage and data access
solutions.
Nokia Corporation(*)(+) NOK
Nokia is a global wireless and wireline telecommunications company. It pioneered
the Nokia 9110 Communicator, an all-in-one mobile phone that offers fax, e-mail
and Internet capabilities.
Sun Microsystems, Inc. SUNW
Sun Microsystems is a world-wide supplier of high-performance workstations,
servers and networking software. Major products include "HotJava" and
"SunScreen."
Tellabs, Inc. TLAB
Tellabs designs, manufactures, markets and services voice and data transport and
network access systems.
Texas Instruments, Inc.(*) TXN
Texas Instruments is a global semiconductor company and a designer and supplier
of digital signal processing solutions. It is a fundamental player in the
networking of today's society, with operations in wireless communications,
semiconductors, signal processing, Internet and digital imaging.
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Internet/Web Service Providers
America Online, Inc. AOL
America Online is a premier online service company. Over the last four years,
sales have grown as the company has aggressively sought new customers and formed
strategic alliances.
BroadVision, Inc. BVSN
BroadVision is a leading supplier of Internet application solutions. It has
experienced significant sales growth over the last several years as the demand
for Internet applications has soared worldwide.
MCI WorldCom, Inc. WCOM
MCI WorldCom offers an array of solutions for residential and small business
communications needs, including Internet. Its Internet expansion comes amidst a
dramatic increase in market demand for Internet bandwidth.
Network Solutions, Inc. NSOL
Network Solutions is a pioneer of Web addresses. It acts as the exclusive
registrar of Internet domain names within the .com, .org, .net and .edu
top-level domains.
Sapient Corporation SAPE
Sapient is a leading e-services consulting company providing Internet strategy
consulting and sophisticated Internet-based solutions.
USWeb Corporation USWB
USWeb provides a comprehensive range of Intranet, Extranet and Web site
solutions and services to medium- and large-sized companies.
Yahoo! Inc. YHOO
Yahoo! is a global Internet media company offering a network of branded World
Wide Web programming.
Internet e-Commerce
eBay, Inc. EBAY
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eBay is the world's largest personal online trading community, in which buyers
and sellers are brought together in an automated and entertaining auction format
to buy and sell personal items.
Sykes Enterprises, Inc. SYKE
Sykes Enterprises operates e-commerce centers and technical call centers through
branch offices located in 13 countries on four continents.
(*) Only these stocks currently pay dividends The current annual dividends per
share, in order of appearance, are $0.10, $0.08, $0.52 and $0.17, based on the
latest quarterly, semi-annual or annual declaration. There can be no assurance
that future dividend payments, if any, will be maintained in an amount equal to
these dividends.
(+) The issuer is a foreign corporation; dividends, if any, will be subject to
withholding taxes.
Defined Asset Funds [SM]
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Connect with the Future!
You can get started today with the Internet 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
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Please keep in mind the following factors when considering this investment. Your
financial professional will be happy to answer any questions you may have.
* There can be no assurance that the Portfolio will meet its objective.
* This Portfolio consists entirely of stocks in the Internet industry. This
industry is subject to special risks including intense competition and
rapid obsolescence. Adverse developments in this industry or in particular
stocks could affect the value of the Portfolio.
* The Portfolio is not appropriate for investors seeking current income or
capital preservation and should not be considered a complete investment
plan.
* The value of your investment will fluctuate with the prices of the
underlying stocks.
* Internet stock prices can be extremely volatile as compared to other types
of investments.
Tax Reporting
When seeking capital appreciation, managing tax liability on capital gains can
be vital to your overall return. By holding this Fund 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%) for individuals.
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.
As a % of Public Amount Per 1,000
Offering Price Units
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Initial Sales Charge 1.00% $10.00
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Deferred Sales Charge 1.75% $17.50
Maximum Sales Charge 2.75% $27.50
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Estimated Annual Expenses (as 0.196% $1.94
a % of net assets)
Estimated Organization Costs $2.04
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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.
Amount Purchased Total Sales Charge as a % of the
Public Offering Price
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Less than $50,000 2.75%
$50,000 to $99,999 2.50%
$1000,000 to $249,999 2.00%
$250,000 to $999,999 1.75%
$1,000,000 or more 1.00%
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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 32776BR-12/99
[Copyright] 1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
