Defined Asset Funds [SM]
Concept Series
2000
A
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 decisions 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
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 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 to be industry leaders? Which companies will emerge as
tomorrow's stars?
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:
o Universal Access - The ability to access any information, over any network,
from any device, is on the way and will affect the system worldwide.
o 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.
o 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 $1.9 billion to over $350 billion, and each reported
positive earnings in their latest fiscal year. Of course, there can be no
assurance of future earnings.
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 producers 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
Internet Software
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 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.
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.
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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.
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.
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.
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.
VERITAS Software Corporation VRTS
VERITAS Software is a leading enterprise-class application storage management
software provider, with over 60 of the world's leading servers and operating
systems integrating is software.
Internet Equipment/Networks
ADC Telecommunications, Inc. ADCT
ADC Telecommunications derives most of its sales from broadband connectivity
products. The company has had a strong emphasis on manufacturing fiber optic
video transmission systems. The fiber access product markets have been growing
significantly.
Broadcom Corporation BRCM
Broadcom is a leading developer of highly integrated silicon solutions that
enable broadband digital data transmission.
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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.
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
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.
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.
Nortel Networks Corporation NT
Nortel Networks is one of the five largest telecommunications equipment
makers in the world. Products include switching, enterprise, wireless and
broadband networks. Nortel delivers value to customers through Unified Networks
solutions, spanning mission-critical telephony and Internet Protocol-optimized
networks.
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
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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.
Visual Networks, Inc. VNWK
Visual Networks provides reliable network infrastructure for the Internet
and Internet Protocol corporate networks regardless of the type of technology
platform used.
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 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.
TMP Worldwide, Inc. TMPW
TMP Worldwide is the onsite recruitment leader with career sites such as
The Monster Board, Online Career Center, Be The Boss and MedSearch. Clients
include 450 of the Fortune 500 companies.
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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
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.
Defined AssetFunds
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<PAGE>
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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
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 There can be no assurance that the Portfolio will meet its objective.
o 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.
o The Portfolio is not appropriate for investors seeking current income or
capital preservation and should not be considered a complete investment plan.
o The value of your investment will fluctuate with the prices of the underlying
stocks.
o Internet stock prices can be extremely volatile as compared to other types of
investments.
o The price you receive when you sell may be more or less than your cost.
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.
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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%.
As % of Public Amount Per
Offering Price 1,000 Units
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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) 0.186% $ 1.84
Estimated Organization Costs $ 1.46
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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 Total Sales Charge as a % of
Purchased Public Offering Price
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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%
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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.
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2000 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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