Defined Asset Funds [Registered]
Select Series 2000 A
Capital Appreciation Quantitative Research
Standard & Poor's Intrinsic Value Portfolio
A Value Approach to Selecting Growth Stocks
[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 [Registered] 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 that we believe 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.
Determining Intrinsic Value
As our Portfolio Consultant, Standard & Poor's uses the approach illustrated at
the right to seek 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.
This process uses a quantitative analysis and a series of screens to select the
stocks in this Portfolio.
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(*) "Standard & Poor's," is a trademark of The McGraw-Hill Companies, Inc. and
has been licensed for use by Defined Asset Funds. The Portfolio is not
sponsored, managed, sold or promoted by Standard & Poor's.
[A graph composed of five descending arrows summarizes the screening process
that determines whether a stock's current market price justifies its purchase.
The top arrow (pink) lists the first determinant applied to the 10,051 Stocks:
Free Cash Flow (greater than $20 million). Below it, the second (purple) arrow
indicates that the requirement of Net Margins of 15% or more is applied to the
remaining 1,598 stocks. This is followed by the third (violet) arrow showing
that the remaining 279 stocks need to have a Return on Equity of 15% or more in
order to qualify. The fourth (blue) arrow indicates that the 94 stocks that
have passed the screening process thus far need to pass the Market Acceptance
screen. The last arrow (green) shows that from the remaining 47 stocks, those
that are overpriced need to be eliminated. The arrows are all pointing
downwards and are arranged one on top of the other, their size decreasing as
the number of stocks they represent decreases. The arrows lead to the "Defined
Asset Funds Liquidity Screen" that narrows the fund down to 28 stocks which
compose the 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.
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.
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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
Company Symbol
Adobe Systems, Inc. ADBE
This company develops, markets and supports computer software products and
technologies that allow users to express and use information across all print
and electronic media.
American Power Conversion Corporation(+) APCC
Designing, developing, manufacturing and marketing uninterruptible power supply
products, American Power Conversion Corporation's products include electrical
surge protection devices, power conditioning products and associated software.
Biogen, Inc.(+) BGEN
Biogen develops, manufactures and markets drugs for human health care. It
develops and tests products used for the treatment of multiple sclerosis,
kidney, inflammatory and cardiovascular diseases as well as focuses on
developmental biology and gene therapy.
Bristol-Myers Squibb Company BMY
This word-wide health and personal care company markets therapies for various
diseases and disorders, consumer medicines, orthopedic devices, ostomy care,
wound management, nutritional supplements, infant formulas, and hair and skin
care products.
Cognos, Inc.(+)(++) COGN
Cognos supplies business intelligence software allowing users to extract
critical information through data access, reporting, analysis and forecasting.
Products are distributed directly and through resellers worldwide.
Compuware Corporation(+) CPWR
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This company's software products and professional services help information
technology professionals develop, implement and support the applications that
run their businesses.
Dionex Corporation(+) DNEX
Dionex develops, manufactures, markets and sells chromatography systems for
chemical analysis. Specific applications for Dionex systems include corrosion
monitoring and evaluation of raw materials.
Dover Corporation DOV
This company manufactures specialized industrial products and manufacturing
equipment such as heat transfer equipment, compressors, elevators, products
used in waste hauling and automated assembly equipment.
Franklin Resources, Inc. BEN
Through its subsidiaries, Franklin Resources provides investment management,
marketing, distribution, transfer agency and administrative services to open-
and closed-end investment companies.
Gannett Company, Inc. GCI
A nation-wide news and information company, Gannett publishes various daily
newspapers, including "USA TODAY" and "USA WEEKEND", a newspaper magazine. This
company also operates television stations and cable television systems in major
U.S. markets.
GTE Corporation GTE
GTE Corporation provides local telephone and wireless services in 29 states and
long-distance service and Internet access in all 50 states.
Investment Technology Group, Inc. ITG
This company provides technology-based equity trading services and transaction
research to institutional investors and brokers.
IPALCO Enterprises, Inc. IPL
A multistate energy company, IPALCO Enterprises provides a variety of energy
products and services.
Johnson & Johnson JNJ
This company manufacture and sells health-care products and related services to
the consumer, pharmaceutical and professional markets worldwide.
Kaydon Corporation KDN
Kaydon designs, manufactures and sells custom-engineered products, such as
antifriction bearings, filters and filter housings and specialty retaining
rings, for the aerospace, defense and industrial industries.
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Lincare Holdings, Inc.(+) LNCR
This company provides oxygen and other respiratory therapy services to patients
in their homes. Patients typically suffer from emphysema, chronic bronchitis or
asthma.
MGIC Investment Corporation MTG
Through its subsidiary, MGIC Investment Corporation provides private mortgage
insurance coverage in the U.S. Its customers include thrifts, mortgage bankers
and brokers, commercial banks, credit unions and other lending institutions.
Microsoft Corporation(+) MSFT
Microsoft offers Internet and Intranet, operating system, server application,
business and consumer applications software and development tools.
Plantronics, Inc.(+) PLT
Designing, manufacturing and marketing lightweight communications headsets and
accessories, Plantronics offers amplified telephone headsets and specialty
telephones for the hearing-impaired users.
Pre-Paid Legal Services, Inc.(+) PPD
Operating across the U.S., this company's plans provide for or reimburse legal
service benefits, will preparation, traffic violation defense,
automobile-related criminal charges and letter writing.
T. Rowe Price Associates, Inc. TROW
Serving as investment advisor to the T. Rowe Price Mutual Funds, this company
provides mutual fund administrative services, including transfer agent,
accounting and shareholder services, discount brokerage and trust services.
Schering-Plough Corporation SGP
This world-wide pharmaceutical company discovers and markets new therapies and
treatment programs. Core products groups include allergy/respiratory, anti-
infective/anticancer, dermatologicals and cardiovasculars as well as an animal
health business.
SLM Holding Corporation SLM
Commonly known as Sallie Mae, this company provides funds, accounting services
and operational support services for federally guaranteed student loans.
Southdown, Inc. SDW
Manufacturing cement and ready-mixed concrete, Southdown also mines, processes
and sells construction aggregates and specialty mineral products, as well as
installs highway safety systems such as guardrails and traffic signals.
Techne Corporation(+) TECH
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This specialty manufacturer of biotechnology products has more than 2,500
products, including 492 introduced in 1999. Its major products include
hematology controls and purified proteins called cytokines.
Tellabs, Inc.(+) TLAB
Tellabs designs, manufactures, markets and services voice, data, video
transport and network access systems. Products are used worldwide by public
telephone companies, long-distance carriers, alternate and cellular service
providers, cable operators, government agencies and utilities.
Tribune Company TRB
This media company publishes newspapers including the "Chicago Tribune," "The
Orlando Sentinel" and the "Hampton Roads." Tribune also owns and operates
television and radio stations.
Watson Pharmaceuticals, Inc.(+) WPI
This company develops, manufactures and sells proprietary and off-patent drugs
in the therapeutic areas of primary care, women's health, dermatology and
neurology/psychiatry.
Past Performance of Prior Standard & Poor's Intrinsic Value Portfolios
Past performance is no guarantee of future results.
Series From Inception Through
3/31/00
(including annual rollovers) Most Recently Completed Portfolio
Inception Series Return Period Series Return
11/21/96 C 16.67% 12/14/98-1/14/00 C 33.38%
4/2/97 A 22.00 4/13/98-5/21/99 A 16.95
8/6/97 B 11.30 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 different performance periods and a reduced sales charge on
annual rollovers.
(+) These stocks currently do not pay dividends.
(++) This is a foreign corporation. The current annual dividends, if any, may
be subject to withholding tax.
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Defined Asset Funds [Registered]
Buy With Knowledge - Hold With Confidence
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Defined Asset Funds -- Our Philosophy
At Defined Asset Funds, we believe that knowledge and discipline are essential
to sound investment planning. For this reason, our unit investment trusts
provide the information to help you invest appropriately, and the discipline to
help you stay on course.
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We've found that diversity and drive can be key to uncovering compelling
investments. To this end, our experienced team of research analysts and
securities traders search Wall Street and beyond, creating portfolios for
strong potential. Our equity funds seek to capitalize on vibrant economic
sectors, innovative quantitative strategies and thorough fundamental analysis.
Our fixed-income funds offer the regular income and stability to help balance
and diversify your investment assets.
At Defined Asset Funds, we set the foundation for each of our portfolios in
this way, because we have a very important goal in mind -- yours.
Select Today!
You can get started with the Standard & Poor's Intrinsic Value Portfolio for
$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.
This 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.
There can be no assurance that this Portfolio will meet its objective or that
stock prices will not decrease.
The value of your investment will fluctuate with the prices of the underlying
stocks. Stock prices can be volatile.
Tax-Efficiency
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 net capital gains will be subject to tax each
year, whether or not reinvested. However, on rollovers to future Portfolios, if
available, investors may 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.
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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 $15.00 per 1,000 units, about
1.50%.
As a % of Public Amount Per
Offering Price 1,000 Units
Initial Sales Charge 1.00% $10.00
Deferred Sales Charge 1.50% $15.00
Maximum Sales Charge 2.50% $25.00
Creation and Development Fee (as % of 0.250% $2.48
net assets)
Estimated Annual Expenses (as a % of 0.21% $2.07
net assets)
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 as a % of Public
Amounts Purchased Offering Price
Less than $50,000 2.50%
$50,000 to $99,999 2.25%
$100,000 to $249,999 1.75%
$250,000 to $999,999 1.50%
$1,000,000 or more 0.75%
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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 the offer or sale is not permitted.
[logo] Printed on Recycled Paper 11571BR-4/00
[copyright] 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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