Defined
Asset Funds
THE S&P
MIDCAP
400
TRUST
Merrill Lynch
A Simple Way to Invest in MidCap Stocks
In the past, index results have often outperformed many money managers.
Investing in a broad representation of the market, or indexing, is an
investment strategy that allows you to own a portfolio of stocks that is
structured to mirror, as closely as possible, the total return of a market
index.
For years, the S&P 500 Index has been used by professional money managers to
measure the performance of a broad portion of the stock market. But as
interest in medium-capitalization (MidCap) companies grew, in 1991 Standard &
Poor's created the S&P MidCap 400 Index,* which offers a benchmark for MidCap
stocks.
* "S&P MidCap 400 Index" is a trademark of the Standard & Poor's
Corporation. The Standard & Poor's Corporation has not participated in any way
in the creation of the Trust and is not affiliated with any of the Trust's
sponsors.
The S&P MidCap Trust
We have a simple way for you to own MidCap stocks. The Defined Assets
Funds(SM) S&P MidCap Trust was designed to track the stock market performance
of MidCap stocks by holding virtually every stock in the index.
Index Investing Offers Several Benefits:
Simplified Decision-Making
When you invest in the S&P MidCap Trust, you don't have to select individual
stocks. You are, in effect buying a portion of the market represented by the
index.
Risk Reduction through Diversification
One of the best reasons for an indexing approach is the fact that indexing
reduces the volatility of holding individual stocks. By investing in this
Trust, you are instantly diversified among hundreds of companies in four
industry sectors with just one purchase. This way, your exposure to risk is
reduced, especially when compared to buying one, two, or even ten of the
individual stocks.
Increase Total Return with Lower Costs
The true test of performance is the total return-- and the price you pay for
it. Low costs are essential if an index fund is going to work efficiently.
After all, an index is just a benchmark and has no expenses of any kind.
The Trust has no management fees, only a small annual supervisory fee and
operating expenses of about 0.25%. Low cost means more of your money is
invested and working for you.
Defined Portfolio
You are investing in a known, pre-selected portfolio of companies.
Liquidity
Your investment may be sold at any time at the then-current market-value, which
may be more or less than your original cost.
Fund Performance
<TABLE>
<CAPTION>
<S> <C>
One Year Ended
(January 1, 1996 -- December 31, 1996)
o Total Return*................................ 18.69%
o Average Annualized Total Return**............ 15.97%
Since Inception
(February 20, 1992 -- December 31, 1996)
o Total Return*................................ 77.93%
o Average Annualized Total Return**............ 12.05%
</TABLE>
*Total Return figures represent changes in unit price plus reinvestment of
income and principal distributions (net of all expenses) but do not reflect
sales charges.
**Average annual returns reflect deduction of maximum applicable sales
charges. Past performance is not indicative of future results.
Investment Results
[A bar chart captioned "If you had invested $10,000 from inception and held
through December 31, 1996, your investment would have achieved the following
results+:" compares the cumulative annual performance of the MidCap stocks
from 2/20/92 through 12/31/96. The x axis reflects dollar amounts in $2,000
increments, the y axis reflects years. There is a series of bars indicating
the dates and gains starting with 2/2/92, $10,000; 12/31/92, $10,393;
12/31/93, $11,716; 12/31/94, $11,260; 12/31/95, $14,654 and ending with
12/31/96, $17,392. The dates are on the bottom of the bars and the values are
on the top.]
+Maximum sales charge was deducted.
If you had invested $10,000 from inception and held through December 31, 1996,
your investment would have achieved the following results:
YOU CAN ALSO TAKE ADVANTAGE OF BENEFITS NOT AVAILABLE THROUGH THE PURCHASE OF
INDIVIDUAL STOCKS:
Monthly Income or Reinvestment
The Trust pays monthly or you can elect to have dividend income and capital
gains automatically reinvested into additional units of the same Trust at net
asset value. By reinvesting your income, you not only increase your holdings,
but gain the important benefits that monthly compounding can have on total
return performance.
Convenience
The Trust invests in many stocks, but makes it simple with only one price to
track. For your convenience, you can follow the price of your investment
weekly in Barron's.
Low Minimum Investment
The minimum investment is only $250.
ABOUT THE INDEX
Standard & Poor's MidCap 400 Index was:
o Created June 5, 1991.
o Measures the performance of 400 mid-sized companies (capitalization
currently ranging from about $148 million to over $7.3 billion).
o Represents 292 companies traded on the New York Stock Exchange,
seven on the American Stock Exchange and 101 over the NASDAQ
National Market System. The market sectors included are
industrials, utilities, financials and transportation.
How The S&P MidCap Trust is Calculated
The S&P MidCap Trust is market-value weighted which takes into account two
factors: price per share and total number of shares outstanding. Therefore,
the larger a Company's capitalization, the greater that company's effect will
be on the performance in the index.
TOP TEN WEIGHTED COMPANIES*
<TABLE>
<CAPTION>
Percentage of
Name Ticker Total Market Value
<S> <C> <C>
Coca-Cola Enterprises CCE 1.095%
Franklin Resources, Inc. BEN 1.026%
Parametric Technology PMTC .943%
Charles Schwab Corp. SCH .916%
State St. Boston Corp. STT .893%
Cardinal Health, Inc. CAH .870%
Aflac, Inc. AFL .789%
USA Waste Services UW .776%
US Robotics Corp. USRX .744%
SunAmerica, Inc. SAI .717%
* As of 3/5/97
</TABLE>
Volume Purchase Discounts
For larger purchases, the sales charge is reduced to put a greater percentage
of your investment dollars to work for you.
<TABLE>
<CAPTION>
Sales Charge
As a Precentage of the
Amount Purchased Public Offering Price
- -----------------------------------------------------------------------------
<S> <C>
Less than $25,000 2.25%
$25,000 to $49,999 2.00%
$50,000 to $74,999 1.75%
$75,000 to $99,999 1.50%
$100,000 to $249,999 1.25%
$250,000 to $999,999 1.00%
$1,000,000 to $4,999,999 .75%
$5,000,000 or more .50%
- -----------------------------------------------------------------------------
</TABLE>
Because of sales charges, Trust expenses and commissions, as well as the fact
that the Trust may not own all of the stocks in the index or in the same
proportions, or be fully invested at all times, Trust performance will vary
somewhat from the performance of the index.
Risk Factors
As with any equity investment, unit price varies. The Trust may not be
appropriate for investors seeking conservation of capital or high-current
income.
Sound Financial Planning
Your financial professional can help you design a financial plan and explain
how the S&P MidCap Trust may help you meet your goals. Contact your financial
professional to request a free prospectus containing more complete information
about the S&P MidCap Trust or any other Defined Asset Fund (including sales
charges and expenses).
Read the prospectus carefully before investing.
Printed on Recycled Paper 14800SJ-3/97
[Copyright] 1997 Merrill Lynch, Pierce, Fenner and Smith Incorporated.
Member SIPC.
