Defined Asset Funds(sm) Index Series
2nd Quarter 1999
IRA Ideal!
The
S&P MidCap
Trust
400
An Investment Strategy
Seeking Attractive
Total Return
[ML logo] Merrill Lynch
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A Diversified Approach to Investing in Mid-Cap Stocks
In the past, index results have often outperformed many money managers. As a
consequence, many investors have recognized the benefits of indexing --
investing in a broad representation of stocks structured to mirror, as closely
as possible, the price and yield performance 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. As interest in
medium-capitalization (mid-cap) companies grew, in 1991 Standard & Poor's
created the S&P MidCap 400 Index* to serve as a benchmark for mid-cap stocks.
The S&P MidCap Trust
Defined Asset Funds(SM) has a convenient way for you to own a broad portfolio
of mid-cap stocks. One S&P MidCap Trust is designed to track the performance
of mid-cap stocks by holding virtually every stock in the Index. It is created
for investors, like you, who are looking for an opportunity to resemble the
performance of a major market index at a reasonable cost.
Index Investing Offers Several Benefits:
Risk Reduction through Diversification
One of the best reasons for an indexing approach to investing is
diversification. By owning units of this Trust, you participate in a broad
portfolio. Through one purchase, you are instantly diversified among hundreds
of companies in four market sectors.
Buy and Hold
When you invest in the S&P MidCap Trust, you don't have to select individual
stocks or market sectors. You are buying, in effect, the major sectors of the
stock market represented by the Index. Of course, it is not possible to invest
in the Index itself.
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* "Standard & Poor's," "S&P 500 Index" and "S&P Midcap 400 Index" are
trademarks 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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INVESTMENT RESULTS+
While past performance is no guarantee of future results, if you had invested
$10,000 at the Trust's inception and held through June 30, 1999, your
investment could have achieved the following results:
[Mountain chart with dates on the x-axis (2/19/92, 12/31/92, 12/31/93,
12/31/94, 12/31/95, 12/31/96, 12/31/97, 12/31/98, 6/30/99) and dollar amounts
on the y-axis ($10,000, $15,000, $20,000, $25,000, $30,000). The points on the
graph reflect the investment value at the respective date ($10,000, $10,552,
$11,895, $11,434, $14,880, $17,661, $23,309, $27,675, $25,556).]
PAST PERFORMANCE OF THE S&P MID-CAP TRUST
One Year
(June 30, 1998 -- June 30, 1999)
o Total Return++......................................................16.82%
o Average Annualized Total Return.....................................14.20%
Five Year
(June 30, 1994 -- June 30, 1999)
o Cumulative Total Return++...........................................168.42%
o Average Annualized Total Return++....................................21.27%
Since Fund Inception
(February 19, 1992 -- June 30, 1999)
o Cumulative Total Return2...........................................202.32%
o Average Annualized Total Return3....................................15.85%
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+ Maximum sales charge and expenses were deducted.
++ Total return figures represent price changes plus reinvestment of
income and principal distributions (net of all expenses) but do not
reflect sales charges.
3 Average annual returns reflect deduction of
maximum applicable sales charges.
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The S&P MidCap Trust Advantages
Cost
The minimum investment is about $250, with sales charge discounts available
for volume purchases of $25,000 or more.
Low Cost May Increase Total Return
The Trust has no management fees, only a small annual supervisory fee and
operating expenses. Low costs are essential in an index fund, since an index
is a benchmark without expenses. Low costs mean more of your money is
invested and working for you.
Convenience
There's no need for multiple security purchases. The Trust offers
diversification with one price you can track weekly in Barron's.
Monthly Income or Reinvestment
The Trust pays income monthly, or you can elect to have any dividend income
and capital gains automatically reinvested into additional units of the Trust
at the then-current market value. By reinvesting your income, you not only
increase your holdings, you also gain the important benefits that monthly
compounding can have on total return.
Liquidity
Your investment may be sold at any time at the units' then-current market
value, which may be more or less than your original cost.
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.
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.
About the S&P MidCap 400 Index
o Standard and Poor's MidCap 400 Index was created on June 5, 1991.
o The Index measures the performance of 400 mid-sized companies
(capitalization as of June 30, 1999 ranging from about $224 million
to over $21 billion).(2)
o It represents 286 companies traded on the New York Stock Exchange,
107 over the NASDAQ National Market System and 7 on the American
Stock
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Exchange. The market sectors included are industrial, utility, financial
and transportation.(2)
How The S&P MidCap 400 Index is Calculated
The S&P MidCap 400 Index 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 of the index.
TOP TEN WEIGHTED COMPANIES#
Name Ticker % of Total
of Issuer Symbol Market Value
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1. QUALCOMM, Inc. QCOM 2.30%
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2. Linear Technology Corp. LLTC 1.18
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3. Biogen, Inc. BGEN 1.07
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4. E*Trade Group, Inc. EGRP 1.03
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5. Maxim Integrated Products MXIM 1.00
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6. Harley-Davidson, Inc. HDI 0.99
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7. Altera Corp. ALTR 0.96
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8. Xilinx, Inc. XLNX 0.96
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9. Veritas Software Corp. VRTS 0.92
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10. Lexmark Intl. Group, Inc. (Class A) LXK 0.85
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2 Source: FactSet
# Source: FactSet as of June 30, 1999
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Start Indexing Today!
Your financial professional can help you design a financial plan and explain
how the S&P MidCap Trust may help you meet your personal investment goals.
Contact your financial professional to obtain a free prospectus containing
more complete information including sales charges, expenses and risks. Please
read it carefully before you invest or send money.
[logo] Defined Asset Funds
Buy With Knowledge o Hold With Confidence
Defining Your Risks
As with an equity investment, the value of your investment will fluctuate with
the value of the underlying stocks. The Trust may not be appropriate for
investors seeking capital preservation or high current income. There can be no
assurance that the Trust will meet its objective.
Because of sales charges, 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. Dividends and any net capital gains
distributed will be subject to tax each year, whether or not reinvested.
Consult your tax advisor concerning state and local taxation.
Volume Purchase Discounts
For larger purchases, the sales charge is reduced to put a greater percentage
of your investment dollars to work for you.
Amount Total Sales Charge as a % of the
Purchased Public Offering Price
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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 to $14,999,999 .50%
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$15,000,000 or more .25%
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[recycle logo] Printed on Recycled Paper 32722SJ-7/99
[copyright logo] 1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC.
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