DEFINED ASSET FUNDS (SM)
Index Series 3rd Quarter
1999
IRA Ideal!
The
S&P MidCap
Trust
An Investment Strategy
Seeking Attractive
Total Return
[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. Our 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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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 September 30, 1999, your
investment could have achieved the following results:
[A graph listing dates on the x-axis and dollars on the y-axis shows the
following data:
2/19/92 $10,000
12/31/92 $10,552
12/31/93 $11,895
12/31/94 $11,434
12/31/95 $14,880
12/31/96 $17,661
12/31/97 $23,309
12/31/98 $27,675
9/30/99 $27,063]
Past Performance of the S&P Mid-Cap Trust
<TABLE>
<S> <C> <C>
One Year Five Year Since Fund Inception
(September 30, 1998- (September 30, 1994- (February 19, 1992-
September 30, 1999) September 30, 1999) September 30, 1999)
Total Return....25.12% Cumulative Total Return.130.32% Cumulative Total Return....176.86%
Average Annualized Average Annualized Average Annualized
Total Return....22.31% Total Return.............17.61% Total Return................13.96%
</TABLE>
*"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.
- - 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.
- - Average annual returns reflect deduction of maximum applicable sales
charges.
The S&P MidCap Trust Advantages
Cost
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The minimum investment is about $250, with sales charge discounts available for
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 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.
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About the S&P Midcap 400 Index
o Standard & 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 September 30, 1999 ranging from about $235 million
to over $12 billion).(11)
o It represents 287 companies traded on the New York Stock Exchange, 105
over the NASDAQ National Market System and 8 on the American Stock
Exchange. The market sectors included are industrial, utility,
financial and transportation.(11)
(11) Source: FactSet
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
1. Veritas Software Co. VRTS 1.56%
2. Biogen, Inc. BGEN 1.43
3. Xilinx, Inc. XLNX 1.25
4. Linear Technology Corp. LLTC 1.09
5. Analog Devices ADI 1.08
6. Altera Corp. ALTR 1.04
7. Maxim Integrated Products MXIM 1.04
8. Univision Communications, Inc. UVN 0.99
9. Harley-Davidson, Inc. HDI 0.92
10. Comverse Technology, Inc. CMVT 0.81
# Source: FactSet as of September 30, 1999
Start Indexing Today!
Your financial professional can explain how the S&P MidCap Trust may help you
meet your personal investment goals, and provide a free prospectus containing
more complete information, including sales charges, expenses and risks.
Please read it carefully before you invest or send money.
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[LOGO (DEFINED ASSET FUNDS)
(Buy With Knowledge-Hold With Confidence)
Defining Your Risks
As with any 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 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 $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 5o $999,999 1.00%
$1,000,000 to $4,999,999 .75%
$5,000,000 to $14,999,999 .50%
$15,000,000 or more .25%
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[Logo] Printed on Recycled Paper 32722SJ-10/99
(C) 1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated. Member SIPC.
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