IRA Idea!
Defined Asset Funds(R)
Index Series
4th Quarter 1999
IRA Ideal!
The S&P MidCap Trust
An Investment Strategy Seeking Attractive Total Return
[logo] Merrill Lynch
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.
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 December 31, 1999, your
investment could have achieved the following results:
[A line graph with dates (usually 12/31 with the exception of opening and
closing dates) on the x-axis and $ on the y axis, amounts as follows: 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; 12/31/99 - $31,727]
Past Performance of the S&P Mid-Cap Trust
One Year (December 31, 1998-December 31, 1999)
Total Return 14.64%
Average Annualized Total Return 12.07%
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Five Year (December 31, 1994-December 31, 1999)
Cumulative Total Return 177.47%
Average Annualized Total Return 22.07%
Since Fund Inception (February 19, 1992-December 31, 1999)
Cumulative Total Return 224.53%
Average Annualized Total Return 15.80%
* "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
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 11 market sectors.
Convenience
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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The S&P MidCap Trust Advantages
Cost
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.
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.
About The S&P MidCap 400 Index
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Standard & Poor's Mid-Cap 400 Index was created on June 5, 1991.
The Index measures the performance of 400 mid-sized companies (capitalization
as of December 31, 1999 ranging from about $166 million to over $37 billion).*
It represents 288 companies traded on the New York Stock Exchange, 105 over the
NASDAQ National Market System and 7 on the American Stock Exchange. The market
sectors included are basic materials, capital goods, communication services,
consumer cyclical, consumer staples, energy, financials, health care,
technology, transportation and utilities.*
*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 of Issuer Ticker % of Total Market Value
Symbol
1. Veritas Software Co. VRTS 4.08%
2. Siebel Systems, Inc. SEBL 1.72
3. Maxim Integrated Products MXIM 1.42
4. Biogen, Inc. BGEN 1.40
5. Intuit, Inc. INTU 1.25
6. Linear Technology Corp. LLTC 1.21
7. Medimmune, Inc. MEDI 1.15
8. Univision Communications, Inc. UVN 1.14
9. Altera Corp. ALTR 1.09
10.Harley-Davidson, Inc. HDI 1.07
#Source FactSet as of December 31, 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
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more complete information, including sales charges, expenses and risks. Please
read it carefully before you invest or send money.
Defined Assets Funds SM
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 Purchased Total Sales Charge as a % of
Public Offering Price
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%
$15,000,000 or more .25%
[recycle logo] Printed on Recycled Paper 32722SJ-1/00
[copyright sign] 2000 Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Member SIPC. Defined Asset Funds is a registered service mark of Merrill Lynch
and Co., Inc.
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