Defined Asset Funds(sm)
Select Series 2
Capital Appreciation
Quantitative Research
IRA Ideal!
Select Large-Cap Growth Portfolio
A Quantitative Approach To Growth Stock Investing
[Logo] Merrill Lynch
Growth 1000
The Russell 1000(R) Growth Index
The Russell 1000(R) Index is an internationally-known benchmark that
measures the performance of the 1,000 largest U.S. companies by total market
capitalization. The Russell 1000(R) Growth Index is a subset of the Russell
1000 that measures the performance of those Russell 1000 companies with higher
price-to-book ratios, and higher forecasted growth values.
Annual Total Returns*
*This portfolio applies screening criteria to select among and reweight the
Russell 1000 Growth stocks. Not only is past performance no indication of future
results, Portfolio performance may differ significantly from Index returns.
Year Russell Growth Index
(not any Portfolio)
1979 23.91%
1980 39.57
1981 -11.31
1982 20.46
1983 15.98
1984 -0.95
1985 32.85
1986 15.36
1987 5.31
1988 11.27
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1989 35.92
1990 -0.26
1991 41.16
1992 5.00
1993 2.90
1994 2.66
1995 37.19
1996 23.12
1997 30.49
1998 38.71
6/30/99 10.45
Average 17.51%
Average Annual Total Returns
(For periods ending 12/31/98)
1 Year 38.71%
3 Year 30.62
5 Year 25.70
10 Year 20.56
20 Year 17.40
When investing in established companies, the challenge for many investors is
identifying stocks whose growth potential makes them worth the price. Defined
Asset Funds(sm) offers you a convenient way to invest in the growth potential
of leading companies with our new. . .
Select Large-Cap Growth Portfolio
A Quantitative Approach to Growth Stock Investing
The Select Large-Cap Growth Portfolio offers you a way to invest in a
professionally selected Portfolio of large companies with the potential to
provide better-than-average growth. By applying a quantitative Selection Model
to stocks in the Russell 1000 Growth Index**, the Large-Cap Growth Portfolio
seeks out leading companies whose potential for growth may make them worth the
price. The result is a diversified Portfolio of 63 promising companies, many of
which are household names.
** "Russell 1000" and "Russell 1000 Growth Index" are trademarks of Frank
Russell Co., which has not sponsored, managed, sold or promoted the Portfolio.
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An Enhanced Index Strategy
The Select Large-Cap Growth Portfolio follows a disciplined "buy and hold"
strategy for index enhancement. A quantitative Selection Model is applied to
select stocks from the Index and determine desirable weightings.
The Selection Model
Bernard V. Tew, Ph.D., Chairman of Q.E.D. Investments, designed his quantitative
model as a means for improving returns and controlling risks in equity sectors.
Dr. Tew, as Portfolio Consultant for the Select Large-Cap Growth Portfolio,
works together with Defined Asset Funds to apply the following stock selection
process:
Define the Universe
We begin by defining the universe of stocks. In this case, the Russell
1000 Growth Index is used for its diversification among large-cap growth stocks
that are forecasted to experience better-than-average growth, relative to their
prices.
Analyze the Index
Stocks in the Russell 1000 Growth Index are then analyzed by the
Portfolio Consultant for historical correlation relationships, in order to
identify stocks whose prices and returns move inversely to one another. These
relationships create a portfolio of stocks that complement each other, which
seek to reduce volatility.
Construct an Enhanced Portfolio
The Russell 1000 Growth Index is then sorted, stock by stock, from most
attractive to least attractive. Stocks that are considered most attractive,
those with the best prices relative to potential performance, are the most
heavily weighted. Stocks with less attractive prices relative to potential
returns are underweighted. This reweighting is designed to enhance potential
return.
Rebalance the Portfolio
Defined Asset Funds and the Portfolio Consultant plan to construct a
new Portfolio each year. The selection Model will be reapplied to the Russell
1000 Growth Index to determine the weightings for a new Select Large-Cap Growth
Portfolio.
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Stay with the Strategy
When the Portfolio ends, you can choose to roll your investment into a new
Select Large-Cap Growth Portfolio, if available, or you can redeem your
investment. Although this is a one-year investment, we suggest you continue with
this Strategy for at least three to five years for potentially more consistent
results.
If your investment objective should change, Defined Asset Funds offers you the
flexibility to exchange your investment for certain other Defined Asset Funds
Portfolios at a reduced sales charge.
A Defined Portfolio
% of
Company Symbol Portfolio***
General Electric Company GE 4.90%
Microsoft Corporation MSFT 4.02
Lucent Technologies, Inc. LU 2.72
Cisco Systems, Inc. CSCO 2.69
Wal-Mart Stores, Inc. WMT 2.69
Intel Corporation INTC 2.68
AT&T Corporation T 2.34
Merck & Company, Inc. MRK 2.22
MCI Worldcom, Inc. WCOM 1.99
Coca-Cola Company KO 1.97
The above 10 stocks represent 28.22% of the Portfolio.
American International Group, Inc. AIG 1.89
Pfizer, Inc. PFE 1.83
Bristol-Myers Squibb Company BMY 1.82
America Online, Inc. AOL 1.70
Johnson & Johnson JNJ 1.67
SBC Communications, Inc. SBC 1.63
Avery Dennison Corporation AVY 1.51
Ecolab, Inc. ECL 1.51
General Mills, Inc. GIS 1.51
H.J. Heinz Company HNZ 1.51
The above 20 stocks represent 44.80% of the Portfolio.
Kellogg Company K 1.51
Nike, Inc. NKE 1.51
Sealed Air Corporation SEE 1.51
SLM Holding Corporation SLM 1.51
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Clorox Company CLX 1.51
The above 25 stocks represent 52.35% of the Portfolio.
Gillette Company G 1.51
McGraw-Hill Companies, Inc. MHP 1.51
UST, Inc. UST 1.51
Alltel Corporation AT 1.50
Anheuser-Busch Companies, Inc. BUD 1.50
Bestfoods BFO 1.50
General Motors Corporation GM 1.50
Hershey Foods Corporation HSY 1.50
Maytag Corporation MYG 1.50
Ralston-Ralston Purina Group RAL 1.50
Safeway, Inc. SWY 1.50
Sara Lee Corporation SLE 1.50
US West, Inc. USW 1.50
Wellpoint Health Networks, Inc. WLP 1.50
Enron Corporation ENE 1.49
Kimberly-Clark Corporation KMB 1.49
Quaker Oats Company OAT 1.49
Servicemaster Company SVM 1.49
USX-Marathon Group MRO 1.49
Waste Management, Inc. WMI 1.49
Albertson's, Inc. ABS 1.48
Sysco Corporation SYY 1.48
Estee Lauder Companies, Inc. EL 1.47
AES Corporation AES 1.45
Procter & Gamble Company PG 1.43
Philip Morris Companies, Inc. MO 1.33
Hewlett-Packard Company HWP 1.26
Home Depot, Inc. HD 1.23
Dell Computer Corporation DELL 1.21
Time Warner, Inc. TWX 1.07
Eli Lilly and Company LLY 1.04
Schering-Plough Corporation SGP 0.97
American Home Products Corporation AHP 0.95
Yahoo!, Inc. YHOO 0.51
Corning, Inc. GLW 0.33
Qualcomm, Inc. QCOM 0.27
CMGI, Inc. CMGI 0.14
Pitney Bowes, Inc. PBI 0.06
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***Based on closing market price as of July 19, 1999.
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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.
Defined Asset Funds
Buy With Knowledge - Hold With Confidence
Equity Investor Funds
Other Select Series
Select Ten Portfolio (DJIA)
United Kingdom Portfolio (Financial Times Index)
Institutional Holdings Portfolio
Select Growth Portfolio
Select S&P Industrial Portfolio
Select Standard & Poor's Industry Turnaround Portfolio
Select Standard & Poor's Intrinsic Value Portfolio
Concept Series
Baby Boom Economy Portfolios(sm)
Health Care Trust
Premier American Portfolio
Premier World Portfolio
Real Estate Income Fund
Tele-Global Trust
Utility Portfolio
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Index Series
S&P 500 Trust
S&P MidCap Trust
Fixed-Income Funds
Corporate Funds
Government Funds
Municipal Funds
Invest in Large-Cap Growth Today!
You can get started with just $250 for regular and retirement accounts. 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.
o There can be no assurance the Portfolio will meet its objective.
o The Portfolio is designed for investors who can assume the increased risks
associated with growth investments, and may not be appropriate for
investors seeking capital preservation or high current income.
o The Portfolio may be considered speculative because it is composed of
growth stocks which are subject to above-average price volatility.
o The Portfolio does not reflect recommendations of any individual stocks by
the Sponsor.
o The Portfolio may continue to purchase or hold stocks originally selected,
even though their market value may have changed, they may no longer be
included in the Index, or they may be subject to Sponsor sell
recommendations.
Tax Reporting
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The proceeds received when you sell this investment will reflect the deduction
of the deferred sales charge and, after the initial offering period, the charge
for organization costs.
In addition, the annual statement and the relevant tax reporting forms you
receive at year-end will be based on the amount paid to you, net of the deferred
sales charge and the charge for organization costs, after the initial offering
period. Accordingly, you should not increase the tax basis in your units by
these charges.
Generally, dividends and any gains will be subject to tax each year. Net capital
gains, if any, on assets held over a year may qualify for a favorable federal
tax rate (currently no more than 20%) for individuals. However, on rollovers of
future Portfolios, if available, investors will 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.
Defining Your Costs
First-time investors pay an initial sales charge of about 1% when they buy. In
addition, all investors pay a deferred sales charge of $17.50 per 1,000 units,
about 1.75%, deducted over the last ten months of the Portfolio.
As a % of Public Offering Price Amount Per 1,000 Units
Initial Sales Charge 1.00% $10.00
Deferred Sales Charge 1.75% $17.50
Maximum Sales Charge 2.75% $27.50
Estimated Annual Expenses
(as a % net assets) 0.239% $2.37
Estimated Organization Costs $2.63
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 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.
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Amount Purchased Total Sales Charge as a % of
Public Offering Price
Less than $50,000 2.75%
$50,000 to $99,999 2.50%
$100,000 to $249,999 2.00%
$250,000 to $999,999 1.75%
$1,000,000 or more 1.00%
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 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 their offer or sale is not permitted.
[logo] Printed on Recycled Paper 32764BR-7/99
(C)1999 Merrill Lynch, Pierce, Fenner & Smith Incorporated. Member SIPC.
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