Defined Asset FundsSM
The S&P 500 Trust 2
Merrill Lynch
Instead of comparing your investment to an index, why not make an index trust
your investment...
For equity investors, it's second nature to compare the performance of an
investment with a general market measure, like an index. But have you
considered that your best performance opportunity over time may not be
attempting to outperform the index, but investing like it?
Investing in a broad representation of the market, or indexing, is a strategy
that most equity investors can use as a part of their overall financial plan;
to seek potential growth in otherwise conservative portfolios or as a
companion investment to hedge an aggressive equity strategy.
Indexing approximates market performance, such as the S&P 500.* {Footnote
text: *"S&P 500" 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.]
Diversification, through an indexed approach to equity investing, reduces the
risks associated with individual stock selection.
The S&P 500 Index Trust 2
Defined Asset FundsSM S&P Index Trust 2 was designed to track the total return
of the S&P 500. It was created for investors, like you, who are looking for
an opportunity to reflect the performance of a major market index at a
reasonable cost.
Index Investing Offers Several Benefits:
Risk Reduction with Diversification
One of the best reasons for an indexing approach to investing is
diversification. By owning this Trust, you participate in a broad portfolio.
Through one purchase, you are instantly diversified among hundreds of
companies in four industry sectors. In this way, your exposure to risk is
reduced, especially when compared to buying one, two, or even ten of the
individual stocks.
Simplified Decision-Making
When you invest in the S&P 500 Trust 2, you don't have to select individual
stocks or market sectors. You are buying the major sectors of the stock
market represented by the index.
Trust performance
One Year Ended
(January 1 1995 - December 31, 1995)
Total Return* [Footnote text: *"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."] 37.24%
Average Annualized Total Return ** [Footnote text: **"Average annual returns
reflect deduction of maximum applicable sales charges. Past performance is not
indicative of future results."] 34.16%
Since Inception
(February 20, 1992 - December 31, 1995)
Total Return* 63.73%
Average Annualized Total Return** 12.97%
Investment Results
A three dimensional bar graph, entitled "Investment Results" shows that if
you invest $10,000 on February 20, 1992 and hold that capital through
December 31, 1995, your investment will reach $16,005. The graph is
captioned "If you had invested $10,000 from inception, and held through
December 31, 1995 your investment would have achieved the following
results+:" The x axis reflects dollar amounts starting with $0. The first
increment is $8,000 and increases in $2,000 increments, until the amount
reaches $16,000. The y axis reflects years, starting with 2/20/92, then
12/31/92, 12/31/93, 12/31/94, and 12/31/95. The five rectangular columns
of the bar graph are placed above the dates on the y axis; the following
amounts: $10,000, $10,496, $11,574, $11,662 and $16,005 respectively, are
listed on the top of the columns.
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+ Maximum sales charge was deducted.
You can also take advantage of benefits not available through the purchase of
individual stocks.
Index investing with Defined Funds offers additional benefits:
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, preselected 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 the original cost.
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
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. You can follow the price of your investment each week in Barron's.
Low Minimum Investment
A minimum investment of 1,000 units (about $1,000) is required. There is no
minimum investment for individual retirement or Keogh accounts.
Why Make An Index Trust Your Investment?
Indexing is an investment strategy that allows you to invest in a portfolio of
stocks that is carefully structured to mirror, as closely as possible the
total return of a market index.
About the Index
Standard & Poor's 500 Stock Price Composite Index
- - A well-known measure of 500 corporations designed to be the performance
benchmark for the U.S. equity markers.
- - The original index developed in 1923, was comprised on 233 stocks. The list
grew to 500 stocks in 1957; in 1976, the index was restructured to a composite
consisting of four market sectors: industrials, utilities, financials and
transportation.
- - Contains a variety of companies with diverse capitalization in order to
represent the over-all market. Most of these companies' stocks are listed on
the New York Stock Exchange.
- - On December 31, 1995, the Index had a market value of $4,588 trillion.
- - The companies in the Index are 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.
Volume Purchase Discounts
For larger purchases, the sales charge is substantially reduced to put a
greater percentage of your investment dollars to work for you.
Sales Charge As a Percentage of
Amount Purchased the 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 or more 1.00%
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 performances will vary
somewhat from the performance of the index.
Sound Financial Planning
Your financial professional can help you design a financial plan and consider
how the S&P 500 Trust 2 can help you meet your goals. Contact your financial
professional to request a free prospectus containing more complete information
about the S&P 500 Trust 2 or any other Defined Asset Fund (including charges
and expenses). Read it carefully before you invest.
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