Defined
Assets Funds[SM]
Index Series
The S&P
500
Trust 2
An Investment Strategy
Seeking Higher Total Return
[ML logo] 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 to invest in 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.
The S&P 500 Trust 2
Defined Asset Funds has a way for you to seek results similar to those of the
S&P 500 Index(1). The objective of the Trust is to keep pace with the total
return of the S&P 500 Index. 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.
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(1) "Standard & Poor's" and "S&P 500 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.
Simplified Decision-Making
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.
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.
DEFINED ASSET FUNDS -- Time in the Market
We believe a disciplined strategy with a long-term view can help in meeting our
investors' needs. For income, for growth or for total return, time in the
market can be an effective strategy for growing your portfolio. This
philosophy is the cornerstone of Defined Asset Funds.
Investment Results(2)
If you had invested $10,000 at the Trust's inception, and held through
December 31, 1998, your investment could have achieved the following results:
Total Return $34,053(2)
Past performance is no guarantee of future results.
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(2) Maximum sales charges and expenses were deducted.
A three dimensional mountain graph, entitled "Investment Results," shows that
if you invested $10,000 on February 19, 1992 and held that capital through
December 31, 1998, your investment would have reached $34,053. The y axis
reflects dollar amount. The x axis reflects date, starting with 2/19/92, then
12/31/92, 12/31/93, 12/31/94, 12/31/95, 12/31/96, 12/31/97, and 12/31/98. The
eight points of the graph are placed above the dates on the x axis; the
following amounts: $10,000, $10,496, $11,522, $11,662, $16,005, $19,636,
$26,501, and $34,053, respectively, are listed above the points.
Past Performance of the S&P 500 Trust 2
One Year (December 31, 1997-December 31, 1998)
o Total Return(3)....................................28.49%
o Average Annualized Total Return(4).................25.60%
Five Year (December 31, 1993-December 31, 1998)
o Cumulative Total Return(3)........................191.60%
o Average Annualized Total Return(4)................23.29%
Since Fund Inception (February 12, 1992-December 31, 1998)
o Cumulative Total Return(3)........................248.37%
o Average Annualized Total Return(4)................19.53%
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(3) Total return figures represent price changes plus reinvestment of income
and principal distributions (net of all expenses) but do not
reflect sales charges.
(4) Average annual returns reflect deduction of maximum applicable sales
charges.
THE S&P 500 TRUST ADVANTAGES
Purchase Option
The minimum investment is about $250 with discounts available for purchases of
$25,000 or more.
Convenience
There's no need for multiple security purchases. The Trust offers
diversification, with one price you can track weekly in Barron's.
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 but 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(SM)
Buy With Knowledge o Hold with Confidence
About the S&P 500 Index
o The original index was developed in 1923 and comprised of 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.
o On December 31, 1998, the Index had a market capitalization of $9.942
trillion.(5)
o A well-known measure of 500 corporations designed to be the
performance benchmark for U.S. equity markets.
o It contains a variety of companies with diverse capitalization in
order to represent the overall market. Most of these companies'
stocks are listed on the New York Stock Exchange.
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(5) Source: FactSet
How the S&P 500 Index is Calculated
The S&P 500 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.
Ten Top Weighted Companies*
Name Ticker % of Total
of Issuer Symbol Market Value
1. Microsoft Corp. MSFT 3.48%
2. General Electric Company GE 3.36
3. Intel Corp INTC 1.99
4. Wal-Mart Stores, Inc. WMT 1.84
5. Exxon Corp. XON 1.79
6. Merck & Company, Inc. MRK 1.77
7. International Business IBM 1.73
Machines Corp.
8. Coca-Cola Co. KO 1.66
9. Pfitzer, Inc. PFE 1.63
10. Cisco Systems, Inc. CSCO 1.47
*As of December 31, 1998
Defining Your Risks
As with any equity investment, the value of your investment will fluctuate with
the value if the underlying stocks. The Trust may not be appropriate for
investors seeking capital preservation or high-current income.
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
Purchased 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 or more .50%
Don't Delay!
Your financial professional can help you design a financial plan and explain
how the S&P 500 Trust may help you meet your personal investment goals.
Contact your financial professional to request a free prospectus containing
more complete information including sales charges, expenses and risks. Please
read the prospectus carefully before you invest or send money.
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