IRA Idea!
Defined Asset Funds(R)
Index Series 4th Quarter 1999
The S&P 500 Trust 2
An Investment Seeking Total Return
[logo] Merrill Lynch
Instead of comparing your investment to an index, why not make your investment
an index trust?
For equity investors, it's second nature to compare the performance of an
investment with a general market measure like an index. Have you considered,
however, that the best performance over time may come not from trying to
outperform an index, but rather from investing like it?
Investing in a broad representation oaf the market, or indexing, is a strategy
most equity investors can use as part of their overall financial plan - to seek
growth in an otherwise conservative portfolio, or as a companion investment to
hedge an aggressive equity strategy.
The S&P 500 Trust 2
Defined Asset Funds has a plan for you to seek results similar to those of the
S&P 500 Index.* The objective of the Trust is to track the total return of the
S&P 500 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
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When you invest in the S&P 500 Trust 2, 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.
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 mountain chart, captioned "Investment Results" compares the cumulative
annual performance from 2/19/92 through 12/31/99 of an initial investment of
$10,000 with an end fund value of $41,179]
Past Performance of the S&P 500 Trust 2
One Year
(Dec. 31, 1998-Dec. 31, 1999)
Total Return[++] ..........................................20.91%
Average Annualized Total Return[ss.] ......................18.19%
Five Year
(Dec. 31, 1994-Dec. 31, 1999)
Cumulative Total Return[++] ..............................248.33%
Average Annualized Total Return[ss.] ......................27.77%
Since Fund Inception
(Feb. 19, 1992-Dec. 31, 1999)
Cumulative Total Return [++] ..............................321.21%
Average Annualized Total Return [ss.]......................19.71%
*"Standard & Poor's," "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.
+ 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 not reflect sales charges.
ss. Average annual returns reflect deduction of maximum applicable sales
charges.
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The S&P 500 Trust Advantages
Cost
The minimum investment is about $250, with sales charge discounts available for
purchases of $25,000 or more.
Diversification
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 ten- 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 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.
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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 500 Index
o The Index is a well-known measure of 500 companies designed to be a
performance benchmark for U.S. equity markets. It contains a variety of
companies with diverse capitalization in order to represent the overall
market. Most of these index stock are traded on the New York Stock
Exchange.
o The Index was created in 1923 and comprised 233 stock. The list grew to
500 stocks by 1957. As of December 31, 1999, the Index consisted of 11
market sectors: basic materials, capital goods, communication services,
consumer cyclical, consumer staples, energy, financials, health care,
technology, transportation and utilities.
o On December 31, 1999, the Index had a market capitalization of $12.16
trillion.(1)
How the S&P 500 Index in 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 the company's effect will be on
the performance of the Index.
Top Ten Weighted Companies(2)
Name of Issuer Ticker % of Total
Symbol Market Value
1. Microsoft Corp. MSFT 4.94%
2. General Electric GE 4.17
3. Cisco Systems, Inc. CSCO 2.92
4. Wal-Mart Stores, Inc. WMT 2.53
5. Intel Corp. INTC 2.26
6. Lucent Technologies, Inc. LU 1.89
- --------
1 Source: FactSet
2 As of December 31, 1999
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7. AT&T Corp. T .86
8. International Business
Machines Corp. IBM .62
9 Exxon Mobil Corp. XOM 1.61
10. Citigroup, Inc. C 1.54
Start Indexing Today!
Your financial professional can explain how the S&P 500 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.
[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 meets 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 overall sales charges are reduced to put more 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 $249,000 1.25
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$250,000 to $999,999 1.00
$1,000,000 to $4,999,999 0.75
$5,000,000 to $14,999,999 0.50
$15,000,000 or more 0.25
[logo] Printed on recycled paper. 32711SJ-1/00
Copyright 2000 Merrill Lynch, Pierce, Fenner & Smith Incorporated. Member SPIC.
Defined Asset Funds is a registered service mark of Merrill Lynch & Co., Inc.
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