DEFINED ASSET FUNDS
SELECT TEN PORTFOLIO-
SERIES A WINTER-1996
A SIMPLE INVESTMENT STRATEGY FOR HIGHER TOTAL RETURN
THE DOW JONES INDUSTRIAL AVERAGE
The Dow Jones Industrial Average (DJIA) consists of 30 common stocks chosen by
the editors of The Wall Street Journal as representative of the New York Stock
Exchange and of American industry. The companies are highly capitalized in
their industries and their stocks are widely held by individual and
institutional investors:
Allied Signal Procter & Gamble
J.P. Morgan American Express
3M International Paper
Du Pont Philip Morris
Eastman Kodak United Technologies
Goodyear Sears Roebuck & Co.
Bethlehem Steel Exxon
IBM Texaco
General Electric Coca-Cola
General Motors Union Carbide
McDonald's Walt Disney
Chevron AT&T
Caterpillar Westinghouse Electric
Boeing Woolworth
Merck Aluminum Co. of America
With so many choices available, selecting investments for your portfolio can
be complicated. Sometimes, simple can be better.
The Select Ten Strategy
The Select Ten Portfolio seeks total return by holding the ten highest
dividend-yielding stocks of the Dow Jones Industrial Average [(Footnote:) The
name "Dow Jones Industrial Average" is the property of Dow Jones & Company,
Inc., which has not participated in any way in the creation of the Select Ten
Portfolio or the selection of its stocks and is unaffiliated with the
portfolio. (end of footnote)] (the "Strategy Stocks" for about one year. It's
simple. It's convenient.
It's Simple
The Portfolio offers a simple way to seek potential values in the equity
market by investing in leading companies that are currently out of favor.
The Portfolio consists of approximately equal values of the ten stocks in the
DJIA having the highest dividend yield at the time of the offering, and will
hold them for about one year. After one year, the Portfolio will liquidate.
You may choose to reinvest your proceeds into the next portfolio of the
then-current Strategy Stocks, if available, at a reduced sales charge, or you
can take the cash.
You can get started with the Select Ten Portfolio for as little as about $250
in a regular or IRA account.
It's Convenient
With the Select Ten Portfolio, you have a convenient way to invest in a fixed
portfolio of well known stocks with just on purchase. You'll also enjoy the
advantages of:
Quarterly dividends. you will receive four consolidated checks per year,
not 40 for the 10 stocks.
Reinvestment. You may choose to reinvest your dividends at a reduced sales
charge to compound your income.
No sell decisions. You are buying and holding for about a year, a portfolio
of established companies with relatively high dividend yields.
A deferred sales charge. You pay only part of your total sales charge when
you buy, since most will be collected on a deferred basis. This way, more of
your money is put to work immediately.
Defining Your Risks
At Defined Asset Funds, our goal is to give investors the information they
need to make informed decisions. The following are important facts to keep in
mind when considering this investment for your portfolio. Please read them
carefully. Your financial professional will be happy to answer any questions
you may have.
The Portfolio is designed for investors able and willing to assume the risks
generally associated with equity investments. It may not be appropriate for
investors seeking preservation of capital or high current income.
There can be no assurance that the Portfolio or Strategy will meet its
objective.
The value of your investment will fluctuate with the prices of the
underlying stocks. There is no guarantee that dividend rates will be
maintained or that stock prices will not decrease.
Stocks may have higher yields because they or their industries are
experiencing financial difficulties or are out of favor. There can be no
assurance the market factors that caused these relatively low prices and high
yields will change.
Time-Tested Track Record
We analyzed the Strategy of investing in the ten highest dividend-yielding
stocks, or "Strategy Stocks," over a 20-year period to see how it had
performed. Although past performance is no guarantee of future results, as
you can see from the graph below, the results are compelling.
[A mountain chart, captioned "Suppose you had invested $10,000 in the Strategy
in 1976?", compares the cumulative annual performance from 1976 through 1995
of the Strategy Stocks (ochre) with the Dow Jones Industrial Average (blue).
A box in upper left quadrant indicates the components of the chart. The x axis
reflects years and the y axis reflects dollar amounts in $25,000 increments.
The initial value of the Dow Jones Industrial Average is indicated at about
$10,000; the initial value of the Strategy Stocks is slightly higher (at about
$11,000). The right margin shows ending values of: $261,132 (Strategy) and
$137,445 (Index), both ending in 1995.]
It is important to note that the actual performance of a Portfolio will differ
from that of the Strategy Stocks because the Portfolio has sales charges and
pays brokerage commissions and expenses. Strategy Stock figures are generally
annual figures based on the closing sale prices on December 31, while the
Portfolios are established and liquidated at different times during the year.
Also, performance varies because Portfolios normally purchase and sell stocks
at prices different from the closing price used in determining the Portfolio's
unit price, and the Portfolio is not fully invested at all times and not all
stocks may be weighted equally.
The chart above represents past performance of the DJIA and the Stragegy
STocks (but not any portfolio) and should not be considered indicative of
future resutls. The performance of the Strategy is a hypothetical example of
how the Select Ten Portfolio could have performed if its Strategy had been
employed since 1976. The chart assumes that all dividends during a year are
reinvested at the end of that year. It does not reflect sales charges,
commissions, expenses or taxes.
Select Ten Portfolio 1996 Series A (Winter)*
Current
Dividend
Name Of Issuer Ticker Symbol Yield+
1. Philip Morris
Companies, Inc. MO 4.40%
2. Texaco, Inc. TX 4.15
3. J.P. Morgan & Co. Inc. JPM 4.09
4. Exxon Corporation XON 3.74
5. Chevron Corporation CHV 3.73
6. Minnesota Mining &
Manufacturing Co. MMM 2.95
7. Du Pont De Nemours
& Company DD 2.94
8. International Paper
Company IP 2.70
9. Caterpillar, Inc. CAT 2.59
10. General Electric Company GE 2.58
*Initial date of deposit - January 18,1996.
+Current Dividend Yield for each security was calculated by annualizing the
last quarterly or semi annual ordinary dividend distributed on that security
and dividing the result by that security's market value as of the close of
trading on January 17, 1996. There can be no assurance that future dividends,
if any, will be maintained at the indicated rates.
The Strategy may not necessarily reflect the research opinions or any buy or
sell recommendation of any of the Sponsors.
Prior Select Ten Portfolio Performance++
The following shows total returns(price changes plus dividends received,
divided by the maximum initial public offering price) for each completed prior
series, and reflects all sales charges and expenses.
Fund Term Total Return
Series B
1991 Spring 5/17/91-6/12/92 14.72%
1992 Spring 5/5/92-5/14/93 4.67%
1993 Spring 5/5/93-5/13/94 6.83%
1994 Spring 5/6/94-5/31/95 19.05%
Series C
1992 Autumn 9/1/92-9/14/93 17.01%
1993 Autumn 9/1/93-9/16/94 7.08%
1994 Autumn 9/7/94-9/29/95 23.90%
Series A
1992 Winter 1/3/92-1/8/93 0.07%
1993 Winter 1/4/93-1/14/94 23.93%
1994 Winter 1/5/94-1/27/95 -0.52%
On the same basis, including presently outstanding series, an investor who
reinvested all income and principal distributions in the next available series
would have received the following results:
Series Term Total Return Average
Annual Return
Spring 5/17/91-12/31/95 85.31% 14.28%
Autumn 9/1/92-12/31/95 71.95% 17.70%
Winter 1/3/92-12/31/95 65.77% 13.51%
++This represents past performance, and is no guarantee of future results.
Historical Performance of Strategy Stocks
If the Strategy had been follow for the last 20 years, investors generally
would have achieve a higher total return than if they had invested in the
entire DJIA.
Below is a hypothetical example of how the Strategy would have performed on a
theoretical basis from January 1, 1976 through December 31, 1995. Past
performance shown is no guarantee of future results of any portfolio. The
figures do not reflect the Portfolio's sales charges, commissions, expenses,
or reinvestment of dividends.
Strategy Illustration
January 1, 1976-December 31, 1995
Strategy Stocks
Year DJIA Total Return Total Return
1976 22.72% 34.81%
1977 -12.71% -0.83%
1978 2.69% 0.16%
1979 10.52% 12.35%
1980 21.41% 26.37%
1981 -3.40% 7.47%
1982 25.79% 25.46%
1983 25.68% 38.46%
1984 1.06% 7.34%
1985 32.78% 28.63%
1986 26.91% 34.57%
1987 6.02% 6.97%
1988 15.95% 21.50%
1989 31.71% 27.30%
1990 -0.57% -7.94%
1991 23.93% 33.37%
1992 7.34% 8.32%
1993 16.72% 26.92%
1994 4.95% 3.89%
1995 36.48% 36.48%
Average 14.00% 17.72%
* As indicated, the Strategy Stocks underperformed the DJIA in 6 years, and
there can be no assurance that the Portfolio will outperform the DJIA. After
Portfolio sales charges and expenses, a Portfolio would have outperformed the
DJIA in 10 of the 20 years.
Average annual total returns represent the annual rate of price appreciation,
plus dividends reinvested at the end of each year
Defining Your Cost
Low Initial Sales Charge/Reduced Charge for Rollovers
As illustrated in the chart below, first-time investors pay a 1% maximum sales
charge when they buy. In addition, a deferred sales charge of $1.75 per 1,000
units will be deducted from the Portfolio's net asset value each month over
the last ten months of the Portfolio's life ($17.50 total). This deferred
method of payment keeps more of your money invested over a longer period of
time.
As a % of
Amount per Public Offering
Amount Purchased 1,000 Units Price
Maximum Initial Sales Charge $10.00 1.00%
Deferred Sales Charge $17.50 1.75%
Your Total Costs $27.50 2.75%
When you reinvest the proceeds of your investment into a new portfolio, if
available, you will not be subject to the 1% initial charge, just the $17.50
deferred fee. If you sell your investment before maturity, the remaining
deferred sales charge and, in the secondary market, a charge to reflect
estimated costs of liquidating securities to meet cash redemptions, will be
deducted.
Volume Purchase Discounts
For larger purchases, the overall sales charges are reduced to put more of
your investment dollars to work for you.
Deferred Sales Total Sales Charge
Charge per as a % of the
Amount Purchased 1,000 units Public Offering Price
Less than $50,000 $17.50 3.25%
$50,000 to $99,999 $17.50 2.50%
$100,000 to $249,999 $17.50 2.00%
$250,000 or more $17.50 1.75%
Tax Reporting
The proceeds received when you sell this investment will reflect the deduction
of the deferred sales charge and the charge for organizational expenses. In
addition, the annual statement and the relevant tax reporting forms you receive
at year-end will reflect the actual amount paid to you (net of the deferred
sales charge and the charge for organizational expenses). Accordingly, you
should not increase your basis in your units by the deferred sales charge and
the charge for organizational expenses.
Don't Delay
Call your financial professional for a free prospectus containing more
complete information, including all charges and expenses. Read it carefully
before you invest.
Units of the Spring 1996 Series are not yet available, Information herein is
subject to amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission. These securities
may not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This document shall not constitute
an offer to buy nor shall there be any sale of these securities in any state
in which such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of such state.
