Defined Asset Funds[SM]
Select Ten Portfolio
International
1996 Japan Portfolio
Series 5
Merrill Lynch
Select Ten Portfolio
Japan
International Series
The Nikkei 225 Index
The Nikkei 225 Index consists of 225 Japanese companies listed in the first
section of the Tokyo Stock Exchange. First published in 1950, the Nikkei is
well known both in Japan and worldwide.
The Nikkei 225 Index is published by the Nihon Keizai Shimbun (Japan Economic
Journal).
The Nikkei 225 Index is a price-weighted index. This means that the movement
of each stock, in yen or dollars, is equally weighted regardless of its market
capitalization.
Today's global marketplace offers many opportunities. Defined Asset
Funds' Select Ten Portfolio -- International Series uses a simple investment
strategy to help you take advantage of opportunities in selected countries.
Global Opportunities
Many international equity markets, such as Japan's, offer attractive growth
potential, which can help investors diversify their portfolios globally.
Japan's economic growth is reflected in the performance of its leading stock
market indicator, the Nikkei 225 Index.
A Simple Strategy
The Japan Portfolio seeks total return by investing in approximately equal
values of the ten stocks in the Nikkei 225 Index* having the highest
dividend yield at the time of the offering (Strategy Stocks). These companies
are among the most highly capitalized in Japan.
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*The publisher of the Nikkei 225 Index has not participated in any way
in the creation of the Portfolio or in the selection of its stocks nor
approved any information included in this brochure.
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 significantly reduced sales charge, or you can take the cash.
Offers U.S. Investors Some Big Advantages
o Semi-annual dividends. This means investors receive two consolidated checks
per year, not 20 for the 10 stocks, and payments are in U.S. dollars.
o Low costs. The minimum purchase is about $250. There is a total sales
charge of 2 3/4%.
o Reinvestment. You may choose to reinvest your dividends at a reduced sales
charge to compound your income.
o Year-end rollover option. The Japan Portfolio matures in about one year, at
which time you'll have an opportunity to reinvest your Select Ten Portfolio
into the next Portfolio, if available. Although each Select Ten Portfolio is
a one-year fund, we recommend you stay with the Strategy for a minimum of
three- to five-years.
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.
o The Portfolio should not be considered a complete investment program, and
may be considered speculative.
o The Portfolio may not be appropriate for investors seeking either
preservation of capital or high current income, nor would it be suitable for
investors unable or unwilling to assume the increased risks of higher price
volatility and currency fluctuations associated with investments in
international equities.
o There can be no assurance that the Portfolio or the Strategy will meet its
objectives.
o Total returns on Japanese stocks fluctuate widely, and the value of your
investment will change with the prices of the underlying stocks and currency
exchange rates. In addition, there is no guarantee that dividend rates will
be maintained or that stock prices or currency exchange rates will not decline.
o The Portfolio's exposure to the Japanese yen is not hedged.
o The Strategy Stocks may have higher yields because they or their industries
are experiencing financial difficulty or are out of favor.
Time-Tested Track Record
Since stocks in the Portfolio were chosen solely by applying the Strategy, we
analyzed the Strategy since 1976 to see how it had performed. The chart below
illustrates past performance of the Nikkei 225 Index and the Strategy Stocks.
Although this is no guarantee of future results, as you can see the results
are compelling.
[GRAPH entitled "Suppose you had invested $10,000 in the Strategy in 1976?"]
There can be no assurance that the Portfolio or Strategy will meet its
objective. The performance of the Strategy is a hypothetical example of how
the Japan 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. The back cover discusses the significant effects that the
exchange rate of the Japanese yen relative to the U.S. dollar can have on
Portfolio performance.
It's important to note that actual performance of the Portfolio will differ
from the Strategy Stocks because the Portfolio has sales charges and pays
brokerage commissions and expenses. Strategy Stocks figures are generally
annual figures based on December 31 closing sale prices, while the Portfolio
are established and liquidated at different times during the year. The
Portfolio will normally purchase and sell stocks at prices and currency
exchange rates different from the closing price and currency exchange rate
used in determining the Portfolio's unit price. In addition, the Portfolio is
not fully invested at all times and all stocks may not be weighted equally.
Select Ten Portfolio - International Series 5 - 1996 Japan*
Current
Dividend
Name of Issuer Yield+
1. Tonen Corporation 2.05%
2. Chubu Electric Power Company, Inc. 1.70
3. Kansai Electric Power Company, Inc. 1.67
4. Tokyo Electric Power Company, Inc. 1.53
5. Fuji Electric Company, Ltd. 1.24
6. Mitsubishi Electric Corporation 1.21
7. Toyobo Company, Ltd. 1.15
8. Fujita Corporation 1.14
9. Osaka Gas Company, Ltd. 1.14
10. Tokyo Gas Company, Ltd. 1.13
* Initial date of deposit - October 31, 1996.
+ Current Dividend Yield for each security was calculated by adding the
most recent interim and final dividends declared on the security and
dividing the result by its market value as of the close of trading on
October 31, 1996.
The Portfolio may not necessarily reflect the research opinions or any buy or
sell recommendation of any of the Sponsors.
Historical Performance of Strategy Stocks
If the Strategy had been followed in each of the last 20 years, investors
would have generally achieved a higher total return than by investing in the
entire Nikkei 225 Index.
The table below illustrates how the Strategy would have performed on a
theoretical basis from January 1, 1976 through September 30, 1996.* The
returns shown represent past performance of the Nikkei 225 Index and Strategy
Stocks, and are no guarantee of future results. The figures do not reflect
the Portfolio's sales charges, commissions, expenses, or reinvestment of
dividends.
Strategy Illustration*
January 1, 1976 - September 30, 1996
Nikkei 225 Index Strategy Stocks
Year Total Return Total Return
1976 21.93% 10.57%
1977 21.55 54.28
1978 55.32 72.10
1979 -10.00 -0.89
1980 29.47 38.93
1981 2.20 18.44
1982 -0.77 -2.54
1983 27.08 31.04
1984 8.92 3.11
1985 44.19 53.01
1986 83.78 77.83
1987 50.71 93.67
1988 36.57 63.04
1989 12.80 22.96
1990 -34.79 -40.99
1991 5.56 6.90
1992 -25.76 -16.17
1993 15.94 21.52
1994 28.30 27.99
1995 -2.30 -4.98
1/1-9/30/96 1.25 -0.18
Average** 14.76% 20.97%
Changes in the exchange rates of the Japanese yen relative to the U.S. dollar
affected these figures significantly. These changes ranged from -23% in 1979
to +23% in 1987 and averaged +4.61% annually over the last 20 years. There can
be no assurance that such appreciation will continue during the life of the
Portfolio or successive rollover Series.
* After Portfolio sales charges and expenses, a Portfolio would have
outperformed the index in 12 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 Sales Charge $27.50 2.75%
After a year, should you reinvest proceeds of your investment into a new
Portfolio, you will not be subject to an additional 1% initial sales 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 the 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 2.75%
$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 (not including the
deferred sales charge and the charge for organizational expenses).
Accordingly, you should not increase your tax basis in your units by the
deferred sales charge and the charge for organizational expenses.
