DEFINED ASSET FUNDS(sm)
Select Ten Portfolio
INTERNATIONAL
1996 Hong Kong Portfolio -- Series 3
Many international equity markets, such as Hong Kong's, offer attractive growth
potential. Defined Asset Funds(sm) Select Ten Portfolio -- International
Series uses a simple investment strategy to help you take advantage of
potential opportunities in this country.
A Defined Strategy
The Hong Kong Portfolio seeks total return by holding for about one year, the
ten stocks in the Hang Seng Index* having the highest dividend yield at the
time of the offering (the "Strategy Stocks"). 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.
- ---------------
*This name is the property of its publisher. That firm is not
affiliated with, nor has participated in any way in the creation of the
Portfolio or in the selection of its stocks, and has neither reviewed
nor approved any information in this insert or the prospectus.
The Select Ten Portfolio selection process is straightforward, objective and
mathematical -- it eliminates subjective influences. What's more, when
investors follow the Strategy, they're investing in some of the largest
companies in Hong Kong.
Defining Your Risks
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 higher 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 Strategy will meet its
objective.
o Total returns on Hong Kong 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 Future political changes in Hong Kong, including the effects of July 1997
reversion to Chinese sovereignty, could impact market values of Hong Kong
stocks in general.
o The Strategy Stocks may have higher yields because they or their industries
are experiencing financial difficulties or are out of favor.
Don't Delay
You can get started with the Select Ten Portfolio with as little as about $250.
Call your financial professional for a free prospectus containing more complete
information, including all charges and expenses and the special risks
associated with international investing including currency risk. Read it
carefully before you invest.
Time-Tested Track Record
We analyzed the Strategy of investing in the ten highest dividend yielding
stocks in the Hang Seng Index, or "Strategy Stocks," since 1978 to see how it
had performed. The chart below illustrates past performance of the Hang Seng
Index and Strategy Stocks (But not any Portfolio). Although this is no
guarantee of future results of any Portfolio, as you can see the results are
compelling.
A mountain chart, captioned "Suppose you had invested $10,000 in the Strategy
in 1978", compares the cumulative annual performance from 1978 through 6/30/96
of the Strategy Stocks (gold) with the Hang Seng Index (silver). A box in the
upper left quadrant indicates the components of the chart. The x axis
reflects dollar amounts in $100,00 increments; the y axis reflects years. The
initial value of each is $10,000; next to the right margin the ending values
are stated as follows: $443,629 Ending 6/30/96 (Strategy); $333,791 Ending
6/30/96 (Index).
The performance of the Strategy is a hypothetical example of how Hong Kong
Portfolio could have performed if its Strategy had been employed since 1978.
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 Hang Seng Index
The Hang Seng Index, published in 1969, is a recognized indicator of Hong
Kong's stock market performance. The Index is an arithmetic index, weighted
by market capitalization representing about 70% of the total stocks on the
Hong Kong Stock Exchange. The Hang Seng Index includes companies intended to
represent four major market sectors:
1) commerce and industry;
2) finance;
3) properties; and
4) utilities.
Select Ten Portfolio -- International 1996 Hong Kong Portfolio -- Series 3**
Current
Name of Issuer Dividend Yield+
1. Shun Tak Holdings, Ltd. 6.98%
2. South China Morning Post (Hldgs.), Ltd. 5.94%
3. Hong Kong Telecommunications, Ltd. 5.24%
4. Henderson Investment, Ltd.*** 5.10%
5. Henderson Land Development Company, Ltd. 5.09%
6. Hang Lung Development company 4.84%
7. Amoy Properties, Ltd. 4.83%
8. Hysan Development Company, Ltd. 4.75%
9. Hong Kong Electric Holdings, Ltd. 4.69%
10. Oriental Press Group 4.22%
- --------------
**Initial date of deposit -- July 22, 1996
***To be included in the Hang Seng Index as of August 30, 1996.
+ Current Dividend Yield for each security was generally calculated by adding
the most recent interim and final dividends declared on that security and
dividing the result of that security's market value as of the close of trading
on July 19, 1996. There can be no assurance that future dividends, if any,
will be maintained at the indicated rates.
The Portfolio does not necessarily reflect the research opinions of any buy or
sell recommendation of any of the Sponsors.
Prior Select Ten Portfolio Rollover Performance
The following table shows total returns (price changes plus dividends
reinvested, dividend by the maximum initial public offering price, converted
into U.S. dollars) and reflects all sales charges and expenses, but not taxes.
These figures represent past performance and are no guarantee of future
results. The first three lines show the results that could have been obtained
by investing in the first fund of each established Series. The last three
lines show the average annual return of the latest completed fund of each
Series. The Series now being offered is for a different time period.
About the Chart
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. After deducting Portfolio sales
charges and expenses, the Strategy Stocks would have outperformed the Index in
9 of the 18 years. 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 and currency exchange rates different from the closing price and
currency exchange rate 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.
<TABLE>
<CAPTION>
Average
Series Term Total Return Annual Return
<S> <C> <C> <C>
Series B 6/21/93-6/30/96 25.05% 7.68%
Series C 9/28/93-6/30/96 2.06% 0.74%
Series A 1/5/94-6/30/96 -22.39% -9.72%
Performance of the last completed fund of each established series:
1995 Series B 5/10/95-6/28-96 20.70% 18.01%
1995 Series A 1/6/95-2/23/96 41.18% 35.65%
1994 Series C 9/6/94-10/13/95 -27.02% -24.94%
</TABLE>
