Defined Asset Funds
Select Ten Portfolio International
1996 Hong Kong Portfolio Series 5
Merrill Lynch
The Hang Seng Index
The Hang Seng Index, published in 1969, is a recognized indictor 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. The companies include:
Amoy Properties
Bank of East Asia
Cathay Pacific
Cheung Kong
China Light & Power Co.
Citic Pacific
First Pacific
Great Eagle Holdings
Guangdong Investment
Hang Lung Investment
Hang Seng Bank
Henderson Investment
Henderson Land Development
Hong Kong Electric
Hong Kong and China Gas
Hong Kong and Shanghai Hotels
Hong Kong Telecommunications
Hopewell Holdings
HSBC Holdings
Hutchinson Whampoa
Hysan Development Company
Johnson Electric Holdings
New World Development
Oriental Press Group
Shangri-La Asia
Shun Tak Holdings
Sino Land Co.
South China Morning Post
Sun Hung Kai Properties
Swire Pacific (A)
Television Broadcasts
Wharf Holdings
Wheelock & Co.
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 Hong Kong's offer attractive growth
potential, which can help investors diversify their portfolios globally.
Hong Kong's economic growth is reflected in the performance of its stock
market indicator, the Hang Seng Index.
A Simple Strategy For Total Return
The Hong Kong Portfolio seeks total return by investing in approximately equal
values of the ten stocks in the Hang Seng Index(1) having the highest dividend
yield at the time of the offering (Strategy Stocks). These companies are among
the most highly capitalized in Hong Kong.
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(1) The publisher of the Hang Seng 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.
Offers U.S. Investors Some Big Advantages
- -Semi-annual dividends. This means investors receive two consolidated checks
per year, not 20 for the 10 stocks, and payment are in U.S. dollars.
- -Low costs. The minimum purchase is about $250. There is a total sales charge
of 2 3/4%.
- -Reinvestment. You may choose to reinvest your dividends at a reduced sales
charge to compound your income.
- -Year-end rollover. The Hong Kong Portfolio matures in one year, at which time
you'll have an opportunity to reinvest your Select Ten Portfolio into the next
Portfolio. Although each Select Ten Portfolio is a one-year fund, we recommend
you stay with the Strategy for a minimum for 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.
- -The Portfolio should not be considered a complete investment program, and may
be considered speculative. It is appropriate for investors willing and able to
assume the risks generally associated with equity investments traded in a
foreign currency.
- -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 high risks of higher
price volatility and currency fluctuations associated with investments in
international equities.
- -There can be no assurance that the Portfolio or Strategy will meet its
objective.
- -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.
- -Future political changes in Hong Kong, including the effects of the July 1997
revision to Chinese sovereignty, could impact market values of the Hong Kong
stocks in general.
- -The Strategy Stocks may have higher yields because they or their industries
are experiencing financial difficulties 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 1978 to see how it had performed. Although past
performance in no guarantee of future results, as you can see from the graph
below the results are compelling.
[Mountain graph entitled "Suppose you had invested $10,000 in the Strategy in
1978?" compares the cumulative annual performance from 1978 through 9/30/96 of
the Strategy Stocks (yellow) and the Hang Seng Index (green). A box in the
upper left hand quadrant indicated the components of the chart. The x axis
reflects years and the y axis reflects dollar amounts in $50,000 increments.
The initial value of each is $10,000; the ending values are $443,438 and
$363,550, for the Strategy Stocks and Hang Seng Index, respectively.]
After one year, the Portfolio will liquidate. You may chose 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.
It is important to note that actual performance of the Portfolio will differ
from the Strategy Stocks because the Portfolio has sales charges and pays
brokerage commission and expenses. Strategy Stock figures are generally annual
figures based on December 31 sales prices, while the Portfolios are
established and liquidated at different times during the year. Portfolios
normally purchase and sell stocks at prices and currency exchange rates
different from the closing price and currency exchange rates used in
determining the Portfolio's unit price. The Portfolio is not fully invested at
all times and not all stocks may be weighed equally.
The performance of the Strategy is a hypothetical example of how the Hong Kong
Portfolio could have performed if its Strategy had been employed since 1978.
The chart assumes that all the dividends are reinvested at the end of that
year. It does not reflect sales charges, commissions, expenses or taxes.
Select Ten Portfolio - International Series 1996 Series 5 Hong Kong
Portfolio(2)
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(2) Initial date of deposit - October 31, 1996
Name of Issuer Current Dividend
Yield(3)
1. Shun Tak Holdings, Ltd. 6.37%
2. Hong Kong Telecommunications, Ltd. 4.97
3. Henderson Investment, Ltd. 4.85
4. Hong Kong Electronic Holdings, Ltd. 4.67
5. South China Morning Post (Holdings), Ltd. 4.55
6. Amoy Properties, Ltd. 4.55
7. Hang Lung Development Co. 4.54
8. Henderson Land Development Co., Ltd. 4.41
9. Hysan Development Co., Ltd. 4.35
10. Cathay Pacific Airways 4.01
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(3) Current dividend yield for each security was calculated by adding
the most recent interim and final dividends declared on that security and
dividing the result by the market value of that security 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.
Prior Select Ten Portfolio Performance
The chart below shows average annual total return for each of the three
Series, which assumes an annual "rollover" into the next Portfolio. We've also
included returns for the most recently completed Portfolio of each Series.
Series From Inception through 9/30/96
Inception Return
A Series 1/5/94 -7.84%
B Series 6/21/93 7.47%
C Series 9/28/93 0.47%
Most Recent Completed Portfolio
Period Return
1/6/95 - 2/23/96 35.65%
5/10/95 - 6/28/96 18.01%
9/6/94 - 10/13/95 -24.94%
Past performance is no guarantee of future results. Average annual total
return represents price changes plus dividends reinvested, divided by the
initial public offering price, and reflects maximum sales charges and expenses.
Historical Performance of Strategy Stocks
If the Strategy had been followed in each of the last 18 years, investors
would have generally achieved a higher total return than by investing in the
entire Hang Seng Index.
The table below illustrates how the Strategy would have performed on a
theoretical basis from January 1, 1978 through September 30, 1996.(4) The
returns shown represent past performance of the Hang Seng 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.
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(4) After Portfolio sales charges and expenses, a Portfolio would have
underperformed the index in 9 out of 18 years. There can be no assurance that
any Portfolio will outperform its related index over its one year life.
Strategy Illustration
January 1, 1978 - September 30, 1996
Hang Seng Index Strategy Stocks
Year Total Return Total Return
1978 23.51% 28.04%
1979 78.33 82.28
1980 65.83 41.40
1981 -11.07 -3.86
1982 -47.79 -38.97
1983 -0.89 -7.48
1984 42.54 65.32
1985 51.10 47.52
1986 51.16 60.49
1987 -6.73 3.03
1988 20.60 34.04
1989 10.19 9.41
1990 11.99 6.11
1991 48.25 48.51
1992 33.36 38.94
1993 121.11 106.99
1994 -28.83 -31.45
1995 26.95 16.11
1/1/96-9/30/96 20.95 16.03
Average(5) 21.12% 22.41%
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(5) Average annual total returns represent the annual rate of price
appreciation, plus dividends reinvested at the end of each year.
redemptions, will be deducted.
Defining Your Cost
Low Initial Sales Charge/Reduced Charge for Rollovers
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.
Amount per As a % of Public
Amount Purchased 1,000 Units Offering Price
Maximum Initial Sales Charge $10.00 1.00%
Deferred Sales Charge $17.50 1.75%
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Your Sales Charge $27.50 2.75%
After a year, should you reinvest the proceeds of your investment into a new
portfolio, if available, you will not be subjected to an additional 1% initial
sales charge, just the $17.50 deferred fee. If you sell your investment before
maturity, the deferred sales charge and, in the secondary market, a charge to
reflect the estimated costs of liquidating securities to meet cash
Volume Purchase Discounts
For larger purchase, 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 Percentage 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 reinvestment 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 tax 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, and the special
considerations associated with the risks of international investing including
currency risk and political developments. Read it carefully before you invest.
Additional Hong Kong Portfolios containing the then-highest dividend-yielding
stocks may be created in the future. Information contained herein is subject
to completion or amendment. A registration statement relating to the next
Portfolio in this Select Ten Portfolio - International Series has been filed
with the Securities and Exchange Commission. The securities of the Portfolio
may not be sold nor may offers be accepted to buy be accepted prior to the
time that registration becomes effective. This brochure may not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws or any such state.
Other Select Series
Select Ten Portfolio (DJIA)
United Kingdom Portfolio (Financial Times Index)
Japan Portfolio (Nikkei Index)
Select Growth Portfolio
Equity Income Funds Concept Series
Premier American Portfolio
Health Care Trust II
Natural Gas Trust 2
Real Estate Income Fund 2
Tele-Global Trust 2
Equity Income Funds Utility Series
15th Utility Common Stock Series
Equity Income Funds Index Series
S&P 500 Index Trust 2
S&P MidCap Index Trust
Other Defined Asset Funds Bond Funds
Municipal Income Funds
Corporate Income Funds
Government Securities Income Funds
International Bond Funds
Cover photo Statue of Kuan-yin, Chinese Goddess of Mercy
Her statue, pictured on the front cover, stands in from of the Repluse Bay
Temple in Hong Kong.
Printed on Recycled Paper
14951BR-11/96
