At Defined Asset Funds, we set the foundation for each of our portfolios in this way, because we have a very important goal in mind—yours.

The United Kingdom Portfolio seeks total return by holding the ten highest dividend-yielding stocks of the Financial Times Industrial Ordinary Share Index* (FT Index) for about one year.

The Universe

The FT Index consists of 30 common stocks chosen by the editors of The Financial Times (London) as representative of British industry and commerce. The companies are major players in their industries, and their stocks are widely held by individual and institutional investors.

Dividend Yield

The Portfolio looks for potential values in the equity market by investing in established companies whose prices may be depressed. It consists of approximately equal dollar amounts of the ten FT Index stocks with the highest dividend yields, selected shortly before the offering. A higher yield may indicate that a stock is out of favor. As the prices of a stock declines, the dividend yield often increases, indicating a possible buying opportunity.

New Portfolio Annually

The Portfolio will hold its stocks for about one year. At the end of that period, we intend to reapply the Strategy to select a new Portfolio of the ten highest dividend-yielding stocks at that time. This annual process allows the Strategy to capitalize on new opportunities in the marketplace.

Discipline

Using dividend yield as the selection criteria eliminates emotion from the investment decision-making process. This disciplined contrarian approach to investing selects established stocks that others might be selling. It also eliminates the need to make buy and sell decisions on individual stocks.

Tax Efficiency

By holding this Portfolio for more than one year, individuals may be eligible for favorable federal tax rates on net long-term capital gainst (currently no more than 20%). On rollovers to future Portfolios, if available, certain investors may defer recognition of gains and losses on stocks that are transferred to the new Portfolio.

* The publisher of the Financial Times Index has not participated in any way in the creation of this Portfolio or in the selection of its stocks, nor approved any information included in this brochure.

Since the stocks in the portfolio were chosen solely by applying the Strategy, we analyzed the Strategy to see how it could have performed. Past performance of the Strategy is no guarantee of future results of any Portfolio. The Strategy (with Portfolio sales charges and expenses deducted) would have underperformed the FT Index in 7 of the last 20 years. There can be no assurance that any Portfolio will outperform the Index.

Portfolio results of this value-oriented Strategy may differ from the FT Index for various reasons. For example, FT Index performance may be driven by stocks not held in the Portfolio, such as growth stocks.

Returns shown represent price changes plus dividends reinvested at year ends, divided by the initial public offering price and do not reflect deduction of any commissions or taxes. Changes in the exchange rate of the pound sterling relative to the U.S. dollar affected these figures significantly in certain years. These changes ranged from -20% in 1984 to +27% in 1987, and averaged -0.67% over the last 20 years.

Portfolio performance will differ from the Strategy because of commissions, Portfolios are established and liquidated at different times during the year, they normally purchase and sell stocks at prices and currency exchange rates different from those used in determining Portfolio unit price, they are not fully invested at all times and stocks may not be weighted equally.

Generally, dividends and any net capital gains will be subject to tax each year, whether or not reinvested. Please consult your tax advisor concerning state and local taxation.