Business Services Growth Trust, Series 2
Energy Growth Trust, Series 4
Financial Services Growth Trust, Series 5
Market Leaders Growth Trust, Series 3
Pharmaceutical Growth Trust, Series 5
Technology Growth Trust, Series 8
The Trusts. FT 259 consists of the underlying separate unit investment
trusts set forth above. The various trusts are sometimes collectively
referred to herein as the "Trusts" and individually as a "Trust."
The objective of each Trust is to provide for potential capital
appreciation by investing the Trust's portfolio in common stocks (the
"Equity Securities") of companies represented by each Trust's specific
sector or investment focus. See "Schedule of Investments" for each
Trust. Each Trust has a mandatory termination date ("Mandatory
Termination Date" or "Trust Ending Date") as set forth under "Summary of
Essential Information" for each Trust. There is, of course, no guarantee
that the objective of the Trusts will be achieved.
Each Unit of a Trust represents an undivided fractional interest in all
the Equity Securities deposited in such Trust. The Equity Securities
deposited in each Trust's portfolio have no fixed maturity date and the
value of these underlying Equity Securities will fluctuate with changes
in the values of stocks in general. See "Portfolio."
The Sponsor may, from time to time during a period of up to
approximately 360 days after the Initial Date of Deposit, deposit
additional Equity Securities or cash (including a letter of credit) with
instructions to purchase additional Equity Securities in the Trusts.
Such deposits of additional Equity Securities will be done in such a
manner that the original proportionate relationship amongst the
individual issues of the Equity Securities in each Trust shall be
maintained. Any deposit by the Sponsor of additional Equity Securities,
or the purchase of additional Equity Securities pursuant to a cash
deposit, will duplicate, as nearly as is practicable, the original
proportionate relationship established on the Initial Date of Deposit,
and not the actual proportionate relationship on the subsequent date of
deposit, since the two may differ. Any such difference may be due to the
sale, redemption or liquidation of any Equity Securities deposited in
the Trusts on the Initial, or any subsequent, Date of Deposit. See "What
is the FT Series?" and "Rights of Unit Holders-How May Equity Securities
be Removed from a Trust?"
Public Offering Price. The Public Offering Price per Unit of each Trust
during the initial offering period is equal to the aggregate underlying
value of the Equity Securities in such Trust (generally determined by
the closing sale prices of listed Equity Securities and the ask prices
of over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of such
Trust, plus an initial sales charge equal to the difference between the
maximum sales charge of 4.5% of the Public Of-
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is July 15, 1998,
as amended October 13, 1998
Page 1
fering Price and the maximum remaining deferred sales charge, initially
$.35 per Unit. Commencing on February 19, 1999, and on the twentieth day
of each month thereafter (or if such date is not a business day, on the
preceding business day) through June 18, 1999, a deferred sales charge
of $.07 will be assessed per Unit per month. Units purchased subsequent
to the initial deferred sales charge payment but still during the
initial offering period will be subject to the initial sales charge and
the remaining deferred sales charge payments not yet collected. The
deferred sales charge will be paid from funds in the Income and/or
Capital Accounts, if sufficient, or from the periodic sale of Equity
Securities. The total maximum sales charge assessed to Unit holders on a
per Unit basis will be 4.5% of the Public Offering Price (equivalent to
4.545% of the net amount invested, exclusive of the deferred sales
charge). However, Unit holders who acquire Units which, as a result of a
reduction in the aggregate underlying value of the Equity Securities, are
not subject to an initial sales charge will be subject to the maximum
remaining deferred sales charge (initially $.35 per Unit). In such case
the maximum sales charge may exceed 4.5% of the Public Offering Price per
Unit but in no event will the maximum sales charge exceed 5.5% of the
Public Offering Price per Unit for Financial Services Growth Trust, Series
5, Market Leaders Growth Trust, Series 3 or Technology Growth Trust, Series
8; or 6.5% of the Public Offering Price per Unit for Business Services
Growth Trust, Series 2 or Energy Growth Trust, Series 4. A pro rata share
of accumulated dividends, if any, in the Income Account of a Trust is
included in the Public Offering Price. In addition, a portion of the
Public Offering Price on Units purchased prior to the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period also consists of Equity Securities in an amount sufficient
to pay for all or a portion of the costs incurred in establishing the
Trusts. The organizational and offering costs will be deducted from the
assets of each Trust as of the earlier of six months after the Initial Date
of Deposit or the end of the initial offering period. Upon completion of the
deferred sales charge period, the secondary market Public Offering Price per
Unit for a Trust will not include deferred payments, but will instead
include only a one-time initial sales charge of 4.5% of the Public Offering
Price (equivalent to 4.712% of the net amount invested), which will be
reduced by 1/2 of 1% on each July 30, commencing July 30, 1999 to a minimum
sales charge of 3.0%. The minimum amount which an investor may purchase
of a Trust is $1,000 ($500 for Individual Retirement Accounts or other
retirement plans). The sales charge of a Trust is reduced on a graduated
scale for sales involving at least $50,000. See "Public Offering-How is
the Public Offering Price Determined?"
UNITS OF THE TRUSTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE INVESTMENT RISK
INCLUDING LOSS OF PRINCIPAL.
Dividend and Capital Distributions. Distributions of dividends and
capital, if any, received by a Trust, net of expenses of such Trust,
will be paid on the Distribution Date to Unit holders of record on the
Record Date as set forth in the "Summary of Essential Information" for
each Trust. Distributions of funds in the Capital Account, if any, will
be made at least annually in December of each year. Any distribution of
income and/or capital will be net of the expenses of the respective
Trust. See "What is the Federal Tax Status of Unit Holders?"
Additionally, upon termination of the Trusts, the Trustee will
distribute, upon surrender of Units for redemption, to each Unit holder
his or her pro rata share of a Trust's assets, less expenses, in the
manner set forth under "Rights of Unit Holders-How are Income and
Capital Distributed?"
Secondary Market for Units. After the initial offering period, while
under no obligation to do so, the Sponsor intends to maintain a market
for Units of the Trusts and offer to repurchase such Units at prices
which are based on the aggregate underlying value of Equity Securities
in such Trusts (generally determined by the closing sale prices of
listed Equity Securities and the bid prices of over-the-counter traded
Equity Securities) plus or minus cash, if any, in the Capital and Income
Accounts of such Trusts. If a secondary market is maintained during the
initial offering period, the prices at which Units will be repurchased
will also be based upon the aggregate underlying value of the Equity
Securities in the Trusts (generally determined by the closing sale
prices of listed Equity Securities and the ask prices of over-the-
counter traded Equity Securities) plus or minus cash, if any, in the
Capital and Income Accounts of such Trusts. If a secondary market is not
maintained, a Unit holder may redeem Units through redemption at prices
based upon the aggregate underlying value of the Equity Securities in a
Trust (generally determined by the closing sale prices of listed Equity
Securities and either the ask prices (during the initial offering
Page 2
period) or the bid prices (subsequent to the initial offering period) of
over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of a Trust. A
Unit holder tendering 1,000 Units or more of a Trust for redemption may
request a distribution of shares of Equity Securities (reduced by
customary transfer and registration charges) (an "In-Kind Distribution")
in lieu of payment in cash. See "Rights of Unit Holders-How May Units be
Redeemed?" Any deferred sales charge remaining on Units at the time of
their sale or redemption will be collected at that time. See "Rights of
Unit Holders-How May Units be Redeemed?"
Termination. Commencing no later than the Mandatory Termination Date,
Equity Securities will begin to be sold as prescribed by the Sponsor.
The Trustee will provide written notice of any termination of the Trusts
to Unit holders which will specify when Unit holders may surrender their
certificates for cancellation and will include with such notice a form
to enable Unit holders to elect an In-Kind Distribution if such Unit
holder owns at least 1,000 Units of a Trust, rather than to receive
payment in cash for such Unit holder's pro rata share of the amounts
realized upon the disposition by the Trustee of Equity Securities. To be
effective, the election form, together with surrendered certificates and
other documentation required by the Trustee, must be returned to the
Trustee at least ten business days prior to the Mandatory Termination
Date. Unit holders not electing a distribution of shares of Equity
Securities will receive a cash distribution within a reasonable time
after a Trust is terminated. See "Rights of Unit Holders-How are Income
and Capital Distributed?" and "Other Information-How May the Indenture
be Amended or Terminated?"
Risk Factors. An investment in a Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers of the Equity Securities or the general condition of the
stock market, changes in interest rates and economic recession.
Volatility in the market price of the Equity Securities in a Trust also
changes the value of the Units of the Trusts. Unit holders tendering
Units for redemption during periods of market volatility may receive
redemption proceeds which are more or less than they paid for the Units.
The Trusts' portfolios are not managed and Equity Securities will not be
sold by the Trusts regardless of market fluctuations, although certain
Equity Securities may be sold under certain limited circumstances. For
further information concerning these risk factors as well as a
discussion of additional risks specific to each Trust, see "What are the
Equity Securities?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-July 15, 1998
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Business Financial
Services Energy Services
Growth Trust Growth Trust Trust
General Information Series 2 Series 4 Series 5
____________ _________ __________
<S> <C> <C> <C>
Initial Number of Units (1) 14,928 14,973 15,034
Fractional Undivided Interest in the Trust per Unit (1) 1/14,928 1/14,973 1/15,034
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities
in Portfolio (2) $ 147,790 $ 148,231 $ 148,837
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of 4.5% of the Public Offering Price
per Unit (4.545% of the net amount invested, exclusive
of the deferred sales charge) (3) $ .450 $ .450 $ .450
Less Deferred Sales Charge per Unit $ (.350) $ (.350) $ (.350)
Public Offering Price per Unit (3) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (4) $ 9.550 $ 9.550 $ 9.550
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less deferred sales charge) (4) $ 9.550 $ 9.550 $ 9.550
CUSIP Number 30264R 322 30264R 330 30264R 348
Security Code 55779 55780 55781
Trustee's Annual Fee per Unit outstanding $ .0096 $ .0096 $ .0096
Evaluator's Annual Fee per Unit outstanding (5) $ .0030 $ .0030 $ .0030
Maximum Supervisory Fee per Unit outstanding (6) $ .0035 $ .0035 $ .0035
Estimated Organizational and Offering Costs per Unit (7) $ .0225 $ .0225 $ .0225
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date July 20, 1998
Mandatory Termination Date July 15, 2003
Discretionary Liquidation Amount A Trust may be terminated if the value thereof is less than the lower of
$2,000,000 or 20% of the total value of Equity Securities deposited in such
Trust during the initial offering period.
Income Distribution Record Date Fifteenth day of each June and December commencing December 15, 1998.
Income Distribution Date (8) Last day of each June and December commencing December 31, 1998.
_____________
<FN>
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of a Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each listed Equity Security is valued at the last closing sale price,
or if no such price exists or if the Equity Security is not so listed,
at the closing ask price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering" for
additional information regarding these charges. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in such Income Account. The Public Offering Price
as shown reflects the value of the Equity Securities at the opening of
business on the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales
to investors will be executed at this price. Additional Equity
Securities will be deposited during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
(4) The Sponsor's Initial Repurchase Price per Unit and the Redemption
Price per Unit set forth above and until the earlier of six months after
the Initial Date of Deposit or the end of the initial offering period
include estimated organizational and offering costs per Unit. After such
date, the Sponsor's Repurchase Price and Redemption Price per Unit will
not include such estimated organizational and offering costs. See
"Rights of Unit Holders-How May Units be Redeemed?"
(5) The Evaluator's Fee is payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are
made as of the close of trading (generally 4:00 p.m. Eastern time) on
the New York Stock Exchange on each day on which it is open.
(6) The Supervisory Fee is payable to an affiliate of the Sponsor. In
addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0028 per
Unit per Trust.
(7) Investors will bear all or a portion of the costs incurred in
organizing a Trust (including costs of preparing the registration
statement, the trust indenture and other closing documents, registering
Units with the Securities and Exchange Commission and states, the
initial audit of a Trust portfolio, legal fees and the initial fees and
expenses of the Trustee but not including the expenses incurred in the
printing of preliminary and final prospectuses, and expenses incurred in
the preparation and printing of brochures and other advertising
materials and any other selling expenses) as is common for mutual funds.
Estimated organizational and offering costs are included in the Public
Offering Price per Unit and will be deducted from the assets of a Trust
at the earlier of six months after the Initial Date of Deposit or the
end of the initial offering period. See "Public Offering" and
"Statements of Net Assets."
(8) Distributions from the Capital Account will be made monthly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
</FN>
</TABLE>
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-July 15, 1998
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Market
Leaders Pharmaceutical Technology
Growth Trust Growth Trust Growth Trust
General Information Series 3 Series 5 Series 8
____________ ____________ ____________
<S> <C> <C> <C>
Initial Number of Units (1) 14,953 14,981 14,961
Fractional Undivided Interest in the Trust per Unit (1) 1/14,953 1/14,981 1/14,961
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities
in Portfolio (2) $ 148,036 $ 148,309 $ 148,121
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of 4.5% of the Public Offering Price per
Unit (4.545% of the net amount invested, exclusive
of the deferred sales charge) (3) $ .450 $ .450 $ .450
Less Deferred Sales Charge per Unit $ (.350) $ (.350) $ (.350)
Public Offering Price per Unit (3) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (4) $ 9.550 $ 9.550 $ 9.550
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less deferred sales charge) (4) $ 9.550 $ 9.550 $ 9.550
CUSIP Number 30264R 355 30264R 363 30264R 371
Security Code 55782 55783 55784
Trustee's Annual Fee per Unit outstanding $ .0096 $ .0096 $ .0096
Evaluator's Annual Fee per Unit outstanding (5) $ .0030 $ .0030 $ .0030
Maximum Supervisory Fee per Unit outstanding (6) $ .0035 $ .0035 $ .0035
Estimated Organizational and Offering Costs per Unit (7) $ .0225 $ .0225 $ .0225
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date July 20, 1998
Mandatory Termination Date July 15, 2003
Discretionary Liquidation Amount A Trust may be terminated if the value thereof is less than the lower of
$2,000,000 or 20% of the total value of Equity Securities deposited in such
Trust during the initial offering period.
Income Distribution Record Date Fifteenth day of each June and December commencing December 15, 1998.
Income Distribution Date (8) Last day of each June and December commencing December 31, 1998.
______________
<FN>
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of a Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each listed Equity Security is valued at the last closing sale price,
or if no such price exists or if the Equity Security is not so listed,
at the closing ask price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering" for
additional information regarding these charges. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in such Income Account. The Public Offering Price
as shown reflects the value of the Equity Securities at the opening of
business on the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales
to investors will be executed at this price. Additional Equity
Securities will be deposited during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
(4) The Sponsor's Initial Repurchase Price per Unit and the Redemption
Price per Unit set forth above and until the earlier of six months after
the Initial Date of Deposit or the end of the initial offering period
include estimated organizational and offering costs per Unit. After such
date, the Sponsor's Repurchase Price and Redemption Price per Unit will
not include such estimated organizational and offering costs. See
"Rights of Unit Holders-How May Units be Redeemed?"
(5) The Evaluator's Fee is payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are
made as of the close of trading (generally 4:00 p.m. Eastern time) on
the New York Stock Exchange on each day on which it is open.
(6) The Supervisory Fee is payable to an affiliate of the Sponsor. In
addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0028 per
Unit per Trust.
(7) Each Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing
Investors will bear all or a portion of the costs incurred in organizing
a Trust (including costs of preparing the registration statement, the
trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of a
Trust portfolio, legal fees and the initial fees and expenses of the
Trustee but not including the expenses incurred in the printing of
preliminary and final prospectuses, and expenses incurred in the
preparation and printing of brochures and other advertising materials
and any other selling expenses) as is common for mutual funds. Estimated
organizational and offering costs are included in the Public Offering
Price per Unit and will be deducted from the assets of a Trust at the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period. See "Public Offering" and "Statements of
Net Assets."
(8) Distributions from the Capital Account will be made monthly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
</FN>
</TABLE>
Page 5
FEE TABLES
These Fee Tables are intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although the Trusts
have a term of approximately five years and are unit investment trusts
rather than mutual funds, this information is presented to permit a
comparison of fees.
<TABLE>
<CAPTION>
Business Services Energy Financial Services
Growth Trust Growth Trust Growth Trust
Series 2 Series 4 Series 5
___________________ __________________ _________________
<S> <C> <C> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 3.50%(b) .350 3.50%(b) .350 3.50%(b) .350
________ ________ ________ ________ ________ ________
4.50% $ .450 4.50% $ .450 4.50% $ .450
======== ======== ======== ======== ======== ========
ORGANIZATIONAL AND OFFERING COSTS
Estimated Organizational and Offering Costs
(as a percentage of public offering price) .225%(c) $ .0225 .225%(c) $ .0225 .225%(c) $ .0225
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Trustee's fee .098% $ .0096 .098% $ .0096 .098% $ .0096
Portfolio supervision, bookkeeping, administrative
and evaluation fees .095% .0093 .095% .0093 .095% .0093
Other operating expenses .055% .0054 .055% .0054 .055% .0054
________ ________ ________ ________ ________ ________
Total .248% $ .0243 .248% $ .0243 .248% $ .0243
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Market Leaders Pharmaceutical Technology
Growth Trust Growth Trust Growth Trust
Series 3 Series 5 Series 8
___________________ __________________ _________________
<S> <C> <C> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 3.50%(b) .350 3.50%(b) .350 3.50%(b) .350
________ ________ ________ ________ ________ ________
4.50% $ .450 4.50% $ .450 4.50% $ .450
======== ======== ======== ======== ======== ========
ORGANIZATIONAL AND OFFERING COSTS
Estimated Organizational and Offering Costs
(as a percentage of public offering price) .225%(c) $ .0225 .225%(c) $ .0225 .225%(c) $ .0225
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of public offering price)
Trustee's fee .098% $ .0096 .098% $ .0096 .098% $ .0096
Portfolio supervision, bookkeeping, administrative
and evaluation fees .095% .0093 .095% .0093 .095% .0093
Other operating expenses .055% .0054 .055% .0054 .055% .0054
________ ________ ________ ________ ________ ________
Total .248% $ .0243 .248% $ .0243 .248% $ .0243
======== ======== ======== ======== ======== ========
</TABLE>
Page 6
<TABLE>
<CAPTION>
Examples
_______
CUMULATIVE EXPENSES PAID
Business Services Energy Growth Trust Financial Services
Growth Trust, Series 2 Series 4 Growth Trust, Series 5
_________________________ _________________________ _______________________
1 Year 3 Years 5 Years 1 Year 3 Years 5 Years 1 Year 3 Years 5 Years
______ _______ _______ ______ _______ _______ ______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming the Trust
has an estimated operating expense ratio of
.248% and a 5% annual return on the
investment throughout the periods $50 $55 $60 $50 $55 $60 $50 $55 $60
</TABLE>
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID
Market Leader Growth Pharmaceutical Growth Technology Growth
Trust, Series 3 Trust, Series 5 Trust, Series 8
_________________________ _________________________ _______________________
1 Year 3 Years 5 Years 1 Year 3 Years 5 Years 1 Year 3 Years 5 Years
______ _______ _______ ______ _______ _______ ______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming the Trust
has an estimated operating expense ratio of
.248% and a 5% annual return on the
investment throughout the periods $50 $55 $60 $50 $55 $60 $50 $55 $60
______________
<FN>
(a) The Initial Sales Charge is actually the difference between the
maximum total sales charge of 4.5% and the maximum remaining deferred
sales charge (initially $.35 per Unit) and would exceed 1.0% if the
Public Offering Price exceeds $10.00 per Unit.
(b) The actual fee is $.07 per month per Unit, irrespective of purchase
or redemption price deducted monthly commencing February 19, 1999
through June 18, 1999. If a Unit holder sells or redeems Units before
all of these deductions have been made, the balance of the deferred
sales charge payments remaining will be deducted from the sales or
redemption proceeds. If the Unit price exceeds $10.00 per Unit, the
deferred sales charge will be less than 3.5%. Units purchased subsequent
to the initial deferred sales charge payment will also be subject to the
remaining deferred sales charge payments not yet collected.
(c) Investors will bear all or a portion of the costs incurred in
organizing the Trusts (including costs of preparing the registration
statement, the trust indenture, and other closing documents, registering
Units with the Securities and Exchange Commission and states, the
initial audit of the Trust portfolio, legal fees and the initial fees
and expenses of the Trustee) as is common for mutual funds. Estimated
organizational and offering costs are included in the Public Offering
Price per Unit and will be deducted from the assets of a Trust at the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period.
</FN>
</TABLE>
Examples
The examples assume reinvestment of all dividends and distributions and
utilize a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. For purposes
of the examples, the deferred sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the
dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment. The
examples should not be considered a representation of past or future
expenses or annual rate of return; the actual expenses and annual rate
of return may be more or less than those assumed for purposes of the
examples.
Page 7
BUSINESS SERVICES GROWTH TRUST, SERIES 2
ENERGY GROWTH TRUST, SERIES 4
FINANCIAL SERVICES GROWTH TRUST, SERIES 5
MARKET LEADERS GROWTH TRUST SERIES 3
PHARMACEUTICAL GROWTH TRUST, SERIES 5
TECHNOLOGY GROWTH TRUST, SERIES 8
FT 259
What is the FT Series?
FT 259 is one of a series of investment companies created by the Sponsor
under the name of the FT Series, all of which are generally similar, but
each of which is separate and is designated by a different series
number. The FT Series was previously known as The First Trust Special
Situations Trust Series. This Series consists of the underlying separate
unit investment trusts set forth above. The Trusts were created under
the laws of the State of New York pursuant to a Trust Agreement (the
"Indenture"), dated the Initial Date of Deposit, with Nike Securities
L.P. as Sponsor, The Chase Manhattan Bank as Trustee, and First Trust
Advisers L.P. as Portfolio Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of common stocks (the
"Equity Securities"), together with an irrevocable letter or letters of
credit of a financial institution in an amount at least equal to the
purchase price of such securities. In exchange for the deposit of
securities or contracts to purchase securities in the Trusts, the
Trustee delivered to the Sponsor documents evidencing the entire
ownership of the Trusts.
Business Services Growth Trust, Series 2
The objective of the Business Services Growth Trust, Series 2 (the
"Business Services Growth Trust") is to provide investors with the
potential for above-average capital appreciation through an investment
in a diversified portfolio of common stocks of companies the Sponsor
believes are positioned to take advantage of the trend among
institutions such as corporations and government entities toward
utilizing specialized, vendor-supplied services. The Business Services
Growth Trust's portfolio is diversified across several companies
involved in various industries, such as temporary staffing, information
technology services, electronics manufacturing services, and business
and information services. The companies selected for the Business
Services Growth Trust have been researched and evaluated using database
screening techniques, fundamental analysis, and the judgment of the
Sponsor's research analysts. In general, the Sponsor believes these
companies have above-average growth prospects for both sales and
earnings, established market shares for their services and lower-than-
average levels of debt.
In today's increasingly competitive business environment, firms with
specialized services are able to provide businesses a way to reduce
fixed costs and enable them to concentrate more on core operations.
Mundane but necessary tasks are being outsourced to the companies with
expertise in those tasks. Thus, financial resources otherwise spent on
hiring and training in-house personnel become available to spend on core
operations.
In addition, a simple but critical computer issue may cause problems for
many companies if it is not corrected before January 1, 2000. Many
computers and software programs only recognize the last two numbers of a
year, so on January 1, 2000, a computer may think the date is 1900,
causing a multitude of problems. Estimates range from $300 to $600
billion to solve this problem, with 15%-20% of corporate information
technology budgets allocated toward this issue in 1998. That figure is
expected to rise to as much as 50% as the year 2000 approaches. Many
companies are unable to dedicate the necessary resources to address and
correct this problem, while others are focusing on it and have
subsequently caused a need in another area. In both cases, a specialized
vendor-supplied service company provides the solution. This computer
problem has spurred the creation of several companies whose primary
focus is to work with businesses to address this problem.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the Business Services Growth Trust. There is, however, no
Page 8
assurance that the objective of the Business Services Growth Trust will
be achieved.
Energy Growth Trust, Series 4
The objective of the Energy Growth Trust, Series 4 (the "Energy Growth
Trust") is to provide investors with the potential for above-average
capital appreciation through an investment in a diversified portfolio of
common stocks of energy companies which the Sponsor believes are
positioned to take advantage of the world's increasing demand for
energy. The Energy Growth Trust's portfolio is diversified across many
energy sectors, including integrated oil, oilfield services and
equipment, oil and gas production, and natural gas. The companies
selected for the Energy Growth Trust have been researched and evaluated
using database screening techniques, fundamental analysis and the
judgment of the Sponsor's research analysts. To help reduce risk, the
Energy Growth Trust avoids small companies, newly-issued stocks and
stocks with little or no earnings. In general, the Sponsor believes the
companies selected for the Energy Growth Trust have above-average growth
prospects for both sales and earnings and lower-than-average levels of
debt.
Worldwide demand for energy continues to increase daily, driven
primarily by the rapid developments in newly-industrialized countries in
Asia, Eastern Europe and Latin America. Energy prices are expected to
rise by decade's end because current energy supplies are being drained
by the world's demands for energy. By the year 2020, it is projected
that the world will consume three times as much energy as it did 25
years ago. Most of the added consumption is attributed to the developing
countries of Asia, where it is estimated that their consumption will
exceed all of North America by 36% in the year 2020. Industry
overcapacity and declining energy prices in the 1980s forced energy
companies to become more competitive under difficult conditions. As a
result, energy companies have greatly improved their operating
efficiencies through cost cutting, consolidation and new technologies as
discussed below:
- - Consolidation and the divestiture of non-core assets has reduced
industry capacity and allowed companies to focus on their core operations.
- - New technologies are expected to lead to the discovery of
additional energy reserves and lower the cost of developing these
reserves. Given these measures, energy companies are positioned for
significantly improved profitability when energy prices increase, as
analysts expect.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the Energy Growth Trust. There is, however, no assurance
that the objective of the Energy Growth Trust will be achieved.
Financial Services Growth Trust, Series 5
The objective of the Financial Services Growth Trust, Series 5 (the
"Financial Services Growth Trust") is to provide for the potential for
above-average capital appreciation through an investment in a
diversified portfolio of common stocks of companies which are money
center banks, major regional banks, financial and investment service
providers and insurance companies. The companies selected for the
Financial Services Growth Trust have been researched and evaluated using
database screening techniques, fundamental analysis and the judgment of
the Sponsor's research analysts. To help reduce risk, the Financial
Services Growth Trust avoids small companies, newly-issued stocks and
stocks with little or no earnings.
The financial services industry continues to evolve as banks and
insurers expand their businesses through innovative products and
services. The Sponsor believes the companies in the Financial Services
Growth Trust are ideally positioned to benefit from the rapid changes in
this industry. The following factors support the positive outlook for
financial services companies:
- - The banking, financial services and insurance industries continue
to experience significant consolidation.
- - Given their high level of profitability and earnings growth, the
companies included in the portfolio trade at attractive valuation levels
relative to the S&P 500 and their historic trading range.
- - Baby boomers are becoming heirs and heiresses. Some studies
indicate that more than $1 trillion may transfer from one American
generation to another before the year 2000.
- - Liquid financial assets of U.S. households rose to over $10.9
billion in 1995.
It is important to note that the financial institutions industry is
subject to the adverse effect of volatile interest rates, economic
Page 9
recession, increased competition from new entrants in the field and
potential increased regulation. See "Schedule of Investments" and "What
are the Equity Securities?-Risk Factors" for the Financial Services
Growth Trust. There is, however, no assurance that the objective of the
Financial Services Growth Trust will be achieved.
Market Leaders Growth Trust, Series 3
The objective of the Market Leaders Growth Trust, Series 3 (the "Market
Leaders Growth Trust") is to provide investors with the potential for
above-average capital appreciation through an investment in a
diversified portfolio of common stocks issued by well-known blue chip
companies with a long-standing history of performance and financial
stability. Blue chip stocks typically are safer investments than other
kinds of stocks by virtue of their size and strength. The Sponsor
believes that the companies selected have above-average growth prospects
based on their financial strength and market dominance, competitive
advantages, skilled management, and essential products and services that
they provide. The companies selected for the Market Leaders Growth Trust
have been researched and evaluated using database screening techniques,
fundamental analysis, and the judgment of the Sponsor's research
analysts.
Blue chip companies typically weather economic downturns, grow
consistently in a healthy economy, and may provide a stable total return
over time. Such companies' generally strong performance, even during
periods of economic uncertainty, can be attributed to their products and
services, which typically remain in demand. In fact, many of the
products of blue chip companies can be found in almost every home in
America today.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the Market Leaders Growth Trust. There is, however, no
assurance that the objective of the Market Leaders Growth Trust will be
achieved.
Pharmaceutical Growth Trust, Series 5
The objective of the Pharmaceutical Growth Trust, Series 5 (the
"Pharmaceutical Growth Trust") is to provide investors with the
potential for above-average capital appreciation through an investment
in a diversified portfolio of common stocks issued by pharmaceutical
companies. The companies selected for the Pharmaceutical Growth Trust
have been researched and evaluated using database screening techniques,
fundamental analysis, and the judgment of the Sponsor's research
analysts.
The pharmaceutical industry continues to evolve, and as a result,
pharmaceutical companies need to keep pace with this constant change, in
order to be successful. The Sponsor believes that the companies selected
for the Pharmaceutical Growth Trust are leaders within this dynamic
industry and are ideally positioned for growth.
Several factors support this belief. First, in 1998, pharmaceutical
companies are expected to spend 19.6% of their domestic revenues on the
research and development of new medications. Research-based
pharmaceutical companies continue to invest record-setting amounts on
research and development. Spending in this area is expected to increase
by 10.7% in 1998 to a new record level of $20.6 billion. Second, as in
many other industries, consolidation and cost cutting have resulted in
more stabilized profit margins. Finally, companies are improving unit
volume growth by working more closely with managed care providers who
frequently see pharmaceuticals as a cost-effective alternative to other
more expensive treatments.
It is important to note that companies engaged in the pharmaceutical
industry are subject to fierce competition, stringent government
regulation and the risk that their products and services are subject to
rapid obsolescence. The Sponsor believes this above-average level of
risk and volatility is more than offset by the potential for above-
average returns.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the Pharmaceutical Growth Trust. There is, however, no
assurance that the objective of the Pharmaceutical Growth Trust will be
achieved.
Technology Growth Trust, Series 8
The objective of the Technology Growth Trust, Series 8 (the "Technology
Growth Trust") is to provide investors with the potential for above-
average capital appreciation through an investment in a diversified
Page 10
portfolio of common stocks issued by companies involved in computers,
computer networking, software, semiconductor equipment and
semiconductors. To help reduce high risk, the Trust avoids small market
capitalization stocks, newly-issued stocks and stocks with little or no
earnings. The companies all have market capitalizations of at least $500
million and have been publicly traded for two years or more.
The technology industry is among the fastest growing and fastest
changing industries in the world. The Sponsor believes that the industry
will continue to grow and the companies selected for the Technology
Growth Trust have above-average growth prospects. The companies selected
for the Technology Growth Trust have been researched and evaluated using
database screening techniques, fundamental analysis, and the judgment of
the Sponsor's research analysts.
Technology companies continue to make advancements. In the last several
years, the development and/or improvement of personal computers, fax
machines, cellular phones, online data services and Internet-related
products and services has led to tremendous growth in technology
companies. Corporations continue to invest in technology to enhance
their productivity and to keep ahead of the competition. In addition,
consumer demand continues to increase as education and entertainment
technology becomes more affordable and accessible.
It is important to note that companies engaged in the technology
industry are subject to fierce competition and their products and
services may be subject to rapid obsolescence. The Sponsor believes the
above-average levels of risk and volatility in technology stocks are
more than offset by the potential for above-average returns.
See "Schedule of Investments" and "What are the Equity Securities?-Risk
Factors" for the Technology Growth Trust. There is, however, no
assurance that the objective of the Technology Growth Trust will be
achieved.
With the deposit of the Equity Securities on the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
amounts of Equity Securities in each Trust's portfolio, as set forth
under "Schedule of Investments" for each Trust. From time to time
following the Initial Date of Deposit, the Sponsor, pursuant to the
Indenture, may create additional Units in a Trust by depositing
additional Equity Securities or cash (including a letter of credit) with
instructions to purchase additional Equity Securities in a Trust. Units
may be continuously offered for sale to the public by means of this
Prospectus, resulting in a potential increase in the outstanding number
of Units of a Trust. Any deposit by the Sponsor of additional Equity
Securities, or the purchase of additional Equity Securities pursuant to
a cash deposit, will duplicate, as nearly as is practicable, the
original proportionate relationship and not the actual proportionate
relationship on the subsequent date of deposit, since the two may
differ. Any such difference may be due to the sale, redemption or
liquidation of any of the Equity Securities deposited in a Trust on the
Initial, or any subsequent, Date of Deposit. See "Rights of Unit Holders-
How May Equity Securities be Removed from a Trust?" Since the prices of
the underlying Equity Securities will fluctuate daily, the ratio, on a
market value basis, will also change daily. The portion of Equity
Securities represented by each Unit will not change as a result of the
deposit of additional Equity Securities in a Trust. If the Sponsor
deposits cash, however, existing and new investors may experience a
dilution of their investment and a reduction in their anticipated income
because of fluctuations in the prices of the Equity Securities between
the time of the cash deposit and the purchase of the Equity Securities
and because such Trust will pay the associated brokerage fees. To
minimize this effect, the Trusts will try to purchase the Equity
Securities as close to the evaluation time as possible. The Trustee may,
from time to time, retain and pay compensation to the Sponsor (or an
affiliate of the Sponsor) to act as agent for a Trust with respect to
acquiring Equity Securities for a Trust. In acting in such capacity, the
Sponsor or its affiliate will be subject to the restrictions under the
Investment Company Act of 1940, as amended.
On the Initial Date of Deposit, each Unit of a Trust represented the
undivided fractional interest in the Equity Securities deposited in such
Trust set forth under "Summary of Essential Information" for each Trust.
To the extent that Units of a Trust are redeemed, the aggregate value of
the Equity Securities in such Trust will be reduced and the undivided
fractional interest represented by each outstanding Unit of that Trust
will increase. However, if additional Units are issued by a Trust in
connection with the deposit of additional Equity Securities or cash by
the Sponsor, the aggregate value of the Equity Securities in that Trust
will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit of that Trust
Page 11
will be decreased proportionately. See "Rights of Unit Holders-How May
Units be Redeemed?"
What are the Expenses and Charges?
With the exception of brokerage fees discussed above and bookkeeping and
other administrative services provided to each Trust, for which the
Sponsor will be reimbursed in amounts as set forth under "Summary of
Essential Information," the Sponsor will not receive any fees in
connection with its activities relating to a Trust.
First Trust Advisers L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Information," for providing portfolio
supervisory services for each Trust. Such fee is based on the number of
Units outstanding in a Trust on January 1 of each year except for the
year or years in which an initial offering period occurs in which case
the fee for a month is based on the number of Units outstanding at the
end of such month. In providing such supervisory services, the Portfolio
Supervisor may purchase research services from a variety of sources
which may include dealers of the Trusts.
Subsequent to the initial offering period, First Trust Advisers L.P., in
its capacity as the Evaluator for the Trusts, will receive a fee as
indicated in the "Summary of Essential Information."
The Trustee pays certain expenses of each Trust for which it is
reimbursed by such Trust. The Trustee will receive for its ordinary
recurring services to each Trust an annual fee set forth in each
"Summary of Essential Information." Such fee is based upon the largest
aggregate number of Units of each Trust outstanding during the calendar
year, except during the initial offering period, in which case the fee
is calculated based on the largest number of Units outstanding during
the period for which compensation is paid. For a discussion of the
services performed by the Trustee pursuant to its obligations under the
Indenture, reference is made to the material set forth under "Rights of
Unit Holders."
The Trustee's and the above described fees are payable from the Income
Account of a Trust to the extent funds are available and then from the
Capital Account of such Trust. Since the Trustee has the use of the
funds being held in the Capital and Income Accounts for payment of
expenses and redemptions and since such Accounts are noninterest-bearing
to Unit holders, the Trustee benefits thereby. Part of the Trustee's
compensation for its services to each Trust is expected to result from
the use of these funds.
Each of the above mentioned fees may be increased without approval of
the Unit holders by amounts not exceeding proportionate increases under
the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor. In addition,
with respect to the fees payable to the Sponsor or an affiliate of the
Sponsor for providing bookkeeping and other administrative services,
supervisor services and evaluation services, such individual fees may
exceed the actual costs of providing such services for a Trust, but at
no time will the total amount received for such services rendered to all
unit investment trusts of which Nike Securities L.P. is the Sponsor in
any calendar year exceed the actual cost to the Sponsor or its affiliate
of supplying such services in such year.
The following additional charges are or may be incurred by a Trust: all
legal and annual auditing expenses of the Trustee incurred by or in
connection with its responsibilities under the Indenture; the expenses
and costs of any action undertaken by the Trustee to protect a Trust and
the rights and interests of the Unit holders; fees of the Trustee for
any extraordinary services performed under the Indenture;
indemnification of the Trustee for any loss, liability or expense
incurred by it without negligence, bad faith or willful misconduct on
its part, arising out of or in connection with its acceptance or
administration of a Trust; any offering costs incurred after the earlier
of six months after the Initial Date of Deposit or the end of the
initial offering period; indemnification of the Sponsor for any loss,
liability or expense incurred without gross negligence, bad faith or
willful misconduct in acting as Depositor of such Trust; all taxes and
other government charges imposed upon the Securities or any part of a
Trust (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor, contemplated). The above expenses and the
Trustee's annual fee, when paid or owing to the Trustee, are secured by
a lien on each Trust. In addition, the Trustee is empowered to sell
Equity Securities in a Trust in order to make funds available to pay all
these amounts if funds are not otherwise available in the Income and
Capital Accounts of such Trust. Since the Equity Securities are all
common stocks and the income stream produced by dividend payments is
Page 12
unpredictable, the Sponsor cannot provide any assurance that dividends
will be sufficient to meet any or all expenses of a Trust. As described
above, if dividends are insufficient to cover expenses, it is likely
that Equity Securities will have to be sold to meet such Trust expenses.
These sales may result in capital gains or losses to Unit holders. See
"What is the Federal Tax Status of Unit Holders?"
The Indenture requires each Trust to be audited on an annual basis at
the expense of such Trusts by independent auditors selected by the
Sponsor. So long as the Sponsor is making a secondary market for the
Units, the Sponsor is required to bear the cost of such annual audits to
the extent such cost exceeds $0.0050 per Unit. Unit holders of a Trust
covered by an audit may obtain a copy of the audited financial
statements upon request.
What is the Federal Tax Status of Unit Holders?
This is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment) within the meaning of
Section 1221 of the Internal Revenue Code of 1986 (the "Code"). Unit
holders should consult their tax advisors in determining the Federal,
state, local and any other tax consequences of the purchase, ownership
and disposition of Units in the Trusts. For purposes of the following
discussion and opinion, it is assumed that each Equity Security is
equity for Federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. Each Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of each of the assets of a Trust under the
Code; and the income of each Trust will be treated as income of the Unit
holders thereof under the Code. Each Unit holder will be considered to
have received his or her pro rata share of the income derived from each
Equity Security when such income is considered to be received by a Trust.
2. Each Unit holder will be considered to have received all of the
dividends paid on his or her pro rata portion of each Equity Security
when such dividends are considered to be received by a Trust regardless
of whether such dividends are used to pay a portion of the deferred
sales charge. Unit holders will be taxed in this manner regardless of
whether distributions from such Trust are actually received by the Unit
holder.
3. Each Unit holder will have a taxable event when a Trust disposes of
an Equity Security (whether by sale, taxable exchange, liquidation,
redemption, or otherwise) or upon the sale or redemption of Units by
such Unit holder (except to the extent an In-Kind distribution of stocks
is received by such Unit holder as described below). The price a Unit
holder pays for his or her Units, generally including sales charges, is
allocated among his or her pro rata portion of each Equity Security held
by a Trust (in proportion to the fair market values thereof on the
valuation date closest to the date the Unit holder purchases his or her
Units) in order to determine the tax basis for his or her pro rata
portion of each Equity Security held by such Trust. Unit holders should
consult their own tax advisors with regard to calculation of basis. For
Federal income tax purposes, a Unit holder's pro rata portion of
dividends, as defined by Section 316 of the Code, paid by a corporation
with respect to an Equity Security held by a Trust is taxable as
ordinary income to the extent of such corporation's current and
accumulated "earnings and profits." A Unit holder's pro rata portion of
dividends paid on such Equity Security which exceed such current and
accumulated earnings and profits will first reduce a Unit holder's tax
basis in such Equity Security, and to the extent that such dividends
exceed a Unit holder's tax basis in such Equity Security shall generally
be treated as capital gain. In general, the holding period for such
capital gain will be determined by the period of time a Unit holder has
held his or her Units.
4. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held by a
Trust will generally be considered a capital gain (except in the case of
a dealer or a financial institution). A Unit holder's portion of loss,
if any, upon the sale or redemption of Units or the disposition of
Equity Securities held by a Trust will generally be considered a capital
loss (except in the case of a dealer or a financial institution). Unit
holders should consult their tax advisors regarding the recognition of
Page 13
such capital gains and losses for Federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unit holder
includes sales charges, and such charges are not deductible. A portion
of the sales charge for the Trusts is deferred. It is possible that for
Federal income tax purposes a portion of the deferred sales charge may
be treated as interest which would be deductible by a Unit holder
subject to limitations on the deduction of investment interest. In such
a case, the non-interest portion of the deferred sales charge should be
added to the Unit holder's tax basis in his or her Units. The deferred
sales charge could cause the Unit holder's Units to be considered to be
debt-financed under Section 246A of the Code which would result in a
small reduction of the dividends-received deduction. In any case, the
income (or proceeds from redemption) a Unit holder must take into
account for federal income tax purposes is not reduced by amounts
deducted to pay the deferred sales charge. Unit holders should consult
their own tax advisors as to the income tax consequences of the deferred
sales charge.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with respect
to such Unit holder's pro rata portion of dividends received by a Trust
(to the extent such dividends are taxable as ordinary income, as
discussed above, and are attributable to domestic corporations) in the
same manner as if such corporation directly owned the Equity Securities
paying such dividends (other than corporate Unit holders, such as "S"
corporations, which are not eligible for the deduction because of their
special characteristics and other than for purposes of special taxes
such as the accumulated earnings tax and the personal holding
corporation tax). However, a corporation owning Units should be aware
that Sections 246 and 246A of the Code impose additional limitations on
the eligibility of dividends for the 70% dividends received deduction.
These limitations include a requirement that stock (and therefore Units)
must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been issued which address
special rules that must be considered in determining whether the 46-day
holding period requirement is met. Moreover, the allowable percentage of
the deduction will be reduced from 70% if a corporate Unit holder owns
certain stock (or Units) the financing of which is directly attributable
to indebtedness incurred by such corporation.
To the extent dividends received by a Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of
such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations.
It should be noted that various legislative proposals that would affect
the dividends received deduction have been introduced. Unit holders
should consult with their tax advisors with respect to the limitations
on and possible modifications to the dividends received deduction.
Limitations on Deductibility of a Trust's Expenses by Unit Holders. Each
Unit holder's pro rata share of each expense paid by a Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by such Unit holder. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of a
Trust as miscellaneous itemized deductions subject to this limitation.
Unit holders should consult with their tax advisors regarding the
limitations on the deductibility of Trust expenses.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by a
Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
by a Trust or if the Unit holder disposes of a Unit. For taxpayers other
than corporations, net capital gain (which is defined as net long-term
capital gain over net short-term capital loss for the taxable year) is
subject to a maximum marginal stated tax rate of either 28% or 20%,
depending upon the holding periods of the capital assets. Capital gain
or loss is long-term if the holding period for the asset is more than
one year, and is short-term if the holding period for the asset is one
year or less. The date on which a Unit is acquired (i.e., the "trade
date") is excluded for purposes of determining the holding period of the
Unit. Generally, capital gains realized from assets held for more than
one year but not more than 18 months are taxed at a maximum marginal
stated tax rate of 28% and capital gains realized from assets (with
Page 14
certain exclusions) held for more than 18 months are taxed at a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in
the lowest tax bracket). Further, capital gains realized from assets
held for one year or less are taxed at the same rates as ordinary
income. Legislation is currently pending that provides the appropriate
methodology that should be applied in netting the realized capital gains
and losses. Such legislation is proposed to be effective retroactively
for tax years ending after May 6, 1997. Note also that legislation is
currently pending under which net capital gain realized from property
(with certain exclusions) held for more than one year (rather than more
than 18 months) would be taxed at the maximum marginal stated tax rate
of 20% (10% for certain taxpayers) provided by the 1997 Act. Such
legislation is proposed to be effective retroactively for amounts
properly taken into account on or after January 1, 1998.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisors regarding the potential effect of this
provision on their investment in Units.
If the Unit holder disposes of a Unit, he or she is deemed thereby to
have disposed of his or her entire pro rata interest in all assets of
the Trust involved, including his or her pro rata portion of all the
Equity Securities represented by the Unit.
The Taxpayer Relief Act of 1997 (the "1997 Act") includes provisions
that treat certain transactions designed to reduce or eliminate risk of
loss and opportunities for gain (e.g., short sales, offsetting notional
principal contracts, futures or forward contracts or similar
transactions) as constructive sales for purposes of recognition of gain
(but not loss) and for purposes of determining the holding period. Unit
holders should consult their own tax advisors with regard to any
constructive sale rules.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units or Termination of a Trust. As discussed in "Rights of Unit Holders-
How are Income and Capital Distributed?", under certain circumstances a
Unit holder who owns at least 1,000 Units of a Trust may request an In-
Kind Distribution upon the redemption of Units or the termination of a
Trust. The Unit holder requesting an In-Kind Distribution will be liable
for expenses related thereto (the "Distribution Expenses") and the
amount of such In-Kind Distribution will be reduced by the amount of the
Distribution Expenses. See "Rights of Unit Holders-How are Income and
Capital Distributed?" As previously discussed, prior to the redemption
of Units or the termination of a Trust, a Unit holder is considered as
owning a pro rata portion of each of a Trust's assets for Federal income
tax purposes. The receipt of an In-Kind Distribution will result in a
Unit holder receiving an undivided interest in whole shares of stock
plus, possibly, cash.
The potential tax consequences that may occur under an In-Kind
Distribution with respect to each Equity Security owned by a Trust will
depend on whether or not a Unit holder receives cash in addition to
Equity Securities. An "Equity Security" for this purpose is a particular
class of stock issued by a particular corporation. A Unit holder will
not recognize gain or loss if a Unit holder only receives Equity
Securities in exchange for his or her pro rata portion in the Equity
Securities held by a Trust. However, if a Unit holder also receives cash
in exchange for a fractional share of an Equity Security held by a
Trust, such Unit holder will generally recognize gain or loss based upon
the difference between the amount of cash received by the Unit holder
and his or her tax basis in such fractional share of an Equity Security
held by such Trust.
Because a Trust will own many Equity Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by a Trust. The
amount of taxable gain (or loss) recognized upon such exchange will
generally equal the sum of the gain (or loss) recognized under the rules
described above by such Unit holder with respect to each Equity Security
owned by a Trust. Unit holders who request an In-Kind Distribution are
advised to consult their tax advisors in this regard.
Computation of the Unit Holder's Tax Basis. Initially, a Unit holder's
tax basis in his or her Units will generally equal the price paid by
such Unit holder for his or her Units. The cost of the Units is
allocated among the Equity Securities held in a Trust in accordance with
the proportion of the fair market values of such Equity Securities as of
the valuation date nearest the date the Units are purchased in order to
determine such Unit holder's tax basis for his or her pro rata portion
of each Equity Security.
A Unit holder's tax basis in his or her Units and his or her pro rata
portion of an Equity Security held by a Trust will be reduced to the
Page 15
extent dividends paid with respect to such Equity Security are received
by a Trust which are not taxable as ordinary income as described above.
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified that payments to the Unit holder are
subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by a Trust to such Unit holder (including amounts received
upon the redemption of Units) will be subject to back-up withholding.
Distributions by a Trust (other than those that are not treated as
United States source income, if any) will generally be subject to United
States income taxation and withholding in the case of Units held by non-
resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisors.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unit holders and derived from dividends of foreign corporations will not
be subject to U.S. withholding tax provided that less than 25 percent of
the gross income of the foreign corporation for a three-year period
ending with the close of its taxable year preceding payment was not
effectively connected to the conduct of a trade or business within the
United States. In addition, such earnings may be exempt from U.S.
withholding pursuant to a specific treaty between the United States and
a foreign country. Non-U.S. Unit holders should consult their own tax
advisors regarding the imposition of U.S. withholding on distributions
from the Trusts.
It should be noted that payments to the Trusts of dividends on Equity
Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes and Unit holders should consult their tax
advisors regarding the potential tax consequences relating to the
payment of any such withholding taxes by the Trusts. Any dividends
withheld as a result thereof will nevertheless be treated as income to
the Unit holders. Because, under the grantor trust rules, an investor is
deemed to have paid directly his or her share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign
tax credit or deduction for United States purposes with respect to such
taxes. The 1997 Act imposes a required holding period for such credits.
Investors should consult their tax advisors with respect to foreign
withholding taxes and foreign tax credits.
At the termination of a Trust, the Trustee will furnish to each Unit
holder a statement containing information relating to the dividends
received by the particular Trust on the Equity Securities, the gross
proceeds received by such Trust from the disposition of any Equity
Security (resulting from redemption or the sale of any Equity Security)
and the fees and expenses paid by the Trust. The Trustee will also
furnish annual information returns to Unit holders and to the Internal
Revenue Service.
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Are Investments in the Trusts Eligible for
Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trusts for New York tax matters, under the existing income tax laws of
the State of New York, each Trust is not an association taxable as a
corporation and the income of such Trusts will be treated as the income
of the Unit holders thereof.
The foregoing discussion relates only to the tax treatment of U.S. Unit
holders ("U.S. Unit holders") with regard to United States Federal and
certain aspects of New York State and City income taxes. Unit holders
may be subject to taxation in New York or in other jurisdictions and
should consult their own tax advisors in this regard. As used herein,
the term "U.S. Unit holder" means an owner of a Unit in the Trusts that
(a) is (i) for United States federal income tax purposes a citizen or
resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the
income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unit holder
in paragraph (a) but whose income from a Unit is effectively connected
with such Unit holder's conduct of a United States trade or business.
The term also includes certain former citizens of the United States
whose income and gain on the Units will be taxable. Unit holders should
consult their tax advisors regarding potential foreign, state or local
taxation with respect to the Units.
Page 16
Are Investments in the Trusts Eligible for Retirement Plans?
Units of the Trusts are eligible for purchase by Individual Retirement
Accounts, Keogh Plans, pension funds and other tax-deferred retirement
plans. Generally, the Federal income tax relating to capital gains and
income received in each of the foregoing plans is deferred until
distributions are received. Distributions from such plans are generally
treated as ordinary income but may, in some cases, be eligible for
special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisors
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are the Equity Securities?
The Trusts consist of different issues of Equity Securities which are
listed on a national securities exchange or The Nasdaq Stock Market or
traded in the over-the-counter market. See "What are the Equity
Securities Selected for Business Services Growth Trust, Series 2?,"
"What are the Equity Securities Selected for Energy Growth Trust, Series
4?," "What are the Equity Securities Selected for Financial Services
Growth Trust, Series 5?," "What are the Equity Securities Selected for
Market Leaders Growth Trust, Series 3?," "What are the Equity Securities
Selected for Pharmaceutical Growth Trust, Series 5?," and "What are the
Equity Securities Selected for Technology Growth Trust, Series 8?" for a
general description of the companies.
Risk Factors. An investment in Units of the Trusts should be made with
an understanding of the problems and risks such an investment may entail.
Business Services Growth Trust, Series 2. An investment in Units of the
Business Services Growth Trust should be made with an understanding of
the problems and risks inherent in such an investment.
The Business Services Growth Trust consists of companies engaged in
providing specialized, vendor-supplied services, such as temporary
staffing, information technology services and software, electronics
manufacturing services, and business and information services. Companies
in this field are subject to rapidly changing technology, cyclical
market patterns, evolving industry standards, economic recession in the
industries they service, shifting corporate trends regarding the hiring
of vendors and general stock market volatility. An unexpected change in
one or more of the foregoing factors may have a material adverse affect
on an issuer's operating results. Furthermore, there can be no assurance
that the issuers of the Equity Securities will be able to respond timely
to compete in the rapidly developing marketplace.
Energy Growth Trust, Series 4. An investment in Units of the Energy
Growth Trust should be made with an understanding of the problems and
risks such an investment may entail.
The Energy Growth Trust invests in Equity Securities of companies
involved in the energy industry. The business activities of companies
held in the Energy Growth Trust may include: production, generation,
transmission, marketing, control, or measurement of energy or energy
fuels; providing component parts or services to companies engaged in the
above activities; energy research or experimentation; and environmental
activities related to the solution of energy problems, such as energy
conservation and pollution control. Companies participating in new
activities resulting from technological advances or research discoveries
in the energy field were also considered for the Energy Growth Trust.
The securities of companies in the energy field are subject to changes
in value and dividend yield which depend, to a large extent, on the
price and supply of energy fuels. Swift price and supply fluctuations
may be caused by events relating to international politics, energy
conservation, the success of exploration projects, and tax and other
regulatory policies of various governments. As a result of the
foregoing, the Equity Securities in the Energy Growth Trust may be
subject to rapid price volatility. The Sponsor is unable to predict what
impact the foregoing factors will have on the Equity Securities during
the life of the Energy Growth Trust.
According to the U.S. Department of Commerce, the factors which will
most likely shape the energy industry include the price and availability
of oil from the Middle East, changes in United States environmental
policies and the continued decline in U.S. production of crude oil.
Possible effects of these factors may be increased U.S. and world
Page 17
dependence on oil from the Organization of Petroleum Exporting Countries
("OPEC") and highly uncertain and potentially more volatile oil prices.
Factors which the Sponsor believes may increase the profitability of oil
and petroleum operations include increasing demand for oil and petroleum
products as a result of the continued increases in annual miles driven
and the improvement in refinery operating margins caused by increases in
average domestic refinery utilization rates. The existence of surplus
crude oil production capacity and the willingness to adjust production
levels are the two principal requirements for stable crude oil markets.
Without excess capacity, supply disruptions in some countries cannot be
compensated for by others. Surplus capacity in Saudi Arabia and a few
other countries and the utilization of that capacity prevented, during
the Persian Gulf crisis, and continues to prevent, severe market
disruption. Although unused capacity contributed to market stability in
1990 and 1991, it ordinarily creates pressure to overproduce and
contributes to market uncertainty. The restoration of a large portion of
Kuwait and Iraq's production and export capacity could lead to such a
development in the absence of substantial growth in world oil demand.
Formerly, OPEC members attempted to exercise control over production
levels in each country through a system of mandatory production quotas.
Because of the 1990-1991 crisis in the Middle East, the mandatory system
has since been replaced with a voluntary system. Production under the
new system has had to be curtailed on at least one occasion as a result
of weak prices, even in the absence of supplies from Kuwait and Iraq.
The pressure to deviate from mandatory quotas, if they are reimposed, is
likely to be substantial and could lead to a weakening of prices. In the
longer term, additional capacity and production will be required to
accommodate the expected large increases in world oil demand and to
compensate for expected sharp drops in U.S. crude oil production and
exports from the Soviet Union. Only a few OPEC countries, particularly
Saudi Arabia, have the petroleum reserves that will allow the required
increase in production capacity to be attained. Given the large-scale
financing that is required, the prospect that such expansion will occur
soon enough to meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the industry
over the coming decade. Refiners are likely to be required to make heavy
capital investments and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as
the 1990 amendments to the Clean Air Act. If the cost of these changes
is substantial enough to cut deeply into profits, smaller refiners may
be forced out of the industry entirely. Moreover, lower consumer demand
due to increases in energy efficiency and conservation, gasoline
reformulations that call for less crude oil, warmer winters or a general
slowdown in economic growth in this country and abroad could negatively
affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will
increase or that any increases will not be marked by great volatility.
Some oil companies may incur large cleanup and litigation costs relating
to oil spills and other environmental damage. Oil production and
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the
disposal of hazardous materials. Increasingly stringent environmental
laws and regulations are expected to require companies with oil
production and refining operations to devote significant financial and
managerial resources to pollution control. General problems of the oil
and petroleum products industry include the ability of a few influential
producers to significantly affect production, the concomitant volatility
of crude oil prices, increasing public and governmental concern over air
emissions, waste product disposal, fuel quality and the environmental
effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry
or the environment could have a negative impact on the petroleum
products industry. While legislation has been enacted to deregulate
certain aspects of the oil industry, no assurances can be given that new
or additional regulations will not be adopted. Each of the problems
referred to could adversely affect the financial stability of the
issuers of any petroleum industry stocks in the Energy Growth Trust.
Financial Services Growth Trust, Series 5. An investment in Units of the
Financial Services Growth Trust should be made with an understanding of
the problems and risks inherent in the bank and financial services
sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates,
Page 18
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in
their fields of business. Banks and thrifts are highly dependent on net
interest margin. Recently, bank profits have come under pressure as net
interest margins have contracted, but volume gains have been strong in
both commercial and consumer products. There is no certainty that such
conditions will continue. Bank and thrift institutions had received
significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic
conditions in the real estate markets, which have been weak in the past,
can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by
real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Equity Securities in the Trust's portfolio cannot be
predicted with certainty. Periodic efforts by recent Administrations to
introduce legislation broadening the ability of banks to compete with
new products have not been successful, but if enacted could lead to more
failures as a result of increased competition and added risks. Failure
to enact such legislation, on the other hand, may lead to declining
earnings and an inability to compete with unregulated financial
institutions. Efforts to expand the ability of federal thrifts to branch
on an interstate basis have been initially successful through
promulgation of regulations, and legislation to liberalize interstate
banking has recently been signed into law. Under the legislation, banks
will be able to purchase or establish subsidiary banks in any state, one
year after the legislation's enactment. Since mid-1997, banks have been
allowed to turn existing banks into branches. Consolidation is likely to
continue. The Securities and Exchange Commission and the Financial
Accounting Standards Board require the expanded use of market value
accounting by banks and have imposed rules requiring market accounting
for investment securities held in trading accounts or available for
sale. Adoption of additional such rules may result in increased
volatility in the reported health of the industry, and mandated
regulatory intervention to correct such problems. Additional legislative
and regulatory changes may be forthcoming. For example, the bank
regulatory authorities have proposed substantial changes to the
Community Reinvestment Act and fair lending laws, rules and regulations,
and there can be no certainty as to the effect, if any, that such
changes would have on the Equity Securities in the Trust's portfolio. In
addition, from time to time the deposit insurance system is reviewed by
Congress and federal regulators, and proposed reforms of that system
could, among other things, further restrict the ways in which deposited
moneys can be used by banks or reduce the dollar amount or number of
deposits insured for any depositor. Such reforms could reduce
profitability as investment opportunities available to bank institutions
become more limited and as consumers look for savings vehicles other
than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions,
mortgage banking companies and insurance companies, and increased
Page 19
competition may result from legislative broadening of regional and
national interstate banking powers as has been recently enacted. Among
other benefits, the legislation allows banks and bank holding companies
to acquire across previously prohibited state lines and to consolidate
their various bank subsidiaries into one unit. The Sponsor makes no
prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions
might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Equity Securities or whether such approvals, if necessary,
will be obtained.
Some of the nation's largest banks, already working to upgrade their own
computer systems to meet the Year 2000 deadline, are concerned that some
borrowers may fail to upgrade their computers in time, creating problem
loans and increasing overall loan losses. Banks considered most
vulnerable by analysts include those lending primarily to small
businesses, which aren't as likely as large businesses to have a plan
for upgrading their computers. Also at risk are banks with significant
exposure overseas, where many foreign businesses are not moving as
quickly to resolve this problem. Analysts warn that it will be difficult
for banks to determine their potential loan losses related to Year 2000
credit risk.
Companies involved in the insurance industry are engaged in
underwriting, reinsuring, selling, distributing or placing of property
and casualty, life or health insurance. Other growth areas within the
insurance industry include brokerage, reciprocals, claims processors and
multiline insurance companies. Insurance company profits are affected by
interest rate levels, general economic conditions, and price and
marketing competition. Property and casualty insurance profits may also
be affected by weather catastrophes and other disasters. Life and health
insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation,
including the imposition of maximum rate levels, which may not be
adequate for some lines of business. Proposed or potential tax law
changes may also adversely affect insurance companies' policy sales, tax
obligations, and profitability. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including
those applicable to regulated insurance companies, such as: (i) the
inherent uncertainty in the process of establishing property-liability
loss reserves, particularly reserves for the cost of environmental,
asbestos and mass tort claims, and the fact that ultimate losses could
materially exceed established loss reserves which could have a material
Page 20
adverse effect on results of operations and financial condition; (ii)
the fact that insurance companies have experienced, and can be expected
in the future to experience, catastrophe losses which could have a
material adverse impact on their financial condition, results of
operations and cash flow; (iii) the inherent uncertainty in the process
of establishing property-liability loss reserves due to changes in loss
payment patterns caused by new claims settlement practices; (iv) the
need for insurance companies and their subsidiaries to maintain
appropriate levels of statutory capital and surplus, particularly in
light of continuing scrutiny by rating organizations and state insurance
regulatory authorities, and in order to maintain acceptable financial
strength or claims-paying ability rating; (v) the extensive regulation
and supervision to which insurance companies' subsidiaries are subject,
various regulatory initiatives that may affect insurance companies, and
regulatory and other legal actions; (vi) the adverse impact that
increases in interest rates could have on the value of an insurance
company's investment portfolio and on the attractiveness of certain of
its products; (vii) the need to adjust the effective duration of the
assets and liabilities of life insurance operations in order to meet the
anticipated cash flow requirements of its policyholder obligations; and
(vii) the uncertainty involved in estimating the availability of
reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have
considered or enacted laws that alter and, in many cases, increase state
authority to regulate insurance companies and insurance holding company
systems. Further, the National Association of Insurance Commissioners
("NAIC") and state insurance regulators are re-examining existing laws
and regulations, specifically focusing on insurance companies,
interpretations of existing laws and the development of new laws. In
addition, Congress and certain federal agencies have investigated the
condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is
unable to predict whether any state or federal legislation will be
enacted to change the nature or scope of regulation of the insurance
industry, or what effect, if any, such legislation would have on the
industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the
amount of investments in certain investment categories. Failure to
comply with these laws and regulations would cause non-conforming
investments to be treated as non-admitted assets for purposes of
measuring statutory surplus and, in some instances, would require
divestiture.
Environmental pollution clean-up is the subject of both federal and
state regulation. By some estimates, there are thousands of potential
waste sites subject to clean up. The insurance industry is involved in
extensive litigation regarding coverage issues. The Comprehensive
Environmental Response Compensation and Liability Act of 1980
("Superfund") and comparable state statutes ("mini-Superfund") govern
the clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund and the mini-Superfunds ("Environmental Clean-up
Laws or "ECLs") establish a mechanism to pay for clean-up of waste sites
if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
Further, the number of waste sites subject to clean-up is unknown. Very
few sites have been subject to clean-up to date. The extent of clean-up
necessary and the assignment of liability has not been established. The
insurance industry is disputing many such claims. Key coverage issues
include whether Superfund response costs are considered damages under
the policies, when and how coverage is triggered, applicability of
pollution exclusions, the potential for joint and several liability and
definition of an occurrence. Similar coverage issues exist for clean up
and waste sites not covered under Superfund. To date, courts have been
inconsistent in their rulings on these issues. An insurer's exposure to
liability with regard to its insureds which have been, or may be, named
as PRPs is uncertain. Superfund reform proposals have been introduced in
Congress, but none have been enacted. There can be no assurance that any
Superfund reform legislation will be enacted or that any such
legislation will provide for a fair, effective and cost-efficient system
for settlement of Superfund related claims.
Proposed federal legislation which would permit banks greater
participation in the insurance business could, if enacted, present an
increased level of competition for the sale of insurance products. In
addition, while current federal income tax law permits the tax-deferred
accumulation of earnings on the premiums paid by an annuity owner and
Page 21
holders of certain savings-oriented life insurance products, no
assurance can be given that future tax law will continue to allow such
tax deferrals. If such deferrals were not allowed, consumer demand for
the affected products would be substantially reduced. In addition,
proposals to lower the federal income tax rates through a form of flat
tax or otherwise could have, if enacted, a negative impact on the demand
for such products.
Companies engaged in investment banking/brokerage and investment
management include brokerage firms, broker/dealers, investment banks,
finance companies and mutual fund companies. Earnings and share prices
of companies in this industry are quite volatile, and often exceed the
volatility levels of the market as a whole. Recently, ongoing
consolidation in the industry and the strong stock market has benefited
stocks which investors believe will benefit from greater investor and
issuer activity. Major determinants of future earnings of these
companies are the direction of the stock market, investor confidence,
equity transaction volume, the level and direction of long-term and
short-term interest rates, and the outlook for emerging markets.
Negative trends in any of these earnings determinants could have a
serious adverse effect on the financial stability, as well as the stock
prices, of these companies. Furthermore, there can be no assurance that
the issuers of the Equity Securities included in the Financial Services
Growth Trust will be able to respond in a timely manner to compete in
the rapidly developing marketplace. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
Market Leaders Growth Trust Series 3. An investment in Units of the
Market Leaders Growth Trust should be made with an understanding of the
problems and risks associated with an investment in the common stock of
Berkshire Hathaway, Inc. and related companies. Since the Trust is
concentrated in Berkshire Hathaway, Inc. common stock and the common
stock of certain companies in which Berkshire Hathaway, Inc. owns an
equity interest, the Trust's lack of diversity increases risks to
investors. Berkshire Hathaway, Inc. and the other issuers of Equity
Securities included in the Trust have in no way participated in the
creation of this Trust.
Pharmaceutical Growth Trust, Series 5. An investment in Units of the
Pharmaceutical Growth Trust should be made with an understanding of the
characteristics of the pharmaceutical and medical industries and the
risks which such investment may entail.
Pharmaceutical companies are companies involved in drug development and
production services. Such companies have potential risks unique to their
sector of the healthcare field. Such companies are subject to
governmental regulation of their products and services, a factor which
could have a significant and possibly unfavorable effect on the price
and availability of such products or services. Furthermore, such
companies face the risk of increasing competition from generic drug
sales, the termination of their patent protection for drug products and
the risk that technological advances will render their products or
services obsolete. The research and development costs of bringing a drug
to market are substantial and include lengthy governmental review
processes, with no guarantee that the product will ever come to market.
Many of these companies may have losses and not offer certain products
for several years. Such companies may also have persistent losses during
a new product's transition from development to production, and revenue
patterns may be erratic.
The medical sector has historically provided investors with significant
growth opportunities. One of the industries included in the sector is
pharmaceutical companies. Such companies develop, manufacture and sell
prescription and over-the-counter drugs. In addition, they are well
known for the vast amounts of money they spend on world-class research
and development. In short, such companies work to improve the quality of
life for millions of people and are vital to the nation's health and
well-being.
As the population of the United States ages, the companies involved in
the pharmaceutical field will continue to search for and develop new
drugs through advanced technologies and diagnostics. On a worldwide
basis, such companies are involved in the development and distributions
of drugs and vaccines. These activities may make the pharmaceutical
sector very attractive for investors seeking the potential for growth in
their investment portfolio. However, there are no assurances that the
Trust's objectives will be met.
Legislative proposals concerning healthcare are considered from time to
time. These proposals span a wide range of topics, including cost and
Page 22
price controls (which might include a freeze on the prices of
prescription drugs), national health insurance, incentives for
competition in the provision of healthcare services, tax incentives and
penalties related to healthcare insurance premiums and promotion of pre-
paid healthcare plans. The Sponsor is unable to predict the effect of
any of these proposals, if enacted, on the issuers of Equity Securities
in the Trust.
Technology Growth Trust, Series 8. An investment in Units of the
Technology Growth Trust should be made with an understanding of the
characteristics of the technology industry and the risks which such an
investment may entail.
Technology companies generally include companies involved in the
development, design, manufacture and sale of computers, computer-related
equipment, computer networks, communications systems, telecommunications
products, electronic products and other related products, systems and
services. The market for these products, especially those specifically
related to the Internet, is characterized by rapidly changing
technology, rapid product obsolescence, cyclical market patterns,
evolving industry standards and frequent new product introductions. The
success of the issuers of the Equity Securities depends in substantial
part on the timely and successful introduction of new products. An
unexpected change in one or more of the technologies affecting an
issuer's products or in the market for products based on a particular
technology could have a material adverse affect on an issuer's operating
results. Furthermore, there can be no assurance that the issuers of the
Equity Securities will be able to respond in a timely manner to compete
in the rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements
of new products or development of new technologies and general
conditions of the industry have caused and are likely to cause the
market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to
the operating performance of such companies. This market volatility may
adversely affect the market price of the Equity Securities and therefore
the ability of a Unit holder to redeem Units at a price equal to or
greater than the original price paid for such Units.
Some key components of certain products of technology issuers are
currently available only from single sources. There can be no assurance
that in the future suppliers will be able to meet the demand for
components in a timely and cost effective manner. Accordingly, an
issuer's operating results and customer relationships could be adversely
affected by either an increase in price for, or an interruption or
reduction in supply of, any key components. Additionally, many
technology issuers are characterized by a highly concentrated customer
base consisting of a limited number of large customers who may require
product vendors to comply with rigorous industry standards. Any failure
to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies of technology
companies are incorporated into other related products, such companies
are often highly dependent on the performance of the personal computer,
electronics and telecommunications industries. There can be no assurance
that these customers will place additional orders, or that an issuer of
Equity Securities will obtain orders of similar magnitude as past orders
from other customers. Similarly, the success of certain technology
companies is tied to a relatively small concentration of products or
technologies. Accordingly, a decline in demand of such products,
technologies or from such customers could have a material adverse impact
on issuers of the Equity Securities.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their
proprietary rights in their products and technologies. There can be no
assurance that the steps taken by the issuers of the Equity Securities
to protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology. In addition, due to the increasing
public use of the Internet, it is possible that other laws and
regulations may be adopted to address issues such as privacy, pricing,
characteristics, and quality of Internet products and services. For
example, recent proposals would prohibit the distribution of obscene,
lascivious or indecent communications on the Internet. The adoption of
any such laws could have a material adverse impact on the Equity
Securities in the Trust.
General. Each Trust consists of such Equity Securities listed under the
"Schedule of Investments" for each Trust as may continue to be held from
Page 23
time to time in a Trust and any additional Equity Securities acquired
and held by the Trusts pursuant to the provisions of the Indenture,
together with cash held in the Income and Capital Accounts. Neither the
Sponsor nor the Trustee shall be liable in any way for any failure in
any of the Equity Securities. However, should any contract for the
purchase of any of the Equity Securities initially deposited hereunder
fail, the Sponsor will, unless substantially all of the moneys held in a
Trust to cover such purchase are reinvested in substitute Equity
Securities in accordance with the Indenture, refund the cash and sales
charge attributable to such failed contract to all Unit holders on the
next distribution date.
Because certain of the Equity Securities from time to time may be sold
under certain circumstances described herein, and because the proceeds
from such events will be distributed to Unit holders and will not be
reinvested, no assurance can be given that a Trust will retain for any
length of time its present size and composition. Although the Portfolio
is not managed, the Sponsor may instruct the Trustee to sell Equity
Securities under certain limited circumstances. Pursuant to the
Indenture and with limited exceptions, the Trustee may sell any
securities or other property acquired in exchange for Equity Securities
such as those acquired in connection with a merger or other transaction.
If offered such new or exchanged securities or property, the Trustee
shall reject the offer. However, in the event such securities or
property are nonetheless acquired by a Trust, they may be accepted for
deposit in such Trust and either sold by the Trustee or held in the
Trust pursuant to the direction of the Sponsor (who may rely on the
advice of the Portfolio Supervisor). See "Rights of Unit Holders-How May
Equity Securities be Removed from a Trust?" Equity Securities, however,
will not be sold by a Trust to take advantage of market fluctuations or
changes in anticipated rates of appreciation or depreciation.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be
in the over-the-counter market. As a result, the existence of a liquid
trading market for the Equity Securities may depend on whether dealers
will make a market in the Equity Securities. There can be no assurance
that a market will be made for any of the Equity Securities, that any
market for the Equity Securities will be maintained or of the liquidity
of the Equity Securities in any markets made. In addition, a Trust may
be restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions, and the value of a Trust,
will be adversely affected if trading markets for the Equity Securities
are limited or absent.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities or the
general condition of the common stock market may worsen and the value of
the Equity Securities and therefore the value of the Units may decline.
The past market and earnings performance of the Equity Securities
included in the Trusts is not predictive of their future performance.
Common stocks are especially susceptible to general stock market
movements and to volatile increases and decreases of value as market
confidence in and perceptions of the issuers change. These perceptions
are based on unpredictable factors including expectations regarding
government, economic, monetary and fiscal policies, inflation and
interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Shareholders of common
stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or
holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by a Trust have a right
to receive dividends only when and if, and in the amounts, declared by
the issuer's board of directors and have a right to participate in
amounts available for distribution by the issuer only after all other
claims on the issuer have been paid or provided for. Common stocks do
not represent an obligation of the issuer and, therefore, do not offer
any assurance of income or provide the same degree of protection of
capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its
common stock or the rights of holders of common stock with respect to
assets of the issuer upon liquidation or bankruptcy. The value of common
stocks is subject to market fluctuations for as long as the common
stocks remain outstanding, and thus the value of the Equity Securities
in the Portfolio may be expected to fluctuate over the life of a Trust
to values higher or lower than those prevailing on the Initial Date of
Deposit.
Page 24
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Cumulative
preferred stock dividends must be paid before common stock dividends and
any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Certain of the Equity Securities in one or more of the Trusts are of
foreign issuers, and therefore, an investment in such a Trust involves
some investment risks that are different in some respects from an
investment in a trust that invests entirely in securities of domestic
issuers. Those investment risks include future political and
governmental restrictions which might adversely affect the payment or
receipt of payment of dividends on the relevant Equity Securities,
currency exchange rate fluctuations, exchange control policies, and the
limited liquidity and small market capitalization of such foreign
countries' securities markets. In addition, for foreign issuers that are
not subject to the reporting requirements of the Securities Exchange Act
of 1934, there may be less publicly available information than is
available from a domestic issuer. Also, foreign issuers are not
necessarily subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers. However, due to the nature of the
issuers of the Equity Securities included in the Trust, the Sponsor
believes that adequate information will be available to allow the
Portfolio Supervisor to provide portfolio surveillance.
Certain of the Equity Securities in one or more of the Trusts are in ADR
or GDR form. ADRs, which evidence American Depositary Receipts and GDRs,
which evidence Global Depositary Receipts, represent common stock
deposited with a custodian in a depositary. American Depositary Shares
and Global Depositary Shares (collectively, the "Depositary Receipts")
are issued by a bank or trust company to evidence ownership of
underlying securities issued by a foreign corporation. These instruments
may not necessarily be denominated in the same currency as the
securities into which they may be converted. For purposes of the
discussion herein, the terms ADR and GDR generally include American
Depositary Shares and Global Depositary Shares, respectively.
Depositary Receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at the
request of market makers and acts as agent for the Depositary Receipts
holder, while the company itself is not involved in the transaction. In
a sponsored facility, the issuing company initiates the facility and
agrees to pay certain administrative and shareholder-related expenses.
Sponsored facilities use a single depositary and entail a contractual
relationship between the issuer, the shareholder and the depositary;
unsponsored facilities involve several depositaries with no contractual
relationship to the company. The depositary bank that issues Depositary
Receipts generally charges a fee, based on the price of the Depositary
Receipts, upon issuance and cancellation of the Depositary Receipts.
This fee would be in addition to the brokerage commissions paid upon the
acquisition or surrender of the security. In addition, the depositary
bank incurs expenses in connection with the conversion of dividends or
other cash distributions paid in local currency into U.S. dollars and
such expenses are deducted from the amount of the dividend or
distribution paid to holders, resulting in a lower payout per underlying
shares represented by the Depositary Receipts than would be the case if
the underlying share were held directly. Certain tax considerations,
including tax rate differentials and withholding requirements, arising
from applications of the tax laws of one nation to nationals of another
and from certain practices in the Depositary Receipts market may also
exist with respect to certain Depositary Receipts. In varying degrees,
any or all of these factors may affect the value of the Depositary
Receipts compared with the value of the underlying shares in the local
market. In addition, the rights of holders of Depositary Receipts may be
different than those of holders of the underlying shares, and the market
for Depositary Receipts may be less liquid than that for the underlying
shares. Depositary Receipts are registered securities pursuant to the
Securities Act of 1933 and may be subject to the reporting requirements
of the Securities Exchange Act of 1934.
For the Equity Securities that are Depositary Receipts, currency
fluctuations will affect the U.S. dollar equivalent of the local
currency price of the underlying domestic share and, as a result, are
likely to affect the value of the Depositary Receipts and consequently
Page 25
the value of the Equity Securities. The foreign issuers of securities
that are Depositary Receipts may pay dividends in foreign currencies
which must be converted into dollars. Most foreign currencies have
fluctuated widely in value against the United States dollar for many
reasons, including supply and demand of the respective currency, the
soundness of the world economy and the strength of the respective
economy as compared to the economies of the United States and other
countries. Therefore, for any securities of issuers (whether or not they
are in Depositary Receipt form) whose earnings are stated in foreign
currencies, or which pay dividends in foreign currencies or which are
traded in foreign currencies, there is a risk that their United States
dollar value will vary with fluctuations in the United States dollar
foreign exchange rates for the relevant currencies.
Unit holders will be unable to dispose of any of the Equity Securities
in a Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee will
have the right to vote all of the voting stocks in a Trust and will vote
such stocks in accordance with the instructions of the Sponsor.
What are the Equity Securities Selected for Business Services Growth
Trust, Series 2?
BUSINESS & INFORMATION SERVICES
ABR Information Services, Inc., headquartered in Palm Harbor, Florida,
provides healthcare benefits administration, information and compliance
services relating to the continuation of healthcare coverage following
changes in employment status and certain other events.
Automatic Data Processing, Inc., headquartered in Roseland, New Jersey,
through subsidiaries, provides computer services, including employer
services, brokerage services, dealer services and automotive claims
services.
CSG Systems International Inc., headquartered in Englewood, Colorado,
offers its clients a full range of processing services and software and
support services which automate customer management functions, including
billing, sales support and order processing, invoice calculation and
production, management reporting and customer analysis for target
marketing.
Equifax, Inc., headquartered in Atlanta, Georgia, through subsidiaries,
provides informational services for consumer credit report purposes to
retailers, banks and financial institutions; as well as consumer and
commercial credit reporting outside the United States and credit and
debit card services.
Fair Isaac & Company, Inc., headquartered in San Rafael, California,
develops data management systems and services for the consumer credit,
personal lines insurance and direct marketing industries. The company
employs various tools such as database enhancement software, predictive
modeling, adaptive control, and systems automation to help its customers
make decisions.
Fiserv, Inc., headquartered in Brookfield, Wisconsin, provides data
processing, software system development, item processing and check
imaging, multiple technology support and related product businesses. The
company has business support centers in Canada, England and Singapore.
Galileo International, Inc., headquartered in Rosemont, Illinois,
provides electronic distribution of schedule and fare information,
reservation booking and ticket issuance for airlines to travel agencies
as well as to other subscribers. The company also provides information
and booking capability covering car rental companies and major hotel
chains.
HBO & Company, headquartered in Atlanta, Georgia, develops integrated
patient care, clinical, financial, managed care and strategic management
software solutions for the healthcare industry. The company also
provides network communications technologies.
Paychex, Inc., headquartered in Rochester, New York, provides payroll
processing, human resource, and benefits outsourcing solutions for small-
to medium-sized businesses nationwide.
Quintiles Transnational Corporation, headquartered in Durham, North
Carolina, provides full-service contract research, sales and marketing
services to the global pharmaceutical, biotechnology and medical device
industries. The company also offers health economics and healthcare
policy consulting, as well as disease and health information management
services.
Rentokil Initial Plc (ADR), headquartered in the United Kingdom, is an
international environmental services group. The company's services
include pest control, landscaping, hospital waste disposal, cleaning
services and general maintenance for offices and washrooms. The company
also manufactures and sells products under the "Rentokil" and "Initial"
Page 26
brand names and offers engineering services for heating and ventilation
systems.
ServiceMaster Company, headquartered in Downers Grove, Illinois, through
subsidiaries, provides lawn, tree, plant and shrub services, pest
control, housekeeping, radon testing, cleaning, disaster restoration,
home warranty and service plans, and on-site furniture repair and
restoration. The company also provides hospital, health, long-term care,
education, business and management services.
ELECTRONICS MANUFACTURING SERVICES
SCI Systems, Inc., headquartered in Huntsville, Alabama, designs, makes,
markets and services products for the computer, computer peripheral,
telecommunication, medical, industrial, consumer and military and
aerospace markets.
Sanmina Corporation, headquartered in San Jose, California, provides
customized integrated electronics manufacturing services, including
turnkey electronic assembly and manufacturing management services, to
original equipment manufacturers in the electronics industry.
Solectron Corporation, headquartered in Milpitas, California, provides a
complete range of advanced manufacturing services, including
sophisticated electronic assembly and turnkey manufacturing management
services, to original equipment manufacturers in the electronics industry.
INFORMATION TECHNOLOGY SERVICES & SOFTWARE/YEAR 2000
Analysts International Corporation, headquartered in Minneapolis,
Minnesota, provides services to assist users of computer equipment in
the development and maintenance of custom applications software programs
and the maintenance of systems software through regional and branch
offices.
CIBER, Inc., headquartered in Englewood, Colorado, provides information
technology consulting services, combining application software staff
supplementation, system life-cycle project responsibility and package
software implementation services, through a nationwide network of branch
offices in 20 states and Canada.
Cambridge Technology Partners, Inc., headquartered in Cambridge,
Massachusetts, provides management consulting and systems integration.
The company combines management consulting, IT strategy, process
innovation and implementation, custom and package software deployment,
network services and training to deliver business solutions for clients.
Computer Horizons Corporation, headquartered in Mountain Lakes, New
Jersey, provides a wide range of information technology services and
solutions to major corporations, including staffing, Year 2000 services,
application development, conversions/migrations, enterprise network
management, legacy maintenance outsourcing, and knowledge transfer and
training.
Computer Sciences Corporation, headquartered in El Segundo, California,
provides management consulting and education and research programs in
the strategic use of information resources. The company also designs,
develops and installs computer-based and communications systems; and
provides outsourcing services, consumer credit-related services and
automated systems.
Compuware Corporation, headquartered in Farmington Hills, Michigan,
develops, sells and supports an integrated line of software products, as
well as client/server systems management and application development
products. The company also offers data processing professional services.
Information Management Resources, Inc., headquartered in Clearwater,
Florida, provides applications software outsourcing solutions for the
information technology departments of large businesses including
software development, application maintenance, migration and re-
engineering services and Year 2000 conversion services.
Jack Henry & Associates, Inc., headquartered in Monett, Missouri,
provides integrated computer systems for in-house data processing to
banks and other financial institutions. The company also installs
software, performs data conversion, customizes software for the
implementation of its systems and provides customer support services
after the systems are installed.
Keane, Inc., headquartered in Boston, Massachusetts, through divisions,
provides software design, development and management services to
corporations and government agencies with large and recurring software
development needs; and develops, makes and supports financial, patient
care and clinical application software for hospitals and long-term care
facilities. Services and methodologies are designed to enable companies
Page 27
to leverage their existing information systems capability and more
rapidly and cost effectively develop and manage mission critical
software applications.
Mastech Corporation, headquartered in Oakdale, Pennsylvania, provides
information technology services to large organizations including
client/server design and development, conversion/migration services,
Year 2000 services, enterprise resource planning, package implementation
services and maintenance outsourcing.
Metro Information Services, Inc., headquartered in Virginia Beach,
Virginia, provides information technology consultants on a contract
basis to organizations with complex information technology operations
through offices in the United States and Puerto Rico.
PeopleSoft, Inc., headquartered in Pleasanton, California, develops
"PeopleSoft Human Resource Management System," "PeopleSoft Distribution"
and "PeopleSoft Financials for the Public Sector" software products
which are portable and scaleable families of cross-industry
client/server enterprise-wide applications for use throughout companies.
SunGard Data Systems, Inc., headquartered in Wayne, Pennsylvania,
provides computer services and software, including proprietary
investment support systems, comprehensive computer disaster recovery
services and proprietary healthcare information systems.
STAFFING
AccuStaff, Inc., headquartered in Jacksonville, Florida, provides
strategic staffing, consulting and outsourcing services to businesses,
professional and service organizations and government agencies through
branch offices in 45 states, the District of Columbia and Canada.
Norrell Corporation, headquartered in Atlanta, Georgia, provides
temporary personnel and outsourcing services to businesses, professional
and service organizations and government agencies.
On Assignment, Inc., headquartered in Calabasas, California, provides
temporary and permanent placement of scientific personnel with
laboratories and other institutions. The company also provides temporary
and permanent placement of credit, collection and medical billing
professionals to the financial services and healthcare industries.
Personnel Group of America, Inc., headquartered in Charlotte, North
Carolina, provides information technology and personnel staffing
services, including temporary staffing, placement of full-time employees
and training and testing of temporary and permanent workers throughout
the United States.
Robert Half International, Inc., headquartered in Menlo Park,
California, provides temporary and permanent personnel in the fields of
accounting and finance. The company also provides administrative and
office personnel, paralegal, legal administrative, legal support
positions and temporary information technology professionals.
Romac International, Inc., headquartered in Tampa, Florida, provides
temporary, contract and permanent placement of professional and
technical personnel under the name "ROMAC."
StaffMark, Inc., headquartered in Fayetteville, Arkansas, provides
diversified staffing services to businesses, professional and service
organizations, medical niches and governmental agencies. The company
operates offices in the United States, Canada and the United Kingdom.
What are the Equity Securities Selected for Energy Growth Trust, Series 4?
OIL & GAS - DRILLING
Cliffs Drilling Company, headquartered in Houston, Texas, provides
daywork and turnkey drilling services and engineering services and
operates mobile offshore production units (MOPUs). The company also
participates in domestic oil and gas exploration and production
activities.
Diamond Offshore Drilling, Inc., headquartered in Houston, Texas,
performs contract drilling of offshore oil and gas wells. The company
operates a fleet of offshore rigs consisting of semisubmersibles, jack-
ups and a drillship which operate in the waters of six of the world's
seven continents.
ENSCO International Incorporated, headquartered in Dallas, Texas,
conducts contract drilling and marine transportation services for the
oil and gas industry in the Asia Pacific, Gulf of Mexico, North Sea and
Venezuela regions.
Global Marine, Inc., headquartered in Houston, Texas, conducts contract
drilling for oil and gas in offshore areas using jackup drilling rigs,
drillships, semi-submersible drilling rigs and a drilling system. The
Page 28
company also provides offshore drilling management services and engages
in oil and gas exploration, development and production.
Nabors Industries, Inc., headquartered in Houston, Texas, operates the
largest land oil and gas drilling contract business in the world. The
company also provides a number of ancillary well-site services, makes
top drives for a broad range of drilling rig applications, and rig
instrumentation equipment to monitor rig performance.
Noble Drilling Corporation, headquartered in Houston, Texas, provides
contract drilling of oil and gas wells for others, including offshore
and land drilling services, turnkey drilling services and engineering
and production management services.
R&B Falcon Corporation, headquartered in Houston, Texas, operates a
fleet of inland marine drilling and workover units, shallow-water units
and deep-water drilling and service units. The company also operates an
inland marine towing and support fleet consisting of tugs and other
support units.
Transocean Offshore, Inc., headquartered in Houston, Texas, provides
contract drilling of oil and gas wells in offshore areas throughout the
world. The company provides additional services, including well
engineering and planning, turnkey drilling and coiled tubing drilling.
OIL & GAS - EXPLORATION & PRODUCTION
Noble Affiliates, Inc., headquartered in Ardmore, Oklahoma, explores
for, develops and markets oil and gas in the United States as well as
internationally, mainly in the United Kingdom sector of the North Sea as
well as in Argentina, China, Ecuador and Equatorial Guinea; and markets
oil and natural gas for itself and others.
Ocean Energy, Inc., headquartered in Baton Rouge, Louisiana, acquires,
explores for, develops and produces crude oil and natural gas, with
operations focused primarily in the Gulf of Mexico.
OIL - FIELD SERVICES
BJ Services Company, headquartered in Houston, Texas, provides well
stimulation, cementing, sand control and coiled tubing services used in
the completion of new oil and natural gas wells and in remedial work on
existing wells, both onshore and offshore.
Cooper Cameron Corporation, headquartered in Houston, Texas, makes,
sells and services petroleum production equipment and compression and
power equipment for the oil and gas drilling, production and
transmission markets and for the non-utility power generation, process
and industrial markets.
EVI Weatherford, Inc., headquartered in Houston, Texas, provides marine
drilling and workover services to the oil and gas industries. The
company also makes, distributes and services oilfield equipment, drill
pipes, premium tubulars and artificial lift products.
Global Industries, Inc., headquartered in Lafayette, Louisiana, provides
pipeline construction, platform installation and removal, and diving
services, mainly to the offshore oil and gas industry in the Gulf of
Mexico.
Petroleum Geo-Services ASA (ADR), headquartered in Lysaker, Norway,
acquires, processes, manages and markets marine seismic data that is
used by petroleum companies in the exploration for new reserves, the
development of existing fields, and the management of producing fields.
Schlumberger Ltd., headquartered in New York, New York, through
subsidiaries, provides oilfield services to the petroleum industry,
including measurement of physical properties of underground formations;
well testing; pressure measurements; perforating, completion and
workover services; reservoir evaluation; and data services.
Tidewater, Inc., headquartered in New Orleans, Louisiana, through
divisions, provides support services to the international offshore
petroleum industry through a large fleet of vessels operating on a
worldwide basis. The company also provides natural gas and air
compression equipment and services to the energy industry, mainly in the
United States.
Veritas DGC, Inc., headquartered in Houston, Texas, provides seismic
data acquisition, data processing and multi-client data surveys to the
oil and gas industry in selected markets worldwide.
OIL - INTEGRATED
The British Petroleum Company Plc (ADR), headquartered in London,
England, one of the world's largest petroleum and petrochemical groups,
Page 29
produces, transports, refines and markets crude oil, natural gas and
related products; and makes and markets petrochemicals and related
products. The company also operates tankers for its own use and for
third parties.
Chevron Corporation, headquartered in San Francisco, California,
explores for, develops and produces crude oil and natural gas;
transports crude oil, natural gas and petroleum products; makes
chemicals; and explores for, produces and markets coal and other minerals.
ENI SpA (ADR), headquartered in Rome, Italy, through subsidiaries,
explores, develops and produces oil and natural gas in Italy, North
Africa, West Africa and the North Sea. The company also supplies,
transmits and distributes natural gas; refines and markets oil and
petroleum products; produces and sells petrochemicals; and provides
oilfield services contracting and engineering.
Mobil Corporation, headquartered in Fairfax, Virginia, produces,
transports, refines and markets petroleum and natural gas and related
products; and makes and markets chemicals.
Royal Dutch Petroleum Company NV, headquartered in The Netherlands,
through subsidiaries, produces crude oil, natural gas, chemicals, coal
and metals worldwide; and provides integrated petroleum services in the
United States.
Texaco, Inc., headquartered in White Plains, New York, with
subsidiaries, explores for, produces, transports, refines, and markets
crude oil, natural gas and petroleum products. The company conducts its
operations in the United States, Europe and elsewhere throughout the
Eastern and Western hemispheres.
Total SA (ADR), headquartered in Paris, France, makes rubber-based
products and specialty chemicals; explores and produces crude oil and
natural gas; and refines and markets petroleum products.
What are the Equity Securities Selected for Financial Services Growth
Trust, Series 5?
BANKS & THRIFTS
Banc One Corporation, headquartered in Columbus, Ohio, through
subsidiaries, conducts a general banking business through offices in
Arizona, Colorado, Illinois, Indiana, Kentucky, Louisiana, Ohio,
Oklahoma, Texas, Utah, West Virginia and Wisconsin.
BankBoston Corporation, headquartered in Boston, Massachusetts, through
subsidiaries, conducts a general banking business, offering a broad
range of individual, corporate and global banking services through
offices across the United States and in Africa, Asia, Europe and Latin
America.
Charter One Financial, Inc., headquartered in Cleveland, Ohio, through
wholly-owned Charter One Bank, F.S.B., operates a banking business
through full-service banking offices in Michigan, New York and Ohio and
loan production offices in Indiana, Kentucky, Michigan and Ohio.
The Chase Manhattan Corporation, headquartered in New York, New York,
through subsidiaries, conducts domestic and international financial
services business with operations in more than 50 countries and clients
throughout the world. Principal bank subsidiaries of the company are The
Chase Manhattan Bank, a New York banking corporation, Texas Commerce
Bank, N.A., a national bank and Chase Manhattan Bank USA, N.A., a
national bank.
First Union Corporation, headquartered in Charlotte, North Carolina,
through subsidiaries, conducts a wide range of commercial and retail
banking and trust services. The company also provides other financial
services including mortgage banking, investment banking, home equity
lending, leasing, insurance and securities brokerage.
NationsBank Corporation, headquartered in Charlotte, North Carolina,
conducts a general banking business through banking centers and
automated teller machines in several states and Washington, D.C. The
company also offers corporate banking and investment banking services in
the United States and abroad, and provides lending services.
Sovereign Bancorp, Inc., headquartered in Wyomissing, Pennsylvania,
conducts a banking business through banking offices serving eastern
Pennsylvania, northern Delaware and New Jersey.
U.S. Bancorp, headquartered in Minneapolis, Minnesota, through
subsidiaries, conducts a commercial bank and trust business through
banking and nonbanking offices in Colorado, Illinois, Iowa, Kansas,
Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wisconsin and
Wyoming. The company also provides leasing, commercial and agricultural
finance, mortgage banking, brokerage and data processing services.
Page 30
Washington Mutual, Inc., headquartered in Seattle, Washington, through
subsidiaries, provides financial services to individuals and small- to
mid-sized businesses, including accepting deposits from the general
public and making residential and other loans. The company's operations
are conducted through offices throughout the United States.
Zions Bancorporation, headquartered in Salt Lake City, Utah, conducts a
banking business through offices in Arizona, California, Colorado,
Idaho, Nevada, New Mexico and Utah. The company also underwrites
insurance; operates an insurance brokerage business; and provides
innovative financing solutions for small businesses nationwide.
FINANCIAL SERVICES
American Express Company, headquartered in New York, New York, with
subsidiaries, provides travel related services, including travelers'
cheques, American Express cards, consumer lending, tour packages and
itineraries, and publications; investors diversified financial products
and services; and international banking services through offices in 36
countries.
Capital One Financial Corporation, headquartered in Falls Church,
Virginia, issues Visa and MasterCard credit card products to customers
in the United States and in the United Kingdom. The company also
provides certain consumer lending and deposit services.
Countrywide Credit Industries, Inc., headquartered in Pasadena,
California, through wholly-owned Countrywide Funding Corp., originates,
buys, sells and services mortgage loans, including first-lien mortgage
loans secured by single- (one to four) family residences; and offers
home equity loans in conjunction with newly produced first-lien
mortgages as a separate product.
Fannie Mae, headquartered in Washington, D.C., provides ongoing
assistance to the secondary market for residential mortgages by
providing liquidity for residential mortgage investments, thereby
improving the distribution of investment capital available for such
mortgage financing.
Freddie Mac, headquartered in McLean, Virginia, is a stockholder owned
corporation established by the United States Congress to facilitate
funds availability to mortgage lenders. The company buys mortgages from
lenders throughout the United States and then pools and packages them as
securities to sell to investors.
Household International, Inc., headquartered in Prospect Heights,
Illinois, through subsidiaries, provides consumer financial services,
primarily offering consumer lending products to middle market consumers
in the United States, Canada and the United Kingdom.
MBNA Corporation, headquartered in Wilmington, Delaware, issues premium
and standard MasterCard or Visa bank credit cards marketed mainly
through endorsements of membership associations and financial
institutions. The company also makes other consumer loans and offers
deposit products.
Travelers Group, Inc., headquartered in New York, New York, through
subsidiaries, provides investment banking and securities brokerage
services; insurance services, including life, accident and health,
credit, property and casualty insurance and consumer finance services.
INSURANCE
AFLAC, Inc., headquartered in Columbus, Georgia, through subsidiaries,
writes supplemental health insurance, mainly limited to reimbursement
for medical, non-medical and surgical expenses of cancer. The company
also sells individual and group life, accident and health insurance.
Allstate Corporation, headquartered in Northbrook, Illinois, through
subsidiaries, writes property-liability insurance, primarily private
passenger automobile and homeowners policies and offers life insurance,
annuity and group pension products.
American International Group, Inc., headquartered in New York, New York,
provides a broad range of insurance and insurance-related activities and
financial services in the United States and abroad. The company also
owns and operates ski slopes and related facilities in Vermont.
The Chubb Corporation, headquartered in Warren, New Jersey, through
subsidiaries, writes property and casualty insurance, including personal
and commercial insurance coverage. The company also develops real
estate, mainly in Florida and New Jersey.
MGIC Investment Corporation, headquartered in Milwaukee, Wisconsin,
through subsidiaries, provides private mortgage insurance in the United
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States to savings institutions, mortgage bankers, commercial banks,
mortgage brokers, credit unions and other lenders. The company also
provides various underwriting and contract services related to home
mortgage lending.
Nationwide Financial Services, Inc., headquartered in Columbus, Ohio,
offers long-term savings and retirement products to retail and
institutional customers throughout the United States. Products offered
include variable and fixed annuities, life insurance, mutual funds,
retirement products and administrative services.
SunAmerica, Inc., headquartered in Los Angeles, California, through
subsidiaries, sells tax-deferred, long-term savings products for the pre-
retirement market, including single premium insurance products, and
fixed and variable annuities. The company also provides broker/dealer
operations; retirement trust services; asset management; and premium
financing.
INVESTMENT SERVICES
Franklin Resources, Inc., headquartered in San Mateo, California,
through subsidiaries, provides investment management, marketing,
distribution, transfer agency and administrative services to open-end
investment companies and to managed and institutional accounts. The
company also provides investment management and related services to
closed-end investment companies.
Lehman Brothers Holdings, Inc., headquartered in New York, New York,
through wholly-owned Lehman Brothers Inc., provides securities
underwriting, financial advisory and investment and merchant banking
services, securities and commodities trading as principal and agent, and
asset management to institutional, corporate, government and high net
worth individual clients throughout the United States and the world.
Merrill Lynch & Company, Inc., headquartered in New York, New York,
through subsidiaries, provides brokerage, trading and underwriting;
investment banking and corporate finance advisory services; asset
management; trading of foreign exchange instruments, futures,
commodities, derivatives; securities clearance services; banking, trust,
and lending services; and insurance services.
Morgan Stanley, Dean Witter, Discover and Company, headquartered in New
York, New York, provides a broad range of nationally-marketed credit and
investment products, with a principal focus on individual customers. The
company provides investment banking, transaction processing, private-
label credit card and various other investment advice services.
T. Rowe Price Associates, Inc., headquartered in Baltimore, Maryland,
serves as investment advisor to the T. Rowe Price Mutual Funds, other
sponsored investment products and institutional and individual private
accounts; and it provides certain administrative and shareholder
services to the Price Funds and other mutual funds.
What are the Equity Securities Selected for Market Leaders Growth Trust,
Series 3?
American Express Company, headquartered in New York, New York, with
subsidiaries, provides travel related services, including travelers'
cheques, American Express cards, consumer lending, tour packages,
itineraries and publications. The company also provides investors
diversified financial products and services; and international banking
services through offices in 36 countries.
Berkshire Hathaway, Inc. (Class B), headquartered in Omaha, Nebraska, is
a holding company owning subsidiaries in a variety of business sectors.
Berkshire Hathaway Insurance Group sells property and casualty insurance
and other insurance products. The company also owns the "Buffalo News,"
which manufactures and markets home cleaning systems, manufactures and
sells confectionery products and retails home furnishings. (Class B
voting rights equal one-two-hundredth (1/200th) of a vote for each share
held. Class B dividend rights equal one-thirtieth (1/30th) of the amount
declared for each Class A share held.)
The Coca-Cola Company, headquartered in Atlanta, Georgia, makes and
distributes soft drink concentrates and syrups and also markets juice
and juice-drink products. The company's products are sold in 200
countries and include the leading soft drink products in most of these
countries.
The Walt Disney Company, headquartered in Burbank, California, operates
as a diversified international entertainment company with operations
consisting of filmed entertainment, theme parks, resorts and consumer
products. The company also has broadcasting (including Capital
Cities/ABC, Inc.) and publishing operations.
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Freddie Mac, headquartered in McLean, Virginia, is a stockholder owned
corporation established by the United States Congress to facilitate
funds availability to mortgage lenders. The company buys mortgages from
lenders throughout the United States and then pools and packages them as
securities to sell to investors.
The Gillette Company, headquartered in Boston, Massachusetts, is a
leading manufacturer of male and female grooming products and oral care
products. The company is also the top seller of writing instruments and
correction products. Gillette's products are distributed through
wholesalers, retailers and agents in over 200 countries and territories.
The Washington Post Company (Class B), headquartered in Washington,
D.C., with subsidiaries, publishes "The Washington Post," "The Herald,"
and "The Gazette" newspapers. The company also publishes "Newsweek"
magazine; owns and operates VHF television stations and cable television
systems. The company owns Stanley Kaplan exam preparation centers and
conducts other related businesses.
Wells Fargo & Company, headquartered in San Francisco, California,
primarily through wholly-owned Wells Fargo Bank, conducts a general
banking business throughout the western and midwestern United States and
provides various bank-related services.
What are the Equity Securities Selected for Pharmaceutical Growth Trust,
Series 5?
Abbott Laboratories, headquartered in Abbott Park, Illinois, discovers,
develops, makes and sells a broad and diversified line of healthcare
products and services. The company's operations are comprised of two
principal segments: pharmaceutical and nutritional products and hospital
and laboratory products.
Amgen, Inc., headquartered in Thousand Oaks, California, a global
biotechnology concern, develops, makes and markets human therapeutics
based on advanced cellular and molecular biology, including a protein
that stimulates red blood cell production and a protein that stimulates
white blood cell production.
Astra AB (ADR), headquartered in Sodertalje, Sweden, researches,
develops and makes pharmaceuticals for gastrointestinal disorders,
respiratory and cardiovascular disease, the central nervous system and
infection and pain control. The company also makes advanced medical
devices mainly for surgery, radiology, urotherapy and odontology.
Biogen, Inc., headquartered in Cambridge, Massachusetts, develops and
makes pharmaceuticals for human healthcare through genetic engineering.
The company is focused primarily on developing and testing products for
the treatment of multiple sclerosis, inflammatory and respiratory
diseases, kidney diseases and certain viruses and cancers.
Bristol-Myers Squibb Company, headquartered in New York, New York,
through divisions and subsidiaries, produces and distributes
pharmaceutical and non-prescription health products, toiletries and
beauty aids and medical devices.
Dura Pharmaceuticals, Inc., headquartered in San Diego, California,
markets and develops prescription pharmaceuticals, drug delivery and
monitoring systems for the treatment of asthma, hay fever, chronic
obstructive pulmonary disease, the common cold and other respiratory
illnesses. The company also operates a mail service pharmacy.
Elan Corporation Plc (ADR), headquartered in Athlone, Ireland, develops
and licenses drug delivery systems formulated to increase the
therapeutic value of certain medications, with reduced side effects. The
company also develops and markets therapeutic agents to diagnose and
treat central nervous system diseases and disorders. The company
develops its formulated compounds under license arrangements with major
pharmaceutical firms and subsequently manufactures the licensees'
requirements, in whole or in part.
Eli Lilly and Company, headquartered in Indianapolis, Indiana, with
subsidiaries, develops, makes and markets pharmaceutical and animal
health products sold in 155 countries around the world. The company also
provides healthcare management services in the United States.
Genzyme Corporation, headquartered in Cambridge, Massachusetts, through
divisions, develops and markets specialty therapeutic, surgical and
diagnostic products, pharmaceuticals and genetic diagnostic services;
and it develops, makes and markets biological products for the treatment
of cartilage damage, severe burns, chronic skin ulcers and
neurodegenerative diseases.
Glaxo Wellcome Plc (ADR), headquartered in London, England, is the
world's largest pharmaceutical company. It conducts research into and
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develops, makes and markets ethical pharmaceuticals around the world.
Products include gastrointestinal, respiratory, antiemesis,
antimigraine, systemic antibiotics, cardiovascular, dermatological and
animal health products; as well as foods.
ICN Pharmaceuticals, Inc., headquartered in Costa Mesa, California,
develops, makes and sells pharmaceutical and nutritional products,
research chemicals and diagnostic products.
IDEC Pharmaceuticals Corporation, headquartered in San Diego,
California, develops products for the long-term management of immune
system cancers and autoimmune and inflammatory diseases. The company's
lead immune system cancer and rheumatoid arthritis products are
genetically engineered to combat disease through the patient's immune
system.
Johnson & Johnson, headquartered in New Brunswick, New Jersey, makes and
sells pharmaceuticals, personal healthcare products, medical and
surgical equipment and contact lenses.
Jones Pharma, Inc. (formerly known as Jones Medical Industries, Inc.),
headquartered in St. Louis, Missouri, makes and sells pharmaceuticals,
including products that serve the thyroid treatment and the critical
care segments of the healthcare industry. The company also makes
nutritional supplements, including vitamins, minerals and antioxidants.
Merck & Company, Inc., headquartered in Whitehouse Station, New Jersey,
discovers, develops, makes and markets a broad range of human and animal
health products and services. The company also administers managed
prescription drug programs.
Mylan Laboratories, Inc., headquartered in Pittsburgh, Pennsylvania,
develops, makes and distributes generic and proprietary pharmaceutical
and wound care products for resale by others. Products include solid
oral dosage forms, as well as suspensions, liquids, injectables and
transdermals, many of which are packaged in specialized systems.
Novartis AG (ADR), headquartered in Basel, Switzerland, was created by
the merger of Sandoz and Ciba-Geigy, the Swiss pharmaceutical companies.
Novartis AG manufactures healthcare products for use in a broad range of
medical fields, as well as nutritional and agricultural products. The
company markets its products worldwide.
Pfizer, Inc., headquartered in New York, New York, produces and
distributes anti-infectives, anti-inflammatory agents, cardiovascular
agents, antifungal drugs, central nervous system agents, orthopedic
implants, food science products, animal health products, toiletries,
baby care products, dental rinse and other proprietary health items.
Roche Holdings AG (ADR), headquartered in Basel, Switzerland, develops
and manufactures pharmaceutical and chemical products. Through its
subsidiaries, the company develops pharmaceuticals and drugs, fine
chemicals and vitamins, fragrances and flavors, diagnostic equipment and
liquid crystals. The company distributes its products throughout Asia,
Europe, Latin America and the United States.
Schering-Plough Corporation, headquartered in Madison, New Jersey,
develops, makes and markets pharmaceutical and healthcare products
worldwide. Products include prescription drugs, animal health, over-the-
counter, foot care and sun care products.
SmithKline Beecham Plc (ADR), headquartered in Brentford, England,
through subsidiaries, develops, makes and markets human pharmaceuticals,
over-the-counter medicines, consumer healthcare products and clinical
laboratory testing services.
Teva Pharmaceutical Industries Ltd. (ADR), headquartered in Petach
Tikva, Israel, makes, sells and exports antibiotic, cardiovascular,
analgesic, gastrointestinal, antidiabetic, fertility, central nervous
system, oncological, anti-inflammatory and ophthalmological drugs. The
company also makes bulk pharmaceutical chemicals, hospital supplies,
veterinary products, yeast and alcohol.
Warner-Lambert Company, headquartered in Morris Plains, New Jersey,
makes consumer healthcare products including over-the-counter health
products, shaving products and pet care products. Confectionery products
include chewing gums, breath mints and hard candies. The company also
sells ethical pharmaceuticals, biologicals and empty gelatin capsules.
Watson Pharmaceuticals, Inc., headquartered in Corona, California,
researches, develops and sells off-patent and proprietary pharmaceutical
products, including therapeutic equivalents of solid, liquid and
sustained release products.
Zeneca Group Plc (ADR), headquartered in London, England, researches,
develops and makes ethical (prescription) pharmaceuticals, agricultural
chemicals, specialty chemicals and seeds; and provides disease-specific
healthcare services.
Page 34
What are the Equity Securities Selected for Technology Growth Trust,
Series 8?
COMPUTER & PERIPHERALS
Compaq Corporation, headquartered in Houston, Texas, makes and markets
desktop personal computers, portable computers, workstations,
communications products and tower PC servers and peripheral products
that store and manage data in network environments. The company's
products are marketed mainly to business, home, government and education
customers and are sold directly to full-service computer specialty
dealers for resale to end-users.
Dell Computer Corporation, headquartered in Round Rock, Texas, designs,
develops, makes, sells, services and supports a broad range of personal
computers, including desktops, notebooks and servers compatible with
industry standards under the "Dell" brand name. The company also sells
software, peripheral equipment, and service and support programs.
EMC Corporation, headquartered in Hopkinton, Massachusetts, designs,
makes, markets and supports a wide range of storage-related hardware,
software and service products for the open systems, mainframe and
network-attached information storage and retrieval system markets.
Gateway 2000, Inc., headquartered in North Sioux City, South Dakota,
develops, makes, sells and supports a broad line of desktop and portable
personal computers for use by businesses, individuals, government
agencies and educational institutions.
Hewlett-Packard Company, headquartered in Palo Alto, California,
designs, makes and services equipment and systems for measurement,
computation and communications, including computer systems, personal
computers, printers, calculators, electronic test equipment, medical
electronic equipment, solid state components and instrumentation for
chemical analysis.
Sun Microsystems, Inc., headquartered in Palo Alto, California, supplies
network computing products, including workstations, desktop systems,
storage subsystems, network switches, servers, software, microprocessors
and a full range of services and support. The company's software
utilizes the UNIX operating system.
COMPUTER NETWORKING
3Com Corporation, headquartered in Santa Clara, California, designs,
makes, markets and supports a wide range of global data networking
computer systems based on industry standards and an open systems
architecture. The company also offers integrated services, digital
network adapters, Internet-working products and integrated digital
remote access systems. The company's products are distributed and
serviced worldwide.
Ascend Communications, Inc., headquartered in Alameda, California,
develops, makes, markets, sells and supports a broad range of high-speed
digital wide area network access products that enable the company's
customers to build Internet access systems, extensions and enhancements
to corporate backbone networks, and video conferencing and multimedia
access facilities. Internet access systems consist of point-of-presence
(POP) termination equipment for Internet service providers (ISPs) and
remote site Internet access equipment for Internet subscribers.
Cisco Systems, Inc., headquartered in San Jose, California, develops,
makes, sells and supports high performance Internet-working systems that
link geographically dispersed local-area and wide-area networks to form
a single, seamless information infrastructure.
SEMICONDUCTOR EQUIPMENT
ASM Lithography Holdings N.V., headquartered in The Netherlands,
develops, makes, sells and services advanced photolithography projection
systems, known as wafer steppers, that are essential to the fabrication
of modern integrated circuits.
Applied Materials, Inc., headquartered in Santa Clara, California,
develops, makes, sells and services semiconductor wafer fabrication
equipment and related spare parts worldwide. The company also supplies
critical dimension scanning electron microscope systems, and wafer and
reticle inspection systems.
KLA-Tencor Corporation, headquartered in San Jose, California, designs,
makes, markets and services yield management and process monitoring
Page 35
systems for the semiconductor manufacturing industry.
SEMICONDUCTORS
Altera Corporation, headquartered in San Jose, California, develops and
markets high-density CMOS (complementary-metal-oxide-semiconductor)
programmable logic devices and associated software tools for logic
development.
Intel Corporation, headquartered in Santa Clara, California, designs,
develops, makes and markets advanced microcomputer components and
related products at various levels of integration. Microcomputer
components are integrated circuits consisting of silicon-based
semiconductors etched with complex patterns of transistors.
Linear Technology Corporation, headquartered in Milpitas, California,
designs, makes and markets a broad line of standard high performance
linear integrated circuits using silicon gate complementary metal-oxide
semiconductor (CMOS), BiCMOS, and bipolar and complementary bipolar
wafer process technologies. Linear circuits monitor, condition, amplify,
or transform continuous analog signals associated with such physical
properties as temperature, pressure, weight, light, sound, or speed.
Maxim Integrated Products, Inc., headquartered in Sunnyvale, California,
designs and makes linear and mixed-signal integrated circuits. Products
include data converters, interface circuits, power supplies,
microprocessor supervisors, battery chargers, operational amplifiers,
multiplexers, switches and voltage references.
PMC-Sierra, Inc., headquartered in Burnaby, B.C. Canada, designs,
develops, markets and supports high-performance semiconductor system
solutions used in broad-band communications infrastructures, high-band
width networks and multimedia personal computers.
STMicroelectronics N.V., headquartered in Genis Pouilly, France,
designs, develops, makes and markets a broad range of semiconductor
integrated circuits and discrete devices used in a variety of
microelectronic applications, including telecommunications and computer
systems, consumer products, automotive products and industrial
automation and control systems.
SOFTWARE
BMC Software, Inc., headquartered in Houston, Texas, develops, markets
and supports standard systems software products to enhance IBM's
mainframe database management, network management and data
communications software systems.
Check Point Software Technologies, Inc., headquartered in Redwood City,
California, develops, markets and supports network security software
products that enable connectivity with security and manageability. The
company's "Firewall-1" product provides scaleable application support,
an open and extensible architecture and integration of authentication,
encryption and remote access.
Microsoft Corporation, headquartered in Redmond, Washington, makes,
sells and licenses software products, including operating systems,
server applications, business and consumer products, Internet software
technologies and development tools. The company also markets personal
computer books and input devices and researches and develops software
technologies. The company is divided into four groups: the Platforms
Product Group, the Applications and Content Product Group, the Sales and
Support Group and the Operations Group.
Network Associates, Inc., headquartered in Santa Clara, California,
develops, markets, distributes and supports network security and
management software products, including anti-virus protection, as well
as client/server network management tools.
Oracle Corporation, headquartered in Redwood City, California, designs,
develops, markets and supports computer software products with a wide
variety of uses, including database management, network products,
application development, business intelligence productivity tools and
client server business applications.
PeopleSoft, Inc., headquartered in Pleasanton, California, develops
"PeopleSoft Human Resource Management System," "PeopleSoft Distribution"
and "PeopleSoft Financials for the Public Sector" software products,
which are portable and scaleable families of cross-industry
client/server enterprise-wide applications for use throughout companies.
Page 36
SAP AG (ADR), headquartered in Waldorf, Germany, is a multinational
software company that develops business software, consults on
organizational usage of its application software and provides training
services. The company markets its products and services through
subsidiaries, distributors and other business partners worldwide.
The Sponsor has obtained the foregoing company descriptions from sources
it deems reliable. The Sponsor has not independently verified the
provided information either in terms of accuracy or completeness.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before making
a decision to invest in the Trusts.
The value of the Equity Securities will fluctuate over the life of a
Trust and may be more or less than the price at which they were
deposited in such Trust. The Equity Securities may appreciate or
depreciate in value (or pay dividends) depending on the full range of
economic and market influences affecting these securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any Security. In the event of a notice
that any Equity Security will not be delivered ("Failed Contract
Obligations") to a Trust, the Sponsor is authorized under the Indenture
to direct the Trustee to acquire other Equity Securities ("Replacement
Securities"). Any Replacement Security will be identical to those which
were the subject of the failed contract. The Replacement Securities must
be purchased within 20 days after delivery of the notice of a failed
contract and the purchase price may not exceed the amount of funds
reserved for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraph is not utilized to acquire Replacement Securities in the event
of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
a Trust and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in a Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of a Trust.
The Indenture also authorizes the Sponsor to increase the size of a
Trust and the number of Units thereof by the deposit of additional
Equity Securities, or cash (including a letter of credit) with
instructions to purchase additional Equity Securities, in such Trust and
the issuance of a corresponding number of additional Units. If the
Sponsor deposits cash, existing and new investors could experience a
dilution of their investments and a reduction in anticipated income
because of fluctuations in the prices of the Equity Securities between
the time of the cash deposit and the actual purchase of the Equity
Securities and because the Trusts will pay the brokerage fees associated
therewith.
Each Trust consists of the Equity Securities listed under "Schedule of
Investments" for each Trust (or contracts to purchase such Securities)
as may continue to be held from time to time in such Trust and any
additional Equity Securities acquired and held by such Trust pursuant to
the provisions of the Indenture (including provisions with respect to
deposits into such Trust of Equity Securities in connection with the
issuance of additional Units).
Once all of the Equity Securities in a Trust are acquired, the Trustee
will have no power to vary the investments of such Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, and may dispose of
Equity Securities only under limited circumstances. See "Rights of Units
Holders-How May Equity Securities be Removed from a Trust?"
Like other investment companies, financial and business organizations
and individuals around the world, the Trusts could be adversely affected
if the computer systems used by the Sponsor, Evaluator, Portfolio
Supervisor or Trustee or other service providers to the Trusts do not
properly process and calculate date-related information and data
involving dates of January 1, 2000 and thereafter. This is commonly
known as the "Year 2000 Problem." The Sponsor, Evaluator, Portfolio
Supervisor and Trustee are taking steps that they believe are reasonably
designed to address the Year 2000 Problem with respect to computer
systems that they use and to obtain reasonable assurances that
Page 37
comparable steps are being taken by each Trust's other service
providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact to the Trusts.
The Year 2000 Problem is expected to impact corporations, which may
include issuers of the Equity Securities contained in the Trusts to
varying degrees based upon various factors, including, but not limited
to, their industry sector and degree of technological sophistication.
The Sponsor is unable to predict what impact, if any, the Year 2000
Problem will have on issuers of the Equity Securities contained in the
Trusts.
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit in respect of any Equity Security
which might reasonably be expected to have a material adverse effect on
a Trust. At any time after the Initial Date of Deposit, litigation may
be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on a Trust.
Legislation. From time to time Congress considers proposals to reduce
the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unit holders are
urged to consult their own tax advisors. Further, at any time after the
Initial Date of Deposit, legislation may be enacted that could
negatively affect the Equity Securities in a Trust or the issuers of the
Equity Securities. Changing approaches to regulation, particularly with
respect to any of the industry sectors represented in a Trust, may have
a negative impact on certain companies represented in a Trust. There can
be no assurance that future legislation, regulation or deregulation will
not have a material adverse effect on the Trusts or will not impair the
ability of the issuers of the Equity Securities to achieve their
business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
underlying value of the Equity Securities in a Trust (generally
determined by the closing sale prices of listed Equity Securities and
the ask prices of over-the-counter traded Equity Securities), plus or
minus cash, if any, in the Income and Capital Accounts of a Trust, plus
an initial sales charge equal to the difference between the maximum
sales charge of 4.5% of the Public Offering Price and the maximum
remaining deferred sales charge, initially $.350 per Unit. Commencing on
February 19, 1999, and on the twentieth day of each month thereafter (or
if such date is not a business day, on the preceding business day)
through June 18, 1999, a deferred sales charge of $.07 will be assessed
per Unit per month. Units purchased subsequent to the initial deferred
sales charge payment but still during the initial offering period will
be subject to the initial sales charge and the remaining deferred sales
charge payments not yet collected. The deferred sales charge will be
paid from funds in the Income and/or Capital Accounts, if sufficient, or
from the periodic sale of Equity Securities. The total maximum sales
charge assessed to Unit holders on a per Unit basis will be 4.5% of the
Public Offering Price (equivalent to 4.545% of the net amount invested,
exclusive of the deferred sales charge). However, Unit holders who acquire
Units which, as a result of a reduction in the aggregate underlying value
of the Equity Securities, are not subject to an initial sales charge will
be subject to the maximum remaining deferred sales charge (initially $.35
per Unit). In such case the maximum sales charge may exceed 4.5% of the
Public Offering Price per Unit but in no event will the maximum sales charge
exceed 5.5% of the Public Offering Price per Unit for Financial Services
Growth Trust, Series 5, Market Leaders Growth Trust, Series 3 or Technology
Growth Trust, Series 8; or 6.5% of the Public Offering Price per Unit for
Business Services Growth Trust, Series 2 or Energy Growth Trust, Series 4.
In addition, a portion of the Public Offering Price on Units purchased prior
to the earlier of six months after the Initial Date of Deposit or the end of
the initial offering period also consists of Equity Securities in an amount
sufficient to pay for all or a portion of the costs incurred in
establishing the Trusts, including the costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of a Trust portfolio, legal fees and the
initial fees and expenses of the Trustee. The organizational and
offering costs will be deducted from the assets of each Trust as of the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period. For secondary market sales after the
completion of the deferred sales charge period, the Public Offering
Price is also based on the aggregate underlying value of the Equity
Securities in a Trust (generally determined by the closing sale prices
Page 38
of listed Equity Securities and the bid prices of over-the-counter
traded Equity Securities), plus or minus cash, if any, in the Income and
Capital Accounts of a Trust, plus a one-time initial sales charge of
4.5% of the Public Offering Price (equivalent to 4.712% of the net
amount invested), which will be reduced by 1/2 of 1% on each subsequent
July 30, commencing July 30, 1999 to a minimum sales charge of 3.0%,
divided by the number of outstanding Units of a Trust.
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying value of the Equity Securities in a
Trust (generally determined by the closing sale prices of listed Equity
Securities and the ask prices of over-the-counter traded Equity
Securities), plus or minus cash, if any, in the Income and Capital
Accounts of a Trust, plus, until the earlier of six months after the
Initial Date of Deposit or the end of the initial offering period,
estimated organizational and offering costs, divided by the number of
Units of a Trust outstanding, reduced by the deferred sales charge not
yet paid. During the secondary market, the Sponsor's Repurchase Price is
also based on the aggregate underlying value of the Equity Securities in
a Trust (generally determined by the closing sale prices of listed
Equity Securities and the bid prices of over-the-counter traded Equity
Securities), plus or minus cash, if any, in the Income and Capital
Accounts of a Trust, divided by the number of outstanding Units of a
Trust.
The minimum amount which an investor may purchase of a Trust is $1,000
($500 for Individual Retirement Accounts or other retirement plans). The
applicable sales charge for the Trusts for both primary and secondary
market sales is reduced by a discount as indicated below for aggregate
volume purchases of the Trusts (except for sales made pursuant to a
"wrap fee account" or similar arrangements as set forth below):
<TABLE>
<CAPTION>
Primary and Secondary
_____________________
Percent of Percent of
Dollar Amount of Transaction Offering Net Amount
at Public Offering Price* Price Invested
____________________________ __________ __________
<S> <C> <C>
$ 50,000 but less than $100,000 0.25% 0.2506%
$100,000 but less than $250,000 0.50% 0.5025%
$250,000 but less than $500,000 1.00% 1.0101%
$500,000 or more 2.00% 2.0408%
___________
<FN>
* The breakpoint sales charges are also applied on a Unit basis
utilizing a breakpoint equivalent in the above table of $10 per Unit and
will be applied on whichever basis is more favorable to the investor.
The breakpoints will be adjusted to take into consideration purchase
orders stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
</FN>
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
broker/dealer, bank or other selling agent. The reduced sales charge
structure will apply on all purchases of Units of a Trust by the same
person on any one day from any one broker/dealer, bank or other selling
agent. An investor may aggregate purchases of Units of Trusts contained
in this Prospectus and other trusts sponsored by Nike Securities L.P.
which are currently in the initial offering period and which have
substantially the same sales load and years to maturity as the Trusts
for purposes of qualifying for volume purchase discounts listed above.
Unit holders of FT 156, FT 161 or other unit investment trusts in which
the Sponsor acted as sole Principal Underwriter and which at the time of
their creation had substantially the same sales load and approximately a
five-year term ("Eligible Sector Trusts") may utilize their redemption or
termination proceeds from the Eligible Sector Trusts to acquire Units of
the Trusts during the initial offering period subject only to the remaining
deferred sales charge to be collected on such Units. Unit holders who
redeem Units of FT 156, FT 161 or the Eligible Sector Trusts should note
that they will be assessed the amount of any remaining deferred sales
charges on such units at the time of redemption. Additionally, Units
purchased in the name of the spouse of a purchaser or in the name of a
child of such purchaser under 21 years of age will be deemed, for the
purposes of calculating the applicable sales charge, to be additional
purchases by the purchaser. The reduced sales charges will also be
applicable to a trustee or other fiduciary purchasing securities for a
single trust estate or single fiduciary account. The purchaser must inform
the broker/dealer, bank or other selling agent of any such combined purchase
prior to the sale in order to obtain the indicated discount. In
addition, with respect to the employees, officers and directors
(including their immediate family members, defined as spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-
in-law, sons-in-law and daughters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons) of the Sponsor and
broker/dealers, banks or other selling agents and their subsidiaries and
vendors providing services to the Sponsor, Units may be purchased at the
Public Offering Price less the concession the Sponsor typically allows
to dealers and other selling agents.
Page 39
Units may be purchased in the primary or secondary market at the Public
Offering Price less the concession the Sponsor typically allows to
dealers and other selling agents (see "Public Offering-How are Units
Distributed?") for purchases by investors who purchase Units through
registered investment advisors, certified financial planners or
registered broker/dealers who in each case either charge periodic fees
for financial planning, investment advisory or asset management
services, or provide such services in connection with the establishment
of an investment account for which a comprehensive "wrap fee" charge is
imposed.
Had the Units of the Trusts been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information." The Public
Offering Price of Units on the date of the prospectus or during the
initial offering period may vary from the amount stated under "Summary
of Essential Information" in accordance with fluctuations in the prices
of the underlying Equity Securities. During the initial offering period,
the aggregate value of the Units of a Trust shall be determined on the
basis of the aggregate underlying value of the Equity Securities therein
plus or minus cash, if any, in the Income and Capital Accounts of a
Trust. The aggregate underlying value of the Equity Securities during
the initial offering period will be determined in the following manner:
if the Equity Securities are listed, this evaluation is generally based
on the closing sale prices on that exchange (unless it is determined
that these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange, at the closing ask
prices. If the Equity Securities are not so listed or, if so listed and
the principal market therefor is other than on the exchange, the
evaluation shall generally be based on the current ask prices on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the
value of the Equity Securities on the ask side of the market or (c) by
any combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein, plus or minus cash, if any, in
the Income and Capital Accounts of a Trust plus the applicable sales
charge. The aggregate underlying value of the Equity Securities for
secondary market sales is calculated in the same manner as described
above for sales made during the initial offering period with the
exception that bid prices are used instead of ask prices.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of the Units on the date of
settlement provided payment has been received. Cash, if any, made
available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934. Delivery of Certificates representing
Units so ordered will be made three business days following such order
or shortly thereafter. See "Rights of Unit Holders-How May Units be
Redeemed?" for information regarding the ability to redeem Units ordered
for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the Initial
Date of Deposit and (ii) for additional Units issued after such date as
additional Equity Securities or cash are deposited by the Sponsor, Units
will be distributed to the public at the then current Public Offering
Price. The initial offering period may be up to approximately 360 days.
During such period, the Sponsor may deposit additional Equity Securities
or cash in a Trust and create additional Units. Units reacquired by the
Sponsor during the initial offering period (at prices based upon the
aggregate underlying value of the Equity Securities in a Trust plus or
minus a pro rata share of cash, if any in the Income and Capital
Accounts of such Trust) may be resold at the then current Public
Offering Price. Upon the termination of the initial offering period,
unsold Units created or reacquired during the initial offering period
will be sold or resold at the then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in the
secondary market (see "Public Offering-Will There be a Secondary
Page 40
Market?") may be offered by this prospectus at the secondary market
public offering price determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trusts for
sale in a number of states. Sales initially will be made to dealers and
other selling agents at prices which represent a concession or agency
commission of 3.2% of the Public Offering Price, and, for secondary
market sales, 3.2% of the Public Offering Price (or 65% of the then
current maximum sales charge after July 30, 1999). Dealers and other
selling agents will be allowed a concession or agency commission on the
sale of Units purchased with redemption or termination proceeds from
FT 156, FT 161 or Eligible Sector Trusts equal to (i) $.22 per Unit on
Units sold subject to a deferred sales charge of $.350 per Unit or (ii)
63% of the then current maximum remaining deferred sales charge on Units
sold subject to a deferred sales charge of less than $.350 per Unit. Volume
concessions or agency commissions of an additional 0.30% of the Public
Offering Price on all purchases of Units of the Trusts will be given to any
broker/dealer or bank who has aggregate purchases of Trust Units from
the Sponsor on the Initial Date of Deposit of at least $100,000 of the
Trusts or purchases $250,000 of any one of such Trusts on any day
thereafter. In addition, dealers and other selling agents will receive
an additional volume concession or agency commission with respect to
sales of Units of each individual Trust in the amounts set forth below:
Additional
Total Sales per Trust Concession
_____________________ __________
$ 1,000,000 but less than $2,000,000 .10%
$ 2,000,000 but less than $3,000,000 .15%
$ 3,000,000 but less than $10,000,000 .20%
$10,000,000 or more .30%
Effective on each July 30, commencing July 30, 1999, the sales charge
will be reduced by 1/2 of 1% to a minimum sales charge of 3.0%. However,
resales of Units of a Trust by such dealers and other selling agents to
the public will be made at the Public Offering Price described in the
prospectus. The Sponsor reserves the right to change the amount of the
concession or agency commission from time to time. Certain commercial
banks may be making Units of a Trust available to their customers on an
agency basis. A portion of the sales charge paid by these customers is
retained by or remitted to the banks in the amounts indicated above.
Under the Glass-Steagall Act, banks are prohibited from underwriting
Trust Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In
Texas and in certain other states, any banks making Units available must
be registered as broker/dealers under state law.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or other selling agents of a Trust may receive
nominal awards from the Sponsor for each of their registered
representatives who have sold a minimum number of UIT Units during a
specified time period. In addition, at various times the Sponsor may
implement other programs under which the sales force of a broker/dealer,
bank or other selling agent may be eligible to win other nominal awards
for certain sales efforts, or under which the Sponsor will reallow to
any such dealer that sponsors sales contests or recognition programs
conforming to criteria established by the Sponsor, or participates in
sales programs sponsored by the Sponsor, an amount not exceeding the
total applicable sales charges on the sales generated by such person at
the public offering price during such programs. Also, the Sponsor in its
discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying dealers for certain
services or activities which are primarily intended to result in sales
of Units of a Trust. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of a Trust. These programs will
not change the price Unit holders pay for their Units or the amount that
the Trusts will receive from the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on the Trusts and returns
over specified periods on other similar trusts sponsored by Nike
Securities L.P. with returns on other taxable investments such as
corporate or U.S. Government bonds, bank CDs and money market accounts
or money market funds, each of which has investment characteristics
that may differ from those of the Trusts. U.S. Government bonds,
for example, are backed by the full faith and credit of the U.S.
Government and bank CDs and money market accounts are insured by an
Page 41
agency of the federal government. Money market accounts and money market
funds provide stability of principal, but pay interest at rates that
vary with the condition of the short-term debt market. The investment
characteristics of the Trusts are described more fully elsewhere in this
Prospectus.
Information on percentage changes in the dollar value of Units, on the
basis of changes in Unit price may be included from time to time in
advertisements, sales literature, reports and other information
furnished to current or prospective Unit holders. Total return figures
are not averaged, and may not reflect deduction of the sales charge,
which would decrease the return. Average annualized return figures
reflect deduction of the maximum sales charge. No provision is made for
any income taxes payable.
Past performance may not be indicative of future results. Each Trust's
portfolio is not managed. Unit price and return fluctuate with the value
of the common stocks in a Trust's portfolio, so there may be a gain or
loss when Units are sold.
Each Trust's performance may be compared to performance on a total
return basis with the Dow Jones Industrial Average, the S&P 500
Composite Stock Price Index, or performance data from Lipper Analytical
Services, Inc. and Morningstar Publications, Inc. or from publications
such as Money, The New York Times, U.S. News and World Report, Business
Week, Forbes or Fortune. As with other performance data, performance
comparisons should not be considered representative of a Trust's
relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trusts will receive a gross sales commission equal to
4.5% of the Public Offering Price of the Units (equivalent to 4.545% of
the net amount invested, exclusive of the deferred sales charge), less
any reduced sales charge described under "Public Offering-How is the
Public Offering Price Determined?" See "Public Offering-How are Units
Distributed?" for information regarding the receipt of additional
concessions available to dealers and other selling agents. In addition,
the Sponsor may be considered to have realized a profit or to have
sustained a loss, as the case may be, in the amount of any difference
between the cost of the Equity Securities to the Trusts (which is based
on the Evaluator's determination of the aggregate offering price of the
underlying Equity Securities of such Trust on the Initial Date of
Deposit as well as subsequent deposits) and the cost of such Equity
Securities to the Sponsor. See Note (2) of "Schedule of Investments" for
each Trust. During the initial offering period, the dealers and other
selling agents also may realize profits or sustain losses as a result of
fluctuations after the Initial Date of Deposit in the Public Offering
Price received by the dealers and other selling agents upon the sale of
Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are
resold (which price includes a sales charge of 4.5% subject to reduction
beginning July 30, 1999) or redeemed. The secondary market public
offering price of Units may be greater or less than the cost of such
Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do so, the
Sponsor intends to maintain a market for the Units and continuously
offer to purchase Units at prices, subject to change at any time, based
upon the aggregate underlying value of the Equity Securities in a Trust
plus or minus cash, if any, in the Income and Capital Accounts of such
Trust. All expenses incurred in maintaining a secondary market, other
than the fees of the Evaluator and the costs of the Trustee in
transferring and recording the ownership of Units, will be borne by the
Sponsor. If the supply of Units exceeds demand, or for some other
business reason, the Sponsor may discontinue purchases of Units at such
prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS OR HER UNITS, HE OR
SHE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO
MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. Units subject to a
deferred sales charge which are sold or tendered for redemption prior to
such time as the entire deferred sales charge on such Units has been
collected will be assessed the amount of the remaining deferred sales
charge at the time of sale or redemption.
Page 42
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his or her name appears on the face of the
certificate with the signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guaranty program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Record ownership
may occur before settlement.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of their respective Trust; the number of Units issued or
transferred; the name, address and taxpayer identification number, if
any, of the new registered owner; a notation of any liens and
restrictions of the issuer and any adverse claims to which such Units
are or may be subject or a statement that there are no such liens,
restrictions or adverse claims; and the date the transfer was
registered. Uncertificated Units are transferable through the same
procedures applicable to Units evidenced by certificates (described
above), except that no certificate need be presented to the Trustee and
no certificate will be issued upon the transfer unless requested by the
Unit holder. A Unit holder may at any time request the Trustee to issue
certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the securities in a Trust on or about the Income Distribution Dates
to Unit holders of record on the preceding Income Distribution Record
Date. See "Summary of Essential Information." Persons who purchase Units
will commence receiving distributions only after such person becomes a
record owner. Notification to the Trustee of the transfer of Units is
the responsibility of the purchaser, but in the normal course of
business such notice is provided by the selling broker-dealer. The pro
rata share of cash in the Capital Account of a Trust will be computed as
of the fifteenth day of each month. Proceeds received on the sale of any
Equity Securities in a Trust, to the extent not used to meet redemptions
of Units or pay expenses, will, however, be distributed on the last day
of each month to Unit holders of record on the fifteenth day of such
month if the amount available for distribution equals at least $1.00 per
100 Units. The Trustee is not required to pay interest on funds held in
the Capital Account of a Trust (but may itself earn interest thereon and
therefore benefit from the use of such funds). Notwithstanding,
distributions of funds in the Capital Account, if any, will be made on
the last day of each December to Unit holders of record as of December
15. See "What is the Federal Tax Status of Unit Holders?"
Page 43
It is anticipated that the deferred sales charge will be collected from
the Capital Account and that amounts in the Capital Account will be
sufficient to cover the cost of the deferred sales charge. However, to
the extent that amounts in the Capital Account are insufficient to
satisfy the then current deferred sales charge obligation, Equity
Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made
to an account designated by the Sponsor for purposes of satisfying Unit
holders' deferred sales charge obligations.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
a Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder only when filing a tax return. Under
normal circumstances the Trustee obtains the Unit holder's tax
identification number from the selling broker. However, a Unit holder
should examine his or her statements from the Trustee to make sure that
the Trustee has been provided a certified tax identification number in
order to avoid this possible "back-up withholding." In the event the
Trustee has not been previously provided such number, one should be
provided as soon as possible.
Within a reasonable time after each Trust is terminated, each Unit
holder will, upon surrender of his or her Units for redemption, receive:
(i) the pro rata share of the amounts realized upon the disposition of
Equity Securities, unless he or she elects an In-Kind Distribution as
described under "Other Information-How May the Indenture be Amended or
Terminated?" and (ii) a pro rata share of any other assets of a Trust,
less expenses of such Trust.
The Trustee will credit to the Income Account of a Trust any dividends
received on the Equity Securities therein. All other receipts (e.g.
return of capital, etc.) are credited to the Capital Account of each
Trust.
The Trustee may establish reserves (the "Reserve Account") within each
Trust for state and local taxes, if any, and any governmental charges
payable out of a Trust.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of a Trust the following information in reasonable detail: (1) a summary
of transactions in such Trust for such year; (2) any Equity Securities
sold during the year and the Equity Securities held at the end of such
year by such Trust; (3) the redemption price per Unit based upon a
computation thereof on the 31st day of December of such year (or the
last business day prior thereto); and (4) amounts of income and capital
distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trusts furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his or her Units by tender
to the Trustee at its unit investment trust office in the City of New
York of the certificates representing the Units to be redeemed, or in
the case of uncertificated Units, delivery of a request for redemption,
duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed as explained above (or by providing satisfactory
indemnity, as in connection with lost, stolen or destroyed
certificates), and payment of applicable governmental charges, if any.
No redemption fee will be charged. On the third business day following
such tender, the Unit holder will be entitled to receive in cash an
amount for each Unit equal to the Redemption Price per Unit next
computed after receipt by the Trustee of such tender of Units. The "date
of tender" is deemed to be the date on which Units are received by the
Trustee (if such day is a day on which the New York Stock Exchange is
open for trading), except that as regards Units received after 4:00 p.m.
Eastern time (or as of any earlier closing time on a day on which the
New York Stock Exchange is scheduled in advance to close at such earlier
time), the date of tender is the next day on which the New York Stock
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption
price computed on that day. Units so redeemed shall be cancelled. Units
Page 44
tendered for redemption prior to such time as the entire deferred sales
charge on such Units has been collected will be assessed the amount of
the remaining deferred sales charge at the time of redemption.
Any Unit holder tendering 1,000 Units or more of a Trust for redemption
may request by written notice submitted at the time of tender from the
Trustee in lieu of a cash redemption a distribution of shares of Equity
Securities in an amount and value of Equity Securities per Unit equal to
the Redemption Price Per Unit as determined as of the evaluation next
following tender. However, no In-Kind Distribution requests submitted
during the nine business days prior to the Mandatory Termination Date
will be honored. To the extent possible, in-kind distributions ("In-Kind
Distributions") shall be made by the Trustee through the distribution of
each of the Equity Securities in book-entry form to the account of the
Unit holder's bank or broker-dealer at the Depository Trust Company. An
In-Kind Distribution will be reduced by customary transfer and
registration charges. The tendering Unit holder will receive his or her
pro rata number of whole shares of each of the Equity Securities
comprising the portfolio and cash from the Capital Account equal to the
fractional shares to which the tendering Unit holder is entitled. The
Trustee may adjust the number of shares of any issue of Equity
Securities included in a Unit holder's In-Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made
on the basis of the value of Equity Securities on the date of tender.
See "What is the Federal Tax Status of Unit Holders?" If funds in the
Capital Account are insufficient to cover the required cash distribution
to the tendering Unit holder, the Trustee may sell Equity Securities in
the manner described above.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"Rights of Unit Holders-How are Income and Capital Distributed?" In the
event the Trustee has not been previously provided such number, one must
be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of a Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of each Trust.
The Trustee is empowered to sell Equity Securities of each Trust in
order to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of each Trust will be
reduced. Such sales may be required at a time when Equity Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The Redemption Price per Unit will be determined on the basis of the
aggregate underlying value of the Equity Securities in a Trust plus or
minus cash, if any, in the Income and Capital Accounts of such Trust.
The Redemption Price per Unit is the pro rata share of each Unit
determined by the Trustee by adding: (1) the cash on hand in a Trust
other than cash deposited in a Trust to purchase Equity Securities not
applied to the purchase of such Equity Securities; (2) the aggregate
value of the Equity Securities held in a Trust, as determined by the
Evaluator on the basis of the aggregate underlying value of the Equity
Securities in such Trust next computed; and (3) dividends receivable on
the Equity Securities trading ex-dividend as of the date of computation;
and deducting therefrom: (1) amounts representing any applicable taxes
or governmental charges payable out of the Trust; (2) any amounts owing
to the Trustee for its advances; (3) an amount representing estimated
accrued expenses of a Trust, including but not limited to fees and
expenses of the Trustee (including legal and auditing fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of a Trust as of the business day prior to the
evaluation being made; and (5) other liabilities incurred by a Trust;
and finally dividing the results of such computation by the number of
Units of the Trust outstanding as of the date thereof. The redemption
price per Unit will be assessed the amount, if any, of the remaining
deferred sales charge at the time of redemption. Until the earlier of
six months after the Initial Date of Deposit or the end of the initial
offering period, the Redemption Price per Unit will include estimated
organizational and offering costs as set forth under "Summary of
Essential Information" for each Trust.
The aggregate value of the Equity Securities used to calculate the
Redemption Price per Unit will be determined in the following manner: if
the Equity Securities are listed, this evaluation is generally based on
Page 45
the closing sale prices on that exchange (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if there is
no closing sale price on that exchange, at the closing ask prices
(during the initial offering period) or the closing bid prices
(subsequent to the initial offering period). If the Equity Securities
are not so listed or, if so listed and the principal market therefor is
other than on the exchange, the evaluation shall generally be based on
the current ask or bid prices (as appropriate) on the over-the-counter
market (unless these prices are inappropriate as a basis for
evaluation). If current ask or bid prices (as appropriate) are
unavailable, the evaluation is generally determined (a) on the basis of
current ask or bid prices (as appropriate) for comparable securities,
(b) by appraising the value of the Equity Securities on the ask or bid
side of the market (as appropriate) or (c) by any combination of the
above.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Securities and Exchange Commission determines that trading on the New
York Stock Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances, the
Sponsor may apply to the Securities and Exchange Commission for an order
permitting a full or partial suspension of the right of Unit holders to
redeem their Units. The Trustee is not liable to any person in any way
for any loss or damage which may result from any such suspension or
postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 p.m. Eastern time on the same
business day and by making payment therefor to the Unit holder not later
than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he or she would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
prospectus describing such Units. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
How May Equity Securities be Removed from a Trust?
The Portfolios of the Trusts are not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of an Equity Security in
the event that an issuer defaults in the payment of a dividend that has
been declared, that any action or proceeding has been instituted
restraining the payment of dividends or there exists any legal question
or impediment affecting such Equity Security, that the issuer of the
Equity Security has breached a covenant which would affect the payments
of dividends, the credit standing of the issuer or otherwise impair the
sound investment character of the Equity Security, that the issuer has
defaulted on the payment on any other of its outstanding obligations,
that the price of the Equity Security has declined to such an extent or
other such credit factors exist so that in the opinion of the Sponsor,
the retention of such Equity Securities would be detrimental to a Trust.
Except as stated under "Portfolio-What are Some Additional
Considerations for Investors?" for Failed Contract Obligations, the
acquisition by a Trust of any securities or other property other than
the Equity Securities is prohibited. Pursuant to the Indenture and with
limited exceptions, the Trustee may sell any securities or other
property acquired in exchange for Equity Securities such as those
acquired in connection with a merger or other transaction. If offered
such new or exchanged securities or property, the Trustee shall reject
the offer. However, in the event such securities or property are
nonetheless acquired by a Trust, they may be accepted for deposit in a
Trust and either sold by the Trustee or held in a Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Portfolio
Page 46
Supervisor). Proceeds from the sale of Equity Securities (or any
securities or other property received by a Trust in exchange for Equity
Securities) by the Trustee are credited to the Capital Account of a
Trust for distribution to Unit holders or to meet redemptions. The
Trustee may, from time to time, retain and pay compensation to the
Sponsor (or an affiliate of the Sponsor) to act as agent for the Trusts
with respect to selling Equity Securities from the Trusts. In acting in
such capacity, the Sponsor or its affiliate will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may also sell Equity Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose of
redeeming Units of a Trust tendered for redemption and the payment of
expenses.
The Sponsor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares
of individual issues of Equity Securities. To the extent this is not
practicable, the composition and diversity of the Equity Securities may
be altered. In order to obtain the best price for a Trust, it may be
necessary for the Sponsor to specify minimum amounts (generally 100
shares) in which blocks of Equity Securities are to be sold. The Sponsor
may consider sales of Units of unit investment trusts which it sponsors
in making recommendations to the Trustee as to the selection of
broker/dealers to execute the Trusts' portfolio transactions.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, the FT Series (formerly known as The First Trust Special
Situations Trust), The First Trust Insured Corporate Trust, The First
Trust of Insured Municipal Bonds and The First Trust GNMA. First Trust
introduced the first insured unit investment trust in 1974 and to date
more than $9 billion in First Trust unit investment trusts have been
deposited. The Sponsor's employees include a team of professionals with
many years of experience in the unit investment trust industry. The
Sponsor is a member of the National Association of Securities Dealers,
Inc. and Securities Investor Protection Corporation and has its
principal offices at 1001 Warrenville Road, Lisle, Illinois 60532;
telephone number (630) 241-4141. As of December 31, 1997, the total
partners' capital of Nike Securities L.P. was $11,724,071 (audited).
(This paragraph relates only to the Sponsor and not to the Trusts or to
any series thereof or to any other dealer. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its
contractual obligations. More detailed financial information will be
made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. Unit holders who have questions regarding the Trusts
may call the Customer Service Help Line at 1-800-682-7520. The Trustee
is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
Page 47
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Equity Securities. In the event of the failure of
the Sponsor to act under the Indenture, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under
the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisers L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor or the Trustee, in
which event the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
Page 48
The Indenture provides that a Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." A Trust may be liquidated at any time by consent of 100%
of the Unit holders of a Trust or by the Trustee when the value of the
Equity Securities owned by a Trust as shown by any evaluation, is less
than the lower of $2,000,000 or 20% of the total value of Equity
Securities deposited in such Trust during the initial offering period,
or in the event that Units of a Trust not yet sold aggregating more than
60% of the Units of such Trust are tendered for redemption by a
broker/dealer, including the Sponsor. If a Trust is liquidated because
of the redemption of unsold Units of such Trust by a broker/dealer, the
Sponsor will refund to each purchaser of Units of such Trust the entire
sales charge paid by such purchaser. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit holders
of such Trust. Within a reasonable period after termination, the Trustee
will follow the procedures set forth under "Rights of Unit Holders-How
are Income and Capital Distributed?"
Commencing during the period beginning nine business days prior to, and
no later than, the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of a Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of a Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
holder at his or her address appearing on the registration books of the
Trust maintained by the Trustee. At least 60 days prior to the Mandatory
Termination Date of a Trust the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges), if
such Unit holder owns at least 1,000 Units of such Trust, rather than to
receive payment in cash for such Unit holder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity
Securities. To be effective, the election form, together with
surrendered certificates and other documentation required by the
Trustee, must be returned to the Trustee at least ten business days
prior to the Mandatory Termination Date of a Trust. Unit holders not
electing or eligible to receive a distribution of shares of Equity
Securities will receive a cash distribution from the sale of the
remaining Equity Securities within a reasonable time after a Trust is
terminated. Regardless of the distribution involved, the Trustee will
deduct from the funds of such Trust any accrued costs, expenses,
advances or indemnities provided by the Indenture, including estimated
compensation of the Trustee and costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or
other governmental charges. Any sale of Equity Securities in a Trust in
connection with termination may result in a lower amount than might
otherwise be realized if such sale were not required at such time. In
addition, to the extent that Equity Securities are sold prior to the
Mandatory Termination Date, Unit holders will not benefit from any stock
appreciation they would have received had the Equity Securities not been
sold at such time. The Trustee will then distribute to each Unit holder
his or her pro rata share of the balance of the Income and Capital
Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trusts.
Experts
The statements of net assets, including the schedules of investments, of
the Trusts at the opening of business on the Initial Date of Deposit
appearing in this Prospectus and Registration Statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
Page 49
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 259
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 259, comprised of Business Services
Growth Trust, Series 2; Energy Growth Trust, Series 4; Financial
Services Growth Trust, Series 5; Market Leaders Growth Trust, Series 3;
Pharmaceutical Growth Trust, Series 5 and Technology Growth Trust,
Series 8, as of the opening of business on July 15, 1998. These
statements of net assets are the responsibility of the Trusts' Sponsor.
Our responsibility is to express an opinion on these statements of net
assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of net assets
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
statements of net assets. Our procedures included confirmation of the
letter of credit allocated among the Trusts on July 15, 1998. An audit
also includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall
presentation of the statements of net assets. We believe that our audit
of the statements of net assets provides a reasonable basis for our
opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of FT 259,
comprised of Business Services Growth Trust, Series 2; Energy Growth
Trust, Series 4; Financial Services Growth Trust, Series 5; Market
Leaders Growth Trust, Series 3; Pharmaceutical Growth Trust, Series 5
and Technology Growth Trust, Series 8, at the opening of business on
July 15, 1998 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
July 15, 1998
Page 50
Statements of Net Assets
FT 259
At the Opening of Business on the
Initial Date of Deposit-July 15, 1998
<TABLE>
<CAPTION>
Business Energy Financial
Services Growth Services
Growth Trust Trust Growth Trust
Series 2 Series 4 Series 5
_____________ ________ _________
<S> <C> <C> <C>
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $147,790 $148,231 $148,837
Less accrued organizational and offering costs (3) (336) (337) (338)
Less liability for deferred sales charge (4) (5,225) (5,241) (5,262)
________ ________ ________
Net assets $142,229 $142,653 $143,237
======== ======== ========
Units outstanding 14,928 14,973 15,034
ANALYSIS OF NET ASSETS
Cost to investors (5) $149,283 $149,728 $150,340
Less sales charge (5) (6,718) (6,738) (6,765)
Less estimated organizational and offering costs (3) (336) (337) (338)
________ ________ ________
Net assets $142,229 $142,653 $143,237
======== ======== ========
</TABLE>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $1,200,000 issued by The
Chase Manhattan Bank, which will be allocated among each of the six
Trusts in FT 259, has been deposited with the Trustee as collateral,
which is sufficient to cover the monies necessary for the purchase of
the Equity Securities pursuant to contracts for the purchase of such
Equity Securities.
(3) A portion of the Public Offering Price on Units purchased prior to
the earlier of six months after the Initial Date of Deposit or the end
of the initial offering period consists of Equity Securities in an
amount sufficient to pay for all or a portion of the costs incurred in
establishing the Trusts. These costs have been estimated at $.0225 per
Unit for each Trust, based upon the expected number of Units of each
Trust to be created. A distribution will be made at the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period to an account maintained by the Trustee from which the
organizational and offering cost obligation of the investors to the
Sponsor will be satisfied. To the extent the number of Units of a Trust
is larger or smaller than the estimate, the actual distribution per Unit
for such Trust may differ from that set forth above.
(4) Represents the amount of mandatory distributions from each Trust
($.350 per Unit), payable to the Sponsor in five equal monthly
installments beginning on February 19, 1999, and on the twentieth day of
each month thereafter (or if such date is not a business day, on the
preceding business day) through June 18, 1999. If Units are redeemed
prior to June 18, 1999, the remaining amount of the deferred sales
charge applicable to such Units will be payable at the time of redemption.
(5) The aggregate cost to investors includes a sales charge computed at
the rate of 4.5% of the Public Offering Price (equivalent to 4.545% of
the net amount invested, exclusive of the deferred sales charge),
assuming no reduction of sales charge as set forth under "Public
Offering-How is the Public Offering Price Determined?"
Page 51
Statements of Net Assets (con't.)
FT 259
At the Opening of Business on the
Initial Date of Deposit-July 15, 1998
<TABLE>
<CAPTION>
Market Leaders Pharmaceutical Technology
Growth Trust Growth Trust Growth Trust
Series 3 Series 5 Series 8
____________ ____________ _____________
<S> <C> <C> <C>
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $148,036 $148,309 $148,121
Less accrued organizational and offering costs (3) (336) (337) (337)
Less liability for deferred sales charge (4) (5,234) (5,243) (5,236)
________ ________ ________
Net assets $142,466 $142,729 $142,548
======== ======== ========
Units outstanding 14,953 14,981 14,961
ANALYSIS OF NET ASSETS
Cost to investors (5) $149,531 $149,807 $149,618
Less sales charge (5) (6,729) (6,741) (6,733)
Less estimated organizational and offering costs (3) (336) (337) (337)
________ ________ ________
Net assets $142,466 $142,729 $142,548
======== ======== ========
</TABLE>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $1,200,000 issued by The
Chase Manhattan Bank, which will be allocated among each of the six
Trusts in FT 259, has been deposited with the Trustee as collateral,
which is sufficient to cover the monies necessary for the purchase of
the Equity Securities pursuant to contracts for the purchase of such
Equity Securities.
(3) A portion of the Public Offering Price on Units purchased prior to
the earlier of six months after the Initial Date of Deposit or the end
of the initial offering period consists of Equity Securities in an
amount sufficient to pay for all or a portion of the costs incurred in
establishing the Trusts. These costs have been estimated at $.0225 per
Unit for each Trust, based upon the expected number of Units of each
Trust to be created. A distribution will be made at the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period to an account maintained by the Trustee from which the
organizational and offering cost obligation of the investors to the
Sponsor will be satisfied. To the extent the number of Units of a Trust
is larger or smaller than the estimate, the actual distribution per Unit
for such Trust may differ from that set forth above.
(4) Represents the amount of mandatory distributions from each Trust
($.350 per Unit), payable to the Sponsor in five equal monthly
installments beginning on February 19, 1999, and on the twentieth day of
each month thereafter (or if such date is not a business day, on the
preceding business day) through June 18, 1999. If Units are redeemed
prior to June 18, 1999, the remaining amount of the deferred sales
charge applicable to such Units will be payable at the time of redemption.
(5) The aggregate cost to investors includes a sales charge computed at
the rate of 4.5% of the Public Offering Price (equivalent to 4.545% of
the net amount invested, exclusive of the deferred sales charge),
assuming no reduction of sales charge as set forth under "Public
Offering-How is the Public Offering Price Determined?"
Page 52
Schedule of Investments
BUSINESS SERVICES GROWTH TRUST, SERIES 2
FT 259
At the Opening of Business on the Initial Date of Deposit-July 15, 1998
<TABLE>
<CAPTION>
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_________ _______________________________________ ____________ ______ __________
<S> <C> <C> <C> <C>
BUSINESS & INFORMATION SERVICES
204 ABRX ABR Information Services, Inc. 2.81% $20.375 $ 4,157
58 AUD Automatic Data Processing, Inc. 2.89% 73.750 4,277
92 CSGS CSG Systems International Inc. 2.86% 46.000 4,232
111 EFX Equifax, Inc. 2.90% 38.563 4,280
106 FIC Fair Isaac & Company, Inc. 2.87% 40.000 4,240
90 FISV Fiserv, Inc. 2.85% 46.750 4,207
96 GLC Galileo International, Inc. 2.83% 43.563 4,182
117 HBOC HBO & Company 2.54% 32.063 3,751
99 PAYX Paychex, Inc. 2.95% 44.000 4,356
85 QTRN Quintiles Transnational Corporation 2.87% 49.938 4,245
59 RTOKY Rentokil Initial Plc (ADR) 2.84% 71.230 4,203
123 SVM ServiceMaster Company 2.87% 34.438 4,236
ELECTRONICS MANUFACTURING SERVICES
103 SCI SCI Systems, Inc. 2.88% 41.250 4,249
96 SANM Sanmina Corporation 2.84% 43.750 4,200
89 SLR Solectron Corporation 2.88% 47.875 4,261
INFORMATION TECHNOLOGY SERVICES & SOFTWARE/YEAR 2000
145 ANLY Analysts International Corporation 2.99% 30.500 4,423
106 CBR CIBER, Inc. 2.87% 40.000 4,240
74 CATP Cambridge Technology Partners, Inc. 2.84% 56.625 4,190
98 CHRZ Computer Horizons Corporation 2.84% 42.875 4,202
65 CSC Computer Sciences Corporation 2.89% 65.625 4,266
78 CPWR Compuware Corporation 2.85% 54.000 4,212
124 IMRS Information Management Resources, Inc. 2.88% 34.375 4,263
115 JKHY Jack Henry & Associates, Inc. 2.91% 37.375 4,298
71 KEA Keane, Inc. 2.86% 59.625 4,233
152 MAST Mastech Corporation 2.76% 26.875 4,085
107 MISI Metro Information Services, Inc. 2.91% 40.125 4,293
84 PSFT PeopleSoft, Inc. 2.82% 49.625 4,168
106 SDS SunGard Data Systems, Inc. 2.84% 39.625 4,200
STAFFING
138 ASI AccuStaff, Inc. 2.85% 30.563 4,218
213 NRL Norrell Corporation 2.84% 19.688 4,194
118 ASGN On Assignment, Inc. 2.85% 35.625 4,204
219 PGA Personnel Group of America, Inc. 2.93% 19.750 4,325
79 RHI Robert Half International, Inc. 2.87% 53.688 4,241
141 ROMC Romac International, Inc. 2.85% 29.875 4,212
124 STAF StaffMark, Inc. 2.87% 34.250 4,247
______ _________
Total Investments 100% $147,790
====== =========
____________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on July 14, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$147,790. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,113 and $323, respectively.
</FN>
</TABLE>
Page 53
Schedule of Investments
ENERGY GROWTH TRUST, SERIES 4
FT 259
At the Opening of Business on the Initial Date of Deposit-July 15, 1998
<TABLE>
<CAPTION>
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_________ _______________________________________ ____________ ______ __________
<S> <C> <C> <C> <C>
OIL & GAS - DRILLING
232 CDG Cliffs Drilling Company 4% $26.500 $ 6,148
168 DO Diamond Offshore Drilling, Inc. 4% 35.313 5,933
370 ESV ENSCO International Incorporated 4% 15.938 5,897
352 GLM Global Marine, Inc. 4% 16.750 5,896
319 NBR Nabors Industries, Inc. 4% 18.500 5,901
267 NE Noble Drilling Corporation 4% 22.125 5,907
299 FLC R&B Falcon Corporation 4% 19.438 5,812
138 RIG Transocean Offshore, Inc. 4% 43.125 5,951
OIL & GAS - EXPLORATION & PRODUCTION
168 NBL Noble Affiliates, Inc. 4% 35.000 5,880
393 OEI Ocean Energy, Inc. 4% 15.438 6,067
OIL - FIELD SERVICES
222 BJS BJ Services Company 4% 26.125 5,800
128 RON Cooper Cameron Corporation 4% 46.625 5,968
177 EVI EVI Weatherford, Inc. 4% 34.125 6,040
374 GLBL Global Industries, Inc. 4% 15.313 5,727
207 PGO Petroleum Geo-Services ASA (ADR) 4% 28.750 5,951
88 SLB Schlumberger Ltd. 4% 67.688 5,957
187 TDW Tidewater, Inc. 4% 31.750 5,937
149 VTS Veritas DGC, Inc. 4% 38.938 5,802
OIL - INTEGRATED
71 BP The British Petroleum Company Plc (ADR) 4% 84.688 6,013
72 CHV Chevron Corporation 4% 82.000 5,904
88 E ENI SpA (ADR) 4% 67.063 5,902
80 MOB Mobil Corporation 4% 75.375 6,030
113 RD Royal Dutch Petroleum Company NV (3) 4% 52.875 5,975
102 TX Texaco, Inc. 4% 57.625 5,878
95 TOT Total SA (ADR) 4% 62.688 5,955
______ _________
Total Investments 100% $148,231
====== =========
____________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on July 14, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$148,231. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,423 and $192, respectively.
(3)This Equity Security represents the common stock of a foreign company
which trades directly on a United States national securities exchange.
</FN>
</TABLE>
Page 54
Schedule of Investments
FINANCIAL SERVICES GROWTH TRUST, SERIES 5
FT 259
At the Opening of Business on the Initial Date of Deposit-July 15, 1998
<TABLE>
<CAPTION>
Percentage Market Cost of
Number of Aggregate Value Equity
of Ticker Symbol and Offering per Securities
Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
______ _______________________________________ __________ ______ ___________
<S> <C> <C> <C> <C>
BANK & THRIFTS
81 ONE Banc One Corporation 3.34% $ 61.313 $ 4,966
86 BKB BankBoston Corporation 3.34% 57.750 4,966
141 COFI Charter One Financial, Inc. 3.36% 35.438 4,997
66 CMB The Chase Manhattan Corporation (3) 3.35% 75.500 4,983
77 FTU First Union Corporation 3.35% 64.813 4,991
56 NB NationsBank Corporation 3.31% 87.875 4,921
275 SVRN Sovereign Bancorp, Inc. 3.30% 17.875 4,916
105 USB U.S. Bancorp 3.32% 47.063 4,942
109 WAMU Washington Mutual, Inc. 3.34% 45.625 4,973
91 ZION Zions Bancorporation 3.33% 54.500 4,959
FINANCIAL SERVICES
42 AXP American Express Company 3.33% 117.875 4,951
39 COF Capital One Financial Corporation 3.37% 128.563 5,014
92 CCR Countrywide Credit Industries, Inc. 3.34% 54.125 4,979
73 FNM Fannie Mae 3.35% 68.313 4,987
97 FRE Freddie Mac 3.32% 50.938 4,941
98 HI Household International, Inc. 3.37% 51.250 5,023
133 KRB MBNA Corporation 3.36% 37.563 4,996
70 TRV Travelers Group, Inc. 3.34% 71.063 4,974
INSURANCE
137 AFL AFLAC, Inc. 3.39% 36.813 5,043
97 ALL Allstate Corporation 3.30% 50.688 4,917
33 AIG American International Group, Inc. 3.36% 151.500 5,000
56 CB The Chubb Corporation 3.32% 88.250 4,942
77 MTG MGIC Investment Corporation 3.23% 62.500 4,812
92 NFS Nationwide Financial Services, Inc. 3.32% 53.750 4,945
81 SAI SunAmerica, Inc. 3.34% 61.313 4,966
INVESTMENT SERVICES
99 BEN Franklin Resources, Inc. 3.31% 49.750 4,925
59 LEH Lehman Brothers Holdings, Inc. 3.33% 83.938 4,952
47 MER Merrill Lynch & Company, Inc. 3.33% 105.313 4,950
53 MWD Morgan Stanley, Dean Witter, Discover and Company 3.36% 94.500 5,009
118 TROW T. Rowe Price Associates, Inc. 3.29% 41.500 4,897
______ _________
Total Investments 100% $148,837
====== =========
____________________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on July 14 and 15, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$148,837. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $149,035 and $198, respectively.
(3)The Chase Manhattan Corporation is the holding company for The Chase
Manhattan Bank, the Trustee for the Trust.
</FN>
</TABLE>
Page 55
Schedule of Investments
MARKET LEADERS GROWTH TRUST, SERIES 3
FT 259
At the Opening of Business on the
Initial Date of Deposit-July 15, 1998
<TABLE>
<CAPTION>
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_________ _______________________________________ ____________ ______ _________
<S> <C> <C> <C> <C>
159 AXP American Express Company 12.66% $ 117.875 $ 18,742
7 BRK/B Berkshire Hathaway, Inc. (Class B) 12.15% 2,570.000 17,990
212 KO The Coca-Cola Company 12.59% 87.938 18,643
464 DIS The Walt Disney Company 12.50% 39.875 18,502
365 FRE Freddie Mac 12.56% 50.938 18,593
301 G The Gillette Company 12.45% 61.250 18,436
31 WPO The Washington Post Company (Class B) 12.61% 602.000 18,662
47 WFC Wells Fargo & Company 12.48% 392.938 18,468
______ _________
Total Investments 100% $148,036
====== =========
_______________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on July 14, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$148,036. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,074 and $38, respectively.
</FN>
</TABLE>
Page 56
Schedule of Investments
PHARMACEUTICAL GROWTH TRUST, SERIES 5
FT 259
At the Opening of Business on the
Initial Date of Deposit-July 15, 1998
<TABLE>
<CAPTION>
Percentage Market Cost of
Number of Aggregate Value Equity
of Ticker Symbol and Offering per Securities
Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_________ _______________________________________ ____________ ______ ___________
<S> <C> <C> <C> <C>
132 ABT Abbott Laboratories 4% $ 45.000 $ 5,940
86 AMGN Amgen, Inc. 4% 69.938 6,015
295 A Astra AB (ADR) 4% 20.188 5,955
109 BGEN Biogen, Inc. 4% 53.938 5,879
49 BMY Bristol-Myers Squibb Company 4% 122.750 6,015
259 DURA Dura Pharmaceuticals, Inc. 4% 22.500 5,828
82 ELN Elan Corporation Plc (ADR) 4% 72.125 5,914
92 LLY Eli Lilly and Company 4% 65.063 5,986
230 GENZ Genzyme Corporation 4% 25.500 5,865
97 GLX Glaxo Wellcome Plc (ADR) 4% 61.438 5,959
138 ICN ICN Pharmaceuticals, Inc. 4% 43.125 5,951
218 IDPH IDEC Pharmaceuticals Corporation 4% 26.625 5,804
80 JNJ Johnson & Johnson 4% 74.250 5,940
175 JMED Jones Pharma, Inc. 4% 33.438 5,852
43 MRK Merck & Company, Inc. 4% 137.375 5,907
172 MYL Mylan Laboratories, Inc. 4% 34.375 5,912
75 NVTSY Novartis AG (ADR) 4% 80.700 6,053
50 PFE Pfizer, Inc. 4% 118.563 5,928
60 ROHHY Roche Holdings AG (ADR) 4% 99.490 5,969
57 SGP Schering-Plough Corporation 4% 103.688 5,910
94 SBH SmithKline Beecham Plc (ADR) 4% 63.688 5,987
175 TEVIY Teva Pharmaceutical Industries Ltd. (ADR) 4% 34.125 5,972
76 WLA Warner-Lambert Company 4% 78.750 5,985
120 WPI Watson Pharmaceuticals, Inc. 4% 48.688 5,843
141 ZEN Zeneca Group Plc (ADR) 4% 42.125 5,940
______ _________
Total Investments 100% $148,309
====== =========
__________________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on July 14 and 15, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$148,309. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,648 and $339, respectively.
</FN>
</TABLE>
Page 57
Schedule of Investments
TECHNOLOGY GROWTH TRUST, SERIES 8
FT 259
At the Opening of Business on the
Initial Date of Deposit-July 15, 1998
<TABLE>
<CAPTION>
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_________ _____________________________________ ____________ ______ _________
<S> <C> <C> <C> <C>
COMPUTER & PERIPHERALS
174 CPQ Compaq Corporation 4% $ 33.688 $ 5,862
55 DELL Dell Computer Corporation 4% 107.375 5,906
120 EMC EMC Corporation 4% 48.875 5,865
93 GTW Gateway 2000, Inc. 4% 63.938 5,946
99 HWP Hewlett-Packard Company 4% 59.125 5,853
127 SUNW Sun Microsystems, Inc. 4% 46.125 5,858
COMPUTER NETWORKING
207 COMS 3Com Corporation 4% 28.688 5,938
116 ASND Ascend Communications, Inc. 4% 49.563 5,749
62 CSCO Cisco Systems, Inc. 4% 94.875 5,882
SEMICONDUCTOR EQUIPMENT
196 ASMLF ASM Lithography Holdings N.V. (3) 4% 30.063 5,892
212 AMAT Applied Materials, Inc. 4% 28.500 6,042
231 KLAC KLA-Tencor Corporation 4% 25.375 5,862
SEMICONDUCTORS
173 ALTR Altera Corporation 4% 34.063 5,893
73 INTC Intel Corporation 4% 80.688 5,890
87 LLTC Linear Technology Corporation 4% 68.500 5,960
177 MXIM Maxim Integrated Products, Inc. 4% 33.563 5,941
133 PMCS PMC-Sierra, Inc. (3) 4% 46.125 6,135
89 STM STMicroelectronics N.V. (3) 4% 67.250 5,985
SOFTWARE
111 BMCS BMC Software, Inc. 4% 54.438 6,043
180 CHKPF Check Point Software Technologies, Inc. 4% 33.000 5,940
51 MSFT Microsoft Corporation 4% 116.500 5,941
118 NETA Network Associates, Inc. 4% 50.625 5,974
228 ORCL Oracle Corporation 4% 26.000 5,928
118 PSFT PeopleSoft, Inc. 4% 49.625 5,856
29 SAPHY SAP AG (ADR) 4% 206.220 5,980
______ _________
Total Investments 100% $148,121
====== =========
____________
<FN>
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on July 14 and 15, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$148,121. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,491 and $370, respectively.
(3)) This Equity Security represents the common stock of a foreign
company which trades directly on a United States national securities
exchange.
</FN>
</TABLE>
Page 58
This page is intentionally left blank.
Page 59
CONTENTS:
Summary of Essential Information:
Business Services Growth Trust, Series 2 4
Energy Growth Trust, Series 4 4
Financial Services Growth Trust, Series 5 4
Market Leaders Growth Trust, Series 3 5
Pharmaceutical Growth Trust, Series 5 5
Technology Growth Trust, Series 8 5
FT 259:
What is the FT Series? 8
What are the Expenses and Charges? 12
What is the Federal Tax Status of Unit Holders? 13
Are Investments in the Trusts Eligible for 17
Retirement Plans?
Portfolio:
What are the Equity Securities? 17
Risk Factors 17
What are the Equity Securities Selected for:
Business Services Growth Trust, Series 2? 26
Energy Growth Trust, Series 4? 28
Financial Services Growth Trust, Series 5? 30
Market Leaders Growth Trust, Series 3? 32
Pharmaceutical Growth Trust, Series 5? 33
Technology Growth Trust, Series 8? 35
What are Some Additional Considerations for
Investors? 37
Public Offering:
How is the Public Offering Price Determined? 38
How are Units Distributed? 40
What are the Sponsor's Profits? 42
Will There be a Secondary Market? 42
Rights of Unit Holders:
How is Evidence of Ownership Issued and Transferred? 43
How are Income and Capital Distributed? 43
What Reports will Unit Holders Receive? 44
How May Units be Redeemed? 44
How May Units be Purchased by the Sponsor? 46
How May Equity Securities be Removed from a Trust? 46
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 47
Who is the Trustee? 47
Limitations on Liabilities of Sponsor and Trustee 48
Who is the Evaluator? 48
Other Information:
How May the Indenture be Amended or Terminated? 48
Legal Opinions 49
Experts 49
Report of Independent Auditors 50
Statements of Net Assets:
Business Services Growth Trust, Series 2 51
Energy Growth Trust, Series 4 51
Financial Services Growth Trust, Series 5 51
Market Leaders Growth Trust, Series 3 52
Pharmaceutical Growth Trust, Series 5 52
Technology Growth Trust, Series 8 52
Schedules of Investments:
Business Services Growth Trust, Series 2 53
Energy Growth Trust, Series 4 54
Financial Services Growth Trust, Series 5 55
Market Leaders Growth Trust, Series 3 56
Pharmaceutical Growth Trust, Series 5 57
Technology Growth Trust, Series 8 58
_____________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
BUSINESS SERVICES GROWTH TRUST, SERIES 2
ENERGY GROWTH TRUST SERIES 4
FINANCIAL SERVICES GROWTH TRUST, SERIES 5
MARKET LEADERS GROWTH TRUST, SERIES 3
PHARMACEUTICAL GROWTH TRUST, SERIES 5
TECHNOLOGY GROWTH TRUST, SERIES 8
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
24-Hour Pricing Line:
1-800-446-0132
July 15, 1998,
as amended October 13, 1998
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 60
