SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: FT 309
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title of Securities
Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 1998
AS AMENDED DECEMBER 23, 1998
European Target 20 Strategy, January 1999 Series
The S&P (registered trademark)Target 10 Strategy, January 1999 Series
The Trust. FT 309 consists of the underlying separate unit investment
trusts set forth above. The various trusts are sometimes collectively
referred to herein as the "Trusts" and each as a "Trust." Each Trust
consists of a portfolio containing common stocks issued by companies
which provide income and are considered to have the potential for
capital appreciation (the "Equity Securities"). See "Schedule of
Investments" for each Trust.
The European Target 20 Strategy, January 1999 Series (the "European
Target 20 Strategy") consists of a portfolio of common stocks of the
twenty companies having the highest dividend yield as of ____________,
1998 (the "European Target 20 Strategy Stock Selection Date") of the 120
largest companies based on market capitalization which are headquartered
in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland or
the United Kingdom.
The S&P(registered trademark) Target 10 Strategy, January 1999 Series
(the "S&P Target 10 Strategy") consists of a portfolio of common stocks
of ten companies selected from a pre-screened subset of stocks which are
components of the Standard & Poor's 500 Composite Stock Price Index
("S&P 500 Index") selected as of the close of business on ____________,
1998 (the "S&P Target 10 Strategy Stock Selection Date").
The objective of each Trust is to provide an above-average total return.
The European Target 20 Strategy seeks to achieve its stated objective
through a combination of capital appreciation and dividend income
whereas the S&P(registered trademark) Target 10 Strategy seeks to
achieve its stated objective through capital appreciation. Units of the
Trusts have not been designed so that their prices will parallel or
correlate with movements in a particular index against which the Trusts
are measured, and it is expected that their prices will not do so. Each
Trust has a mandatory termination date ("Mandatory Termination Date") of
approximately 13 months from the date of this Prospectus as set forth in
"Summary of Essential Information." Investors in the European Target 20
Strategy should note that an investment in a portfolio which contains
foreign equity securities involves risks in addition to those normally
associated with an investment in a portfolio consisting solely of
domestic equity securities. There is, of course, no guarantee that
either Trust's objective will be achieved.
Each Unit of a Trust represents an undivided interest in all of the
Equity Securities deposited therein. The Sponsor may deposit additional
Equity Securities or cash to create new Units after the Initial Date of
Deposit in the manner described in "What is the FT Series?"
Unless otherwise indicated, all amounts herein are stated in U.S.
dollars. In the case of the common stocks which are not traded on a
United States securities exchange, amounts are computed on the basis of
the exchange rate for the currency in which an Equity Security is
generally denominated on the business day prior to the Initial Date of
Deposit.
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.
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.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is ____________, 1998
Page 1
Public Offering Price. The Public Offering Price per Unit of each Trust
is equal to the aggregate underlying U.S. dollar value of the Equity
Securities in such Trust (generally determined by the closing sale
prices of the 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 for each Trust (2.75% of the Public Offering Price) and the
maximum remaining deferred sales charge (initially $.175 per Unit),
divided by the number of Units of such Trust outstanding. Subsequent to
the Initial Date of Deposit, the amount of the initial sales charge will
vary with changes in the aggregate value of the Equity Securities.
Commencing ____________, 1999, and on the twentieth day of each month
thereafter (or if such day is not a business day, on the preceding
business day) through ____________, 1999, a deferred sales charge of
$.0175 will also be assessed per Unit per month. Units purchased
subsequent to the initial deferred sales charge payment will be subject
to the initial sales charge and the remaining deferred sales charge
payments. The deferred sales charge will be paid from funds in the
Capital Account, 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 2.75% of the Public Offering Price (equivalent to
2.778% of the net amount invested, exclusive of the deferred sales
charge). A pro rata share of accumulated dividends, if any, in the
Income Account is included in the Public Offering Price. In addition, a
portion of the Public Offering Price during 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 a Trust. The
organizational and offering costs will be deducted from the assets of a
Trust as of the close of the initial offering period. The minimum
purchase for each Trust is $1,000 ($500 for Individual Retirement
Accounts or other retirement plans), except for Rollover Unit holders
who are not subject to a minimum purchase amount. The sales charge for
each Trust is reduced on a graduated scale for sales involving at least
$50,000. See "Public Offering-How is the Public Offering Price
Determined?"
Estimated Net Annual Distributions. The estimated net annual dividend
distributions per Unit to Unit holders (based on the most recent
annualized dividend paid with respect to the Equity Securities and
converted into U.S. dollars at the offer side of the exchange rate at
the Evaluation Time) at the opening of business on the Initial Date of
Deposit was $ and $ for the European Target 20 Strategy and S&P
Target 10 Strategy, respectively. This estimate will vary with changes
in a Trust's fees and expenses, in dividends received, in currency
exchange rates, foreign withholding, and with the sale of Equity
Securities. There is no assurance that the estimated net annual dividend
distributions will be realized in the future.
Dividend and Capital Distributions. Cash dividends received by a Trust
will be paid on each December 31 and June 30 to Unit holders of record
on December 15 and June 15, respectively, and again as part of the final
liquidation distribution. Distributions of funds in the Capital Account,
if any, will be made to Unit holders as part of the final liquidation
distribution, and in certain circumstances, earlier. Any distribution of
income and/or capital will be net of expenses of a Trust. See "What is
the Federal Tax Status of Unit Holders?" Additionally, upon termination
of a Trust, the Trustee will distribute, upon surrender of Units, to
each remaining Unit holder (other than a Rollover Unit holder as defined
below) his or her pro rata share of such Trust's assets, less expenses,
in the manner set forth under "Rights of Unit Holders-How are Income and
Capital Distributed?" For distributions to Rollover Unit holders, see
"Special Redemption, Liquidation and Investment in a New Trust." Any
Unit holder may elect to have each distribution of income or capital on
his or her Units, other than the final liquidating distribution,
automatically reinvested in additional Units of such Trust subject only
to remaining deferred sales charge payments. See "Rights of Unit Holders-
How are Income and Capital Distributed?"
Foreign Investors. If you are not a United States citizen or resident,
distributions from the European Target 20 Strategy will generally not be
subject to U.S. federal withholding tax. See "What is the Federal Tax
Status of Unit Holders?" Such investors should consult their tax advisor
regarding the imposition of U.S. withholding on distributions.
Secondary Market for Units. Although not obligated to do so, the Sponsor
may maintain a market for Units and offer to repurchase the Units at
prices based on the aggregate underlying U.S. dollar value of the Equity
Securities, plus or minus cash, if any, in the Capital and Income
Accounts of such Trust. If a secondary market is not maintained, a Unit
holder may still redeem his or her Units through the Trustee. A Unit
Page 2
holder of the S&P Target 10 Strategy tendering 1,000 Units or more for
redemption may request a distribution of shares of Equity Securities
(reduced by customary transfer and registration charges) in lieu of
payment in cash (an "In-Kind Distribution"). See "Public Offering-Will
There be a Secondary Market?" and "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.
Special Redemption, Liquidation and Investment in a New Trust. The
Sponsor intends to create a separate series of trusts (the "New Trusts")
in conjunction with the termination of the Trusts. The portfolio of the
New Trusts will contain equity securities of the companies which satisfy
each New Trust's investment strategy at the time such New Trust is
established. Unit holders may elect to have their proceeds reinvested
into a New Trust by notifying the Trustee of this election by the
Rollover Notification Date. Such a Unit holder's Units will be redeemed
In-Kind, the distributed Equity Securities sold, and the proceeds
reinvested into a New Trust at a reduced sales charge, provided such New
Trust is offered and units are available. Cash not invested in a New
Trust will be distributed. Such Unit holders are "Rollover Unit
holders." Rollover Unit holders therefore will not receive a final
liquidation distribution, but will receive Units in a New Trust. See
"Summary of Essential Information." This exchange option may be
modified, terminated or suspended. See "Rights of Unit Holders-Special
Redemption, Liquidation and Investment in a New Trust."
Termination. Commencing no later than the Mandatory Termination Date,
the Equity Securities will begin to be sold as prescribed by the
Sponsor. The Trustee will provide written notice of the termination to
Unit holders which will specify when certificates may be surrendered and
include a form to enable a Unit holder to elect an In-Kind Distribution,
if such Unit holder owns at least 1,000 Units of the S&P Target 10
Strategy. Unit holders not electing the "Rollover Option," or those not
electing or eligible for an In-Kind Distribution, will receive a cash
distribution within a reasonable time after their respective Trust's
termination. 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 the Trusts 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 or the general condition of the applicable stock market
(which have recently experienced substantial volatility and significant
declines), governmental, political, economic and fiscal policies of the
representative countries, volatile interest rates, economic recession,
the lack of adequate financial information concerning an issuer and
exchange control restrictions impacting foreign issuers.
An investment in the European Target 20 Strategy will also be subject to
the risks of currency fluctuations associated with investments in
foreign Equity Securities trading in non-U.S. currencies.
Each Trust is not actively managed and Equity Securities will not be
sold to take advantage of market fluctuations or changes in anticipated
rates of appreciation. Finally, each Trust's strategy has underperformed
its comparative index in certain years. The Trusts may not be an
appropriate investment for those who are unable or unwilling to assume
the risks involved generally with an equity investment. Because of the
nature of the Trusts and the attributes of the common stocks which
caused inclusion in the portfolios, the Trusts may not be appropriate
for investors seeking either preservation of capital or high current
income. The Trusts are not designed to be a complete investment program
for an investor. See "What are Some Additional Considerations for
Investors?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-____________, 1998
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
European Target 20 S&P Target 10
Strategy, January Strategy, January
1999 Series 1999 Series
__________________ _________________
<S> <C> <C>
General Information
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $ $
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.900 $ 9.900
Maximum Sales Charge 2.75% of the Public Offering Price per
Unit (2.778% of the net amount invested, exclusive
of the deferred sales charge) (3) $ .275 $ .275
Less Deferred Sales Charge per Unit $ (.175) $ (.175)
Public Offering Price per Unit (3) $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (4) $ 9.725 $ 9.725
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.725 $ 9.725
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code _____ _____
Trustee's Annual Fee and out-of-pocket expenses per Unit outstanding $ $
Evaluator's Annual Fee per Unit outstanding (5) $ .0025 $ .0025
Portfolio Supervisor's Annual Fee per Unit outstanding (6) $ .0025 $ .0025
Estimated Organizational and Offering Costs per Unit (7) $ $
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date ____________, 1999
Rollover Notification Date ____________, 2000
Special Redemption and Liquidation Period ____________, 2000 to ____________, 2000
Mandatory Termination Date ____________, 2000
Discretionary Liquidation Amount A Trust may be terminated if the value of the Equity Securities is less
than the lower of $2,000,000 or 20% of the total value of Equity
Securities deposited in a Trust during the initial offering period.
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 1999.
Income Distribution Date (8) Last day of June and December, commencing June 30, 1999.
______________
<FN>
(1) As of the close of business on January 4, 1999, 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
on the relevant stock exchange on the business day prior to the Initial
Date of Deposit, or if no such price exists or if the Equity Security is
not so listed, at the closing ask price thereof. The aggregate value of
the foreign Equity Securities trading in non-U.S. currencies represents
the U.S. dollar value based on the offering side value of the currency
exchange rate for the currency in which an Equity Security is generally
denominated at the Evaluation Time on the business day prior to the
Initial Date of Deposit.
(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 business day
prior to 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 per Unit is based on the aggregate
value of the Equity Securities computed on the basis of the offering
side value of the relevant currency exchange rate expressed in U.S.
dollars. The Public Offering Price as shown reflects the value of the
Equity Securities at the Evaluation Time on the United States business
day prior to 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 may be deposited during the day of the Initial Date of
Deposit which will be valued generally 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 during the initial offering period
include estimated organizational and offering costs per Unit. After the
initial offering period, 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) 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 (the "Evaluation Time") on each day on which
it is open.
(6) The Portfolio Supervisor's Annual Fee is payable to an affiliate of
the Sponsor. In addition, the Sponsor may be reimbursed by the Trustee
for bookkeeping and other administrative expenses currently at a maximum
annual rate of $.0010 per Unit.
(7) Investors will bear all or a portion of the costs incurred in
organizing their respective 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 each 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). 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
end of the initial offering period (approximately one month). See
"Public Offering" and "Statement of Net Assets."
(8) At the Rollover Notification Date for Rollover Unit holders or upon
termination of a Trust for other Unit holders, amounts in the Income
Account (which consist of dividends on the Equity Securities) will be
included in amounts distributed to or on behalf of Unit holders.
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 as part of the final liquidation
distribution.
</FN>
</TABLE>
Page 4
FEE TABLE
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "The FT Series-What are the Expenses and Charges?"
Although each Trust has a term of approximately 13 months and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming, upon the termination
of a Trust, the principal amount and distributions are rolled over into
a New Trust subject only to the deferred sales charge.
<TABLE>
<CAPTION>
EUROPEAN TARGET 20 STRATEGY S&P TARGET 10 STRATEGY
JANUARY 1999 Series JANUARY 1999 Series
___________________________ ______________________
<S> <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 %(a) $
Deferred sales charge
(as a percentage of public offering price) 1.75%(b) .175 %(b)
________ ______ _____
2.75% $ .275 % $
======== ====== =====
Maximum Sales Charge imposed on Reinvested Dividends 1.75%(c) $ .175 %(c) $
Organizational and Offering Costs
Estimated Organizational and Offering Costs
(as a percentage of public offering price) .180%(d) $.0180 %(d) $
======== ====
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Trustee's fee, portfolio supervision, bookkeeping, .115% $.0115 % $
administrative and evaluation fees
Other operating expenses .138% .0137 %
_____ ______ _____
Total .253% $.0252 % $
===== ====== =====
</TABLE>
An investor would pay the following expenses on a $1,000 investment,
assuming the estimated operating expense ratio and a 5% annual return on
the investment throughout the periods.
<TABLE>
<CAPTION>
Examples
________
European Target 20 Strategy S&P Target 10 Strategy
January 1999 Series January 1999 Series
___________________________ ______________________
<S> <C> <C>
1 Year $ 32 $
3 Years $ 77 $
5 Years $125 $
10 Years $256 $
The above examples assume reinvestment of all dividends and
distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations applicable to mutual
funds. For purposes of the example, 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 example 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 example.
________________
<FN>
(a) The initial sales charge would exceed 1.00% if the Public Offering
Price exceeds $10.00 per Unit.
(b) The actual fee is $.0175 per Unit per month, irrespective of
purchase or redemption price deducted over a ten-month period for each
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than 1.75%. If the Unit price is less than $10.00
per Unit, the deferred sales charge will exceed 1.75%. Units purchased
subsequent to the initial deferred sales charge payment will be subject
to the initial sales charge and to the remaining deferred sales charge
payments.
(c) Reinvested dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "Rights of Unit
Holders-How are Income and Capital Distributed?"
(d) Investors will bear all or a portion of the costs incurred in
organizing their respective 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 each Trust portfolio, legal fees and the
initial fees and expenses of the Trustee). 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 end of the initial
offering period.
</FN>
</TABLE>
Page 5
European Target 20 Strategy, January 1999 Series
The S&P Target 10 Strategy, January 1999 Series
FT 309
What is the FT Series?
The FT Series is one of a series of investment companies created by the
Sponsor, all of which are generally similar, but each of which is
separate and is designated by a different series number. The FT Series
was formerly known as The First Trust Special Situations Trust Series.
This Series consists of the underlying separate unit investment trusts
set forth above. Each Trust was 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 Advisors 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 issued by
companies which provide income and are considered to have the potential
for capital appreciation (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 Equity Securities.
In exchange for the deposit of securities or contracts to purchase
securities in a Trust, the Trustee delivered to the Sponsor documents
evidencing the entire ownership of such Trust.
Because some international marketplaces offer the potential for above-
average growth, in the Sponsor's opinion at least a portion of an
investor's assets should be strategically invested overseas. The
European Target 20 Trust allows investors to strategically invest
overseas by following a simple dividend strategy and investing in some
of the largest companies in Europe. Typically, large companies with high
dividend yields suggests that the companies may be out of favor or
undervalued.
The S&P Target 10 Strategy seeks to outperform the S&P 500 Index by
investing in a simple investment process which has been designed to
screen for both value and growth potential. The S&P Target 10 Strategy
allows investors to strategically invest in ten of the largest and
fastest growing companies in the S&P 500 Index.
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 a Trust's portfolio, as set forth under
"Schedule of Investments" for each Trust. Following the Initial Date of
Deposit, the Sponsor, pursuant to the Indenture, may deposit additional
Equity Securities in a Trust 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 such 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 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. An
affiliate of the Trustee may receive these brokerage fees or 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 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.
Page 6
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 such 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 such Trust
will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit of such Trust
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 the Trusts, for which the
Sponsor may 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 the Trusts.
First Trust Advisors L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee as set forth under "Summary of Essential
Information" for providing portfolio supervisory services for the
Trusts. 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.
First Trust Advisors L.P., in its capacity as the Evaluator for the
Trusts, will receive an annual evaluation fee as set forth under
"Summary of Essential Information" for providing evaluation services for
the Trusts. 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 largest number of Units in a Trust outstanding during the
period for which the compensation is paid.
The Trustee pays certain expenses of the Trusts for which it is
reimbursed by the Trusts. The Trustee will receive for its ordinary
recurring services to a Trust an annual fee as indicated in the "Summary
of Essential Information." Such fee will be based upon the largest
number of Units of a 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 in a Trust outstanding during the
period for which the compensation is paid. For a discussion of the
services performed by the Trustee pursuant to its obligations under the
Indenture, see "Rights of Unit Holders."
The fees described above 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 funds being held in the Capital and Income Accounts
are 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 the Trusts is expected
to result from the use of these funds. Because the above fees are
generally calculated based on the largest aggregate number of Units of a
Trust outstanding during a calendar year, the per Unit amounts set forth
under "Summary of Essential Information" will be higher during any year
in which redemptions of Units occur.
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,
supervisory 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: a
quarterly fee payable by the S&P Target 10 Trust for a license from
Standard & Poor's Corporation for the use by the S&P Target 10 Trust of
certain trademarks and tradenames of Standard & Poor's Corporation; all
legal 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 the Trusts and the rights
and interests of the Unit holders; fees of the Trustee for any
Page 7
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 the Trusts;
any offering costs incurred after 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 the Trusts; foreign custodial and
transaction fees, if any; all taxes and other government charges imposed
upon the Equity Securities or any part of the Trusts (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 the Trusts. 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 a Trust.
Since the Equity Securities are all common stocks and the income stream
produced by dividend payments is 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 Trust expenses. These sales may result in
capital gains or losses to Unit holders. See "What is the Federal Tax
Status of Unit Holders?"
What is the Federal Tax Status of Unit Holders?
The following 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, as amended
(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 a Trust. For
purposes of the following discussion and opinions, 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 the assets of a Trust under the Code; and
the income of such 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 a Trust are actually received by the Unit
holder or are automatically reinvested. See "How are Income and Capital
Distributed?-Distribution Reinvestment Option."
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. 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 nearest the date
the Unit holder purchases his or her Units) in order to determine his or
her tax basis for his or her pro rata portion of each Equity Security
held by a Trust. Unit holders should consult their own tax advisors with
regard to the 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 such 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 exceeds 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
Page 8
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
gains and losses for Federal income tax purposes. In particular, a
Rollover Unit holder should be aware that a Rollover Unit holder's loss,
if any, incurred in connection with the exchange of Units for Units in
the next new series of a Trust (the "New Trust"), (the Sponsor intends
to create a separate New Trust in conjunction with the termination of
each Trust) will generally be disallowed with respect to the disposition
of any Equity Securities pursuant to such exchange to the extent that
such Unit holder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into
account such Unit holder's deemed ownership of the securities underlying
the Units in a New Trust in the manner described above, if such
substantially identical securities are acquired within a period
beginning 30 days before and ending 30 days after such disposition.
However, any gains incurred in connection with such an exchange by a
Rollover Unit holder would be recognized. Unit holders should consult
their tax advisors regarding the recognition of 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 each Trust is deferred. It is possible that for
federal income tax purposes, a portion of the deferred sales charge may
be treated as interest which should be deductible by a Unit holder
subject to limitations on the deduction of investment interest. In such
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 Trust Expenses by Unit Holders. Each
Unit holder's pro rata share of each expense paid by a Trust is
Page 9
deductible by the Unit holder to the same extent as though the expense
had been paid directly by him or her. 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 their tax advisors regarding the limitations
on the deductibility of Trust expenses.
Recognition of Taxable Gain or Loss Upon Disposition of Equity
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
(although losses incurred by Rollover Unit holders may be subject to
disallowance, as discussed above). The Internal Revenue Service
Restructuring and Reform Act of 1998 (the "1998 Tax Act") provides that
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) realized from property (with certain exclusions)
is subject to a maximum marginal stated tax rate of 20% (10% in the case
of certain taxpayers in the lowest tax bracket). 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 for determining the holding period of the Unit.
Capital gains realized from assets held for one year or less are taxed
at the same rates as ordinary income.
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 such
constructive sales rules.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units, Termination of a Trust and Investment in a New Trust. As
discussed under "Rights of Unit Holders-How are Income and Capital
Distributed?", under certain circumstances a Unit holder who owns at
least 1,000 Units of the S&P Target 10 Strategy may request an In-Kind
Distribution upon the redemption of Units or the termination of such
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 such 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 the S&P
Target 10 Strategy 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 the S&P Target 10
Strategy. However, if a Unit holder also receives cash in exchange for a
fractional share of an Equity Security held by such 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 the S&P Target 10 Strategy 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 such
Trust. The amount of taxable gain (or loss) recognized upon such
exchange will generally equal the sum of the gain (or loss) recognized
Page 10
under the rules described above by such Unit holder with respect to each
Equity Security owned by such Trust. Unit holders who request an In-Kind
Distribution are advised to consult their tax advisors in this regard.
As discussed in "Rights of Unit Holders-Special Redemption, Liquidation
and Investment in a New Trust," a Unit holder may elect to become a
Rollover Unit holder. To the extent a Rollover Unit holder exchanges his
or her Units for Units of a New Trust in a taxable transaction, such
Unit holder will recognize gains, if any, but generally will not be
entitled to a deduction for any losses recognized upon the disposition
of any Equity Securities pursuant to such exchange to the extent that
such Unit holder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into
account such Unit holder's deemed ownership of the securities underlying
the Units in such New Trust in the manner described above, if such
substantially identical securities were acquired within a period
beginning 30 days before and ending 30 days after such disposition under
the wash sale provisions contained in Section 1091 of the Code. In the
event a loss is disallowed under the wash sale provisions, special rules
contained in Section 1091(d) of the Code apply to determine the Unit
holder's tax basis in the securities acquired. Rollover Unit holders are
advised to consult their tax advisors.
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 on
the valuation date nearest to 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
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 income tax 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 the Trusts, the Trustee will furnish to each Unit
holder a statement containing information relating to the dividends
received by the Trusts on the Equity Securities, the gross proceeds
received by the Trusts 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 Trusts. The Trustee will also furnish
annual information returns to Unit holders and to the Internal Revenue
Service.
Page 11
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 each Trust 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 a Trust 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.
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 objective of each Trust is to provide an above-average total return.
The European Target 20 Strategy seeks to achieve its stated objective
through a combination of capital appreciation and dividend income
whereas the S&P Target 10 Strategy seeks to achieve its stated objective
through capital appreciation.
The European Target 20 Strategy consists of a portfolio of common stocks
of the twenty companies having the highest dividend yield as of the
European Target 20 Strategy Stock Selection Date of the 120 largest
companies based on market capitalization which are headquartered in
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland
or the United Kingdom.
The S&P Target 10 Strategy consists of common stocks of 10 companies
selected through the following three-step process from a pre-screened
subset to the stocks which are components of the S&P 500 Index as of the
close of business on the S&P Target 10 Strategy Stock Selection Date.
The first step begins by selecting the 250 largest companies based on
market capitalization in the S&P 500 Index. From the 250 companies
identified in the first step, the second step selects the 125 companies
with the lowest price to sales ratios. Finally, of the remaining
companies the 10 companies which had the greatest 1-year stock price
appreciation are selected for the Trust.
An investment in the Trusts involves the purchase of a quality
portfolio of attractive equities in one convenient purchase. Due to the
short duration of the Trusts, there is no guarantee that either a
Trust's objective will be achieved or that a Trust will provide for
capital appreciation in excess of a Trust's expenses.
"S&P," "S&P 500," and "Standard & Poor's" are trademarks of The McGraw-
Hill Companies, Inc. and have been licensed for use by the Sponsor. The
S&P Target 10 Strategy is not sponsored, endorsed, sold or promoted by
Page 12
Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in such Trust.
As set forth below, the hypothetical historical performance of the
European Target 20 Strategy has been compared to the
performance of the Morgan Stanley Capital International Europe Index
("MSCI Europe Index") and the hypothetical performance of the S&P Target
10 Trust strategy has been compared to the performance of the S&P 500
Index. Neither the publisher of the MSCI Europe Index, Morgan Stanley
Capital International, nor the publisher of the S&P 500 Index, Standard
& Poor's Corporation, are affiliated with the Sponsor and have not
participated in the creation of the Trusts or the selection of the
Equity Securities included therein.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust Portfolios as of a
specific date for each Trust. Since the Sponsor may deposit additional
Equity Securities which were originally selected through this process,
the Sponsor may continue to sell Units of the Trusts even though these
Equity Securities may not currently meet a Trust's selection criteria,
and therefore, such Equity Securities would no longer be chosen for
deposit into a Trust if the selection process was to be performed again
at a later time.
Hypothetical Performance Information
The following table shows hypothetical performance and information for
the strategy employed by each Trust and the actual performance of the
S&P 500 Index and MSCI Europe Index in each of the years set forth in
the table, as of December 31 in each of those years (and as of the most
recent quarter). All of the figures set forth below have been adjusted
to take into account the effect of currency exchange rate fluctuations
of the U.S. dollar, where applicable (i.e., returns are stated in U.S.
dollar terms). The returns shown in the following table are not
guarantees of future performance and should not be used as a predictor
of returns to be expected in connection with the Trust Portfolios. Both
stock prices (which may appreciate or depreciate) and dividends (which
may be increased, reduced or eliminated) will affect the returns. Each
Trust strategy underperformed its comparative index in certain years.
Accordingly, there can be no assurance that a Trust's Portfolios will
outperform its comparative index over the life of a Trust or over
consecutive rollover periods, if available.
A holder of Units in the Trusts would not necessarily realize as high a
Total Return on an investment in the stocks upon which the hypothetical
returns are based for the following reasons, among others: the Total
Return figures shown do not reflect sales charges, commissions, Trust
expenses or taxes; each Trust's maturity varies slightly from that
presented in compiling the Total Returns; the Trusts may not be fully
invested at all times or equally weighted in all stocks comprising their
respective strategy; and Equity Securities are often purchased or sold
at prices different from the closing prices used in buying and selling
Units. In addition, investors should note that both the S&P 500 Index
and the MSCI Europe Index provide a much greater level of
diversification of companies, industries and countries than the Trusts.
Page 13
<TABLE>
<CAPTION>
S&P Target 10 Strategy
COMPARISON OF TOTAL RETURN (2)
Hypothetical Strategy
Total Returns (1) Index Total Returns
________________ ___________________
S&P Target 10 S&P 500 Index
Year Strategy
_____ ________________ ______________
<S> <C> <C>
1979 43.17% 18.22%
1980 54.15% 32.11%
1981 -10.59% -4.92%
1982 38.21% 21.14%
1983 20.01% 22.28%
1984 16.34% 6.22%
1985 43.49% 31.77%
1986 21.81% 18.31%
1987 9.16% 5.33%
1988 20.35% 16.64%
1989 39.62% 31.35%
1990 -5.64% -3.30%
1991 24.64% 30.40%
1992 24.66% 7.62%
1993 42.16% 9.95%
1994 8.17% 1.34%
1995 25.26% 37.22%
1996 26.61% 22.82%
1997 61.46% 33.21%
1998 thru 12/30 % %
____________
<FN>
(1) The S&P Target 10 Strategy Stocks for any given period were selected
by applying the S&P Target 10 Strategy as of the beginning of the period.
(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first and last trading days of
a period and the total dividends paid on each group of stocks during the
period divided by the opening market value of each group of stocks as of
the first trading day of a period. Total Return does not take into
consideration any sales charges, commissions, expenses or taxes. Total
Return assumes that all dividends are reinvested semi-annually and all
returns are stated in terms of the United States dollar. Based on the
year-by-year returns contained in the table, over the 20 full years
listed above, the S&P Target 10 Strategy achieved an average annual
total return of _____%, which exceeded the average annual total return
of the S&P 500 Index, which was _____%. Although the S&P Target 10
Strategy seeks to achieve a better performance than the S&P 500 Index as
a whole, there can be no assurance that the S&P Target 10 Strategy will
achieve a better performance over its one-year life or over consecutive
rollover periods, if available.
</FN>
</TABLE>
Page 14
<TABLE>
<CAPTION>
European Target 20 Strategy
COMPARISON OF TOTAL RETURN (2)
Hypothetical Strategy
Total Returns (1) Index Total Returns
_____________________ ___________________
European Target 20
Year Strategy MSCI Europe Index
_____ __________________ __________________
<S> <C> <C>
1983 20.51% 22.38%
1984 2.00% 1.26%
1985 79.54% 79.79%
1986 42.53% 44.46%
1987 14.86% 4.10%
1988 16.77% 16.35%
1989 33.09% 29.06%
1990 -0.49% -3.37%
1991 16.59% 13.66%
1992 -4.03% -4.25%
1993 37.38% 29.79%
1994 -0.51% 2.66%
1995 34.71% 22.13%
1996 24.35% 21.57%
1997 28.91% 24.20%
1998 thru 12/30 % %
____________
<FN>
(1) The European Target 20 Strategy Stocks for any given period were
selected by applying the European Target 20 Strategy as of the beginning
of the period.
(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first and last trading days of
a period and the total dividends paid on each group of stocks during the
period divided by the opening market value of each group of stocks as of
the first trading day of a period. Total Return does not take into
consideration any sales charges, commissions, expenses or taxes. Total
Return assumes that all dividends are reinvested semi-annually and all
returns are stated in terms of the United States dollar. Based on the
year-by-year returns contained in the table, over the 15 full years
listed above, the European Target 20 Strategy Stocks achieved an average
annual total return of 21.45%, which exceeded the average annual total
return of the MSCI Europe Index, which was 18.65%. Although the European
Target 20 Strategy seeks to achieve a better performance than the MSCI
Europe Index as a whole, there can be no assurance that the European
Target 20 Strategy will achieve a better performance over its one-year
life or over consecutive rollover periods, if available.
</FN>
</TABLE>
Page 15
What are Some Additional Considerations for Investors?
Each Trust consists of different issues of Equity Securities, all of
which are listed on a securities exchange. In addition, each of the
companies whose Equity Securities are included in a portfolio are
actively-traded, well-established corporations.
The Trusts consist of such of the Equity Securities listed under
"Schedule of Investments" as may continue to be held from time to time
in the Trusts and any additional Equity Securities acquired and held by
a Trust 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.
Risk Factors. The Equity Securities selected for the European Target 20
Strategy generally share attributes that have caused them to have lower
prices or higher yields relative to other similar stocks in their
respective countries. The Equity Securities may, for example, be
experiencing financial difficulty, or be out of favor in the market
because of weak performance, poor earnings forecasts or negative
publicity; or they may be reacting to general market cycles. There can
be no assurance that the market factors that caused the relatively low
prices and high dividend yields of the Equity Securities will change,
that any negative conditions adversely affecting the stock prices will
not deteriorate, that the dividend rates on the Equity Securities will
be maintained or that share prices will not decline further during the
life of such Trust.
Certain of the issuers of Equity Securities in the Trusts may be
involved in the manufacture, distribution and sale of tobacco products.
Pending litigation proceedings against such issuers in the United States
and abroad cover a wide range of matters including product liability and
consumer protection. Damages claimed in such litigation alleging
personal injury (both individual and class actions), and in health cost
recovery cases brought by governments, labor unions and similar entities
seeking reimbursement for health care expenditures, aggregate many
billions of dollars.
In November 1998, certain companies in the U.S. tobacco industry entered
into a negotiated settlement with several states which would result in
the resolution of significant litigation and regulatory issues affecting
the tobacco industry generally. The proposed settlement, while extremely
costly to the tobacco industry, would significantly reduce uncertainties
facing the industry and increase stability in business and capital
markets. Future litigation and/or legislation could adversely affect the
value, operating revenues and financial position of tobacco companies.
The Sponsor is unable to predict the outcome of litigation pending
against tobacco companies or how the current uncertainty concerning
regulatory and legislative measures will ultimately be resolved. These
and other possible developments may have a significant impact upon both
the price of such Equity Securities and the value of Units of the Trusts.
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 Trusts are
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 elect to keep or
sell any securities or other property acquired in exchange for Equity
Securities, such as those acquired in connection with a merger or other
transaction. 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 or if the Equity Securities no
longer meet the criteria by which they were selected for a Trust.
Whether or not the Equity Securities are listed on a 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, the Trusts
may be restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Page 16
Securities may be sold to meet redemptions and the value of Units of the
Trusts will be adversely affected if trading markets for the Equity
Securities are limited or absent.
An investment in Units of the Trusts should be made with an
understanding of the risks which an investment in common stocks entails.
In general, the value of your investment will decline if the financial
condition of the issuers of the common stocks becomes impaired or if the
general condition of the relevant stock market worsens. 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. Against a backdrop of continued uncertainty
regarding the current global currency crises, falling commodity prices
and certain of the factors described above, both the U.S. and a majority
of foreign markets have experienced substantial volatility and
significant declines recently. For instance, during the period between
July 31, 1998 and September 30, 1998, the S&P 500 Index and the MSCI
Europe Index declined 8.97% and 16.02%, respectively. The Sponsor cannot
predict the direction or scope of any of these factors. Common stocks
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. Moreover, common
stocks do not represent an obligation of the issuer and therefore do not
offer any assurance of income or provide the degree of protection of
capital provided by debt securities.
Unit holders will be unable to dispose of any of the Equity Securities
in the Trusts, 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 the Trusts and will
vote such stocks in accordance with the instructions of the Sponsor.
Investors should be aware of certain other considerations before making
a decision to invest in a Trust. 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 will fluctuate
over the life of a Trust and may be more or less than the price at which
they were deposited in a 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, including the
impact of the Sponsor's purchase and sale of the Equity Securities
(especially during the initial offering period of Units of a Trust and
during the Special Redemption and Liquidation Period) and other factors.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Equity 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 such 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 a 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 each Trust will pay the brokerage fees associated
therewith.
Page 17
Once all of the Equity Securities in the Trusts are acquired, the
Trustee will have no power to vary the investments of a Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, but may dispose of
Equity Securities only under limited circumstances. See "Rights of Unit
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
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, other than tobacco litigation
discussed above, there is no litigation pending as of the Initial Date
of Deposit with respect to any Equity Security which might reasonably be
expected to have a material adverse effect on the Trusts. 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 the Trusts.
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 the Trusts or the issuers of
the Equity Securities. Changing approaches to regulation, particularly
with respect to the tobacco industry, the environment or the petroleum
industry, may have a negative impact on certain companies represented in
the Trusts. 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.
Foreign Issuers. Since all of the Equity Securities included in the
European Target 20 Strategy consist of common stocks of foreign issuers,
an investment in such Trust involves certain investment risks that are
different in some respects from an investment in a trust which invests
entirely in common stocks of domestic issuers. These investment risks
include the possible imposition of future political or governmental
restrictions which might adversely affect the payment or receipt of
dividends on the relevant Equity Securities, the possibility that the
financial condition of the issuers of the Equity Securities may become
impaired or that the general condition of the relevant stock market may
deteriorate, the limited liquidity and relatively small market
capitalization of the relevant securities markets, the imposition of
expropriation or confiscatory taxation, economic uncertainties, the lack
of the quantity and quality of publicly available information concerning
the foreign issuers as such issuers are generally not subject to the
same reporting and accounting requirements as domestic issuers, and the
effect of foreign currency devaluations and fluctuations on the value of
the common stocks and dividends of foreign issuers in terms of U.S.
dollars. In addition, fixed brokerage commissions and other custody and
transaction costs on foreign securities exchanges are generally higher
than in the United States and there is generally less government
supervision and regulation of exchanges, brokers and issuers in foreign
countries than there is in the United States.
On the basis of the best information available to the Sponsor at the
present time, none of the Equity Securities in the European Target 20
Strategy are subject to exchange control restrictions under existing law
which would materially interfere with payment to such Trust of dividends
due on, or proceeds from the sale of, the Equity Securities. The
adoption of such restrictions or other legal restrictions could
adversely impact the marketability of the Equity Securities and may
Page 18
impair the ability of such Trust to satisfy its obligation to redeem
Units or could cause delays or increase the costs associated with the
purchase and sale of the Equity Securities and correspondingly affect
the price of the Units.
The purchase and sale of the Equity Securities in the European Target 20
Strategy will generally be effected only in foreign securities markets.
Although the Sponsor does not believe that such Trust will encounter
obstacles in acquiring or disposing of the Equity Securities, investors
should be aware that in certain situations it may not be possible to
purchase or sell an Equity Security in a timely manner for any number of
reasons, including lack of liquidity in the relevant market, the
unavailability of a seller or purchaser of the Equity Securities, and
restrictions on such purchases or sales by reason of federal securities
laws or otherwise. Custody of certain of the Equity Securities in the
European Target 20 Strategy is maintained by Cedel Bank S.A. ("CEDEL"),
a global custody and clearing institution which has entered into a sub-
custodian relationship with the Trustee.
On January 1, 1999, Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal and Spain (eleven of the
fifteen member countries of the European Union ("EU")) established fixed
conversion rates between their existing sovereign currencies and the
euro. On such date the euro became the official currency of these eleven
countries. As of January 1, 1999, the participating countries no longer
control their own monetary policies by directing independent interest
rates for their currencies. Instead, the authority to direct monetary
policy, including money supply and official interest rates for the euro,
is now exercised by the new European Central Bank. The conversion of the
national currencies of the participating countries to the euro could
negatively impact the market rate of exchange between such currencies
(or the newly created euro) and the U.S. dollar. In addition, European
corporations, and other entities with significant markets or operations
in Europe (whether or not in the participating countries), face
strategic challenges as these entities adapt to a single trans-national
currency. The euro conversion may have a material impact on revenues,
expenses or income from operations; increase competition due to the
increased price transparency of EU markets; effect issuers' currency
exchange rate risk and derivatives exposure; disrupt current contracts;
cause issuers to increase spending on information technology updates
required for the conversion; and result in potential adverse tax
consequences. The Sponsor is unable to predict what impact, if any, the
euro conversion will have on any of the issuers of Equity Securities
contained in the European Target 20 Strategy.
The European Target 20 Strategy is concentrated in common stocks which
are principally traded in the United Kingdom. The emphasis of the United
Kingdom's economy is in the private services sector, which includes the
wholesale and retail sector, banking, finance, insurance and tourism.
Services as a whole account for a majority of the United Kingdom's gross
national product and make a significant contribution to the country's
balance of payments.
The United Kingdom is a member of the EU, which was created through the
formation of the Maastricht Treaty on European Union in late 1993. It is
expected that the Treaty will have the effect of eliminating most
remaining trade barriers between the 15 member nations and make Europe
one of the largest common markets in the world. However, the effective
implementation of the Treaty provisions and the rate at which trade
barriers are eliminated is uncertain at this time. Furthermore, the
recent rapid political and social change throughout Europe make the
extent and nature of future economic development in the United Kingdom
and Europe and the impact of such development upon the value of Equity
Securities issued by United Kingdom companies impossible to predict.
The United Kingdom did not participate in the conversion to the euro on
January 1, 1999 and the Sponsor is unable to predict if or when the
United Kingdom will convert to the euro. Moreover, it is not possible to
accurately predict the effect of the current political and economic
situation upon long-term inflation and balance of trade cycles and how
these changes, as well as the implementation of a common currency
throughout a majority of EU countries, would affect the currency
exchange rate between the U.S. dollar and the British pound sterling.
Exchange Rate. The European Target 20 Strategy is comprised of Equity
Securities that are principally traded in foreign currencies and as
such, involve investment risks that are substantially different from an
investment in a fund which invests in securities that are principally
traded in United States dollars. The United States dollar value of the
portfolios (and hence of the Units) and of the distributions from the
portfolios will vary with fluctuations in the United States dollar
foreign exchange rates for the relevant currencies. Most foreign
Page 19
currencies have fluctuated widely in value against the United States
dollar for many reasons, including supply and demand of the respective
currency, the rate of inflation in the respective economies compared to
the United States, the impact of interest rate differentials between
different currencies on the movement of foreign currency rates, the
balance of imports and exports goods and services, 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.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well-particularly with respect to
transfers of capital). Investor psychology may also be an important
determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing,
depending on the activity at any particular time of the large
international commercial banks, various central banks, large multi-
national corporations, speculators and other buyers and sellers of
foreign currencies, and since actual foreign currency transactions may
not be instantly reported, the exchange rates estimated by the Evaluator
may not be indicative of the amount in United States dollars the
European Target 20 Strategy would receive had the Trustee sold any
particular currency in the market. The foreign exchange transactions of
the European Target 20 Strategy will be conducted by the Trustee with
foreign exchange dealers acting as principals on a spot (i.e., cash)
buying basis. Although foreign exchange dealers trade on a net basis,
they do realize a profit based upon the difference between the price at
which they are willing to buy a particular currency (bid price) and the
price at which they are willing to sell the currency (offer price).
What are the Equity Securities Selected for the European Target 20
Strategy, January 1999 Series?
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
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, headquartered in
, headquartered in
, headquartered in
Page 20
What are the Equity Securities Selected for The S&P Target 10 Strategy,
January 1999 Series?
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
The Sponsor has obtained the foregoing descriptions from sources it
deems reliable. The Sponsor has not independently verified the provided
information either in terms of accuracy or completeness.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price, which is based on the
aggregate underlying U.S. dollar value of the Equity Securities in a
Trust, plus or minus cash, if any, in the Income and Capital Accounts of
such Trust, plus an initial sales charge equal to the difference between
the maximum sales charge (2.75% of the Public Offering Price) and the
maximum remaining deferred sales charge (initially $.175 per Unit),
divided by the number of Units of such Trust outstanding. Commencing
____________, 1999, and on the twentieth day of each month thereafter
(or if such day is not a business day, on the preceding business day)
through ____________, 1999, a deferred sales charge of $.0175 will also
be assessed per Unit per month. Units purchased subsequent to the
initial deferred sales charge payment will be subject to the initial
sales charge and the remaining deferred sales charge payments. The
deferred sales charge will be paid from funds in the Capital Account, if
sufficient, or from the periodic sale of Equity Securities. In addition,
a portion of the Public Offering Price during 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 a Trust,
including costs of preparing the registration statement, the Indenture
and other closing documents, registering Units with the Securities and
Exchange Commission and states, the initial audit of the Trust
portfolios, legal fees and the initial fees and expenses of the Trustee.
The organizational and offering costs will be deducted from the assets
of a Trust as of the close of the initial offering period.
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying U.S. dollar value of the Equity
Securities in a Trust, plus or minus cash, if any, in the Income and
Capital Accounts of such Trust, plus estimated organizational and
offering costs, divided by the number of Units of such Trust outstanding
and reduced by the deferred sales charge not yet paid.
The minimum purchase of each Trust is $1,000 ($500 for Individual
Retirement Accounts or other retirement plans), except for Rollover Unit
holders who are not subject to a minimum purchase amount. The applicable
sales charge for primary market sales is reduced by a discount as
indicated below for volume purchases as a percentage of the Public
Offering Price (except for sales made pursuant to a "wrap fee account"
or similar arrangements as set forth below):
<TABLE>
<CAPTION>
Maximum
Dollar Amount of Transaction at Sales Net Dealer
Public Offering Price* Discount Charge Concession
_______________________________ ________ _______ __________
<S> <C> <C> <C>
$ 50,000 but less than $100,000 0.25% 2.50% 2.00%
$ 100,000 but less than $150,000 0.50% 2.25% 1.75%
$ 150,000 but less than $500,000 0.85% 1.90% 1.40%
$ 500,000 but less than $1,000,000 1.00% 1.75% 1.25%
$1,000,000 or more 1.75% 1.00% 0.50%
<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>
Page 21
Any such reduced sales charge shall be the responsibility of the selling
dealer. An investor may aggregate same-day purchases of Units of the
Trusts contained in this Prospectus and units of other unit investment
trusts containing equity securities of which the Sponsor acted as
Principal Underwriter and which are currently in the initial offering
period for purposes of qualifying for volume purchase discounts listed
above. The sales charge reduction for quantity purchases will not apply
to Rollover Unit holders. Rollover Unit holders of prior series of the
Trusts may purchase Units of the Trusts subject to the maximum deferred
sales charge on such Units (for rollover purchases of $1,000,000 or
more, such charge shall be limited to 1.00%), deferred as set forth
above. Investors who have executed a letter of intent indicating their
intention to purchase a specified dollar amount of Units of any unit
investment trust containing equity securities of which the Sponsor acts
as Principal Underwriter from any broker/dealer during the initial
offering period are eligible to receive a volume discount as set forth
in the above table based on the amount of intended aggregate purchases.
The letter of intent will specify the amount of intended aggregate
purchases which must be purchased over a 13-month period. The initial
purchase made pursuant to a letter of intent must equal at least 5% of
the amount of intended aggregate purchases. Units purchased with
rollover proceeds, reinvested dividends, redemption or termination
proceeds from other unit investment trusts or other similar transactions
will not be counted to reach the amount of intended aggregate purchases.
In the event that total purchases by an investor pursuant to a letter of
intent over the 13-month period are less than the amount specified in
the letter of intent, the selling broker/dealer shall take such action
as is necessary to receive from the investor the difference between the
amounts the investor paid for units pursuant to the letter of intent and
the amounts which the investor would have paid if the higher sales
charge had been applied. It is the responsibility of the selling
broker/dealer to notify the Sponsor of each sale made pursuant to a
letter of intent. All Units of the Trusts will be subject to the
applicable deferred sales charge per Unit regardless of volume purchase
discounts. Investors who, as a result of volume purchase discounts, are
eligible to purchase Units subject to a Maximum Sales Charge of less
than the applicable maximum deferred sales charge amount will be
credited the difference between this Maximum Sales Charge and the
deferred sales charge at the time of purchase. The reduced sales charge
structure will apply on all purchases of Units in the Trusts by the same
person on any one day from any one dealer. 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 dealer
of any such combined purchase prior to the sale in order to obtain the
indicated discount. Unit holders may utilize their redemption or
termination proceeds received from trusts sponsored by the Sponsor, or
termination proceeds from other unit investment trusts having a similar
strategy as the Trusts, to purchase Units of the Trusts, subject to a
deferred sales charge of $.0175 per Unit per month to be collected on
each of the remaining deferred sales charge payment dates as provided
herein. Unit holders who redeem units of trusts sponsored by the Sponsor
should note that they will be assessed the amount of any remaining
deferred sales charge on such units at the time of redemption. Except as
described below, 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, related companies of the
Sponsor, dealers and their affiliates and vendors providing services to
the Sponsor may purchase Units at the Public Offering Price, less the
applicable dealer concession. The Sponsor and certain dealers may
establish a schedule by which employees, officers and directors of such
dealers (as described above) are able to purchase Units of the Trusts at
the Public Offering Price less the established schedule amount, which is
designed to compensate such dealer for activities relating to the sale
of such Units (the "Employee Dealer Concession").
Investors who purchase Units through registered broker/dealers who
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 may purchase Units of the Trusts in the
primary or secondary market at the Public Offering Price, less the
concession the Sponsor typically would allow such broker/dealer. See
"Public Offering-How are Units Distributed?"
Page 22
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 local
currency prices of the underlying Equity Securities, changes in relevant
currency exchange rates and changes in applicable commissions, stamp
taxes, custodial fees and other costs associated with foreign trading,
if any. During the initial offering period, the aggregate value of the
Units of the Trusts shall be determined on the basis of the aggregate
underlying U.S. dollar value of the Equity Securities therein plus or
minus cash, if any, in the Income and Capital Accounts of the Trusts.
The aggregate underlying U.S. dollar value of the Equity Securities will
be determined in the following manner: if the Equity Securities are
listed on a securities exchange, this evaluation is generally based on
the closing sale prices on that exchange or that system (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 or system, 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 U.S.
dollar value of the Equity Securities on the ask side of the market or
(c) by any combination of the above. The aggregate U.S. dollar value of
the Equity Securities during the initial offering period is computed on
the basis of the offering side value of the relevant currency exchange
rate expressed in U.S. dollars as of the Evaluation Time.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
U.S. dollar 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 calculation of the aggregate underlying
U.S. dollar 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.
The Evaluator on each business day will appraise or cause to be
appraised the value of the underlying Equity Securities in each Trust as
of the Evaluation Time and will adjust the Public Offering Price of the
Units commensurate with such valuation. Such Public Offering Price will
be effective for all orders received prior to the Evaluation Time on
each such day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a
business day, will be held until the next determination of price. The
term "business day," as used herein and under "Rights of Unit Holders-
How May Units be Redeemed?", shall exclude Saturdays, Sundays and the
following holidays as observed by the New York Stock Exchange, Inc.: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas Day.
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 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, if requested, 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, Units will be sold at the current
Public Offering Price. Upon the termination of the initial offering
period, Units reacquired in the secondary market (see "Public Offering-
Will There be a Secondary Market?") may be offered by this prospectus at
the secondary market Public Offering Price.
It is the intention of the Sponsor to qualify Units of the Trusts for
sale in a number of states. Sales will be made to dealers and others at
prices which represent a concession or agency commission of 2.25% of the
Public Offering Price for primary and secondary market sales. Dealers
and others will receive a concession or agency commission of $0.13 per
Page 23
Unit on purchases by Rollover Unit holders or on the sale of Units sold
subject only to the remaining deferred sales charge. In addition,
dealers and others will receive a maximum concession of up to $0.10 per
Unit on purchases of Units resulting from the automatic reinvestment of
income or capital distributions into additional Units. Such concession
will vary based upon the month of a Trust's Initial Date of Deposit.
Notwithstanding the foregoing, dealers and other selling agents who sell
Units of a Trust during the initial offering period in the dollar
amounts set forth below will be entitled to the following additional
sales concessions as a percentage of the Public Offering Price:
<TABLE>
<CAPTION>
Total Sales per Trust Additional Concession
_____________________ _____________________
<S> <C>
$ 40,000,000 but less than $50,000,000 0.050%
$ 50,000,000 but less than $75,000,000 0.125%
$ 75,000,000 but less than $100,000,000 0.150%
$100,000,000 or more 0.200%
</TABLE>
No dealer concessions will be made for sales to "wrap fee accounts" or
similar arrangements, or for sales made to employees, officers and
directors of the Sponsor, dealers or vendors providing services to the
Sponsor, except for amounts paid to certain dealers pursuant to the
Employee Dealer Concession. The Sponsor reserves the right to change the
amount of the concession or agency commission from time to time. In the
event the Sponsor reacquires, or the Trustee redeems, Units from
brokers, dealers and others while a market is being maintained for such
Units, such entities agree to repay immediately to the Sponsor any such
concession or agency commission relating to such reacquired Units.
Certain commercial banks may be making Units of the Trusts 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. The Sponsor expects to recoup the foregoing payments from the
deferred sales charge payments related to the Trusts.
From time to time the Sponsor may implement programs under which dealers
of the Trusts 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
dealer 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 the Trusts. Such
payments are made by the Sponsor out of its own assets, and not out of
the assets of the Trusts. These programs will not change the price Unit
holders pay for their Units or the amount that a Trust 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 of the Trusts and returns
over specified periods of other similar trusts sponsored by Nike
Securities L.P. or investment strategies utilized by the Trusts (which
may show performance net of expenses and charges which a Trust would
have charged) with returns on other taxable investments such as the
common stocks comprising the DJIA, S&P 500 Index, the S&P Industrial
Index, Ibbotson Small-Cap Index, MSCI Europe Index, other investment
indices, 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 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
Page 24
elsewhere in this Prospectus.
Advertisements and other sales material for the Trusts may also show the
total returns (price changes plus dividends received, divided by the
maximum public offering price) of each completed prior series and the
total and average annualized return of all series in the same quarterly
cycle, assuming the holder rolled over at the termination of each prior
series. These returns will reflect all applicable sales charges and
expenses.
Trust performance may be compared to performance on a total return basis
of the DJIA, the S&P 500 Index, MSCI Europe 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
2.75% of the Public Offering Price of the Units (equivalent to 2.778% of
the net amount invested, exclusive of the deferred sales charge), less
any reduced sales charge as described under "Public Offering-How is the
Public Offering Price Determined?" 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 a Trust (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 on
subsequent deposits) and the cost of such Equity Securities to the
Sponsor. See Note (2) of "Schedule of Investments." During the initial
offering period, the dealers and others also may realize profits or
sustain losses as a result of fluctuations after the Date of Deposit in
the Public Offering Price received by such dealers and others 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 maximum sales charge for the Trusts of
2.75% of the Public Offering Price) or redeemed. The secondary market
public offering price of Units may be greater or less than the cost of
such Units to the Sponsor. The Sponsor may also realize profits or
sustain losses in connection with the creation of additional Units for
the Distribution Reinvestment Option.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated to do
so, the Sponsor may 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 U.S. dollar value of the Equity Securities
in the Trusts plus or minus cash, if any, in the Income and Capital
Accounts of the Trusts. The aggregate underlying U.S. dollar value of
the Equity Securities is computed on the basis of the bid side value of
the relevant currency exchange rate (offer side during the initial
offering period) expressed in U.S. dollars. 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.
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 or may be redeemed by presentation and surrender to the
Page 25
Trustee 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 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.
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 Equity 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. Proceeds received on the sale of any Equity Securities in
a Trust, to the extent not used to meet redemptions of Units, pay the
deferred sales charge or pay expenses, will, however, be distributed on
the last day of each month to Unit holders of record on the fifteenth
day of each 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 as part of the final liquidation distribution, and in
certain circumstances, earlier. See "What is the Federal Tax Status of
Unit Holders?"
It is anticipated that the deferred sales charge will be collected from
the Capital Account of a Trust and that amounts in the Capital Account
will be sufficient to cover the cost of the deferred sales charge. 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 under certain circumstances by
contacting the Trustee, otherwise the amount may be recoverable only
when filing a tax return. Under normal circumstances the Trustee obtains
the Unit holder's tax identification number from the selling broker.
Page 26
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 a Trust is terminated, each Unit holder
who is not a Rollover 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, in the case
of the S&P Target 10 Strategy, 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 such
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 such
Trust. Dividends received with respect to the Equity Securities in a
foreign currency are converted into U.S. dollars at the applicable
exchange rate.
The Trustee may establish reserves (the "Reserve Account") within a
Trust for state and local taxes, if any, and any governmental charges
payable out of such Trust.
Distribution Reinvestment Option. Any Unit holder may elect to have each
distribution of income or capital on his or her Units, other than the
final liquidating distribution in connection with the termination of a
Trust, automatically reinvested in additional Units of such Trust. Each
person who purchases Units of a Trust may elect to become a participant
in the Distribution Reinvestment Option by notifying the Trustee of
their election. The Distribution Reinvestment Option may not be
available in all states. In order to enable a Unit holder to participate
in the Distribution Reinvestment Option with respect to a particular
distribution on his or her Units, the card must be received by the
Trustee within 10 days prior to the Record Date for such distribution.
Each subsequent distribution of income or capital on the participant's
Units will be automatically applied by the Trustee to purchase
additional Units of such Trust. The remaining deferred sales charge
payments will be assessed on Units acquired pursuant to the
Distributions Reinvestment Option. IT SHOULD BE REMEMBERED THAT EVEN IF
DISTRIBUTIONS ARE REINVESTED, THEY ARE STILL TREATED AS DISTRIBUTIONS
FOR INCOME TAX PURPOSES.
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 Equity Securities in a Trust 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
Page 27
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
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 the S&P Target 10
Strategy 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 time next following tender. However, no
In-Kind Distribution requests submitted during the nine business days
prior to such Trust's Mandatory Termination Date will be honored. To the
extent possible, 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. 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 a Trust.
The Trustee is empowered to sell Equity Securities of a Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of a 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 during the secondary market will be
determined on the basis of the aggregate underlying U.S. dollar value of
the Equity Securities in a Trust plus or minus cash, if any, in the
Income and Capital Accounts of such Trust (net of applicable liquidation
costs for foreign Equity Securities, if any). 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
such 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 a 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 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 a 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. During the initial offering period, the Redemption Price per
Unit will include estimated organizational and offering costs as set
forth under "Summary of Essential Information."
Page 28
The aggregate underlying U.S. dollar value of the Equity Securities for
purposes of the Redemption Price during the secondary market and the
secondary market Public Offering Price will be determined in the
following manner: if the Equity Securities are listed on a securities
exchange, this evaluation is generally based on the closing sale prices
on that exchange or that system (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 or system, at the closing bid
prices. If the Equity Securities are not so listed or, if so listed and
the principal market therefore is other than on a securities exchange,
the evaluation shall generally be based on the current bid prices on the
over-the-counter market (unless these prices are inappropriate as a
basis for evaluation). If current bid prices are unavailable, the
evaluation is generally determined (a) on the basis of current bid
prices for comparable securities, (b) by appraising the value of the
Equity Securities on the bid side of the market or (c) by any
combination of the above. The value of the Equity Securities is
converted to their U.S. dollar equivalent by computing the aggregate
value on the basis of the bid side value of the relevant currency
exchange as of the Evaluation Time and when determining the Redemption
Price during the secondary market includes the applicable liquidation
costs associated with the sale of foreign Equity Securities.
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.
Special Redemption, Liquidation and Investment in a New Trust
It is expected that a special redemption and liquidation will be made of
all Units of the Trusts held by any Unit holder (a "Rollover Unit
holder") who affirmatively notifies the Trustee in writing that he or
she desires to participate as a Rollover Unit holder by the Rollover
Notification Date specified in the "Summary of Essential Information."
The Sponsor intends to create a separate series of trusts (the "New
Trusts") in conjunction with the termination of each Trust.
All Units of Rollover Unit holders will be redeemed In-Kind during the
Special Redemption and Liquidation Period, or such latter date as
permitted by the Trustee, and the underlying Equity Securities will be
distributed to the Distribution Agent on behalf of the Rollover Unit
holders. During the Special Redemption and Liquidation Period (as set
forth in "Summary of Essential Information"), the Distribution Agent
will be required to sell all of the underlying Equity Securities on
behalf of Rollover Unit holders. The sales proceeds will be net of
brokerage fees, governmental charges or any expenses involved in the
sales.
The Distribution Agent may engage the Sponsor, as its agent, or other
brokers to sell the distributed Equity Securities. The Equity Securities
will be sold as quickly as is practicable during the Special Redemption
and Liquidation Period, subject to the Sponsor's sensitivity that
certain Equity Securities have different settlement dates and that the
concentrated sale of large volumes of Equity Securities may affect
market prices in a manner adverse to the interests of investors. The
Sponsor does not anticipate that the period will be longer than five
days, given that the Equity Securities are usually highly liquid. The
liquidity of any Equity Security depends on the daily trading volume of
the Equity Security and the amount that the Sponsor has available for
sale on any particular day.
The Rollover Unit holders' proceeds will be invested in a New Trust or a
trust with a similar investment strategy (as selected by the Unit
holder), if then registered and being offered. The proceeds of
redemption will be used to buy New Trust units once all the proceeds
become available; accordingly, proceeds may be uninvested for up to
several days. Any Rollover Unit holder may thus be redeemed out of a
Trust and become a holder of an entirely different trust, a New Trust,
with a different portfolio of Equity Securities. In accordance with the
Rollover Unit holders' offer to purchase the New Trust units, the
proceeds of the sales (and any other cash distributed upon redemption)
will be invested in a New Trust, at the public offering price, including
Page 29
the applicable maximum sales charge per Unit (which for Rollover Unit
holders is currently expected to be $.175 per unit for the New Trusts,
all of which will be deferred as provided herein).
The Sponsor intends to create New Trust units as quickly as possible,
depending upon the availability and reasonably favorable prices of the
Equity Securities included in a New Trust portfolio, and it is intended
that Rollover Unit holders will be given first priority to purchase the
New Trust units. Rollover Unit holders may also elect to have their
proceeds invested in a trust with a similar investment strategy, if such
trust is then registered in the Unit holder's state of residence and
being offered. There can be no assurance, however, as to the exact
timing of the creation of the New Trust units or the aggregate number of
New Trust units which the Sponsor will create. The Sponsor may, in its
sole discretion, stop creating New Trust units (whether permanently or
temporarily) at any time it chooses, regardless of whether all proceeds
of the Special Redemption and Liquidation have been invested on behalf
of Rollover Unit holders. Cash which has not been invested on behalf of
the Rollover Unit holders in New Trust units will be distributed within
a reasonable time after such occurrence. However, since the Sponsor can
create units, the Sponsor anticipates that sufficient units can be
created, although moneys in a New Trust may not be fully invested on the
next business day.
The process of redemption, liquidation, and investment in a New Trust is
intended to allow for the fact that the portfolios selected by the
Sponsor are chosen on the basis of growth and income potential only for
a limited time period, at which point a new portfolio is chosen. It is
contemplated that a similar process of redemption, liquidation and
investment in a subsequent series of new trusts will be available as the
New Trusts terminate.
It should also be noted that Rollover Unit holders may realize taxable
capital gains on the Special Redemption and Liquidation but, in certain
unlikely circumstances, will not be entitled to a deduction for certain
capital losses and, due to the procedures for investing in a New Trust,
no cash would be distributed at that time to pay any taxes. Included in
the cash for the Special Redemption and Liquidation will be an amount of
cash attributable to a semi-annual distribution of dividend income;
accordingly, Rollover Unit holders also will not have cash from this
source distributed to pay any taxes. See "What is the Federal Tax Status
of Unit Holders?"
In addition, during this period a Unit holder will be at risk to the
extent that Equity Securities are not sold and will not have the benefit
of any stock appreciation to the extent that moneys have not been
invested; for this reason, the Sponsor will be inclined to sell and
purchase the Equity Securities in as short a period as they can without
materially adversely affecting the price of the Equity Securities.
Unit holders who do not inform the Distribution Agent that they wish to
have their Units so redeemed and liquidated ("Remaining Unit holders")
will not realize capital gains or losses due to a Special Redemption and
Liquidation, and will not be charged any additional sales charge.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor the New Trusts or any subsequent series of the Trusts, without
penalty or incurring liability to any Unit holder. If the Sponsor so
decides, the Sponsor shall notify the Unit holders before a Special
Redemption and Liquidation. All Unit holders will then be remaining Unit
holders, with rights to ordinary redemption as before. See "Rights of
Unit Holders-How May Units be Redeemed?" The Sponsor may modify the
terms of the New Trusts or any subsequent series of the Trusts. The
Sponsor may also modify, suspend or terminate the Rollover Option upon
notice to the Unit holders of such amendment at least 60 days prior to
the effective date of such amendment.
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.
Page 30
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
such Trust and either sold by the Trustee or held in such Trust pursuant
to the direction of the Sponsor (who may rely on the advice of the
Portfolio Supervisor). Proceeds from the sale of 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 a Trust. 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 a Trust's portfolio transactions, or when
acting as agent for a Trust in acquiring or selling Equity Securities on
behalf of a Trust.
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, FT Series (formerly known as The First Trust Special Situations
Trust), The First Trust Insured Corporate Trust, The First Trust of
Insured Municipal Bonds, The First Trust GNMA, Templeton Growth and
Treasury Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust
and The Advantage Growth and Treasury Securities Trust. First Trust
introduced the first insured unit investment trust in 1974 and to date
more than $20 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;
Page 31
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
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 Equity Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of a 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 a Trust as provided herein, or (c) continue to act as Trustee
without terminating the Indenture.
Page 32
Who is the Evaluator?
The Evaluator is First Trust Advisors 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 and 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).
The Indenture provides that each Trust shall terminate upon the
Mandatory Termination Date indicated herein under "Summary of Essential
Information." Each 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 such Trust not yet sold aggregating more
than 60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor. If a Trust is liquidated because of
the redemption of unsold Units of such Trust by underwriters, the
Sponsor will refund to each purchaser of Units of such Trust the entire
sales charge paid by such purchaser; however, liquidation of a Trust in
other circumstances will result in all remaining unpaid deferred sales
charges being deducted from termination proceeds paid to Unit holders.
In the event of termination, written notice thereof will be sent by the
Trustee to all Unit holders of a 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?" Also,
because of the Special Redemption and Liquidation in a New Trust, there
is a possibility that a Trust may be reduced below the Discretionary
Liquidation Amount and that such Trust could therefore be terminated at
that time before the Mandatory Termination Date of such Trust.
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 a
Trust maintained by the Trustee. Not less than 30 days prior to the
Mandatory Termination Date of the S&P Target 10 Strategy the Trustee
will provide written notice thereof to all Unit holders of such Trust
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 the 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
Page 33
the S&P Target 10 Strategy. A Unit holder may, of course, at any time
after the Equity Securities are distributed, sell all or a portion of
the shares. Unit holders not electing a distribution of shares of Equity
Securities and who do not elect the Rollover Option 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 a 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 upon 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 is included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
Page 34
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 309
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 309, comprised of European Target 20
Strategy, January 1999 Series and The S&P Target 10 Strategy, January
1999 Series, as of the opening of business on ____________, 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 ____________, 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 309,
comprised of European Target 20 Strategy, January 1999 Series and The
S&P Target 10 Strategy, January 1999 Series, at the opening of business
on ____________, 1998 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
____________, 1998
Page 35
Statements of Net Assets
EUROPEAN TARGET 20 STRATEGY, JANUARY 1999 SERIES
FT 309
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
<TABLE>
<CAPTION>
European Target 20 S&P Target 10
Strategy, January Strategy, January
1999 Series 1999 Series
__________________ _________________
<S> <C> <C>
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $ $
Less accrued organizational and offering costs (3) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( )
________ ________
Net assets $ $
======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $
Less sales charge (5) ( ) ( )
Less estimated organizational and offering costs (3) ( ) ( )
________ ________
Net assets $ $
======== ========
<FN>
NOTES TO STATEMENTS OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $ issued by The Chase
Manhattan Bank, which will be allocated among the two Trusts in FT 309,
has been deposited with the Trustee as collateral, covering the monies
necessary for the purchase of the Equity Securities pursuant to purchase
contracts for such Equity Securities.
(3) A portion of the Public Offering Price 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
$ and $ per Unit, based upon the expected number of Units to be
created of the European Target 20 Strategy and S&P Target 10 Strategy,
respectively. A distribution will be made at 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 issued is
larger or smaller than the estimate, the actual distribution per Unit at
the end of the initial offering period may differ from that set forth
above.
(4) Represents the amount of mandatory distributions from a Trust ($.175
per Unit), payable to the Sponsor in ten equal monthly installments
beginning on ____________, 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 ____________, 1999. If Units are redeemed prior to
____________, 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 in a Trust includes a maximum total
sales charge computed at the rate of 2.75% of the Public Offering Price
(equivalent to 2.778% 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?"
</FN>
</TABLE>
Page 36
Schedule of Investments
EUROPEAN TARGET 20 STRATEGY, JANUARY 1999 SERIES
FT 309
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Equity Current
of Offering Value per Securities to Dividend
Shares Name of Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________________ ___________ ________ ______________ _________
<C> <S> <C> <C> <C> <C>
5% $ $ %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
5% %
_____ ________
Total Investments 100% $
===== ========
______________
<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
purchase contracts for the Equity Securities were entered into by the
Sponsor on December 31, 1998. The Trust has a mandatory termination date
of ____________, 2000.
(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 closing sale prices of the Equity
Securities on the applicable exchange (converted into U.S. dollars at
the offer side of the exchange rate at the Evaluation Time) at the close
of business on December __, 1998, the business day prior to the Initial
Date of Deposit. The valuation of the Equity Securities has been
determined by the Evaluator, an affiliate of the Sponsor. Such aggregate
underlying value of the Equity Securities on the business day prior to
the Initial Date of Deposit was $ . Cost and loss to Sponsor relating
to the Equity Securities sold to the Trust were $ and $ ,
respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
dividing the most recent annualized dividend paid on an Equity Security
by that Equity Security's closing sale price at the close of business on
the business day prior to the Initial Date of Deposit.
</FN>
</TABLE>
Page 37
Schedule of Investments
THE S&P TARGET 10 STRATEGY, JANUARY 1999 SERIES
FT 309
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Equity
of Offering Value per Securities to
Shares Name of Issuer of Equity Securities (1) Price Share the Trust (2)
______ _______________________________________ ___________ ________ _____________
<C> <S> <C> <C> <C>
10% $ $
10%
10%
10%
10%
10%
10%
10%
10%
10%
_____ ________
Total Investments 100% $
===== ========
______________
<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
purchase contracts for the Equity Securities were entered into by the
Sponsor on December 31, 1998. The Trust has a mandatory termination date
of ____________, 2000.
(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 closing sale prices of the Equity
Securities at the close of business on December __, 1998, the business
day prior to the Initial Date of Deposit. The valuation of the Equity
Securities has been determined by the Evaluator, an affiliate of the
Sponsor. Such aggregate underlying value of the Equity Securities on the
business day prior to the Initial Date of Deposit was $ . Cost and
loss to Sponsor relating to the Equity Securities sold to the Trust were
$ and $ , respectively.
</FN>
</TABLE>
Page 38
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Page 39
CONTENTS:
Summary of Essential Information:
European Target 20 Strategy, January 1999 Series 4
The S&P Target 10 Strategy, January 1999 Series 4
FT 309:
What is the FT Series? 6
What are the Expenses and Charges? 7
What is the Federal Tax Status of Unit Holders? 8
Are Investments in the Trusts Eligible for
Retirement Plans? 12
Portfolio:
What are the Equity Securities? 12
Hypothetical Performance Information 13
What are Some Additional Considerations
for Investors? 16
Risk Factors 16
Legislation 18
Foreign Issuers 18
Exchange Rate 19
What are the Equity Securities Selected for the
European Target 20 Strategy, January 1999 Series? 20
The S&P Target 10 Strategy, January 1999 Series? 21
Public Offering:
How is the Public Offering Price Determined? 21
How are Units Distributed? 23
What are the Sponsor's Profits? 25
Will There be a Secondary Market? 25
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 25
How are Income and Capital Distributed? 26
What Reports will Unit Holders Receive? 27
How May Units be Redeemed? 27
Special Redemption, Liquidation and
Investment in a New Trust 29
How May Units be Purchased by the Sponsor? 30
How May Equity Securities be Removed
from a Trust? 31
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 31
Who is the Trustee? 32
Limitations on Liabilities of Sponsor and Trustee 32
Who is the Evaluator? 33
Other Information:
How May the Indenture be Amended
or Terminated? 33
Legal Opinions 34
Experts 34
Report of Independent Auditors 35
Statements of Net Assets 36
Notes to Statements of Net Assets 36
Schedule of Investments:
European Target 20 Strategy, January 1999 Series 37
The S&P Target 10 Strategy, January 1999 Series 38
___________________
When Units of the Trusts are no longer available, or for investors who
will reinvest into subsequent series of a Trust, this Prospectus may be
used as a preliminary prospectus for a future series; in which case
investors should note the following:
INFORMATION CONTAINED HEREIN IS SUBJECT TO AMENDMENT. A REGISTRATION
STATEMENT RELATING TO SECURITIES OF A FUTURE SERIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE.
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)
European Target 20 Strategy, January 1999 Series
The S&P Target 10 Strategy, January 1999 Series
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
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 40
MEMORANDUM
Re: FT 309
As indicated in our cover letter transmitting the
Registration Statement on Form S-6 and other related material
under the Securities Act of 1933 to the Commission, the only
difference of consequence (except as described below) between FT
278, which is the current fund, and FT 309, the filing of which
this memorandum accompanies, is the change in the series number.
The list of securities comprising the Fund, the evaluation,
record and distribution dates and other changes pertaining
specifically to the new series, such as size and number of Units
in the Fund and the statement of condition of the new Fund, will
be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 278 Prospectus relate to the series number and size and
the date and various items of information which will be derived
from and apply specifically to the bonds deposited in the Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 309 has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on December 23, 1998.
FT 309
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
Robert D. Van Kampen Director of
Nike Securities December 23, 1998
Corporation, the
General Partner of
Nike Securities L.P. Robert M. Porcellino
Attorney-in-Fact**
David J. Allen Director of
Nike Securities
Corporation, the
General Partner of
Nike Securities L.P.
___________________________
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., the Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to form S-6 of The First Trust Combined
Series 258 (File No. 33-63483) and the same is hereby
incorporated by this reference.
S-2
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF ERNST & YOUNG LLP
The consent of Ernst & Young LLP to the use of its name and
to the reference to such firm in the Prospectus included in this
Registration Statement will be filed by amendment.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-3
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 24 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-43693] filed on behalf of The First Trust
Special Situations Trust, Series 22).
1.1.1* Form of Trust Agreement for Series 309 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee and First Trust Advisors L.P., as Evaluator
and Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors, L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5
