Registration No. 333-64003
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 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 310
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 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 public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on January 29, 1999 at 2:00 p.m. pursuant to Rule
487.
________________________________
European Target 20 Portfolio, February 1999 Series
The S&P(registered trademark)Target 10 Portfolio, February 1999 Series
The Nasdaq(registered trademark)Target 15 Portfolio, February 1999 Series
The Trust. FT 310 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 are considered to have the potential for capital appreciation (the
"Equity Securities"). See "Schedule of Investments" for each Trust.
The European Target 20 Portfolio, February 1999 Series (the "European
Target 20 Portfolio") consists of a portfolio of common stocks of the
twenty companies having the highest dividend yield as of January 22,
1999 (the "European Target 20 Portfolio 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 Portfolio, February 1999 Series
(the "S&P Target 10 Portfolio") 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 January 27,
1999 (the "S&P Target 10 Portfolio Stock Selection Date").
The Nasdaq(registered trademark) Target 15 Portfolio, February 1999
Series (the "Nasdaq Target 15 Portfolio") consists of a portfolio of
common stocks of 15 companies selected from a pre-screened subset of
stocks which are components of the Nasdaq 100 Index(registered
trademark) selected as of the close of business on January 27, 1999 (the
"Nasdaq Target 15 Portfolio Stock Selection Date").
The objective of each Trust is to provide an above-average total return.
The European Target 20 Portfolio seeks to achieve its stated objective
through a combination of capital appreciation and dividend income
whereas the S&P(registered trademark) Target 10 Portfolio and the Nasdaq
Target 15 Portfolio each seek to achieve their 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 Portfolio 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is January 29, 1999
Page 1
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.
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 March 19, 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 December 20, 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 $.3324 for the European Target 20 Portfolio. 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. It should
be noted that dividend yield is not a criterion for selection for either
the S&P Target 10 Portfolio or the Nasdaq Target 15 Portfolio.
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 Portfolio 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
Page 2
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
holder of the S&P Target 10 Portfolio or the Nasdaq Target 15 Portfolio
tendering 1,000 Units or more of either of such Trusts 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 either the S&P Target
10 Portfolio or the Nasdaq Target 15 Portfolio. 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 Portfolio will also be subject
to the risks of currency fluctuations associated with investments in
foreign Equity Securities trading in non-U.S. currencies.
The Equity Securities selected for the Nasdaq Target 15 Portfolio are
weighted according to their market capitalizations. Accordingly, because
of this weighting, the Trust is significantly concentrated in only a few
issuers. Because certain of the Equity Securities will represent a greater
portion of the Trust than others, the Trust will be more volatile than if
the Equity Securities were evenly weighted.
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-January 29, 1999
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 Nasdaq Target 15
Portfolio Portfolio Portfolio
February February February
1999 Series 1999 Series 1999 Series
____________ _____________ _____________
<S> <C> <C> <C>
General Information
Initial Number of Units (1) 14,987 15,001 15,007
Fractional Undivided Interest in the Trust per Unit (1) 1/14,987 1/15,001 1/15,007
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities $ 148,373 $ 148,512 $ 148,565
in Portfolio (2)
Aggregate Offering Price Evaluation of Equity Securities per $ 9.900 $ 9.900 $ 9.900
Unit
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 $ .275
Less Deferred Sales Charge per Unit $ (.175) $ (.175) $ (.175)
Public Offering Price per Unit (3) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (4) $ 9.725 $ 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 $ 9.725
Cash CUSIP Number 30264U 481 30264U 523 30264U 507
Reinvestment CUSIP Number 30264U 499 30264U 531 30264U 515
Security Code 56420 56424 56422
Trustee's Annual Fee and out-of-pocket expenses
per Unit outstanding $ .0202 $ .0082 $ .0082
Evaluator's Annual Fee per Unit outstanding (5) $ .0025 $ .0025 $ .0025
Portfolio Supervisor's Annual Fee per Unit outstanding (6) $ .0025 $ .0025 $ .0025
Estimated Organizational and Offering Costs per Unit (7) $ .0180 $ .0170 $ .0170
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date February 3, 1999
Rollover Notification Date February 1, 2000
Special Redemption and Liquidation Period February 15, 2000 to February 29, 2000
Mandatory Termination Date February 29, 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 February 1, 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 "Statements 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 TABLES
These Fee Tables are intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "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 S&P TARGET 10 NASDAQ TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO
FEBRUARY 1999 Series FEBRUARY 1999 Series FEBRUARY 1999 Series
____________________ ____________________ ____________________
<S> <C> <C> <C> <C> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 1.75%(b) .175 1.75%(b) .175 1.75%(b) .175
______ ______ ______ ______ ______ ______
2.75% $ .275 2.75% $ .275 2.75% $ .275
======= ======= ======= ======= ======= =======
Maximum Sales Charge imposed on Reinvested Dividends 1.75%(c) $ .175 1.75%(c) $ .175 1.75%(c) $ .175
Organizational and Offering Costs
Estimated Organizational and Offering Costs
(as a percentage of public offering price) .180%(d) $.0180 .170%(d) $.0170 .170%(d) $.0170
======= ======= ======= ======= ======= =======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Trustee's fee, portfolio supervision, bookkeeping, .115% $.0115 .115% $.0115 .115% $.0115
administrative and evaluation fees
Other operating expenses .138% .0137 .063%(e) .0063 .033%(f) .0033
______ ______ ______ ______ ______ ______
Total .253% $.0252 .178% $.0178 .148% $.0148
======= ======= ======= ======= ======= =======
</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 Portfolio S&P Target 10 Portfolio Nasdaq Target 15 Portfolio
February 1999 Series February 1999 Series February 1999 Series
____________________________ _______________________ __________________________
<S> <C> <C> <C>
1 Year $ 32 $ 31 $ 31
3 Years $ 77 $ 74 $ 73
5 Years $125 $120 $119
10 Years $256 $247 $244
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.
(e) Includes estimated per Unit costs associated with a license from
Standard & Poor's.
(f) Includes estimated per Unit costs associated with a license from The
Nasdaq Stock Market, Inc.
</FN>
</TABLE>
Page 5
European Target 20 Portfolio, February 1999 Series
The S&P Target 10 Portfolio, February 1999 Series
The Nasdaq Target 15 Portfolio, February 1999 Series
FT 310
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 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 Portfolio 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 Portfolio seeks to outperform the S&P 500 Index by
utilizing a simple investment process which has been designed to screen
for both value and growth potential. The S&P Target 10 Portfolio allows
investors to strategically invest in ten of the largest and fastest
growing companies in the S&P 500 Index.
The Nasdaq Target 15 Portfolio seeks to outperform the Nasdaq 100 Index
by utilizing a simple investment process which has been designed to
screen for growth, consistency, profitability and value. The Nasdaq
Target 15 Portfolio allows investors to strategically invest in 15 of
the largest and fastest growing companies in the Nasdaq 100 Index, an
index comprised of the 100 largest non-financial companies based on
market capitalization which are traded on The Nasdaq Stock Market.
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
Page 6
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.
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
Page 7
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 Portfolio for a license from
Standard & Poor's for the use by the S&P Target 10 Portfolio of certain
trademarks and tradenames of Standard & Poor's; a quarterly fee payable
by the Nasdaq Target 15 Portfolio for a license from The Nasdaq Stock
Market, Inc. for the use by the Nasdaq Target 15 Portfolio of certain
trademarks and tradenames of The Nasdaq Stock Market, Inc.; 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
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 (except to the extent an In-Kind Distribution of Stock
is received by such Unit holder as described below). The price a Unit
holder pays for his or her Units, generally including sales charges, is
allocated among his or her pro rata portion of each Equity Security held
by a Trust (in proportion to the fair market values thereof on the
valuation date 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
Page 8
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 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
Page 9
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
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 Portfolio or the Nasdaq Target 15
Portfolio may request an In-Kind Distribution upon the redemption of
Units or the termination of such Trusts. 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.
Page 10
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 Portfolio or the Nasdaq Target 15 Portfolio 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 Portfolio or the Nasdaq Target 15 Portfolio.
However, if a Unit holder also receives cash in exchange for a
fractional share of an Equity Security held by such Trusts, 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
Trusts.
Because the S&P Target 10 Portfolio and the Nasdaq Target 15 Portfolio
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 Trusts. The amount of taxable gain
(or loss) recognized upon such exchange will generally equal the sum of
the gain (or loss) recognized under the rules described above by such
Unit holder with respect to each Equity Security owned by such Trusts.
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.
Page 11
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.
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 Portfolio seeks to achieve its stated objective
through a combination of capital appreciation and dividend income
whereas the S&P Target 10 Portfolio and the Nasdaq Target 15 Portfolio
seek to achieve their stated objective through capital appreciation.
The European Target 20 Portfolio consists of a portfolio of common
stocks of the twenty companies having the highest dividend yield as of
the European Target 20 Portfolio Stock Selection Date of the 120 largest
companies based on market capitalization which are headquartered in
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Page 12
Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland or
the United Kingdom.
The S&P Target 10 Portfolio 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 Portfolio 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.
The Nasdaq Target 15 Portfolio consists of common stocks of 15
companies selected through the following process. Initially, from the
list of stocks which are components of the Nasdaq 100 Index, those
companies which are the subject of a business combination expected to be
concluded within six months of the Initial Date of Deposit are
eliminated. This remaining universe of stocks is then analyzed according
to the following criteria and ranked from best (1) to worst (100) for
each. The second step ranks the remaining universe of stocks by 12-month
price appreciation. The third step ranks the remaining universe of
stocks by six-month price appreciation. The fourth step ranks the
remaining universe of stocks by return on assets ratio. The fifth step
ranks the universe of stocks by the ratio of cash flow per share to
price. The final step adds up the numerical ranks achieved by each
company in steps two through five, and the 15 stocks with the lowest
sums are selected for the Nasdaq Target 15 Portfolio. The stocks which
comprise the Nasdaq Target 15 Portfolio are weighted by market
capitalization subject to the restriction that no stock will comprise
less than 1% or 25% or more of the portfolio on the Initial Date of
Deposit. The Equity Securities will be adjusted on a proportionate basis
to accommodate this constraint.
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 Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in such Trust. Please see the
Information Supplement which sets forth certain additional disclaimers
and limitations of liabilities on behalf of Standard & Poor's.
The Nasdaq 100(registered trademark), Nasdaq 100 Index(registered
trademark) and Nasdaq(registered trademark) are trade or service marks
of The Nasdaq Stock Market, Inc. (which with its affiliates are the
"Corporations") and are licensed for use by the Sponsor. The Nasdaq
Target 15 Portfolio has not been passed on by the Corporations as to its
legality or suitability. The Nasdaq Target 15 Portfolio is not issued,
endorsed, sold, or promoted by the Corporations. The Corporations make
no warranties and bear no liability with respect to the Nasdaq Target 15
Portfolio.
As set forth below, the hypothetical historical performance of the
European Target 20 Portfolio has been compared to the performance of the
Morgan Stanley Capital International Europe Index ("MSCI Europe Index"),
the hypothetical performance of the S&P Target 10 Portfolio has been
compared to the performance of the S&P 500 Index and the hypothetical
performance of the Nasdaq Target 15 Portfolio has been compared to the
performance of the Nasdaq 100 Index. Neither the publisher of the MSCI
Europe Index, Morgan Stanley Capital International, the publisher of the
S&P 500 Index, Standard & Poor's, nor the publisher of the Nasdaq 100
Index, The Nasdaq Stock Market, Inc., 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
Page 13
S&P 500 Index, Nasdaq 100 Index and MSCI Europe Index in each of the
years set forth in the table, as of December 31 in each of those years.
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 the S&P 500 Index, Nasdaq
100 Index and the MSCI Europe Index each provide a much greater level of
diversification of companies, industries and countries than the Trusts.
Page 14
S&P Target 10 Portfolio
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN (2)
Hypothetical Strategy
Total Returns (1) Index Total Returns
________________ ___________________
S&P Target 10
Year Strategy S&P 500 Index
_____ ________________ ______________
<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 53.85% 28.57%
____________
<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 26.40%, which exceeded the average annual total return
of the S&P 500 Index, which was 17.61%. Although the S&P Target 10
Portfolio 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 Portfolio
will achieve a better performance over its 13-month life or over
consecutive rollover periods, if available.
</FN>
</TABLE>
Page 15
Nasdaq Target 15 Portfolio
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN (2)
Hypothetical Strategy
Total Returns (1) Index Total Returns
________________ ___________________
Nasdaq Target 15
Year Portfolio Strategy Nasdaq 100 Index
_____ __________________ ________________
<S> <C> <C>
1986 22.94% 6.89%
1987 14.10% 10.49%
1988 -0.59% 13.54%
1989 37.33% 26.17%
1990 -5.39% -10.41%
1991 109.27% 64.99%
1992 -0.15% 8.86%
1993 28.55% 11.67%
1994 10.50% 1.74%
1995 53.80% 43.01%
1996 60.03% 42.74%
1997 35.15% 20.76%
1998 123.10% 85.43%
____________
<FN>
(1) The Nasdaq Target 15 Portfolio Strategy Stocks for any given period
were selected by applying the Nasdaq Target 15 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 13 full years
listed above, the Nasdaq Target 15 Strategy achieved an average annual
total return of 32.79%, which exceeded the average annual total return
of the Nasdaq 100 Index, which was 22.60%. Although the Nasdaq Target 15
Portfolio seeks to achieve a better performance than the Nasdaq 100
Index as a whole, there can be no assurance that the Nasdaq Target 15
Portfolio will achieve a better performance over its 13-month life or
over consecutive rollover periods, if available.
</FN>
</TABLE>
Page 16
European Target 20 Portfolio
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN (2)
Hypothetical Strategy
Total Returns (1) Index Total Returns
_____________________ ___________________
European Target 20
Year Strategy MSCI Europe Index
_____ _______________ __________________
<S> <C> <C>
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 35.77% 28.80%
____________
<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 22.42%, which exceeded the average annual total
return of the MSCI Europe Index, which was 19.05%. Although the European
Target 20 Portfolio seeks to achieve a better performance than the MSCI
Europe Index as a whole, there can be no assurance that the European
Target 20 Portfolio will achieve a better performance over its 13-month
life or over consecutive rollover periods, if available.
</FN>
</TABLE>
Page 17
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. 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. The
past market and earnings performance of the Equity Securities included
in the Trusts is not predictive of their future performance. Common
stocks are especially susceptible to general stock market movements and
to volatile increases and decreases of value, as market confidence in
and perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates,
economic expansion or contraction, and global or regional political,
economic or banking crises. 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. In addition,
during the one-week period of October 1 through October 8, 1998, the
Nasdaq 100 declined 16.1%. 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. In addition, due to the fact that the Equity Securities
selected for the Nasdaq Target 15 Portfolio are weighted according to
their market capitalizations, larger capitalized stocks will represent a
greater portion of the Trust's portfolio than others. As a result, the
Nasdaq Target 15 Portfolio is significantly concentrated in only a few
issuers and will be more volatile than if the Equity Securities were
evenly weighted.
The Equity Securities selected for the European Target 20 Portfolio
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
Page 18
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
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.
Financial Institutions. The European Target 20 Portfolio is considered
to be concentrated in common stocks of financial institutions. Such
institutions are especially subject to the adverse effects of economic
recession, volatile interest rates, portfolio concentrations in
geographic markets and in commercial and residential real estate loans,
and competition from new entrants in their fields of business. European
financial institutions may also be subject to currency exchange rate
risk, both in Europe and around the world; liquidity and taxation
issues; changing approaches to regulation; and economic uncertainty with
respect to the conversion to the euro, including related costs.
Retail. The S&P Target 10 Portfolio is considered to be concentrated in
common stocks of retail companies and, therefore, an investment in Units
of the Trust should be made with an understanding of the characteristics
of the retail industry and the risks which such investment may entail.
The profitability of companies engaged in the retail industry will be
affected by various factors including the general state of the economy
and consumer spending trends. The continued viability of the retail
industry will depend on the industry's ability to adapt and to compete
in changing economic and social conditions, to attract and retain
capable management, and to finance expansion. Weakness in the banking or
real estate industry, a recessionary economic climate with the
consequent slowdown in employment growth, less favorable trends in
unemployment or a marked deceleration in real disposable personal income
growth could result in significant pressure on both consumer wealth and
consumer confidence, adversely affecting consumer spending habits. In
addition, competitiveness of the retail industry will require large
capital outlays for investment in the installation of automated checkout
equipment to control inventory, to track the sale of individual items
and to gauge the success of sales campaigns. Increasing employee and
retiree benefit costs may also have an adverse effect on the industry.
In many sectors of the retail industry, competition may be fierce due to
market saturation, converging consumer tastes and other factors. Because
of these factors and the recent increase in trade opportunities with
other countries, American retailers are now entering global markets
which entail added risks such as sudden weakening of foreign economies,
difficulty in adapting to local conditions and constraints and added
research costs.
Technology. The S&P Target 10 Portfolio and the Nasdaq Target 15
Portfolio are considered to be concentrated in common stocks of
technology companies and therefore an investment in Units of such Trusts
Page 19
should be made with an understanding of the characteristics of the
technology industry and the risks which such an investment may entail.
Technology companies generally include companies involved in the
development, design, manufacture and sale of computers, computer-related
equipment, computer networks, communications systems, telecommunications
products, electronic products and other related products, systems and
services. The market for these products, especially those specifically
related to the Internet, is characterized by rapidly changing
technology, rapid product obsolescence, cyclical market patterns,
evolving industry standards and frequent new product introductions. The
success of the issuers of the Equity Securities depends in substantial
part on the timely and successful introduction of new products. An
unexpected change in one or more of the technologies affecting an
issuer's products or in the market for products based on a particular
technology could have a material adverse affect on an issuer's operating
results. Furthermore, there can be no assurance that the issuers of the
Equity Securities will be able to respond in a timely manner to compete
in the rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements
of new products or development of new technologies and general
conditions of the industry have caused and are likely to cause the
market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to
the operating performance of such companies. This market volatility may
adversely affect the market price of the Equity Securities and therefore
the ability of a Unit holder to redeem Units at a price equal to or
greater than the original price paid for such Units.
Some key components of certain products of technology issuers are
currently available only from single sources. There can be no assurance
that in the future suppliers will be able to meet the demand for
components in a timely and cost effective manner. Accordingly, an
issuer's operating results and customer relationships could be adversely
affected by either an increase in price for, or an interruption or
reduction in supply of, any key components. Additionally, many
technology issuers are characterized by a highly concentrated customer
base consisting of a limited number of large customers who may require
product vendors to comply with rigorous industry standards. Any failure
to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies of technology
companies are incorporated into other related products, such companies
are often highly dependent on the performance of the personal computer,
electronics and telecommunications industries. There can be no assurance
that these customers will place additional orders, or that an issuer of
Equity Securities will obtain orders of similar magnitude as past orders
from other customers. Similarly, the success of certain technology
companies is tied to a relatively small concentration of products or
technologies. Accordingly, a decline in demand of such products,
technologies or from such customers could have a material adverse impact
on issuers of the Equity Securities.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their
proprietary rights in their products and technologies. There can be no
assurance that the steps taken by the issuers of the Equity Securities
to protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology. In addition, due to the increasing
public use of the Internet, it is possible that other laws and
regulations may be adopted to address issues such as privacy, pricing,
characteristics, and quality of Internet products and services. For
example, recent proposals would prohibit the distribution of obscene,
lascivious or indecent communications on the Internet. The adoption of
any such laws could have a material adverse impact on the Equity
Securities in the Trusts.
Foreign Issuers. Since all of the Equity Securities included in the
European Target 20 Portfolio 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
Page 20
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
Portfolio 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
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
Portfolio 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 Portfolio 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 Portfolio.
The European Target 20 Portfolio 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
Page 21
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.
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.
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?"
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.
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
Page 22
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.
Exchange Rate. The European Target 20 Portfolio 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
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 Portfolio would receive had the Trustee sold any
particular currency in the market. The foreign exchange transactions of
Page 23
the European Target 20 Portfolio 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
Portfolio, February 1999 Series?
ABN AMRO Holding NV, headquartered in Amsterdam, the Netherlands,
provides full-service banking operations both in the Netherlands and
worldwide.
Abbey National Plc, headquartered in London, England, offers personal
banking services through its locations in the United Kingdom, France,
Gibraltar, Italy, Spain and other countries worldwide.
BASF AG, headquartered in Ludwigshafen, Germany, is listed as a chemical
producing group. Its main fields of business are health and nutrition,
colorants and finishing products, chemicals, plastics and fibers, and
oil and gas.
BP Amoco Plc, headquartered in London, England, explores for, produces,
refines and retails petroleum products and manufactures chemicals
throughout the world.
Barclays Plc, headquartered in London, England, offers commercial and
investment banking, insurance, financial and related services. The
company's subsidiary, Barclays Bank Plc, operates branches in the United
Kingdom and 76 other countries.
Bayer AG, headquartered in Leverkusen, Germany, manufactures industrial
chemicals and polymers, as well as human and animal healthcare products,
pharmaceuticals and agricultural crop protection agents. The company
markets its products to the automotive, electronic, medical,
construction, farming, textile, utility and printing industries worldwide.
British American Tobacco Plc, headquartered in London, England, is the
holding company for a group of tobacco product manufacturers whose
international brands include "State Express 555," "Lucky Strike," "Kent"
and "Benson & Hedges."
Commerzbank AG, headquartered in Frankfurt, Germany, provides a wide
range of banking services to private and business customers. The bank
offers international commercial banking, export finance, corporate
banking, treasury and foreign exchange, investment and loan management
services.
Diageo Plc, headquartered in London, England, has operations in food,
alcoholic beverages, fast food restaurants and property management. The
company markets food products under the "Pillsbury," "Haagen Dazs," and
"Green Giant" brand names; and liquor and beer products under the
"Smirnoff," "J&B Rare," "Johnnie Walker," "Jose Cuervo," "Baileys,"
"Harp" and "Guinness Stout" names. The company also owns "Burger King"
restaurants.
EDP-Electricidade de Portugal, SA, headquartered in Lisbon, Portugal,
generates, transmits and distributes electric power in Portugal through
six wholly-owned subsidiaries.
ENI SpA, headquartered in Rome, Italy, explores for, distributes,
refines and markets petroleum products through its operations in 80
countries. The company also provides offshore oil and gas pipelaying
services.
Electrabel SA, headquartered in Brussels, Belgium, is a private utility
company active in two fields: electricity generation and transmission,
and operation and management of networks for public-utility services
including electricity, natural gas, cable television, steam and water.
The company maintains partnerships with major industrial consumers and
governments in Belgium and in other European countries.
HSBC Holdings Plc, headquartered in London, England, is the holding
company for the HSBC Group. The group is an international banking and
financial services organization with operations in the Asia-Pacific
region, Europe, the Middle East and the Americas. Services provided
include retail and corporate banking, trade, trustee, securities,
custody, capital markets and treasury services, private and investment
banking and insurance.
Iberdrola SA, headquartered in Bilbao, Spain, produces, transmits and
distributes electrical power within Spain as well as offering
engineering, real estate and telecommunications services.
KPN NV, headquartered in The Hague, the Netherlands, provides local,
long distance and specialized business telecommunications services
throughout the Netherlands.
Page 24
Marks & Spencer Plc, headquartered in London, England, sells quality
clothing through Brooks Brothers stores in the United States and Japan;
food through its King Super Markets in the United States; and other
merchandise through a chain of retail stores in Canada, Europe and Hong
Kong.
Norwich Union Plc, headquartered in Norwich, England, provides insurance
services in England, Australia, France, Ireland, New Zealand and Spain.
Repsol SA, headquartered in Madrid, Spain, through subsidiaries,
explores for, develops and produces crude oil products, natural gas and
a variety of petrochemical and petroleum products.
Rio Tinto Plc, headquartered in London, England, is an international
mining company with operations in Australia, Canada, Europe, New
Zealand, South Africa, South America and the United States.
Royal Dutch Petroleum Company, headquartered in The Hague, the
Netherlands, owns 60% of the Royal Dutch/Shell Group of companies. These
companies are involved in all phases of the petroleum industry from
exploration to financial processing and delivery.
What are the Equity Securities Selected for The S&P Target 10 Portfolio,
February 1999 Series?
Gateway 2000, Inc., headquartered in North Sioux City, South Dakota,
develops, makes, sells and supports a broad line of desktop and portable
personal computers for use by businesses, individuals, government
agencies and educational institutions.
International Business Machines Corporation, headquartered in Armonk,
New York, provides customer solutions through the use of advanced
information technologies, including software, systems, products,
financing and technologies.
Lowe's Companies, Inc., headquartered in North Wilkesboro, North
Carolina, operates stores in 26 states which sell building commodities
and millwork; heating, cooling and water systems; home decorating and
illumination products; kitchens, bathrooms and laundries; yard, patio
and garden products; tools; home entertainment products; and special
order products.
PECO Energy Company, headquartered in Philadelphia, Pennsylvania,
supplies retail electricity and natural gas in southeastern Pennsylvania
and, through pilot programs, natural gas service to areas in Maryland
and New Jersey. The company also markets electricity wholesale on a
national basis.
Seagate Technology, Inc., headquartered in Scotts Valley, California, is
a leading provider of products to store, retrieve and manage data on
computer and data communications systems. It produces and sells disk
drives and magnetic discs used in computer systems and multimedia
applications, and disc drive components, tape drives and software.
Solectron Corporation, headquartered in Milpitas, California, provides a
complete range of advanced manufacturing services, including
sophisticated electronic assembly and turnkey manufacturing management
services to original equipment manufacturers in the electronics industry.
Staples, Inc., headquartered in Westborough, Massachusetts, operates
office superstores throughout the United States and Canada which provide
office supplies, business machines, computers and related products,
office furniture and other business-related products.
Unisys Corporation, headquartered in Blue Bell, Pennsylvania, provides
information technology services, software and customer support to
enhance the productivity, competitiveness and responsiveness of its
clients on a worldwide basis.
Viacom Inc. (Class B), headquartered in New York, New York, operates
satellite entertainment networks, television stations, and theme parks;
produces and distributes theatrical motion pictures and television
programming; operates videocassette rental and sales stores; and
publishes books and software products.
Wal-Mart Stores, Inc., headquartered in Bentonville, Arkansas, is the
largest retailer in the United States measured by total revenues. The
company operates "Wal-Mart" retail discount department stores, "Wal-Mart
Supercenters" and "Sam's" wholesale clubs in the United States, Brazil,
Canada, China, Germany, Mexico and Puerto Rico.
Page 25
What are the Equity Securities Selected for The Nasdaq Target 15
Portfolio, February 1999 Series?
Altera Corporation, headquartered in San Jose, California, develops and
markets CMOS (complementary metal oxide semiconductor) programmable
logic integrated circuits and associated engineering development
software and hardware.
American Power Conversion Corporation, headquartered in West Kingston,
Rhode Island, designs, develops, makes and markets a line of
uninterruptible power supply products, electrical surge protection
devices, power conditioning products and associated software and
interface cables.
Amgen Inc., headquartered in Thousand Oaks, California, a global
biotechnology concern, develops, makes and markets human therapeutics
based on advanced cellular and molecular biology, including a protein
that stimulates red blood cell production and a protein that stimulates
white blood cell production.
Apple Computer, Inc., headquartered in Cupertino, California, designs,
makes and markets microprocessor-based personal computers and related
personal computing and communicating solutions for sale mainly to
education, creative, home, business and government customers.
Biogen, Inc., headquartered in Cambridge, Massachusetts, develops and
makes pharmaceuticals for human healthcare through genetic engineering.
The company's primary focus is on developing and testing products for
the treatment of multiple sclerosis, inflammatory and respiratory
diseases, kidney diseases and certain viruses and cancers.
Cisco Systems, Inc., headquartered in San Jose, California, develops,
makes, sells and supports high performance Internet-working systems that
link geographically dispersed local-area and wide-area networks to form
a single, seamless information infrastructure.
Dell Computer Corporation, headquartered in Round Rock, Texas, designs,
develops, makes, sells, services and supports a broad range of computer
systems, including desktops, notebooks and servers compatible with
industry standards under the "Dell" brand name. The company also sells
software, peripheral equipment, and service and support programs.
Intel Corporation, headquartered in Santa Clara, California, designs,
develops, makes and markets advanced microcomputer components and
related products at various levels of integration. Principal components
consist of silicon-based semiconductors etched with complex patterns of
transistors.
Linear Technology Corporation, headquartered in Milpitas, California,
designs, makes and markets a broad line of standard high performance
linear integrated circuits using silicon gate complementary metal-oxide
semiconductor (CMOS), BiCMOS, and bipolar and complementary bipolar
wafer process technologies.
Microsoft Corporation, headquartered in Redmond, Washington, develops,
makes, licenses and supports a wide range of software products including
operating systems, server applications, business and consumer
productivity applications, software development tools and Internet
software and technologies. "Windows" is the company's flagship PC
operating system.
Oracle Corporation, headquartered in Redwood City, California, designs,
develops, markets and supports computer software products with a wide
variety of uses including database management, application development
and business intelligence and business applications.
Sun Microsystems, Inc., headquartered in Palo Alto, California, supplies
network computing products, including desktop systems, storage
subsystems, network switches, servers, software, microprocessors and a
full range of services and support, using the UNIX operating system.
VERITAS Software Corporation, headquartered in Mountain View,
California, designs, develops, markets and supports enterprise data
storage management and high availability products for open system
environments.
Vitesse Semiconductor Corporation, headquartered in Camarillo,
California, designs, develops, makes and sells digital gallium arsenide
integrated circuits primarily for telecommunications, data
communications and automated test equipment systems providers.
Xilinx, Inc., headquartered in San Jose, California, designs, develops
and sells complementary metal-oxide-silicon (CMOS) programmable logic
devices and related design software, including field programmable gate
arrays and erasable programmable logic devices.
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.
Page 26
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
March 19, 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
December 20, 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>
Any such reduced sales charge shall be the responsibility of the selling
dealer. 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. 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. 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. Additionally, Units purchased in the
Page 27
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?"
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.
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
Page 28
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.
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.
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
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
Page 29
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, Nasdaq 100 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
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, Nasdaq 100 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
Page 30
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
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 must follow procedures established by the Trustee, including
furnishing indemnity satisfactory to the Trustee and paying such
expenses as the Trustee may incur. Mutilated certificates must be
surrendered to the Trustee for replacement.
Page 31
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.
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 Portfolio, 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.
Page 32
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
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
Portfolio or the Nasdaq Target 15 Portfolio 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.
Page 33
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."
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
Page 34
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
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
Page 35
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.
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
Page 36
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;
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
Page 37
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.
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
Page 38
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 Portfolio or the Nasdaq
Target 15 Portfolio the Trustee will provide written notice thereof to
all Unit holders of such Trusts 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 Trusts, 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 the respective Trust. 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.
Supplemental Information
Upon written or telephonic request to the Trustee, investors will
receive at no cost to the investor supplemental information about this
Series, which has been filed with the Securities and Exchange Commission
and is hereby incorporated by reference. The supplemental information
includes more specific risk information concerning the Trusts.
Page 39
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 310
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 310, comprised of European Target 20
Portfolio, February 1999 Series; The S&P Target 10 Portfolio, February
1999 Series; and The Nasdaq Target 15 Portfolio, February 1999 Series,
as of the opening of business on January 29, 1999. 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 January 29, 1999. 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 310,
comprised of European Target 20 Portfolio, February 1999 Series; The S&P
Target 10 Portfolio, February 1999 Series; and The Nasdaq Target 15
Portfolio, February 1999 Series, at the opening of business on January
29, 1999 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 29, 1999
Page 40
Statements of Net Assets
FT 310
At the Opening of Business on the
Initial Date of Deposit-January 29, 1999
<TABLE>
<CAPTION>
European Target 20 S&P Target 10 Nasdaq Target 15
Portfolio Portfolio Portfolio
February February February
1999 Series 1999 Series 1999 Series
___________________ ______________ ________________
<S> <C> <C> <C>
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $148,373 $148,512 $148,565
Less accrued organizational and offering costs (3) (270) (255) (255)
Less liability for deferred sales charge (4) (2,623) (2,625) (2,626)
_______ ________ ________
Net assets $145,480 $145,632 $145,684
======== ======== ========
Units outstanding 14,987 15,001 15,007
ANALYSIS OF NET ASSETS
Cost to investors (5) $149,871 $150,012 $150,066
Less sales charge (5) (4,121) (4,125) (4,127)
Less estimated organizational and offering costs (3) (270) (255) (255)
________ ________ ________
Net assets $145,480 $145,632 $145,684
======== ======== ========
<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 $600,000 issued by The Chase
Manhattan Bank, which will be allocated among each of the three Trusts
in FT 310, 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
$.0180, $.0170 and .0170 per Unit, based upon the expected number of
Units to be created of the European Target 20 Portfolio, S&P Target 10
Portfolio and Nasdaq Target 15 Portfolio, respectively. A distribution
will be made at the end of the initial offering period to an account
maintained by the Trustee from which the organizational and offering
cost obligation of the investors to the Sponsor will be satisfied. To
the extent the number of Units issued is larger or smaller than the
estimate, the actual distribution per Unit at the end of the initial
offering period may differ from that set forth above.
(4) Represents the amount of mandatory distributions from a Trust ($.175
per Unit), payable to the Sponsor in ten equal monthly installments
beginning on March 19, 1999 and on the twentieth day of each month
thereafter (or if such date is not a business day, on the preceding
business day) through December 20, 1999. If Units are redeemed prior to
December 20, 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 41
Schedule of Investments
EUROPEAN TARGET 20 PORTFOLIO, FEBRUARY 1999 SERIES
FT 310
At the Opening of Business on the
Initial Date of Deposit-January 29, 1999
<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>
374 ABN AMRO Holding NV 5% $ 19.868 $ 7,430 3.31%
375 Abbey National Plc 5% 19.822 7,433 3.35%
203 BASF AG 5% 36.652 7,440 4.55%
541 BP Amoco Plc 5% 13.726 7,426 3.53%
354 Barclays Plc 5% 20.959 7,419 3.83%
200 Bayer AG 5% 37.109 7,422 4.27%
731 British American Tobacco Plc 5% 10.158 7,426 4.18%
252 Commerzbank AG 5% 29.516 7,438 4.24%
706 Diageo Plc 5% 10.512 7,422 3.65%
302 EDP-Electricidade de Portugal, SA 5% 24.549 7,414 2.52%
1,273 ENI SpA 5% 5.835 7,428 2.83%
17 Electrabel SA 5% 429.322 7,298 3.22%
277 HSBC Holdings Plc 5% 26.792 7,421 3.99%
431 Iberdrola SA 5% 17.230 7,426 3.03%
130 KPN NV 5% 57.091 7,422 2.54%
1,253 Marks & Spencer Plc 5% 5.924 7,422 5.01%
982 Norwich Union Plc 5% 7.559 7,423 3.27%
137 Repsol SA 5% 54.008 7,399 2.63%
613 Rio Tinto Plc 5% 12.111 7,424 4.29%
181 Royal Dutch Petroleum Company 5% 41.105 7,440 3.98%
_______ ________
Total Investments 100% $148,373
===== ========
______________
<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 January 29, 1999. The Trust has a mandatory termination date
of February 29, 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 January 28, 1999, 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 $148,373. Cost and loss to Sponsor
relating to the Equity Securities sold to the Trust were $150,159 and
$1,786, 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 42
Schedule of Investments
THE S&P TARGET 10 PORTFOLIO, FEBRUARY 1999 SERIES
FT 310
At the Opening of Business on the
Initial Date of Deposit-January 29, 1999
<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>
210 Gateway 2000, Inc. 10% $ 70.750 $ 14,858
83 International Business Machines Corporation 10% 178.625 14,826
263 Lowe's Companies, Inc. 10% 56.375 14,827
391 PECO Energy Company 10% 37.938 14,834
388 Seagate Technology, Inc. 10% 38.313 14,865
169 Solectron Corporation 10% 88.125 14,893
360 Staples, Inc. 10% 41.250 14,850
448 Unisys Corporation 10% 33.125 14,840
175 Viacom Inc. (Class B) 10% 85.000 14,875
174 Wal-Mart Stores, Inc. 10% 85.313 14,844
_______ ________
Total Investments 100% $148,512
===== ========
______________
<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 January 29, 1999. The Trust has a mandatory termination date
of February 29, 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 January 28, 1999, 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 $148,512. Cost and
loss to Sponsor relating to the Equity Securities sold to the Trust were
$148,719 and $207, respectively.
</FN>
</TABLE>
Page 43
Schedule of Investments
THE NASDAQ TARGET 15 PORTFOLIO, FEBRUARY 1999 SERIES
FT 310
At the Opening of Business on the
Initial Date of Deposit-January 29, 1999
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Market
of Offering Value per Securities to Capitalization
Shares Name of Issuer of Equity Securities (1) Price Share the Trust (2) (in millions)(3)
______ _______________________________________ ___________ ________ _____________ ________________
<C> <S> <C> <C> <C> <C>
26 Altera Corporation 1.03% $ 59.063 $ 1,536 $ 5,746
29 American Power Conversion Corporation 1.03% 52.750 1,530 5,049
39 Amgen Inc. 3.14% 119.563 4,663 30,429
37 Apple Computer, Inc. 1.02% 40.875 1,512 5,531
16 Biogen, Inc. 1.03% 96.000 1,536 7,066
237 Cisco Systems, Inc. 17.37% 108.875 25,803 171,918
190 Dell Computer Corporation 11.99% 93.750 17,813 119,274
270 Intel Corporation 24.93% 137.188 37,041 228,692
15 Linear Technology Corporation 1.01% 100.063 1,501 7,522
213 Microsoft Corporation 24.95% 174.000 37,062 433,881
144 Oracle Corporation 5.20% 53.688 7,731 51,525
58 Sun Microsystems, Inc. 4.27% 109.313 6,340 41,603
19 VERITAS Software Corporation 1.02% 79.500 1,510 3,777
29 Vitesse Semiconductor Corporation 1.00% 51.188 1,484 3,777
18 Xilinx, Inc. 1.01% 83.500 1,503 5,969
_______ ________
Total Investments 100% $148,565
===== ========
______________
<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 January 29, 1999. The Trust has a mandatory termination date
of February 29, 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 January 28, 1999, 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 $148,565. Cost and
profit to Sponsor relating to the Equity Securities sold to the Trust
were $148,301 and $264, respectively.
(3) Market capitalization is based on the market value as of the close of
business on January 28, 1999.
</FN>
</TABLE>
Page 44
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Page 45
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Page 46
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Page 47
CONTENTS:
Summary of Essential Information:
European Target 20 Portfolio, February 1999 Series 4
The S&P Target 10 Portfolio, February 1999 Series 4
The Nasdaq Target 15 Portfolio, February 1999 Series 4
FT 310:
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 12
Retirement Plans?
Portfolio:
What are the Equity Securities? 12
Hypothetical Performance Information 13
What are Some Additional Considerations
for Investors? 18
Risk Factors 18
What are the Equity Securities Selected for the
European Target 20 Portfolio, February 1999 24
Series?
The S&P Target 10 Portfolio, February 1999 Series?25
The Nasdaq Target 15 Portfolio, February 1999 26
Series?
Public Offering:
How is the Public Offering Price Determined? 27
How are Units Distributed? 29
What are the Sponsor's Profits? 30
Will There be a Secondary Market? 31
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 31
How are Income and Capital Distributed? 32
What Reports will Unit Holders Receive? 33
How May Units be Redeemed? 33
Special Redemption, Liquidation and
Investment in a New Trust 34
How May Units be Purchased by the Sponsor? 36
How May Equity Securities be Removed
from a Trust? 36
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 37
Who is the Trustee? 37
Limitations on Liabilities of Sponsor and Trustee 38
Who is the Evaluator? 38
Other Information:
How May the Indenture be Amended or Terminated? 38
Legal Opinions 39
Experts 39
Supplemental Information 39
Report of Independent Auditors 40
Statements of Net Assets 41
Schedules of Investments:
European Target 20 Portfolio, February 1999 Series 42
The S&P Target 10 Portfolio, February 1999 Series 43
The Nasdaq Target 15 Portfolio, February 1999 Series 44
_____________________
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 Portfolio, February 1999 Series
The S&P Target 10 Portfolio, February 1999 Series
The Nasdaq Target 15 Portfolio, February 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 48
First Trust (registered trademark)
EUROPEAN TARGET 20 PORTFOLIO SERIES
THE S&P TARGET 10 PORTFOLIO SERIES
THE NASDAQ TARGET 15 PORTFOLIO SERIES
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of unit investment trusts ("Trusts")
contained in The FT Series, European Target 20 Portfolio Series, The S&P
Target 10 Portfolio Series and The Nasdaq Target 15 Portfolio Series not
found in the prospectuses for the Trusts. This Information Supplement is
not a prospectus and does not include all of the information that a
prospective investor should consider before investing in a Trust. This
Information Supplement should be read in conjunction with the prospectus
for the Trust in which an investor is considering investing
("Prospectus"). Copies of the Prospectus can be obtained by calling or
writing the Trustee at the telephone number and address indicated in the
Prospectus. The Information Supplement has been created to supplement
information contained in the Prospectus.
This Information Supplement is dated January 29, 1999. Capitalized terms
have been defined in the Prospectus.
Standard & Poor's
The Trusts are not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes
no representation or warranty, express or implied, to the owners of the
Trusts or any member of the public regarding the advisability of
investing in securities generally or in the Trusts particularly or the
ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the licensee is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index, which is
determined, composed and calculated by S&P without regard to the
licensee or the Trusts. S&P has no obligation to take the needs of the
licensee or the owners of the Trusts into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for
and has not participated in the determination of the prices and amount
of the Trusts or the timing of the issuance or sale of the Trusts or in
the determination or calculation of the equation by which the Trusts are
to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the Trusts.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE
LICENSEE, OWNERS OF THE TRUSTS, OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES,
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY
FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
The Nasdaq Stock Market, Inc.
The Nasdaq Target 15 Portfolio Series is not sponsored, endorsed, sold
or promoted by The Nasdaq Stock Market, Inc. (including its affiliates)
(Nasdaq, with its affiliates, are referred to as the "Corporations").
The Corporations have not passed on the legality or suitability of, or
the accuracy or adequacy of descriptions and disclosures relating to the
Page 1
Nasdaq Target 15 Portfolio Series. The Corporations make no
representation or warranty, express or implied, to the owners of Units
of the Nasdaq Target 15 Portfolio Series or any member of the public
regarding the advisability of investing in securities generally or in
the Nasdaq Target 15 Portfolio Series particularly, or the ability of
the Nasdaq 100 Index(registered trademark) to track general stock market
performance. The Corporations' only relationship to the Sponsor
("Licensee") is in the licensing of the Nasdaq 100(registered
trademark), Nasdaq 100 Index(registered trademark) and Nasdaq(registered
trademark) trademarks or service marks, and certain trade names of the
Corporations and the use of the Nasdaq 100 Index(registered trademark)
which is determined, composed and calculated by Nasdaq without regard to
Licensee or the Nasdaq Target 15 Portfolio Series. Nasdaq has no
obligation to take the needs of the Licensee or the owners of Units of
the Nasdaq Target 15 Portfolio Series into consideration in determining,
composing or calculating the Nasdaq 100 Index(registered trademark). The
Corporations are not responsible for and have not participated in the
determination of the timing of, prices at or quantities of the Nasdaq
Target 15 Portfolio Series to be issued or in the determination or
calculation of the equation by which the Nasdaq Target 15 Portfolio
Series is to be converted into cash. The Corporations have no liability
in connection with the administration, marketing or trading of the
Nasdaq Target 15 Portfolio Series.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED
CALCULATION OF THE NASDAQ 100 INDEX(registered trademark) OR ANY DATA
INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE LICENSEE, OWNERS OF THE NASDAQ
TARGET 15 PORTFOLIO SERIES, OR ANY OTHER PERSON OR ENTITY FROM THE USE
OF THE NASDAQ 100 INDEX(registered trademark) OR ANY DATA INCLUDED
THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES AND
EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ 100
INDEX(registered trademark) OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE,
INDIRECT OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
Page 2
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
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
The Registrant, FT 310, hereby identifies The First Trust
Special Situations Trust, Series 4 Great Lakes Growth and
Treasury Trust, Series 1; The First Trust Special Situations
Trust, Series 18 Wisconsin Growth and Treasury Securities Trust,
Series 1; The First Trust Special Situations Trust, Series 69
Target Equity Trust Value Ten Series; The First Trust Special
Situations Trust, Series 108; The First Trust Special Situations
Trust, Series 119 Target 5 Trust, Series 2 and Target 10 Trust,
Series 8; and The First Trust Special Situations Trust, Series
190 Biotechnology Growth Trust, Series 3 for purposes of the
representations required by Rule 487 and represents the
following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 310, has duly caused this Amendment 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 January 29, 1999.
FT 310
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the 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 )
Corporation, the ) January 29, 1999
General Partner of )
Nike Securities L.P. )
)
David J. Allen Director of )
Nike Securities ) Robert M. Porcellino
Corporation, the ) Attorney-in-Fact**
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.,
Depositor.
** An executed copy of the related power of attorney
was filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Combined Series 258 (File No. 33-63483) and
the same is hereby incorporated herein by this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated January 29, 1999 in
Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-64003) and related Prospectus of FT 310.
ERNST & YOUNG LLP
Chicago, Illinois
January 29, 1999
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 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
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 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 First Trust
Advisors 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 310 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee, First Trust Advisors L.P., as Evaluator, and
First Trust Advisors L.P., as 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).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
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.
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).
S-6
FT 310
TRUST AGREEMENT
Dated: January 29, 1999
The Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank, as Trustee and First Trust
Advisors L.P., as Evaluator and Portfolio Supervisor, sets forth
certain provisions in full and incorporates other provisions by
reference to the document entitled "Standard Terms and Conditions
of Trust for The First Trust Special Situations Trust, Series 22
and certain subsequent Series, Effective November 20, 1991"
(herein called the "Standard Terms and Conditions of Trust"), and
such provisions as are incorporated by reference constitute a
single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR EUROPEAN TARGET 20 PORTFOLIO, FEBRUARY 1999 SERIES ("EUROPEAN
TARGET 20 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding the calendar year except during the initial
offering period as determined in Section 4.01 of this Indenture,
in which case the fee is calculated based on the largest number
of units outstanding during the period for which the compensation
is paid (such annual fee to be pro rated for any calendar year in
which the Evaluator provides services during less than the whole
of such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0065 per Unit, calculated based on the
largest number of Units outstanding during the calendar year
except during the initial offering period as determined in
Section 4.01 of this Indenture, in which case the fee is
calculated based on the largest number of units outstanding
during the period for which the compensation is paid (such annual
fee to be pro rated for any calendar year in which the Trustee
provides services during less than the whole of such year).
However, in no event, except as may otherwise be provided in the
Standard Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is January
29, 1999.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE S&P TARGET 10 PORTFOLIO, FEBRUARY 1999 SERIES ("S&P
TARGET 10 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding the calendar year except during the initial
offering period as determined in Section 4.01 of this Indenture,
in which case the fee is calculated based on the largest number
of units outstanding during the period for which the compensation
is paid (such annual fee to be pro rated for any calendar year in
which the Evaluator provides services during less than the whole
of such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0065 per Unit, calculated based on the
largest number of Units outstanding during the calendar year
except during the initial offering period as determined in
Section 4.01 of this Indenture, in which case the fee is
calculated based on the largest number of units outstanding
during the period for which the compensation is paid (such annual
fee to be pro rated for any calendar year in which the Trustee
provides services during less than the whole of such year).
However, in no event, except as may otherwise be provided in the
Standard Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is January
29, 1999.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE NASDAQ TARGET 15 PORTFOLIO, FEBRUARY 1999 SERIES ("NASDAQ
TARGET 15 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee as set forth in the Prospectus under "Summary of
Essential Information," calculated based on the largest number of
Units outstanding the calendar year except during the initial
offering period as determined in Section 4.01 of this Indenture,
in which case the fee is calculated based on the largest number
of units outstanding during the period for which the compensation
is paid (such annual fee to be pro rated for any calendar year in
which the Evaluator provides services during less than the whole
of such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0065 per Unit, calculated based on the
largest number of Units outstanding during the calendar year
except during the initial offering period as determined in
Section 4.01 of this Indenture, in which case the fee is
calculated based on the largest number of units outstanding
during the period for which the compensation is paid (such annual
fee to be pro rated for any calendar year in which the Trustee
provides services during less than the whole of such year).
However, in no event, except as may otherwise be provided in the
Standard Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is January
29, 1999.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART III
A. Notwithstanding anything to the contrary in the
Standard Terms and Conditions of Trust, references to subsequent
Series established after the date of effectiveness of the First
Trust Special Situations Trust, Series 24 shall include FT 310.
B. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal Account."
C. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or
any successor trustee appointed as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank.
D. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided."
E. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
F. Section 1.01(26) shall be added to read as follows:
"(26) The term "Rollover Unit holder" shall be defined
as set forth in Section 5.05, herein."
G. Section 1.01(27) shall be added to read as follows:
"(27) The "Rollover Notification Date" shall be
defined as set forth in the Prospectus under "Summary of
Essential Information."
H. Section 1.01(28) shall be added to read as follows:
"(28) The term "Rollover Distribution" shall be
defined as set forth in Section 5.05, herein."
I. Section 1.01(29) shall be added to read as follows:
"(29) The term "Distribution Agent" shall refer to the
Trustee acting in its capacity as distribution agent
pursuant to Section 5.02 herein."
J. Section 1.01(30) shall be added to read as follows:
"(30) The term "Special Redemption and Liquidation
Period" shall be as set forth in the Prospectus under
"Summary of Essential Information."
K. Paragraph (b) of Section 2.01 shall be restated in its
entirety as follows:
(b)(1)From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its
discretion, to assign, convey to and deposit with the
Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form, (ii) Contract Obligations relating
to such additional Securities, accompanied by cash and/or
Letter(s) of Credit as specified in paragraph (c) of this
Section 2.01, or (iii) cash (or a Letter of Credit in lieu
of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchased in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur within 20 days from the date of a
failure occurring within such initial 90-day period) shall
maintain exactly the Percentage Ratio existing immediately
prior to such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "Cash" means,
as to the Capital Account, cash or other property (other
than Securities) on hand in the Capital Account or
receivable and to be credited to the Capital Account as of
the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units
created by the deposit) and, as to the Income Account, cash
or other property (other than Securities) received by the
Trust as of the date of the deposit or receivable by the
Trust in respect of a record date for a payment on a
Security which has occurred or will occur before the Trust
will be the holder of record of a Security, reduced by the
amount of any cash or other property received or receivable
on any Security allocable (in accordance with the Trustee's
calculations of distributions from the Income Account
pursuant to Section 3.05) to a distribution made or to be
made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units
created by the deposit and the denominator of which is the
number of Units which are outstanding immediately prior to
the deposit. Cash represented by a foreign currency shall
be replicated in such currency or, if the Trustee has
entered into a contract for the conversion thereof, in U.S.
dollars in an amount replicating the dollars to be received
on such conversion."
L. The following shall be added immediately following the
first sentence of paragraph (c) of Section 2.01:
"The Trustee may allow the Depositor to substitute for
any Letter(s) of Credit deposited with the Trustee in
connection with the deposits described in Section 2.01(a)
and (b) cash in an amount sufficient to satisfy the
obligations to which the Letter(s) of Credit relates. Any
substituted Letter(s) of Credit shall be released by the
Trustee."
M. Section 2.01(c) of the Standard Terms and Conditions of
Trust is hereby amended by adding the following at the conclusion
thereof:
"If any Contract Obligation requires settlement in
a foreign currency, in connection with the deposit of such
Contract Obligation the Depositor will deposit with the
Trustee either an amount of such currency sufficient to
settle the contract or a foreign exchange contract in such
amount which settles concurrently with the settlement of the
Contract Obligation and cash or a Letter of Credit in U.S.
dollars sufficient to perform such foreign exchange
contact."
N. Section 2.03(a) of the Standard Terms and Conditions of
Trust shall be amended by adding the following sentence after the
first sentence of such section:
"The number of Units may be increased through a split
of the Units or decreased through a reverse split thereof,
as directed in writing by the Depositor, at any time when
the Depositor is the only beneficial holder of Units, which
revised number of Units shall be recorded by the Trustee on
its books. The Trustee shall be entitled to rely on the
Depositor's direction as certification that no person other
than the Depositor has a beneficial interest in the Units
and the Trustee shall have no liability to any person for
action taken pursuant to such direction."
O. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. Subject to reimbursement
as hereinafter provided, the cost of organizing the Trust
and the sale of the Trust Units shall be borne by the
Depositor, provided, however, that the liability on the part
of the Depositor under this section shall not include any
fees or other expenses incurred in connection with the
administration of the Trust subsequent to the deposit
referred to in Section 2.01. At the conclusion of the
primary offering period (as certified by the Depositor to
the Trustee), the Trustee shall withdraw from the Account or
Accounts specified in the Prospectus or, if no Account is
therein specified, from the Capital Account, and pay to the
Depositor the Depositor's reimbursable expenses of
organizing the Trust and sale of the Trust Units in an
amount certified to the Trustee by the Depositor. If the
cash balance of the Capital Account is insufficient to make
such withdrawal, the Trustee shall, as directed by the
Depositor, sell Securities identified by the Depositor, or
distribute to the Depositor Securities having a value, as
determined under Section 4.01 as of the date of
distribution, sufficient for such reimbursement. The
reimbursement provided for in this section shall be for the
account of the Unit holders of record at the conclusion of
the primary offering period. Any assets deposited with the
Trustee in respect of the expenses reimbursable under this
Section 3.01 shall be held and administered as assets of the
Trust for all purposes hereunder. The Depositor shall
deliver to the Trustee any cash identified in the Statement
of Net Assets of the Trust included in the Prospectus not
later than the expiration of the Delivery Period and the
Depositors obligation to make such delivery shall be
secured by the letter of credit deposited pursuant to
Section 2.01. Any cash which the Depositor has identified
as to be used for reimbursement of expenses pursuant to this
Section 3.01 shall be held by the Trustee, without interest,
and reserved for such purpose and, accordingly, prior to the
conclusion of the primary offering period, shall not be
subject to distribution or, unless the Depositor otherwise
directs, used for payment of redemptions in excess of the
per Unit amount payable pursuant to the next sentence. If a
Unit holder redeems Units prior to the conclusion of the
primary offering period, the Trustee shall pay to the Unit
holder, in addition to the Redemption Value of the tendered
Units, unless otherwise directed by the Depositor, an amount
equal to the estimated per Unit cost of organizing the Trust
and the sale of Trust Units set forth in the Prospectus, or
such revision thereof most recently communicated to the
Trustee by the Depositor pursuant to Section 5.01,
multiplied by the number of Units tendered for redemption;
to the extent the cash on hand in the Trust is insufficient
for such payment, the Trustee shall have the power to sell
Securities in accordance with Section 5.02. The Trustee,
upon receipt of notification and certification from the
Depositor of the amount of any reimbursable expenses
relating to the sale of Trust Units incurred by the
Depositor subsequent to the conclusion of the primary
offering period, shall withdraw from the Capital Account as
set forth above, and pay to the Depositor such amount. As
used herein, the Depositor's reimbursable expenses of
organizing the Trust and sale of the Trust Units shall
include the cost of the initial preparation and typesetting
of the registration statement, prospectuses (including
preliminary prospectuses), the indenture, and other
documents relating to the Trust, SEC and state blue sky
registration fees, the cost of the initial valuation of the
portfolio and audit of the Trust, the initial fees and
expenses of the Trustee, and legal and other out-of-pocket
expenses related thereto, but not including the expenses
incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and
any other selling expenses.
P. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
Q. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Capital
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Capital Account unless the amount available for
distribution shall equal $1.00 per 100 Units.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) the following
reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the third
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
R. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
S. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Capital Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I."
T. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05.I.(e) deduct from the Income Account or,
to the extent funds are not available in such Account, from
the Capital Account and pay to the Depositor the amount that
it is entitled to receive pursuant to Section 3.14.
U. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
Capital Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by
reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11.
Whenever new securities or property is received and
retained by a Trust pursuant to this Section 3.11, the
Trustee shall provide to all Unit holders of such Trust
notices of such acquisition in the Trustee's annual report
unless prior notice is directed by the Depositor."
V. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed
that amount as set forth in the Prospectus per Unit
outstanding as of January 1 of such year except for a Trust
during the year or years in which an initial offering period
as determined in Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the number of
Units outstanding at the end of such month (such annual fee
to be pro rated for any calendar year in which the Portfolio
Supervisor provides services during less than the whole of
such year), but in no event shall such compensation when
combined with all compensation received from other series of
the Trust for providing such supervisory services in any
calendar year exceed the aggregate cost to the Portfolio
Supervisor for the cost of providing such services."
W. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.14.:
"Section 3.14. Bookkeeping and Administrative Expenses.
As compensation for providing bookkeeping and other
administrative services of a character described in
26(a)(2)(C) of the Investment Company Act of 1940 to the
extent such services are in addition to, and do not
duplicate, the services to be provided hereunder by the
Trustee or the Portfolio Supervisor, the Depositor shall
receive against a statement or statements therefor submitted
to the Trustee monthly or annually an aggregate annual fee
in an amount which shall not exceed that amount set forth in
the Prospectus times the number of Units outstanding as of
January 1 of such year except for a year or years in which
an initial offering period as determined by Section 4.01 of
this Indenture occurs, in which case the fee for a month is
based on the number of Units outstanding at the end of such
month (such annual fee to be pro rated for any calendar year
in which the Depositor provides service during less than the
whole of such year), but in no event shall such compensation
when combined with all compensation received from other unit
investment trusts for which the Depositor hereunder is
acting as Depositor for providing such bookkeeping and
administrative services in any calendar year exceed the
aggregate cost to the Depositor providing services to such
unit investment trusts. Such compensation may, from time to
time, be adjusted provided that the total adjustment upward
does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in
consumer prices for services as measured by the United
States Department of Labor Consumer Price Index entitled
"All Services Less Rent of Shelter" or similar index, if
such index should no longer be published. The consent or
concurrence of any Unit holder hereunder shall not be
required for any such adjustment or increase. Such
compensation shall be paid by the Trustee, upon receipt of
an invoice therefor from the Depositor, upon which, as to
the cost incurred by the Depositor of providing services
hereunder the Trustee may rely, and shall be charged against
the Income and Capital Accounts on or before the
Distribution Date following the Monthly Record Date on which
such period terminates. The Trustee shall have no liability
to any Certificateholder or other person for any payment
made in good faith pursuant to this Section.
If the cash balance in the Income and Capital Accounts
shall be insufficient to provide for amounts payable
pursuant to this Section 3.14, the Trustee shall have the
power to sell (i) Securities from the current list of
Securities designated to be sold pursuant to Section 5.02
hereof, or (ii) if no such Securities have been so
designated, such Securities as the Trustee may see fit to
sell in its own discretion, and to apply the proceeds of any
such sale in payment of the amounts payable pursuant to this
Section 3.14.
Any moneys payable to the Depositor pursuant to this
Section 3.14 shall be secured by a prior lien on the Trust
Fund except that no such lien shall be prior to any lien in
favor of the Trustee under the provisions of Section 6.04
herein.
X. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.15:
"Section 3.15. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus (the "Deferred Sales Charge
Payment Dates"), withdraw from the Capital Account, an
amount per Unit specified in such Prospectus and credit such
amount to a special non-Trust account designated by the
Depositor out of which the deferred sales charge will be
distributed to or on the order of the Depositor on such
Deferred Sales Charge Payment Dates (the "Deferred Sales
Charge Account"). If the balance in the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Capital Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. In the
absence of such direction by the Depositor, the Trustee
shall sell Securities sufficient to pay the deferred sales
charge (and any unreimbursed advance then outstanding) in
full, and shall select Securities to be sold in such manner
as will maintain (to the extent practicable) the relative
proportion of number of shares of each Security then held.
The proceeds of such sales, less any amounts paid to the
Trustee in reimbursement of its advances, shall be credited
to the Deferred Sales Charge Account. If a Unit holder
redeems Units prior to full payment of the deferred sales
charge, the Trustee shall, if so provided in the related
Prospectus, on the Redemption Date, withhold from the
Redemption Price payable to such Unit holder an amount equal
to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated for reasons other than that set
forth in Section 6.01(g), the Trustee shall, if so provided
in the related Prospectus, on the termination of the Trust,
withhold from the proceeds payable to Unit holders an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated pursuant to Section 6.01(g), the
Trustee shall not withhold from the proceeds payable to Unit
holders any amounts of unpaid deferred sales charges. If
pursuant to Section 5.02 hereof, the Depositor shall
purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered
Unit, the Depositor shall pay to the Unit holder the amount
specified under Section 5.02 less the unpaid portion of the
deferred sales charge. All advances made by the Trustee
pursuant to this Section shall be secured by a lien on the
Trust prior to the interest of the Unit holders."
Y. Notwithstanding anything to the contrary in Sections
3.15 and 4.05 of the Standard Terms and Conditions of Trust, so
long as Nike Securities L.P. is acting as Depositor, the Trustee
shall have no power to remove the Portfolio Supervisor.
Z. Article III of the Standard Terms and Conditions of
Trust is hereby amended by adding the following new Section 3.16:
"Section 3.16. Foreign Currency Exchange. Unless the
Depositor shall otherwise direct, whenever funds are
received by the Trustee in foreign currency, upon the
receipt thereof or, if such funds are to be received in
respect of a sale of Securities, concurrently with the
contract of the sale for the Security (in the latter case
the foreign exchange contract to have a settlement date
coincident with the relevant contract of sale for the
Security), the Trustee shall enter into a foreign exchange
contract for the conversion of such funds to U.S. dollars
pursuant to the instruction of the Depositor. The Trustee
shall have no liability for any loss or depreciation
resulting from action taken pursuant to such instruction."
AA. Article IV, Section 4.01 of the Standard Terms and
Conditions of Trust is hereby amended in the following manner:
1. Section 4.01(b) is hereby amended by deleting that
portion of the first sentence appearing after the colon and
the entire second sentence and replacing them in their
entirety with the following:
"if the Securities are listed on a national
or foreign securities exchange or the NASDAQ
National Market System, such Evaluation shall
generally be based on the closing sale price on
the exchange or system which is the principal
market therefor, which shall be deemed to be the
New York Stock Exchange if the Securities are
listed thereon (unless the Evaluator deems such
price inappropriate as a basis for evaluation), or
if there is no closing sale price on such exchange
or system, at the closing ask prices. If the
Securities are not so listed or, if so listed and
the principal market therefor is other than on an
exchange, the evaluation shall generally be based
on the current ask price on the over-the-counter
market (unless it is determined that these prices
are inappropriate as a basis for evaluation). If
current ask prices are unavailable, the evaluation
is generally determined (a) on the basis of
current ask prices for comparable securities, (b)
by appraising the value of the Securities on the
ask side of the market or (c) any combination of
the above. If such prices are in a currency other
than U.S. dollars, the Evaluation of such Security
shall be converted to U.S. dollars based on
current offering side exchange rates, unless the
Security is in the form of an American Depositary
Share or Receipt, in which case the Evaluations
shall be based upon the U.S. dollar prices in the
market for American Depositary Shares or Receipts
(unless the Evaluator deems such prices
inappropriate as a basis for valuation). As used
herein, the closing sale price is deemed to mean
the most recent closing sale price on the relevant
securities exchange immediately prior to the
Evaluation time."
2. Section 4.01(c) is hereby deleted and
replaced in its entirety with the following:
"(c) After the initial offering period and
both during and after the initial offering period,
for purposes of the Trust Fund Evaluations
required by Section 5.01 in determining Redemption
Value and Unit Value, Evaluation of the Securities
shall be made in the manner described in Section
4.01(b), on the basis of current bid prices for
Zero Coupon Obligations (if any),the bid side
value of the relevant currency exchange rate
expressed in U.S. dollars and, except in those
cases in which the Equity Securities are listed on
a national or foreign securities exchange or the
NASDAQ National Market System and the closing sale
prices are utilized, on the basis of the current
bid prices of the Equity Securities. In addition,
the Evaluator shall reduce the Evaluation of each
Security by the amount of any liquidation costs
(other than brokerage costs incurred on any
national securities exchange) and any capital
gains or other taxes which would be incurred by
the Trust upon the sale of such Security, such
taxes being computed as if the Security were sold
on the date of the Evaluation."
BB. The first sentence of Section 4.03. shall be amended to
read as follows:
"As compensation for providing evaluation services under
this Indenture, the Evaluator shall receive, in arrears, against
a statement or statements therefor submitted to the Trustee
monthly or annually an aggregate annual fee equal to the amount
specified as compensation for the Evaluator in the Trust
Agreement per Unit outstanding as of January 1 of such year
except for a Trust during the year or years in which an initial
offering period as determined in Section 4.01 of this Indenture
occurs, in which case the fee is calculated based on the largest
number of Units outstanding during the period for which the
compensation is paid (such annual fee to be pro rated for any
calendar year in which the Evaluator provides services during
less than the whole of such year). Such compensation may, from
time to time, be adjusted provided that the total adjustment
upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in
consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services
Less Rent of Shelter" or similar index, if such index should no
longer be published. The consent or concurrence of any Unit
holder hereunder shall not be required for any such adjustment or
increase. Such compensation shall be paid by the Trustee, upon
receipt of invoice therefor from the Evaluator, upon which, as to
the cost incurred by the Evaluator of providing services
hereunder the Trustee may rely, and shall be charged against the
Income and/or Principal Accounts, in accordance with Section
3.05."
CC. Section 5.01 is hereby amended to add the following at
the conclusion of the first paragraph thereof:
"Amounts receivable by the Trust in a foreign currency
shall be reported to the Evaluator who shall convert the
same to U.S. dollars based on current exchange rates, in the
same manner as provided in Section 4.01(b) or 4.01(c), as
applicable, for the conversion of the valuation of foreign
Equity Securities, and the Evaluator shall report such
conversion with each Evaluation made pursuant to Section
4.01."
DD. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The second sentence of the first paragraph of Section
5.01 shall be amended by deleting the phrase "and (iii)" and
adding the following "(iii) amounts representing unpaid accrued
organizational and offering costs, and (iv)" ; and
(ii) The following text shall immediately precede the last
sentence of the first paragraph of Section 5.01:
Prior to the payment to the Depositor of its
reimbursable organizational and offering costs to be
made at the conclusion of the primary offering period
in accordance with Section 3.01, for purposes of
determining the Trust Fund Evaluation under this
Section 5.01, the Trustee shall rely upon the amounts
representing unpaid accrued organizational and offering
costs in the estimated amount per Unit set forth in the
Prospectus until such time as the Depositor notifies
the Trustee in writing of a revised estimated amount
per Unit representing unpaid accrued organizational and
offering costs. Upon receipt of such notice, the
Trustee shall use this revised estimated amount per
Unit representing unpaid accrued organizational and
offering costs in determining the Trust Fund Evaluation
but such revision of the estimated expenses shall not
effect calculations made prior thereto and no
adjustment shall be made in respect thereof.
Reimbursable offering costs incurred by the Depositor
subsequent to the conclusion of the primary offering
period shall be accounted for as paid by the Trustee.
EE. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Subject to the restrictions set forth in the prospectus
Unit holders of the S&P Target 10 Trust and Nasdaq Target 15
Trust may redeem 1,000 Units or more of such Trust and
request a distribution in kind of (i) such Unit holder's
pro rata portion of each of the Securities in such Trust, in
whole shares, and (ii) cash equal to such Unit holder's
pro rata portion of the Income and Capital Accounts as
follows: (x) a pro rata portion of the net proceeds of sale
of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Principal Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section.
Subject to Section 5.05 with respect to Rollover Unit
holders, to the extent possible, distributions of Securities
pursuant to an in kind redemption of Units shall be made by
the Trustee through the distribution of each of the
Securities in book-entry form to the account of the Unit
holder's bank or broker-dealer at the Depository Trust
Company. Any distribution in kind will be reduced by
customary transfer and registration charges."
FF. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of the European
Target 20 Trust, the S&P Target 10 Trust and the Nasdaq
Target 15 Trust (the "New Series"), the Trustee shall, at
the Depositor's sole cost and expense, include in the notice
sent to Unit holders specified in Section 8.02 a form of
election whereby Unit holders, whose redemption distribution
would be in an amount sufficient to purchase at least one
Unit of the New Series, may elect to have their Unit(s)
redeemed in kind in the manner provided in Section 5.02, the
Securities included in the redemption distribution sold, and
the cash proceeds applied by the Distribution Agent to
purchase Units of a New Series, all as hereinafter provided.
The Trustee shall honor properly completed election forms
returned to the Trustee, accompanied by any Certificate
evidencing Units tendered for redemption or a properly
completed redemption request with respect to uncertificated
Units, by its close of business on the Rollover Notification
Date. The notice and form of election to be sent to Unit
holders in respect of any redemption and purchase of Units
of a New Series as provided in this section shall be in such
form and shall be sent at such time or times as the
Depositor shall direct the Trustee in writing and the
Trustee shall have no responsibility therefor. The
Distributions Agent acts solely as disbursing agent in
connection with purchases of Units pursuant to this Section
and nothing herein shall be deemed to constitute the
Distribution Agent a broker in such transactions
All Units so tendered by a Unit holder (a "Rollover
Unit holder") shall be redeemed and cancelled during the
Special Redemption and Liquidation Period on such date or
dates specified by Depositor. Subject to payment by such
Rollover Unit holder of any tax or other governmental
charges which may be imposed thereon, such redemption is to
be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the
redemption date equal to the net asset value (determined on
the basis of the Trust Fund Evaluation as of the redemption
date in accordance with Section 4.01) multiplied by the
number of Units being redeemed (herein called the "Rollover
Distribution"). Any Securities that are made part of the
Rollover Distribution shall be valued for purposes of the
redemption distribution as of the redemption date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent during
the Special Redemption and Liquidation Period specified in
the Prospectus pursuant to the Depositor's direction, and
the Distribution Agent shall, unless directed otherwise by
the Depositor, employ the Depositor as broker in connection
with such sales. For such brokerage services, the Depositor
shall be entitled to compensation at its customary rates,
provided however, that its compensation shall not exceed the
amount authorized by applicable securities laws and
regulations. The Depositor shall direct that sales be made
in accordance with the guidelines set forth in the
Prospectus under the heading "Special Redemption,
Liquidation and Investment in a New Trust." Should the
Depositor fail to provide direction, the Distribution Agent
shall sell the Securities in the manner provided in the
prospectus. The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon completion of all sales of Securities included in
the Rollover Unit holder's Rollover Distribution, the
Distribution Agent shall, as agent for such Rollover Unit
holder, enter into a contract with the Depositor to purchase
from the Depositor Units of a New Series (if any), at the
Depositor's public offering price for such Units on such
day, and at such reduced sales charge as shall be described
in the prospectus for such Trust. Such contract shall
provide for purchase of the maximum number of Units of a New
Series whose purchase price is equal to or less than the
cash proceeds held by the Distribution Agent for the Unit
holder on such day (including therein the proceeds
anticipated to be received in respect of Securities traded
on such day net of all brokerage fees, governmental charges
and any other expenses incurred in connection with such
sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included
in the Rollover Unit holder's redemption distribution shall
not be consummated in accordance with its terms, the
Distribution Agent shall apply the cash proceeds held for
such Unit holder as of the settlement date for the purchase
of Units of a New Series to purchase the maximum number of
Units which such cash balance will permit, and the Depositor
agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be
extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such
purchase. If the Unit holder's Rollover Distribution will
produce insufficient cash proceeds to purchase all of the
Units of a New Series contracted for, the Depositor agrees
that the contract shall be rescinded with respect to the
Units as to which there was a cash shortfall without any
liability to the Rollover Unit holder or the Distribution
Agent. Any cash balance remaining after such purchase shall
be distributed within a reasonable time to the Rollover Unit
holder by check mailed to the address of such Unit holder on
the registration books of the Trustee. Units of a New Series
will be uncertificated unless and until the Rollover Unit
holder requests a certificate. Any cash held by the
Distribution Agent shall be held in a non-interest bearing
account which will be of benefit to the Distribution Agent
in accordance with normal banking procedures. Neither the
Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation
resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in
the event the Depositor does not make Units available for
purchase.
(b) Notwithstanding the foregoing, the Depositor may,
in its discretion at any time, decide not to offer any new
Trust Series in the future, and if so, this Section 5.05
concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent
shall, however, be entitled to receive indemnification and
reimbursement from the Trust for any and all expenses and
disbursements to the same extent as the Trustee is permitted
reimbursement hereunder."
GG. Paragraph (e) of Section 6.01 of Article VI of the
Standard Terms and Conditions of Trust is amended to read as
follows:
"(e) (I) Subject to the provisions of subparagraphs
(II) and (III) of this paragraph, the Trustee may employ
agents, sub-custodians, attorneys, accountants and auditors
and shall not be answerable for the default or misconduct of
any such agents, sub-custodians, attorneys, accountants or
auditors if such agents, sub-custodians, attorneys,
accountants or auditors shall have been selected with
reasonable care. The Trustee shall be fully protected in
respect of any action under this Indenture taken or suffered
in good faith by the Trustee in accordance with the opinion
of counsel, which may be counsel to the Depositor acceptable
to the Trustee, provided, however, that this disclaimer of
liability shall not (i) excuse the Trustee from the
responsibilities specified in subparagraph II below or
(ii) limit the obligation of the Trustee to indemnify the
Trust under subparagraph III below. The fees and expenses
charged by such agents, sub-custodians, attorneys,
accountants or auditors shall constitute an expense of the
Trust reimbursable from the Income and Capital Accounts of
the affected Trust as set forth in section 6.04 hereof.
(II) The Trustee may place and maintain in the care of
an eligible foreign custodian (which is employed by the
Trustee as a sub-custodian as contemplated by subparagraph
(I) of this paragraph (e) and which may be an affiliate or
subsidiary of the Trustee or any other entity in which the
Trustee may have an ownership Income) the Trust's foreign
securities, cash and cash equivalents in amounts reasonably
necessary to effect the Trust's foreign securities
transactions, provided that the Trustee hereby agrees to
perform all the duties assigned by rule 17f-5 as now in
effect or as it may be amended in the future, to the boards
of management investment companies. The Trustee's duties
under the preceding sentence will not be delegated.
As used in this subparagraph (II),
(1) "foreign securities" include: securities
issued and sold primarily outside the United States by a
foreign government, a national of any foreign country or a
corporation or other organization incorporated or organized
under the laws of any foreign country and securities issued
or guaranteed by the government of the United States or by
any state or any political subdivision thereof or by any
agency thereof or by any entity organized under the laws of
the United States or of any state thereof which have been
issued and sold primarily outside the United States.
(2) "eligible foreign custodian" means
(a) The following securities depositories and
clearing agencies which operate transnational systems for
the central handling of securities or equivalent book
entries which, by appropriate exemptive order issued by the
Securities and Exchange Commission, have been qualified as
eligible foreign custodians for the Trust but only for so
long as such exemptive order continues in effect: Morgan
Guaranty Trust Company of New York, Brussels, Belgium, in
its capacity as operator of the Euroclear System
("Euroclear"), and Cedel Bank S.A. ("CEDEL").
(b) Any other entity that shall have been
qualified as an eligible foreign custodian for the foreign
securities of the Trust by the Securities and Exchange
Commission by exemptive order, rule or other appropriate
action, commencing on such date as it shall have been so
qualified but only for so long as such exemptive order, rule
or other appropriate action continues in effect.
(III) The Trustee will indemnify and hold the
Trust harmless from and against any loss occurring as a
result of an eligible foreign custodian's willful
misfeasance, reckless disregard, bad faith, or gross
negligence in performing custodial duties."
HH. Paragraph (g) of Section 6.01 of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
after the first word thereof:
"(i) the value of any Trust as shown by an evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less
than the lower of $2,000,000 or 20% of the total value of
Securities deposited in such Trust during the initial
offering period, or (ii)"
II . The first sentence of the second paragraph of Section
6.04 shall be amended to include the phrase "license fees, if
any," immediately after the reference to legal and auditing
expenses.
JJ. Section 8.02 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the second paragraph shall
be deleted and replaced with the following:
"The Trustee will honor duly executed requests for in-
kind distributions received (accompanied by the electing
Unit holder's Certificate, if issued) by the close of
business ten business days prior to the Mandatory
Termination Date."
(ii) The first sentence of the fourth paragraph shall
be deleted and replaced with the following:
"Commencing no earlier than the business day following
that date on which Unit holders must submit to the Trustee
notice of their request to receive an in-kind distribution
of Securities at termination, the Trustee will liquidate the
Securities not segregated for in-kind distributions during
such period and in such daily amounts as the Depositor shall
direct."
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank and First Trust Advisors L.P. have each caused
this Trust Agreement to be executed and the respective corporate
seal to be hereto affixed and attested (if applicable) by
authorized officers; all as of the day, month and year first
above written.
NIKE SECURITIES L.P.,
Depositor
By Robert M. Porcellino
Senior Vice President
THE CHASE MANHATTAN BANK,
Trustee
By Rosalia Raviele
Vice President
[SEAL]
ATTEST:
Joan Currie
Assistant Treasurer
FIRST TRUST ADVISORS L.P.,
Evaluator
By Robert M. Porcellino
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
FT 310
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
January 29, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 310
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 310 in connection with the January
29, 1999 among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank, as Trustee and First Trust Advisors L.P. as
Evaluator and Portfolio Supervisor, pursuant to which the
Depositor has delivered to and deposited the Securities listed in
Schedule A to the Trust Agreement with the Trustee and pursuant
to which the Trustee has issued to or on the order of the
Depositor a certificate or certificates representing units of
fractional undivided interest in and ownership of the Fund
created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-64003)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:erg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
January 29, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2793
Re: FT 310
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 310 (the "Fund"), in connection with the issuance of units
of fractional undivided interests in the Trusts of said Fund (the
"Trusts"), under a Trust Agreement, dated January 29, 1999 (the
"Indenture"), among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank, as Trustee and First Trust Advisors L.P., as
Evaluator and Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trusts will be administered, and
investments by the Trusts from proceeds of subsequent deposits,
if any, will be made, in accordance with the terms of the
Indenture. Each Trust holds Equity Securities as such term is
defined in the Prospectus. For purposes of this opinion, it is
assumed that each Equity Security is equity for Federal income
tax purposes.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. Each Trust is not an association taxable as a
corporation for Federal income tax purposes, but will be governed
by the provisions of subchapter J (relating to trusts) of Chapter
1, Internal Revenue Code of 1986 (the "Code"); each Unit holder
will be considered the owner of a pro rata portion of each of the
assets of a Trust, in the proportion that the number of Units
held by him bears to the total number of Units outstanding; under
Subpart E, Subchapter J of Chapter 1 of the Code, income of a
Trust will be treated as income of the Unit holders in the
proportion described above; and an item of Trust income will have
the same character in the hands of a Unit holder as it would have
in the hands of the Trustee. Each Unit holder will be considered
to have received his pro rata share of income derived from each
Trust asset when such income is considered to be received by the
Trust. For Federal income tax purposes, a Unit holder's pro rata
portion of distributions of cash or property by a corporation
with respect to an Equity Security ("dividends" as defined by
Section 316 of the Code) are 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
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 Equity Security, shall be treated as
gain from the sale or exchange of property.
II. The price a Unit holder pays for his Units generally
including sales charges, is allocated among his pro rata portion
of each Equity Security held by such Trust (in proportion to the
fair market values thereof on the valuation date nearest the date
the Unit holder purchases his Units), in order to determine his
tax basis for his pro rata portion of each Equity Security held
by such Trust.
III. Gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code)
upon redemption or sale of his Units, except to the extent an in
kind distribution of stock is received by such Unit holder from
the Trust as discussed below. Such gain or loss is measured by
comparing the proceeds of such redemption or sale with the
adjusted basis of his Units. Before adjustment, such basis would
normally be cost if the Unit holder had acquired his Units by
purchase. Such basis will be reduced, but not below zero, by the
Unit holder's pro rata portion of dividends with respect to each
Equity Security which is not taxable as ordinary income.
IV. If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unit holder
(subject to various nonrecognition provisions under the Code) and
the amount thereof will be measured by comparing the Unit
holder's aliquot share of the total proceeds from the transaction
with his basis for his fractional interest in the asset disposed
of. Such basis is ascertained by apportioning the tax basis for
his Units (as of the date on which his Units were acquired) among
each of the Trust assets of such Trust (as of the date on which
his Units were acquired) ratably according to their values as of
the valuation date nearest the date on which he purchased such
Units. A Unit holder's basis in his Units and of his fractional
interest in each Trust asset must be reduced, but not below zero,
by the Unit holder's pro rata portion of dividends with respect
to each Equity Security which are not taxable as ordinary income.
V. Under the Indenture, under certain circumstances, a
Unit holder tendering Units for redemption may request an in kind
distribution of Equity Securities upon the redemption of Units or
upon the termination of a Trust. As previously discussed, prior
to the redemption of Units or the termination of such Trust, a
Unit holder is considered as owning a pro rata portion of each of
the particular Trust's assets. The receipt of an in kind
distribution will result in a Unit holder receiving an undivided
interest in whole shares of stock and possibly cash. The
potential federal income tax consequences which may occur under
an in kind distribution with respect to each Equity Security
owned by the Trust will depend upon 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 of the Equity Securities
held by a Trust. However, if a Unit holder also receives cash in
exchange for a fractional share of an Equity Security held by a
Trust, such Unit holder will generally recognize gain or loss
based upon the difference between the amount of cash received by
the Unit holder and his tax basis in such fractional share of an
Equity Security held by a Trust. The total amount of taxable
gains (or losses) recognized upon such redemption will generally
equal the sum of the gain (or loss) recognized under the rules
described above by the redeeming Unit holder with respect to each
Equity Security owned by a Trust.
A domestic corporation owning Units in a Trust may be
eligible for the 70% dividends received deduction pursuant to
section 243(a) of the Code 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 attibutable to domestic corporations), subject to the
limitations imposed by Sections 246 and 246A of the Code.
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.
Section 67 of the Code provides that 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.
A Unit holder will recognize taxable gain (or loss) when all
or part of the pro rata interest in an Equity Security is either
sold by the Trust or redeemed or when a Unit holder disposes of
his Units in a taxable transaction, in each case for an amount
greater (or less) than his tax basis therefor, subject to various
nonrecognition provisions of the Code.
It should be noted that payments to a Trust 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 advisers regarding the potential tax
consequences relating to the payment of any such withholding
taxes by a Trust. 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 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 tax purposes with respect
to such taxes. The Taxpayer Relief Act of 1997 imposes a required
holding period for such credits.
Any gain or loss recognized on a sale or exchange will,
under current law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including foreign, state or local taxes or collateral tax
consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-64003)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
January 29, 1999
The Chase Manhattan Bank, as Trustee of
FT 310
4 New York Plaza, 6th Floor
New York, New York 10004-3103
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 310
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for the unit investment trust or trusts included in
FT 310 (each, a "Trust"), which will be established under a
certain Standard Terms and Conditions of Trust dated November 20,
1991, and a related Trust Agreement dated as of today
(collectively, the "Indenture") among Nike Securities L.P., as
Depositor (the "Depositor"), First Trust Advisors L.P., as
Evaluator, First Trust Advisors L.P., as Portfolio Supervisor,
and The Chase Manhattan Bank as Trustee (the "Trustee").
Pursuant to the terms of the Indenture, units of fractional
undivided interest in the Trust (the "Units") will be issued in
the aggregate number set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-64003) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name under the captions "What is the Federal Tax Status of
Unit-holders?" and "Legal Opinions" in such Registration
Statement and the preliminary prospectus included therein.
Very truly yours,
CARTER, LEDYARD & MILBURN
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
January 29, 1999
The Chase Manhattan Bank, as Trustee of
FT 310
4 New York Plaza, 6th Floor
New York, New York 10004-3103
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 310
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
("Chase") in connection with the execution and delivery of a
Trust Agreement ("the Trust Agreement") dated today's date (which
Trust Agreement incorporates by reference certain Standard Terms
and Conditions of Trust dated November 20, 1991, and the same are
collectively referred to herein as the "Indenture") among Nike
Securities L.P., as Depositor (the "Depositor"), First Trust
Advisors L.P., as Evaluator, First Trust Advisors L.P., as
Portfolio Supervisor, and Chase, as Trustee (the "Trustee"),
establishing the unit investment trust or trusts included in FT
310 (each, a "Trust"), and the confirmation by Chase, as Trustee
under the Indenture, that it has registered on the registration
books of the Trust the ownership by the Depositor of a number of
units constituting the entire interest in the Trust (such
aggregate units being herein called "Units"), each of which
represents an undivided interest in the respective Trust which
consists of common stocks (including, confirmations of contracts
for the purchase of certain stocks not delivered and cash, cash
equivalents or an irrevocable letter of credit or a combination
thereof, in the amount required for such purchase upon the
receipt of such stocks), such stocks being defined in the
Indenture as Securities and referenced in the Schedule to the
Indenture.
We have examined the Indenture, a specimen of the
certificates to be issued thereunder (the "Certificates"), the
Closing Memorandum dated todays date, and such other documents
as we have deemed necessary in order to render this opinion.
Based on the foregoing, we are of the opinion that:
1. Chase is a duly organized and existing corporation
having the powers of a Trust Company under the laws of the State
of New York.
2. The Trust Agreement has been duly executed and
delivered by Chase and, assuming due execution and delivery by
the other parties thereto, constitutes the valid and legally
binding obligation of Chase.
3. The Certificates are in proper form for execution and
delivery by Chase, as Trustee.
4. Chase, as Trustee, has registered on the registration
books of the Trust the ownership of the Units by the Depositor.
Upon receipt of confirmation of the effectiveness of the
registration statement for the sale of the Units filed with the
Securities and Exchange Commission under the Securities Act of
1933, the Trustee may deliver Certificates for such Units, in
such names and denominations as the Depositor may request, to or
upon the order of the Depositor as provided in the Closing
Memorandum.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, Illinois 60532
January 29, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 310
Gentlemen:
We have examined the Registration Statement File No.
333-64003 for the above captioned fund. We hereby consent to the
use in the Registration Statement of the references to First
Trust Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Robert M. Porcellino
Senior Vice President
