Registration No. 333-64005
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 311
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 February 26, 1999 at 2:00 p.m. pursuant to Rule
487.
________________________________
The Dow (sm) Target 5 Portfolio, March 1999 Series
The Dow (sm) Target 10 Portfolio, March 1999 Series
Target 25 Portfolio, March 1999 Series
Target Small-Cap Portfolio, March 1999 Series
Global Target 15 Portfolio, March 1999 Series
European Target 20 Portfolio, March 1999 Series
The S&P Target 10 Portfolio, March 1999 Series
The Nasdaq Target 15 Portfolio, March 1999 Series
FT 311
FT 311 consists of eight separate unit investment trusts each of which
is listed above (each, a "Trust," and collectively, the "Trusts"). Each
Trust contains a portfolio of common stocks ("Securities") selected by
applying a specialized strategy. The objective of each Trust is to
provide an above-average total return.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE 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 February 26, 1999
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 6
Report of Independent Auditors 8
Statements of Net Assets 9
Schedules of Investments 11
The FT Series 19
Portfolios 20
Risk Factors 22
Hypothetical Performance Information 24
Public Offering 28
Distribution of Units 30
The Sponsor's Profits 31
The Secondary Market 31
How We Purchase Units 32
Expenses and Charges 32
Tax Status 33
Retirement Plans 35
Rights of Unit Holders 35
Income and Capital Distributions 36
Redeeming Your Units 37
Investing in a New Trust 38
Removing Securities from a Trust 39
Amending or Terminating the Indenture 39
Information on the Sponsor, Trustee and Evaluator 40
Other Information 41
Page 2
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-February 26, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
The Dow(sm) The Dow(sm)
Target 5 Target 10 Target 25
Portfolio Portfolio Portfolio
March 1999 March 1999 March 1999
Series Series Series
____________ ____________ ____________
<S> <C> <C> <C>
Initial Number of Units (1) 14,994 15,008 14,991
Fractional Undivided Interest in the Trust per Unit (1) 1/14,994 1/15,008 1/14,991
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of 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 (4) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.725 $ 9.725 $ 9.725
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ 9.725 $ 9.725 $ 9.725
Estimated Net Annual Distributions per Unit (6) $ .2800 $ .2755 $ .3073
Cash CUSIP Number 30264U 564 30264U 580 30264U 606
Reinvestment CUSIP Number 30264U 572 30264U 598 30264U 614
Security Code 56496 56498 56500
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date March 3, 1999
Rollover Notification Date March 1, 2000
Special Redemption and Liquidation Period March 15, 2000 to March 31, 2000
Mandatory Termination Date March 31, 2000
Discretionary Liquidation Amount A Trust may be terminated if the value of the Securities is 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.
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 1999.
Income Distribution Date (7) Last day of June and December, commencing June 30, 1999.
______________
<FN>
See "Notes to Summary of Essential Information" on page 5.
</FN>
</TABLE>
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-February 26, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Target Small-Cap Global Target 15
Portfolio, March Portfolio, March
1999 Series 1999 Series
________________ ________________
<S> <C> <C>
Initial Number of Units (1) 15,008 14,936
Fractional Undivided Interest in the Trust per Unit (1) 1/15,008 1/14,936
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900
Maximum Sales Charge of 2.75% of the Public Offering Price
per Unit (2.778% of the net amount invested, exclusive of
the deferred sales charge) (3) $ .275 $ .275
Less Deferred Sales Charge per Unit $ (.175) $ (.175)
Public Offering Price per Unit (4) $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.725 $ 9.725
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ 9.725 $ 9.725
Estimated Net Annual Distributions per Unit (6) $ N.A. $ .4385
Cash CUSIP Number 30264U 622 30264U 648
Reinvestment CUSIP Number 30264U 630 30264U 655
Security Code 56502 56504
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date March 3, 1999
Rollover Notification Date March 1, 2000
Special Redemption and Liquidation Period March 15, 2000 to March 31, 2000
Mandatory Termination Date March 31, 2000
Discretionary Liquidation Amount A Trust may be terminated if the value of the Securities is 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.
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 1999.
Income Distribution Date (7) Last day of June and December, commencing June 30, 1999.
_____________
<FN>
See "Notes to Summary of Essential Information" on page 5.
</FN>
</TABLE>
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-February 26, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
European Target The S&P Target The Nasdaq Target
20 Portfolio 10 Portfolio 15 Portfolio
March 1999 March 1999 March 1999
Series Series Series
______________ ______________ ____________
<S> <C> <C> <C>
Initial Number of Units (1) 14,987 15,003 14,993
Fractional Undivided Interest in the Trust per Unit (1) 1/14,987 1/15,003 1/14,993
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of 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 (4) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.725 $ 9.725 $ 9.725
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ 9.725 $ 9.725 $ 9.725
Estimated Net Annual Distributions per Unit (6) $ .3326 $ N.A. $ N.A.
Cash CUSIP Number 30264U 663 30264U 705 30264U 689
Reinvestment CUSIP Number 30264U 671 30264U 713 30264U 697
Security Code 56506 56510 56508
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date March 3, 1999
Rollover Notification Date March 1, 2000
Special Redemption and Liquidation Period March 15, 2000 to March 31, 2000
Mandatory Termination Date March 31, 2000
Discretionary Liquidation Amount A Trust may be terminated if the value of the Securities is 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.
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 1999.
Income Distribution Date (7) Last day of June and December, commencing June 30, 1999.
<FN>
NOTES TO SUMMARY OF ESSENTIAL INFORMATION
(1) As of the close of business on March 1, 1999, we may adjust the
number of Units of a Trust so that the Public Offering Price per Unit
will equal approximately $10.00. If we make such an adjustment, the
fractional undivided interest per Unit will vary from the amounts
indicated above.
(2) Each Security, if listed on a securities exchange, is valued at its
last closing sale price on the relevant stock exchange on the business
day prior to the Initial Date of Deposit. If a Security is not listed,
or if no closing sale price exists, it is valued at its closing ask
price on such date. The U.S. dollar value of foreign Securities trading
in non-U.S. currencies is determined by converting the value of the
foreign Securities to their U.S. dollar equivalent based on the offering
side of the currency exchange rate for the currency in which a Security
is generally denominated at the Evaluation Time on the business day
prior to the Initial Date of Deposit. Evaluations for purposes of
determining the purchase, sale or redemption price of Units are made as
of the close of trading on the New York Stock Exchange (generally 4:00
p.m. Eastern time) on each day on which it is open (the "Evaluation Time").
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" and "Public Offering."
(4) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. Additional Units may be
created during the day of the Initial Date of Deposit which, along with
the Units described above, will be valued as of the Evaluation Time on
the Initial Date of Deposit and sold to investors at the Public Offering
Price per Unit based on this valuation. On the Initial Date of Deposit
the Public Offering Price per Unit will not include any accumulated
dividends on the Securities. After the Initial Date of Deposit, the
Public Offering Price per Unit will include a pro rata share of any
accumulated dividends on the Securities.
(5) During the initial offering period the Sponsor's Initial Repurchase
Price per Unit and Redemption Price per Unit will include the estimated
organization costs per Unit set forth under "Fee Table." After the
initial offering period, the Sponsor's Initial Repurchase Price per Unit
and Redemption Price per Unit will not include such estimated
organization costs. See "Redeeming Your Units."
(6) The actual net annual distributions per Unit you receive will vary
from that set forth above with changes in a Trust's fees and expenses,
dividends received, currency exchange rates, foreign withholding and
with the sale of Securities. See "Fee Table" and "Expenses and Charges."
Dividend yield was not a selection criteria for the Target Small-Cap
Portfolio, The S&P Target 10 Portfolio or The Nasdaq Target 15 Portfolio.
(7) 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 Securities) will be included
in amounts distributed to Unit holders. We will distribute money from
the Capital Account monthly on the last day of each month to Unit
holders of record on the fifteenth day of such month if the amount
available for distribution equals at least $1.00 per 100 Units. In any
case, we will distribute any funds in the Capital Account as part of the
final liquidation distribution.
</FN>
</TABLE>
Page 5
Fee Table
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "Expenses and Charges." Although the Trusts have a term of
approximately 13 months and are unit investment trusts rather than
mutual funds, this information shows you a comparison of fees, assuming
that when each Trust terminates, the principal amount and distributions
are rolled over into a New Trust, and you pay only the deferred sales
charge.
<TABLE>
<CAPTION>
THE DOW (SM) THE DOW (SM)
TARGET 5 PORTFOLIO TARGET 10 PORTFOLIO TARGET 25 PORTFOLIO
MARCH 1999 SERIES MARCH 1999 SERIES MARCH 1999 SERIES
___________________ ___________________ ___________________
<S> <C> <C> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $.100 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge 1.75%(b) .175 1.75%(b) .175 1.75%(b) .175
________ ________ ________ _______ ________ ______
Maximum sales charge 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
======== ======== ======== ======= ======== ======
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated Organization Costs .130%(d) $.0130 .140%(d) $.0140 .225%(d) $.0225
======== ======== ======== ======= ======= ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Portfolio supervision, bookkeeping,
administrative and evaluation fees .050% $.0050 .050% $.0050 .050% $.0050
Trustee's fee and other operating expenses .094%(e) .0094 .094%(e) .0094 .082% .0082
________ ________ ________ ________ ________ _______
Total .144% $.0144 .144% $.0144 .132% $.0132
======== ======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
TARGET SMALL-CAP GLOBAL TARGET EUROPEAN TARGET
PORTFOLIO 15 PORTFOLIO 20 PORTFOLIO
MARCH 1999 SERIES MARCH 1999 SERIES MARCH 1999 SERIES
_________________ _________________ ___________________
<S> <C> <C> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $.100 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge 1.75%(b) .175 1.75%(b) .175 1.75%(b) .175
________ _______ ________ ________ ________ _______
Maximum sales charge 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
======== ======= ======== ======== ======== =======
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated Organization Costs .225%(d) $.0225 .150%(d) $.0150 .180%(d) $.0180
======== ======= ======== ======== ======== =======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Portfolio supervision, bookkeeping,
administrative and evaluation fees .050% $.0050 .050% $.0050 .060% $.0050
Trustee's fee and other operating expenses .082% .0082 .172% .0171 .203% .0202
________ _______ ________ ________ ________ _______
Total .132% $.0132 .222% $.0221 .253% $.0252
======== ======= ======== ======== ======== =======
</TABLE>
Page 6
<TABLE>
<CAPTION>
THE S&P TARGET THE NASDAQ
10 PORTFOLIO TARGET 15 PORTFOLIO
MARCH 1999 SERIES MARCH 1999 SERIES
___________________ ___________________
<S> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge 1.75%(b) .175 1.75%(b) .175
________ _______ ________ ______
Maximum sales charge 2.75% $.275 2.75% $.275
======== ======= ======== ======
Maximum sales charge imposed on reinvested dividends 1.75%(c) $.175 1.75%(c) $.175
======== ======= ======== ======
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated Organization Costs .170%(d) $.0170 .170%(d) $.0170
======== ======== ======== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Portfolio supervision, bookkeeping,
administrative and evaluation fees .050% $.0050 .050% $.0050
Trustee's fee and other operating expenses .128%(e) .0128 .098%(e) .0098
________ ________ ________ ______
Total .178% $.0178 .148% $.0148
======== ======== ======== ======
</TABLE>
This example is intended to help you compare the cost of investing in a
Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in a Trust for the periods shown
and sell all your Units at the end of those periods. The example also
assumes a 5% return on your investment each year and that a Trust's
operating expenses stay the same. Although your actual costs may vary,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
The Dow (sm) Target 5 Portfolio, March 1999 Series $302 $721 $1,166 $2,397
The Dow (sm) Target 10 Portfolio, March 1999 Series 303 724 1,171 2,407
Target 25 Portfolio, March 1999 Series 311 746 1,207 2,482
Target Small-Cap Portfolio, March 1999 Series 311 746 1,207 2,482
Global Target 15 Portfolio, March 1999 Series 312 750 1,214 2,497
European Target 20 Portfolio, March 1999 Series 318 769 1,245 2,559
The S&P Target 10 Portfolio, March 1999 Series 310 744 1,203 2,473
The Nasdaq Target 15 Portfolio, March 1999 Series 307 735 1,188 2,442
The example would not differ if you hold rather than sell your Units at
the end of each period. The example does not reflect sales charges on
reinvested dividends and other distributions. If these sales charges
were included, your costs would be higher.
________________
<FN>
(a) The amount of the initial sales charge will vary depending on the
purchase price of your Units. The amount of the initial sales charge is
actually 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). When the Public Offering Price exceeds
$10.00 per Unit the initial sales charge will exceed 1.00% of the Public
Offering Price per Unit.
(b) The deferred sales charge is a fixed dollar amount equal to $.175
per Unit which will be deducted in ten monthly installments of $.0175
per Unit beginning April 20, 1999 and on the 20th day of each month
thereafter (or the preceding business day if the 20th day is not a
business day) through January 20, 2000. If you buy Units at a price of
less than $10.00 per Unit, the dollar amount of the deferred sales
charge will not change but the deferred sales charge on a percentage
basis will be more than 1.75% of the Public Offering Price. If you
purchase Units after the first deferred sales charge payment has been
deducted, your purchase price will include both the initial sales charge
and any remaining deferred sales charge payments.
(c) Reinvested dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "Income and Capital
Distributions."
(d) You will bear all or a portion of the costs incurred in organizing
your respective Trust. These estimated organization costs are included
in the price you pay for your Units 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 fee as
described in "Expenses and Charges."
</FN>
</TABLE>
Page 7
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 311
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 311, comprised of The Dow (sm) Target 5
Portfolio, March 1999 Series; The Dow (sm) Target 10 Portfolio, March
1999 Series; Target 25 Portfolio, March 1999 Series; Target Small-Cap
Portfolio, March 1999 Series; Global Target 15 Portfolio, March 1999
Series; European Target 20 Portfolio, March 1999 Series; The S&P Target
10 Portfolio, March 1999 Series and The Nasdaq Target 15 Portfolio,
March 1999 Series as of the opening of business on February 26, 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 February 26, 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 311,
comprised of The Dow (sm) Target 5 Portfolio, March 1999 Series; The Dow
(sm) Target 10 Portfolio, March 1999 Series; Target 25 Portfolio, March
1999 Series; Target Small-Cap Portfolio, March 1999 Series; Global
Target 15 Portfolio, March 1999 Series; European Target 20 Portfolio,
March 1999 Series; The S&P Target 10 Portfolio, March 1999 Series and
The Nasdaq Target 15 Portfolio, March 1999 Series, at the opening of
business on February 26, 1999 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 26, 1999
Page 8
Statements of Net Assets
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
The Dow(sm) The Dow(sm) Target 25 Target Small-Cap
Target 5 Portfolio Target 10 Portfolio Portfolio Portfolio, March
March 1999 Series March 1999 Series March 1999 Series 1999 Series
_________________ __________________ ________________ ________________
<S> <C> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $148,441 $148,585 $148,411 $148,579
Less liability for reimbursement to Sponsor
for organization costs (3) (195) (210) (337) (338)
Less liability for deferred sales charge (4) (2,624) (2,626) (2,623) (2,626)
________ ________ ________ ________
Net assets $145,622 $145,749 $145,451 $145,615
======== ======== ======== ========
Units outstanding 14,994 15,008 14,991 15,008
ANALYSIS OF NET ASSETS
Cost to investors (5) $149,940 $150,086 $149,911 $150,080
Less maximum sales charge (5) (4,123) (4,127) (4,123) (4,127)
Less estimated reimbursement to Sponsor
for organization costs (3) (195) (210) (337) (338)
________ ________ ________ ________
Net assets $145,622 $145,749 $145,451 $145,615
======== ======== ======== ========
______________
<FN>
See "Notes to Statements of Net Assets" on page 10.
</FN>
</TABLE>
Page 9
Statements of Net Assets
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Global Target 15 European Target 20 The S&P Target 10 The Nasdaq Target 15
Portfolio, March Portfolio, March Portfolio, March Portfolio, March
1999 Series 1999 Series 1999 Series 1999 Series
________________ __________________ ________________ ________________
<S> <C> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $147,870 $148,375 $148,536 $148,433
Less liability for reimbursement to Sponsor
for organization costs (3) (224) (270) (255) (255)
Less liability for deferred sales charge (4) (2,614) (2,623) (2,626) (2,624)
________ ________ ________ ________
Net assets $145,032 $145,482 $145,655 $145,554
======== ======== ======== ========
Units outstanding 14,936 14,987 15,003 14,993
ANALYSIS OF NET ASSETS
Cost to investors (5) $149,363 $149,874 $150,036 $149,932
Less maximum sales charge (5) (4,107) (4,122) (4,126) (4,123)
Less estimated reimbursement to Sponsor
for organization costs (3) (224) (270) (255) (255)
________ ________ ________ ________
Net assets $145,032 $145,482 $145,655 $145,554
======== ======== ======== ========
__________________
<FN>
NOTES TO STATEMENTS OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit issued by The Chase Manhattan Bank,
of which $1,600,000 will be allocated among each of the eight Trusts in
FT 311, has been deposited with the Trustee as collateral, covering the
monies necessary for the purchase of the Securities according to their
purchase contracts.
(3) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trusts. These costs have been estimated at $.0130,
$.0140, $.0225, $.0225, $.0150, $.0180, $.0170 and $.0170 per Unit for
The Dow (sm) Target 5 Portfolio, The Dow (sm) Target 10 Portfolio, Target
25 Portfolio, Target Small-Cap Portfolio, Global Target 15 Portfolio,
European Target 20 Portfolio, The S&P Target 10 Portfolio and The Nasdaq
Target 15 Portfolio, respectively. A payment will be made at the end of
the initial offering period to an account maintained by the Trustee from
which the obligation of the investors to the Sponsor will be satisfied.
To the extent that actual organization costs of a Trust are greater than
the estimated amount, only the estimated organization costs added to the
Public Offering Price will be reimbursed to the Sponsor and deducted
from the assets of such Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions from a Trust ($.175 per Unit), payable to us in ten equal
monthly installments beginning on April 20, 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 January 20, 2000. If you redeem
Units before January 20, 2000 you will have to pay the remaining amount
of the deferred sales charge applicable to such Units when you redeem
them.
(5) The aggregate cost to investors in a Trust includes a maximum sales
charge (comprised of an initial and a deferred 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."
</FN>
</TABLE>
Page 10
Schedule of Investments
THE DOW (SM) TARGET 5 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Current
of Ticker Symbol and Name of Offering Value per Securities to Dividend
Shares Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ ____________ _________ _____________ _________
<C> <S> <C> <C> <C> <C>
650 CAT Caterpillar Inc. 20% $45.688 $ 29,697 2.63%
558 DD E.I. du Pont de Nemours & Company 20% 53.188 29,679 2.63%
444 EK Eastman Kodak Company 20% 66.875 29,693 2.63%
640 GT Goodyear Tire & Rubber Company 20% 46.375 29,680 2.59%
740 MO Philip Morris Companies, Inc. 20% 40.125 29,692 4.39%
_____ _________
Total Investments 100% $148,441
===== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 11
Schedule of Investments
THE DOW (SM) TARGET 10 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Current
of Ticker Symbol and Name of Offering Value per Securities to Dividend
Shares Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ ____________ _________ ___________ _________
<C> <S> <C> <C> <C> <C>
325 CAT Caterpillar Inc. 10% $ 45.688 $ 14,849 2.63%
189 CHV Chevron Corporation 10% 78.750 14,884 3.10%
279 DD E.I. du Pont de Nemours & Company 10% 53.188 14,840 2.63%
222 EK Eastman Kodak Company 10% 66.875 14,846 2.63%
221 XON Exxon Corporation 10% 67.313 14,876 2.44%
178 GM General Motors Corporation 10% 83.625 14,885 2.39%
320 GT Goodyear Tire & Rubber Company 10% 46.375 14,840 2.59%
197 MMM Minnesota Mining & Manufacturing
Company 10% 75.438 14,861 2.97%
132 JPM J.P. Morgan & Company, Inc. 10% 112.563 14,858 3.52%
370 MO Philip Morris Companies, Inc. 10% 40.125 14,846 4.39%
______ ________
Total Investments 100% $148,585
====== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 12
Schedule of Investments
TARGET 25 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Current
of Ticker Symbol and Offering Value per Securities to Dividend
Shares Name and Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________________ ___________ _______ ___________ _________
<C> <S> <C> <C> <C> <C>
280 ALT Allegheny Teledyne, Inc. 4% $21.188 $ 5,933 3.02%
173 BMS Bemis Company 4% 34.250 5,925 2.69%
138 CBE Cooper Industries, Inc. 4% 43.000 5,934 3.07%
144 CUM Cummins Engine Company, Inc. 4% 41.188 5,931 2.67%
152 DCN Dana Corporation 4% 39.125 5,947 3.17%
253 FSS Federal Signal Corporation 4% 23.500 5,946 3.15%
100 F Ford Motor Company 4% 59.563 5,956 3.09%
196 FO Fortune Brands, Inc. 4% 30.250 5,929 2.91%
73 GIS General Mills, Inc. 4% 80.938 5,908 2.72%
191 HRS Harris Corporation 4% 31.125 5,945 3.08%
323 LPX Louisiana-Pacific Corporation 4% 18.375 5,935 3.05%
382 MRA Meritor Automotive, Inc. 4% 15.563 5,945 2.70%
320 MCH Millennium Chemicals, Inc. 4% 18.563 5,940 3.23%
114 PPG PPG Industries, Inc. 4% 51.938 5,921 2.93%
280 PLL Pall Corporation 4% 21.250 5,950 3.01%
240 PRD Polaroid Corporation 4% 24.750 5,940 2.42%
149 RYN Rayonier, Inc. 4% 39.750 5,923 3.12%
200 SNA Snap-On, Inc. 4% 29.688 5,938 2.96%
240 SON Sonoco Products Company 4% 24.750 5,940 2.91%
124 TRW TRW, Inc. 4% 47.938 5,944 2.75%
143 TNB Thomas & Betts Corporation 4% 41.625 5,952 2.69%
210 UCL Unocal Corporation 4% 28.313 5,946 2.83%
271 WCS Wallace Computer Services, Inc. 4% 21.938 5,945 2.92%
164 WMK Weis Markets, Inc. 4% 36.125 5,925 2.77%
109 WY Weyerhaeuser Company 4% 54.250 5,913 2.95%
______ _________
Total Investments 100% $148,411
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 13
Schedule of Investments
TARGET SMALL-CAP PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Number Percentage Market Cost of
of Ticker Symbol and of Aggregate Value per Securities to
Shares Name of Issuer of Securities (1) Offering Price Share the Trust (2)
______ _______________________________________ ______________ _______ ____________
<C> <S> <C> <C> <C>
84 AVTC AVT Corporation 1.43% $25.250 $2,121
91 ALO Alpharma, Inc. (Class A) 2.37% 38.625 3,515
204 AFWY American Freightways Corporation 2.16% 15.750 3,213
127 ACAI Atlantic Coast Airlines Holdings 2.74% 32.063 4,072
220 CGO Atlas Air, Inc. 4.29% 29.000 6,380
85 EWB E.W. Blanch Holdings, Inc. 3.26% 57.000 4,845
112 BAMM Books-A-Million, Inc. 0.85% 11.313 1,267
88 CTS CTS Corporation 2.89% 48.813 4,296
54 CTEA Celestial Seasonings, Inc. 1.04% 28.625 1,546
79 CHRX ChiRex, Inc. 1.14% 21.375 1,689
123 CHD Church & Dwight Company, Inc. 3.44% 41.500 5,105
116 DRD Duane Reade Inc. 2.39% 30.563 3,545
188 EDMC Education Management Corporation 3.43% 27.063 5,088
61 FPIC FPIC Insurance Group, Inc. 1.77% 43.000 2,623
57 FORR Forrester Research, Inc. 1.37% 35.813 2,041
177 GVA Granite Construction Incorporated 2.96% 24.813 4,392
90 GPSI Great Plains Software, Inc. 2.82% 46.625 4,196
193 HH Hooper Holmes, Inc. 1.82% 14.000 2,702
170 NSIT Insight Enterprises, Inc. 2.80% 24.500 4,165
171 INSUA Insituform Technologies, Inc. (Class A) 1.66% 14.438 2,469
121 ITGI Investment Technology Group, Inc. 3.48% 42.750 5,173
101 LSON Lason, Inc. 3.66% 53.875 5,441
90 MELI Melita International Corporation 1.15% 19.000 1,710
76 MTON Metro One Telecommunications, Inc. 0.72% 14.125 1,073
129 MCRL MICREL, Incorporated 4.11% 47.375 6,111
246 MWHS Micro Warehouse, Inc. 3.48% 21.000 5,166
79 MNC Monaco Coach Corporation 1.58% 29.688 2,345
142 ORLY O'Reilly Automotive, Inc. 4.33% 45.313 6,434
69 PERC Perclose, Inc. 1.99% 42.875 2,958
80 PFGC Performance Food Group Company 1.45% 27.000 2,160
151 PPDI Pharmaceutical Product Development, Inc. 3.37% 33.125 5,002
107 PLT Plantronics, Inc. 4.39% 61.000 6,527
98 PLXS Plexus Corporation 2.15% 32.625 3,197
107 PRGS Progress Software Corporation 2.16% 30.000 3,210
179 ROV Rayovac Corporation 3.25% 26.938 4,822
258 RYAN Ryan's Family Steak Houses, Inc. 2.04% 11.750 3,032
161 SKYW SkyWest, Inc. 3.33% 30.750 4,951
203 SWC Stillwater Mining Company 3.29% 24.063 4,885
77 THQI THQ, Inc. 1.15% 22.125 1,704
133 TECH Techne Corporation 2.29% 25.625 3,408
_______ __________
Total Investments 100% $148,579
======= ==========
____________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 14
Schedule of Investments
GLOBAL TARGET 15 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Current
of Offering Value per Securities to Dividend
Shares Name of Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________________ ___________ ________ _____________ ________
<C> <S> <C> <C> <C> <C>
DJIA COMPANIES:
_______________
217 Caterpillar Inc. 6.70% $45.688 $ 9,914 2.63%
186 E.I. du Pont de Nemours & Company 6.69% 53.188 9,893 2.63%
148 Eastman Kodak Company 6.69% 66.875 9,897 2.63%
213 Goodyear Tire & Rubber Company 6.68% 46.375 9,878 2.59%
247 Philip Morris Companies, Inc. 6.70% 40.125 9,911 4.39%
FT INDEX COMPANIES:
___________________
1,290 Allied Domecq Plc 6.70% 7.676 9,901 5.29%
2,017 Blue Circle Industries Plc 6.69% 4.909 9,900 4.80%
1,362 British Airways Plc 6.70% 7.271 9,904 4.53%
1,488 Marks & Spencer Plc 6.70% 6.653 9,901 4.34%
1,375 Tate & Lyle Plc 6.70% 7.202 9,903 4.08%
HANG SENG INDEX COMPANIES:
_________________________
14,000 Amoy Properties Ltd. 6.72% 0.710 9,941 8.73%
68,000 Guangdong Investment Ltd. 6.77% 0.147 10,008 5.70%
17,000 Henderson Investment Ltd. 6.53% 0.568 9,657 5.45%
14,000 Hongkong & Shanghai Hotels Ltd. 6.60% 0.697 9,760 5.19%
8,000 Hysan Development Company Ltd. 6.43% 1.188 9,502 6.90%
_____ ________
Total Investments 100% $147,870
===== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 15
Schedule of Investments
EUROPEAN TARGET 20 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Number Percentage Market Cost of Current
of of Aggregate Value Securities to Dividend
Shares Name of Issuer of Securities (1) Offering Price per Share the Trust (2) Yield (3)
______ ________________________________ _____________ _______ ____________ ____________
<C> <S> <C> <C> <C> <C>
360 ABN AMRO Holding NV 5% $20.610 $ 7,420 3.09%
364 Abbey National Plc 5% 20.372 7,415 3.22%
214 BASF AG 5% 34.755 7,438 4.64%
529 BP Amoco Plc 5% 14.044 7,429 3.27%
272 Barclays Plc 5% 27.270 7,417 2.94%
211 Bayer AG 5% 35.197 7,427 4.36%
821 British American Tobacco Plc 5% 9.039 7,421 4.57%
262 Commerzbank AG 5% 28.390 7,438 4.26%
684 Diageo Plc 5% 10.860 7,428 3.44%
350 EDP-Electricidade de Portugal, SA 5% 21.240 7,434 2.82%
1,302 ENI SpA 5% 5.702 7,424 2.80%
17 Electrabel SA 5% 427.119 7,261 3.13%
261 HSBC Holdings Plc 5% 28.489 7,436 3.72%
470 Iberdrola SA 5% 15.803 7,427 3.28%
145 KPN NV 5% 51.276 7,435 2.74%
1,116 Marks & Spencer Plc 5% 6.653 7,425 4.34%
1,027 Norwich Union Plc 5% 7.231 7,426 3.33%
570 Rio Tinto Plc 5% 13.033 7,429 4.24%
870 Royal & Sun Alliance Insurance Group Plc 5% 8.530 7,421 4.44%
169 Royal Dutch Petroleum Company 5% 43.928 7,424 3.65%
______ ________
Total Investments 100% $148,375
====== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 16
Schedule of Investments
THE S&P TARGET 10 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of
of Ticker Symbol and Offering Value per Securities to
Shares Name of Issuer of Securities (1) Price Share the Trust (2)
______ _______________________________________ ___________ ________ _____________
<C> <S> <C> <C> <C>
185 GTW Gateway 2000, Inc. 10% $80.125 $ 14,823
252 LOW Lowe's Companies, Inc. 10% 58.938 14,853
415 PE PECO Energy Company 10% 35.813 14,862
323 SLR Solectron Corporation 10% 46.000 14,858
492 SPLS Staples, Inc. 10% 30.188 14,853
240 YUM Tricon Global Restaurants, Inc. 10% 61.875 14,850
489 UIS Unisys Corporation 10% 30.375 14,853
171 VIA/B Viacom Inc. (Class B) 10% 86.750 14,834
175 WMT Wal-Mart Stores, Inc. 10% 85.063 14,886
470 WAG Walgreen Co. 10% 31.625 14,864
_____ ________
Total Investments 100% $148,536
===== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 17
Schedule of Investments
THE NASDAQ TARGET 15 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-February 26, 1999
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Market
of Ticker Symbol and Offering Value per Securities to Capitalization
Shares Name of Issuer of Securities (1) Price Share the Trust (2) (in millions) (4)
______ _______________________________________ ___________ ________ _____________ _____________
<C> <S> <C> <C> <C> <C>
27 ALTR Altera Corporation 1.00% $55.000 $1,485 $ 5,351
64 AMGN Amgen Inc. 5.47% 126.750 8,112 32,258
37 ADSK Autodesk, Inc. 1.02% 41.063 1,519 1,926
16 BGEN Biogen, Inc. 1.04% 96.250 1,540 7,084
39 COMR COMAIR Holdings, Inc. 1.01% 38.625 1,506 2,508
326 DELL Dell Computer Corporation 17.96% 81.750 26,651 104,007
42 EFII Electronics for Imaging, Inc. 1.02% 36.000 1,512 1,914
290 INTC Intel Corporation 24.96% 127.750 37,048 212,959
38 LLTC Linear Technology Corporation 1.26% 49.313 1,874 7,428
241 MSFT Microsoft Corporation 24.92% 153.500 36,994 387,351
232 ORCL Oracle Corporation 9.07% 58.000 13,456 55,663
95 SUNW Sun Microsystems, Inc. 6.57% 102.688 9,755 39,562
50 TLAB Tellabs, Inc. 2.68% 79.563 3,978 15,455
32 VTSS Vitesse Semiconductor Corporation 1.01% 46.938 1,502 3,490
20 XLNX Xilinx, Inc. 1.01% 75.063 1,501 5,426
______ ________
Total Investments 100% $148,433
====== ========
<FN>
NOTES TO SCHEDULES OF INVESTMENTS
(1) All Securities are represented by regular way contracts to purchase
such Securities for the performance of which an irrevocable letter of
credit has been deposited with the Trustee. We entered into purchase
contracts for the Securities on February 26, 1999. Each Trust has a
mandatory termination date of March 31, 2000.
(2) The cost of the Securities to a Trust represents the aggregate
underlying value with respect to the Securities acquired-generally
determined by the closing sale prices of the Securities on the
applicable exchange (where applicable, converted into U.S. dollars at
the offer side of the exchange rate at the Evaluation Time) at the close
of business on February 25, 1999, the business day prior to the Initial
Date of Deposit. The valuation of the Securities has been determined by
the Evaluator, an affiliate of ours. The cost of the Securities to us
and our profit or loss (which is the difference between the cost of the
Securities to us and the cost of the Securities to a Trust) are set
forth below:
Cost of
Securities Profit
to Sponsor (Loss)
__________ ___________
The Dow(sm) Target 5 Portfolio, March 1999 Series $148,927 $ (486)
The Dow(sm) Target 10 Portfolio, March 1999 Series 148,948 (363)
Target 25 Portfolio, March 1999 Series 148,833 (422)
Target Small-Cap Portfolio, March 1999 Series 149,816 (1,237)
Global Target 15 Portfolio, March 1999 Series 149,342 (1,472)
European Target 20 Portfolio, March 1999 Series 148,817 (442)
The S&P Target 10 Portfolio, March 1999 Series 148,196 340
The Nasdaq Target 15 Portfolio, March 1999 Series 145,041 3,392
(3) Current Dividend Yield for each Security was calculated by dividing
the most recent annualized ordinary dividend paid on a Security by that
Security's closing sale price at the close of business on the business
day prior to the Initial Date of Deposit.
(4) Market capitalization is based on the market value as of the close
of business on February 25, 1999.
</FN>
</TABLE>
Page 18
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created several similar
yet separate investment companies which we have named the FT Series. We
designate each of these investment company series, the FT Series, with a
different series number.
You may get more specific details on some of the information in this
prospectus in an "Information Supplement" by calling the Trustee at
1-800-682-7520.
What We Call the Trusts.
This FT Series consists of eight separate unit investment trusts known as:
- - The Dow (sm) Target 5 Portfolio
- - The Dow (sm) Target 10 Portfolio
- - Target 25 Portfolio
- - Target Small-Cap Portfolio
- - Global Target 15 Portfolio
- - European Target 20 Portfolio
- - The S&P Target 10 Portfolio
- - The Nasdaq Target 15 Portfolio
Trusts containing only domestic stocks may be called "Domestic Trusts"
and those which contain foreign stocks may be called "International
Trusts."
Mandatory Termination Date.
The Trusts will terminate on the Mandatory Termination Date,
approximately 13 months from the date of this prospectus. This date is
shown in "Summary of Essential Information." Each Trust was created
under the laws of the State of New York according to a Trust Agreement
(the "Indenture") dated the Initial Date of Deposit. This agreement,
entered into between Nike Securities L.P., as Sponsor, The Chase
Manhattan Bank as Trustee and First Trust Advisors L.P. as Portfolio
Supervisor and Evaluator, governs the operation of the Trusts.
How We Created the Trusts.
On the Initial Date of Deposit, we deposited contracts to buy the
Securities (fully backed by an irrevocable letter of credit of a
financial institution) with the Trustee. In return for depositing the
Securities, the Trustee delivered documents to us representing our
ownership of the Trusts, in the form of units ("Units").
With the deposit of the contracts to buy Securities on the Initial Date
of Deposit we established a percentage relationship among the Securities
in each Trust's portfolio, as stated under "Schedule of Investments" for
each Trust. After the Initial Date of Deposit, we may deposit additional
Securities in a Trust, or cash (including a letter of credit) with
instructions to buy more Securities, in order to create new Units for
sale. If we create additional Units we will attempt, to the extent
practicable, to maintain the percentage relationship established among
the Securities on the Initial Date of Deposit, and not the percentage
relationship existing on the day we are creating Units, since the two
may differ. This difference may be due to the sale, redemption or
liquidation of any of the Securities.
Since the prices of the underlying Securities will fluctuate daily, the
ratio of Securities in a Trust, on a market value basis, will also
change daily. The portion of Securities represented by each Unit will
not change as a result of the deposit of additional Securities or cash
in a Trust. If we deposit cash, you and new investors may experience a
dilution of your investment. This is because prices of Securities will
fluctuate between the time of the cash deposit and the purchase of the
Securities, and because the Trust will pay the associated brokerage
fees. To reduce this dilution, the Trusts will try to buy the Securities
as close to the evaluation time and as close to the evaluation price as
possible.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may, from time to time, retain and pay us (or an affiliate of
ours) to act as agent for a Trust to buy Securities. If we or an
affiliate of ours act as agent to a Trust we will be subject to the
restrictions under the Investment Company Act of 1940, as amended.
We cannot guarantee that a Trust will keep its present size and
composition for any length of time. Securities may periodically be sold
under certain circumstances, and the proceeds from these sales will be
used to meet Trust obligations or distributed to Unit holders, but will
not be reinvested. The Trusts will not, however, sell Securities to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if the Securities no longer meet the
Page 19
criteria by which they were selected. You will not be able to dispose of
any of the Securities in a Trust or vote the Securities. As the holder
of the Securities, the Trustee will vote all of the Securities and will
do so based on our instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in a Trust fails, unless we can purchase
substitute Securities ("Replacement Securities") we will refund to you
that portion of the purchase price and sales charge resulting from the
failed contract on the next Income Distribution Date. Any Replacement
Security a Trust acquires will be identical to those from the failed
contract. The Trustee must purchase the Replacement Securities within 20
days after it receives notice of a failed contract, and the purchase
price may not be more than the amount of funds reserved for the purchase
of the failed contract.
Portfolios
Objectives
When you invest in a Trust you are purchasing a quality portfolio of
attractive common stocks in one convenient purchase. Certain of the
Trusts invest in stocks with high dividend yields. Investing in stocks
with high dividend yields may be effective in achieving a Trust's
investment objective. This is because regular dividends are common for
established companies, and dividends have historically accounted for a
large portion of the total return on stocks. Because the Trusts' lives
are short, we cannot guarantee that a Trust will achieve its objective
or that a Trust will make money once expenses are deducted.
Each Trust's investment objective is to provide an above-average total
return. Except for the Target Small-Cap Portfolio, The S&P Target 10
Portfolio and The Nasdaq Target 15 Portfolio, each Trust seeks to meet
its objective through a combination of capital appreciation and dividend
income. The Target Small-Cap Portfolio, The S&P Target 10 Portfolio and
The Nasdaq Target 15 Portfolio each seek to meet their objective through
capital appreciation. As discussed below, each Trust follows a different
investment strategy to meet its objective.
Portfolio Strategies
The Target 5 Portfolio Strategy.
Step 1: We rank all 30 stocks contained in the Dow Jones Industrial
Average ("DJIA") by dividend yield as of the business day prior to the
date of this prospectus.
Step 2:We then select the ten highest dividend-yielding stocks from this
group.
Step 3:From the ten stocks selected in Step 2, we select the five stocks
with the lowest per share stock price for The Target 5 Portfolio.
The Target 10 Portfolio Strategy.
Step 1: We rank all 30 stocks contained in the DJIA by dividend yield as
of the business day prior to the date of this prospectus.
Step 2: We then select the ten highest dividend-yielding stocks for The
Target 10 Portfolio.
The Target 25 Portfolio Strategy.
Step 1: We select all dividend-paying stocks listed on the New York
Stock Exchange ("NYSE") (excluding financial, transportation and utility
stocks, American Depositary Receipts, limited partnerships and any stock
included in the DJIA) as of two business days prior to the date of this
prospectus.
Step 2: We then rank the stocks from highest to lowest market
capitalization, and select the 400 highest market cap stocks.
Step 3: We rank the 400 stocks from highest to lowest dividend yield,
and select the 75 highest dividend-yielding stocks.
Step 4: We take the remaining 75 stocks, discard the 50 highest dividend-
yielding stocks, and select the remaining 25 stocks for the Target 25
Portfolio.
The Target Small-Cap Portfolio Strategy.
Step 1: We select the stocks of all U.S. corporations which trade on the
NYSE, the American Stock Exchange ("AMEX") or The Nasdaq Stock Market
("Nasdaq") (excluding limited partnerships, American Depositary Receipts
and mineral and oil royalty trusts) as of two business days prior to the
date of this prospectus.
Step 2: We then select companies which, based on 1996 dollars, have a
Page 20
market capitalization of between $150 million and $1 billion and whose
stock has an average daily dollar trading volume of at least $500,000.
Step 3: We next select stocks with positive three-year sales growth.
Step 4: From there we select those stocks whose most recent annual
earnings are positive.
Step 5: We eliminate any stock whose price has appreciated by more than
75% in the last 12 months.
Step 6: We select the 40 stocks with the greatest price appreciation in
the last 12 months on a relative market capitalization basis (highest to
lowest) for the Target Small-Cap Portfolio.
In each of the above steps for the Target Small-Cap Strategy, we apply
monthly and rolling quarterly data instead of annual figures where
possible.
The Global Target 15 Portfolio Strategy.
Step 1: We rank all stocks contained in the DJIA, the Financial Times
Industrial Ordinary Share Index ("FT Index") and the Hang Seng Index by
dividend yield as of the business day prior to the date of this
prospectus in the case of DJIA stocks or three business days prior to
the date of this prospectus in the case of FT Index or Hang Seng Index
stocks.
Step 2: We select the ten highest dividend-yielding stocks in each
respective index.
Step 3: We select the five stocks with the lowest per share stock price
of the ten highest-dividend yielding stocks in each respective index as
of their respective selection date for the Global Target 15 Portfolio.
European Target 20 Portfolio Strategy.
Step 1: We rank the 120 largest companies based on market capitalization
which are headquartered in Austria, Belgium, Denmark, Finland, Germany,
Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland or the United Kingdom by dividend yield as of five
business days prior to the date of this prospectus.
Step 2: We select the 20 highest dividend-yielding stocks for the
European Target 20 Portfolio.
The S&P Target 10 Portfolio Strategy.
Step 1: We select the 250 largest companies based on market
capitalization which are components of the S&P 500 Index as of two
business days prior to the date of this prospectus.
Step 2: From the above list, the 125 companies with the lowest price to
sales ratios are selected.
Step 3:The 10 companies which had the greatest 1-year stock price
appreciation are selected for The S&P Target 10 Portfolio.
The Nasdaq Target 15 Portfolio Strategy.
Step 1: We select stocks which are components of the Nasdaq 100 Index as
of two business days prior to the date of this prospectus and
numerically rank them by 12-month price appreciation (best (1) to worst
(100)).
Step 2: We then numerically rank the stocks by six-month price
appreciation.
Step 3: The stocks are then numerically ranked by return on assets ratio.
Step 4: We then numerically rank the stocks by the ratio of cash flow
per share to stock price.
Step 5: We add up the numerical ranks achieved by each company in the
above steps and select the 15 stocks with the lowest sums 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 date of
this prospectus. The Securities will be adjusted on a proportionate
basis to accommodate this constraint.
Companies which, based on publicly available information as of two
business days prior to the date of this prospectus, are the subject of
an announced business combination which we expect will happen within six
months of date of this prospectus have been excluded from the Target 25
Strategy Portfolio, Target Small-Cap Strategy Portfolio and The Nasdaq
Target 15 Portfolio.
Please note that we applied each strategy at a particular time. If we
create additional Units of a Trust after the Initial Date of Deposit we
Page 21
will deposit the Securities originally selected by applying the strategy
at such time. This is true even if a later application of a strategy
would have resulted in the selection of different Securities.
"Dow Jones Industrial Average (sm)", "Dow" and "DJIA (sm)" are service
marks of Dow Jones & Company, Inc. ("Dow Jones") and have been licensed
for use for certain purposes by First Trust Advisors L.P., an affiliate
of ours. Dow Jones does not endorse, sell or promote any of the Trusts,
in particular, The Dow (sm) Target 5 Trust and The Dow (sm) Target 10
Trust. Dow Jones makes no representation regarding the advisability of
investing in such products.
"S&P," "S&P 500," and "Standard & Poor's" are trademarks of The McGraw-
Hill Companies, Inc. and have been licensed for use by us. 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 us. 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.
Dow Jones, Standard & Poor's and The Nasdaq Stock Market, Inc., as well
as the publishers of the Ibbotson Small-Cap Index, MSCI Europe Index, FT
Index and Hang Seng Index, are not affiliated with us and have not
participated in creating the Trusts or selecting the Securities for the
Trusts. Except as noted above, none of the index publishers have given
us a license to use their index nor have they approved of any of the
information in this prospectus.
Risk Factors
Price Volatility. The Trusts invest in common stocks of U.S., and, for
certain Trusts, foreign companies. The value of a Trust's Units will
fluctuate with changes in the value of these common stocks. Common stock
prices fluctuate for several reasons including changes in investors'
perceptions of the financial condition of an issuer or the general
condition of the relevant stock market, or when political or economic
events affecting the issuers occur.
Because the Trusts are not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of any Trust will be positive over any period of time or
that you won't lose money. Units of the Trusts are not deposits of any
bank and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Trusts which use dividend yield as a selection criteria employ a
contrarian strategy in which the Securities selected share qualities
that have caused them to have lower share prices or higher dividend
yields than other common stocks in their peer group. There is no
assurance that negative factors affecting the share price or dividend
yield of these Securities will be overcome over the life of the Trusts
or that they will increase in value.
Certain Trusts (particularly the Target Small-Cap Portfolio) are
concentrated in Securities issued by companies with market
capitalizations of less than $1 billion. The share prices of these small-
cap companies are often more volatile than those of larger companies.
This is a result of several factors common to many such issuers,
including limited trading volumes, products or financial resources,
management inexperience and less publicly available information.
Dividends. There is no guarantee that the issuers of the Securities will
declare dividends in the future or that if declared they will either
remain at current levels or increase over time.
Financial Institutions Industry. The European Target 20 Portfolio is
concentrated in financial institutions stocks. 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. In addition, financial
institutions are extensively regulated and may be adversely affected by
increased regulations.
Page 22
Financial institutions will face increased competition from
nontraditional lending sources as regulatory changes permit new entrants
to offer various financial products. Technological advances such as the
Internet allow these nontraditional lending sources to cut overhead and
permit the more efficient use of customer data.
Technology Industry. The Nasdaq Target 15 Portfolio is concentrated in
technology stocks. Technology companies are generally subject to the
risks of rapidly changing technologies; short product life cycles,
fierce competition; aggressive pricing; frequent introduction of new or
enhanced products; the loss of patent, copyright and trademark
protections; and government regulation. Technology companies may be
smaller and less experienced companies, with limited product lines,
markets or financial resources. Technology company stocks have
experienced extreme price and volume fluctuations that are often
unrelated to their operating performance.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain of the companies represented in the Trusts.
In addition, litigation regarding any of the issuers of the Securities,
such as that concerning Microsoft Corporation and Philip Morris
Companies, Inc., or of the industries represented by these issuers may
negatively impact the share prices of these Securities. We cannot
predict what impact any pending or threatened litigation will have on
the share prices of the Securities.
Year 2000 Problem. Many computer systems were not designed to properly
process information and data involving dates of January 1, 2000 and
thereafter. This is commonly known as the "Year 2000 Problem." We do not
expect that any of the computer system changes necessary to prepare for
January 1, 2000 will cause any major operational difficulties for the
Trusts. However, we are unable to predict what impact the Year 2000
Problem will have on any of the issuers of the Securities.
Foreign Stocks. Certain or all of the Securities in certain Trusts are
issued by foreign companies, which makes these Trusts subject to more
risks than if they invested solely in domestic common stocks. Risks of
foreign common stocks include losses due to future political and
economic developments, foreign currency devaluations, restrictions on
foreign investments and exchange of securities, inadequate financial
information and lack of liquidity of certain foreign markets. In
addition, brokerage and other transaction costs on foreign securities
exchanges are often higher than in the U.S. and there is generally less
government supervision and regulation of exchanges, brokers, and issuers
in foreign countries.
The purchase and sale of the foreign Securities will generally occur
only in foreign securities markets. Although we do not believe that the
Trusts will have problems buying and selling these Securities, certain
of the factors stated above may make it impossible to buy or sell them
in a timely manner. Custody of certain of the Securities in the European
Target 20 Portfolio is maintained by Cedel Bank S.A., a global custody
and clearing institution which has entered into a sub-custodian
relationship with the Trustee.
United Kingdom. The Global Target 15 Portfolio and the European Target
20 Portfolio are concentrated in common stocks of U.K. issuers. The
United Kingdom is one of 15 members of the European Union ("EU") which
was formed by the Maastricht Treaty on European Union. It is expected
that the Treaty will have the effect of eliminating most remaining trade
barriers between the member nations and make Europe one of the largest
common markets in the world. However, the uncertain implementation of
the Treaty provisions and recent rapid political and social change
throughout Europe make the extent and nature of future economic
development in the United Kingdom and Europe and their effect on
Securities issued by U.K. issuers impossible to predict.
Unlike a majority of EU members, the United Kingdom did not convert
their currency to the new common European currency, the euro, on January
1, 1999. All European (including United Kingdom) companies and other
companies with significant markets or operations in Europe, face
strategic challenges as these entities adapt to a single currency. The
euro conversion may materially impact revenues, expenses or income;
increase competition; affect issuers' currency exchange rate risk and
derivatives exposure; cause issuers to increase spending on information
technology updates; and result in potential adverse tax consequences. We
cannot predict whether the United Kingdom will ever convert to the euro
or what impact the implementation of a common currency throughout a
Page 23
majority of EU countries will have on United Kingdom or European issuers.
Hong Kong. The Global Target 15 Portfolio is also concentrated in common
stocks of Hong Kong issuers. Hong Kong issuers are subject to risks
related to Hong Kong's political and economic environment, the
volatility of the Hong Kong stock market, and the concentration of real
estate companies in the Hang Seng Index. Hong Kong reverted to Chinese
control on July 1, 1997 and any increase in uncertainty as to the future
economic and political status of Hong Kong, or a deterioration of the
relationship between China and the United States, could have negative
implications on stocks listed on the Hong Kong stock market. Securities
prices on the Hong Kong Stock Exchange, and specifically the Hang Seng
Index, can be highly volatile and are sensitive to developments in Hong
Kong and China, as well as other world markets.
Exchange Rates. Because securities of foreign issuers generally pay
dividends and trade in foreign currencies, the U.S. dollar value of
these Securities (and therefore Units of the International Trusts) will
vary with fluctuations in foreign exchange rates. Most foreign
currencies have fluctuated widely in value against the U.S. dollar for
various economic and political reasons. The recent conversion by eleven
of the fifteen EU members of their national currencies to the euro could
negatively impact the market rate of exchange between such currencies
(or the newly created euro) and the U.S. dollar.
To determine the value of foreign Securities or their dividends, the
Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, these markets can be quite volatile, depending on the activity
of the large international commercial banks, various central banks,
large multi-national corporations, speculators and other buyers and
sellers of foreign currencies. Since actual foreign currency
transactions may not be instantly reported, the exchange rates estimated
by the Evaluator may not reflect the amount the International Trusts
would receive, in U.S. dollars, had the Trustee sold any particular
currency in the market.
Hypothetical Performance Information
The following tables compare hypothetical performance information for
the strategies employed by each Trust and the actual performance of the
DJIA, S&P 500 Index, Nasdaq 100 Index, Ibbotson Small-Cap Index, MSCI
Europe Index, FT Index, Hang Seng Index and a combination of the FT
Index, Hang Seng Index and the DJIA (the "Cumulative Index Returns") in
each of the full years listed below (and as of the most recent quarter).
These hypothetical returns should not be used to predict future
performance of the Trusts. Returns from a Trust will differ from its
strategy for several reasons, including the following:
- - Total Return figures shown do not reflect sales charges, commissions,
Trust expenses or taxes.
- - Strategy returns are for calendar years, while the Trusts begin and
end on various dates.
- - Trusts have a maturity longer than one year.
- - Trusts may not be fully invested at all times or equally weighted in
all stocks comprising a strategy.
- - Securities are often purchased or sold at prices different from the
closing prices used in buying and selling Units.
- - For Trusts investing in foreign Securities, currency exchange rates
may differ.
You should note that the Trusts are not designed to parallel movements
in any index or combination of indexes, and it is not expected that they
will do so. In fact, each Trust's strategy underperformed its
comparative index, or combination thereof, in certain years and we
cannot guarantee that a Trust will outperform its respective index over
the life of a Trust or over consecutive rollover periods, if available.
Each index differs widely in size and focus, as described below.
DJIA. The DJIA consists of 30 U.S. stocks chosen by the editors of The
Wall Street Journal as being representative of the broad market and of
American industry.
S&P 500 Index. The S&P 500 Index consists of 500 stocks chosen by Standard
and Poor's to be representative of the leaders of various industries.
Nasdaq 100 Index. The NASDAQ 100 Index consists of the 100 largest non-
financial companies listed on the NASDAQ National Market System. As of
December 18, 1998, the constituents are constructed using a modified
market capitalization approach.
Ibbotson Small-Cap Index. The Ibbotson Small-Cap Index is
Page 24
a market capitalization weighted index of the ninth and tenth
deciles of the New York Stock Exchange, plus stocks listed on the
American Stock Exchange and over-the counter with the same or less
capitalization as the upper bound of the NYSE ninth decile.
Financial Times Industrial Ordinary Share Index. The FT Index consists
of 30 common stocks chosen by the editors of The Financial Times as
being representative of British industry and commerce.
Hang Seng Index. The Hang Seng Index consists of 33 of the stocks
currently listed on the Stock Exchange of Hong Kong Ltd. and is intended
to represent four major market sectors: commerce and industry, finance,
property and utilities.
MSCI Europe Index. The MSCI Europe Index is an equity market capitalization
weighted index consisting of over 500 companies from all of the developed
markets in Europe.
Page 25
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN (2)
Hypothetical Strategy Total Returns (1) Index Total Returns
______________________________________________________ _________________________________________
Target Ibbotson
Target 5 Target 10 Target 25 Small-Cap S&P 500 Small-Cap
Year Strategy Strategy Strategy Strategy DJIA Index Index
____ ________ _________ _________ _________ _______ ______ ___________
<S> <C> <C> <C> <C> <C> <C> <C>
1972 22.92% 23.76% 8.04% 12.66% 18.38% 18.89% 4.43%
1973 20.01% 4.01% -6.99% -25.02% -13.20% -14.57% -30.90%
1974 -5.40% -1.02% -9.54% -34.85% -23.64% -26.33% -19.95%
1975 64.77% 56.10% 76.02% 40.13% 44.46% 36.84% 52.82%
1976 40.96% 35.18% 44.31% 45.70% 22.80% 23.64% 57.38%
1977 5.49% -1.95% -4.58% 16.22% -12.91% -7.25% 25.38%
1978 1.23% 0.03% 6.49% 17.53% 2.66% 6.49% 23.46%
1979 9.84% 13.01% 27.68% 40.78% 10.60% 18.22% 43.46%
1980 41.69% 27.90% 26.45% 61.97% 21.90% 32.11% 38.88%
1981 3.19% 7.46% 8.52% -9.46% -3.61% -4.92% 13.88%
1982 43.37% 27.12% 30.83% 51.26% 26.85% 21.14% 28.01%
1983 36.38% 39.07% 32.09% 31.04% 25.82% 22.28% 39.67%
1984 11.12% 6.22% 5.55% -1.10% 1.29% 6.22% -6.67%
1985 38.34% 29.54% 41.89% 50.81% 33.28% 31.77% 24.66%
1986 30.89% 35.63% 25.01% 23.35% 27.00% 18.31% 6.85%
1987 10.69% 5.59% 14.41% 14.94% 5.66% 5.33% -9.30%
1988 21.47% 24.57% 27.18% 23.19% 16.03% 16.64% 22.87%
1989 10.55% 26.97% 22.98% 26.10% 32.09% 31.35% 10.18%
1990 -15.74% -7.82% -0.82% 1.08% -0.73% -3.30% -21.56%
1991 62.03% 34.20% 37.67% 59.55% 24.19% 30.40% 44.63%
1992 22.90% 7.69% 15.14% 27.81% 7.39% 7.62% 23.35%
1993 34.01% 27.08% 15.22% 22.47% 16.87% 9.95% 20.98%
1994 8.27% 4.21% 9.73% 2.11% 5.03% 1.34% 3.11%
1995 30.50% 36.85% 36.69% 41.65% 36.67% 37.22% 34.66%
1996 26.20% 28.35% 28.53% 34.96% 28.71% 22.82% 17.62%
1997 19.97% 21.68% 30.69% 16.66% 24.82% 33.21% 22.78%
1998 12.36% 10.59% 1.83% 1.85% 18.03% 28.57% -7.38%
________________
<FN>
(1)The Strategy stocks for each Strategy for a given year consist of the
common stocks selected by applying the respective 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 day 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 figures assume that all
dividends are reinvested semi-annually and all returns are stated in
terms of U.S. dollars. Based on the year-by-year returns contained in
the table, over the 27 full years listed above, the Target 5 Strategy,
Target 10 Strategy, the Target 25 Strategy and Target Small-Cap Strategy
achieved an average annual total return of 21.10%, 18.33%, 19.04%, and
19.43%, respectively. In addition, over this period, each individual
strategy achieved a greater average annual total return than that of its
corresponding index, the DJIA, S&P 500 Index and Ibbotson Small-Cap
Index which were 13.45%, 13.71% and 14.83%, respectively.
</FN>
</TABLE>
Page 26
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN (2)
Hypothetical Strategy Total Returns(1) Index Total Returns
__________________________________________ ________________________________________________________
Global European S&P Nasdaq MSCI Cumulative
Target 15 Target 20 Target 10 Target 15 Hang Seng Europe S&P 500 Nasdaq Index
Year Strategy Strategy Strategy Strategy FT Index Index DJIA Index Index 100 Index Returns(3)
____ _________ _________ _________ _________ ________ _________ ____ _______ _______ _________ __________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1979 44.70% 43.17% 3.59% 77.99% 10.60% 18.22% 30.73%
1980 52.51% 54.15% 31.77% 65.48% 21.90% 32.11% 39.72%
1981 0.03% -10.59% -5.30% -12.34% -3.61% -4.92% -7.08%
1982 -2.77% 38.21% 0.42% -48.01% 26.85% 21.14% -6.91%
1983 15.61% 20.01% 21.94% -2.04% 25.82% 22.28% 15.24%
1984 29.88% 2.00% 16.34% 2.15% 42.61% 1.29% 1.26% 6.22% 15.35%
1985 54.06% 79.54% 43.49% 54.74% 50.95% 33.28% 79.79% 31.77% 46.32%
1986 38.11% 42.53% 21.81% 22.94% 24.36% 51.16% 27.00% 44.46% 18.31% 6.89% 34.18%
1987 17.52% 14.86% 9.16% 14.10% 37.13% -6.84% 5.66% 4.10% 5.33% 10.49% 11.99%
1988 24.26% 16.77% 20.35% -0.59% 9.00% 21.04% 16.03% 16.35% 16.64% 13.54% 15.36%
1989 15.98% 33.09% 39.62% 37.33% 20.07% 10.59% 32.09% 29.06% 31.35% 26.17% 20.92%
1990 3.19% -0.49% -5.64% -5.39% 11.03% 11.71% -0.73% -3.37% -3.30% -10.41% 7.34%
1991 40.40% 16.59% 24.64% 109.27% 8.77% 50.68% 24.19% 13.66% 30.40% 64.99% 27.88%
1992 26.64% -4.03% 24.66% -0.15% -3.13% 34.73% 7.39% -4.25% 7.62% 8.86% 12.99%
1993 65.65% 37.38% 42.16% 28.55% 19.22% 124.95% 16.87% 29.79% 9.95% 11.67% 53.68%
1994 -7.26% -0.51% 8.17% 10.50% 1.97% -29.34% 5.03% 2.66% 1.34% 1.74% -7.45%
1995 13.45% 34.71% 25.26% 53.80% 16.21% 27.52% 36.67% 22.13% 37.22% 43.01% 26.80%
1996 21.00% 24.35% 26.61% 60.03% 18.35% 37.86% 28.71% 21.57% 22.82% 42.74% 28.31%
1997 -6.38% 28.91% 61.46% 35.15% 14.78% -17.69% 24.82% 24.20% 33.21% 20.76% 7.30%
1998 13.50% 35.77% 53.85% 123.10% 12.32% -2.60% 18.03% 28.80 28.57% 85.43% 9.25%
____________
<FN>
(1) The Strategy stocks for each Strategy for a given year consist
of the common stocks selected by applying the respective 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
day 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 figures
assume that all dividends are reinvested semi-annually (except for the
FT Index and Hang Seng Index from 12/31/78 through 12/31/86, during
which time annual reinvestment was assumed) and all returns are stated
in terms of U.S. dollars. Based on the year-by-year returns contained in
the table, over the full years listed above, the Global Target 15
Strategy, European Target 20 Strategy, The S&P Target 10 Strategy and
The Nasdaq Target 15 Strategy achieved an average annual total return of
21.32%, 22.42%, 26.40% and 32.79%, respectively. In addition, over each
stated period, each individual strategy achieved a greater average
annual total return than that of its corresponding index, the
combination of the FT Index, Hang Seng Index and DJIA (the "Cumulative
Index"), MSCI Europe Index, S&P 500 Index and Nasdaq 100 Index which
were 17.94% 19.05%, 17.61% and 22.60%, respectively.
(3) Cumulative Index Returns represent the average of the annual
returns of the stocks contained in the FT Index, Hang Seng Index and
DJIA. Cumulative Index Returns do not represent an actual index.
</FN>
</TABLE>
Page 27
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price. The Public Offering
Price per Unit for each Trust is comprised of the following:
- - the aggregate underlying U.S. dollar value of the Securities;
- - the amount of any cash in the Income and Capital Accounts;
dividends receivable on Securities; and
- - the total sales charge (which combines an initial up-front sales
charge and a deferred sales charge).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities, changes in the
relevant currency exchange rates, changes in the applicable commissions,
stamp taxes, custodial fees and other costs associated with foreign
trading, and changes in the value of the Income and/or Capital Accounts.
The Securities purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for a Trust's organization
costs (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 each
Trust portfolio, legal fees and the initial fees and expenses of the
Trustee) will be purchased in the same proportionate relationship as all
the Securities contained in a Trust. Securities will be sold to
reimburse the Sponsor for a Trust's organization costs at the end of the
initial offering period (a significantly shorter time period than the
life of the Trusts). During the initial offering period, there may be a
decrease in the value of the Securities. To the extent the proceeds from
the sale of these Securities are insufficient to repay the Sponsor for
Trust organization costs, the Trustee will sell additional Securities to
allow a Trust to fully reimburse the Sponsor. In that event, the net
asset value per Unit of a Trust will be reduced by the amount of
additional Securities sold. Although the dollar amount of the
reimbursement due to the Sponsor will remain fixed and will never exceed
the per Unit amount set forth for a Trust in "Statement of Net Assets,"
this will result in a greater effective cost per Unit to Unit holders for
the reimbursement to the Sponsor. To the extent actual organization costs
are less than the estimated amount, only the actual organization costs
will be deducted from the assets of a Trust. When Securities are sold to
reimburse the Sponsor for organization costs, the Trustee will sell
Securities, to the extent practicable, to an extent which will maintain
the same proportionate relationship among the Securities contained in a
Trust as existed prior to such sale.
Although you are not required to pay for your Units until three business
days following your order (the "date of settlement"), you may pay before
then. You will become the owner of Units on the date of settlement if
payment has been received. If you pay for your Units before the date of
settlement, we may use your payment during this time and it may be
considered a benefit to us, subject to the limitations of the Securities
Exchange Act of 1934.
Minimum Purchase.
The minimum amount you can purchase of a Trust is $1,000 worth of Units
($500 if you are purchasing Units for your Individual Retirement Account
or any other qualified retirement plan).
Sales Charges.
The sales charge you will pay has both an initial and a deferred
component. The initial sales charge, which you will pay at the time of
purchase, is initially equal to approximately 1% of the Public Offering
Price of a Unit. This initial sales charge is actually equal to the
difference between the maximum sales charge of 2.75% and the maximum
remaining deferred sales charge (initially $.175 per Unit) and will vary
from 1% with changes in the aggregate underlying U.S. dollar value of
the Securities, changes in the Income and Capital Accounts and as
deferred sales charge payments are made. In addition, ten monthly
deferred sales charges of $.0175 per Unit will be deducted from a
Trust's assets on approximately the twentieth day of each month from
April 20, 1999 through January 20, 2000. The maximum sales charge you
will pay during the initial offering period will be 2.75% of the Public
Offering Price per Unit (equivalent to 2.778% of the net amount
invested, exclusive of the deferred sales charge).
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for a "wrap
Page 28
fee account" as described below) the maximum sales charge is reduced, as
follows:
Your Maximum
If You Invest Sales Charge
(in thousands):* will be:
_____________________ ____________
$ 50 but less than $100 2.50%
$ 100 but less than $150 2.25%
$ 150 but less than $500 1.90%
$ 500 but less than $1,000 1.75%
$1,000 or more 1.00%
*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.
You can combine the Units you purchase of Trusts in this prospectus with
any other same day purchases you make of other trusts for which we acted
as Principal Underwriter and which are currently in the initial offering
period to qualify for the reduced sales charges described above. The
reduced sales charge for quantity purchases will apply only to purchases
made by the same person on any one day from any one dealer. However, we
will consider Units you purchase in the name of your spouse or your
child under 21 years of age to be purchases by you for determining the
reduced sales charge. The reduced sales charges will also apply to a
trustee or other fiduciary purchasing Units for a single trust estate or
single fiduciary account. You must inform your dealer of any combined
purchases before the sale in order to be eligible for the reduced sales
charge. Any reduced sales charge is the responsibility of the
broker/dealer or other selling agent making the sale.
If you commit to purchase Units of the Trusts, or subsequent series of
the Trusts, valued at $1,000,000 or more over a 12-month period
commencing with your first purchase you will receive the reduced sales
charge set forth above on all individual purchases over $83,000.
If you are purchasing Units with rollover proceeds from a previous
series of a Trust you will be subject only to the maximum deferred sales
charge on such Units (for rollover purchases of $1,000,000 or more such
charge shall be a deferred sales charge limited to 1.00% of the Public
Offering Price) but you will not be eligible to receive the reduced
sales charges described in the above table. In addition, you can use
termination proceeds from other unit investments trusts which have a
similar strategy as a Trust, or redemption or termination proceeds from
any unit investment trust we sponsor, to purchase Units of the Trusts
subject only to any remaining deferred sales charge. Please note that
you will be charged the amount of any remaining deferred sales charge on
Units you redeem when you redeem them.
The following persons may purchase Units at the Public Offering Price
less the applicable dealer concession:
- - Employees, officers and directors of the Sponsor, our related
companies, dealers and their affiliates, and vendors providing services
to us.
- - Immediate family members of the above (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).
The Sponsor and certain dealers may establish a schedule where
employees, officers and directors of such dealers can purchase Units of
a Trust at the Public Offering Price less the established schedule
amount, which is designed to compensate such dealers for activities
relating to the sale of Units (the "Employee Dealer Concession").
If you purchase Units through registered broker/dealers who charge
periodic fees for financial planning, investment advisory or asset
management services or provide these services as part of an investment
account where a comprehensive "wrap fee" charge is imposed, you may
purchase Units in the primary or secondary market at the Public Offering
Price, less the concession we would typically allow such broker/dealer.
See "Distribution of Units-Dealer Concessions."
Every investor will be charged the deferred sales charge per Unit
regardless of any discounts. However, if you are eligible to receive a
discount such that the maximum sales charge you must pay is less than
the applicable maximum deferred sales charge, you will be credited the
difference between your maximum sales charge and the maximum deferred
sales charge at the time you buy your Units.
The Value of the Securities.
The aggregate underlying U.S. dollar value of the Securities in a Trust
will be determined as follows: if the Securities are listed on a
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securities exchange or The Nasdaq Stock Market, their value is generally
based on the closing sale prices on that exchange or system (unless it
is determined that these prices are not appropriate as a basis for
valuation). However, if there is no closing sale price on that exchange
or system, they are valued based on the closing ask prices. If the
Securities are not so listed, or, if so listed and the principal market
for them is other than on that exchange or system, the evaluation will
generally be based on the current ask prices on the over-the-counter
market (unless it is determined that these prices are not appropriate 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 Securities on the ask side
of the market, or
c) by any combination of the above.
The total U.S. dollar value of the Securities in the International
Trusts 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 will appraise or have appraised the value of the
underlying Securities in a Trust as of the Evaluation Time on each
business day and will adjust the Public Offering Price of the Units
according to this valuation. This Public Offering Price will be
effective for all orders received before the Evaluation Time on each
such day. If we or the Trustee receive orders for purchases, sales or
redemptions after that time, or on a day which is not a business day,
they will be held until the next determination of price. The term
"business day" as used in this prospectus will exclude Saturdays,
Sundays and the following holidays as observed by the NYSE, Inc.: New
Year's Day, Martin Luther King, Jr.'s Birthday, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day.
After the initial offering period is over, the secondary market Public
Offering Price will be determined based on the aggregate underlying U.S.
dollar value of the Securities in the Trust, plus or minus cash, if any,
in the Income and Capital Accounts of a Trust plus the applicable sales
charge. We calculate the aggregate underlying U.S. dollar value of the
Securities during the secondary market the same way as described above
for sales made during the initial offering period, except that bid
prices are used instead of ask prices when necessary. In addition, the
aggregate underlying U.S. dollar value of the Securities during the
secondary market is computed on the basis of the bid side value of the
relevant currency exchange rate expressed in U.S. dollars as of the
Evaluation Time.
Distribution of Units
We intend to qualify Units of the Trusts for sale in a number of states.
During the initial offering period, Units will be sold at the current
Public Offering Price. When the initial offering period ends, Units we
have reacquired may be offered by this prospectus at the secondary
market Public Offering Price (see "The Secondary Market").
Dealer Concessions.
Dealers and other selling agents can purchase Units at prices which
represent a concession or agency commission of 2.25% of the Public
Offering Price per Unit. However, dealers and other selling agents will
receive a concession or agency commission of $0.13 per Unit on purchases
by Rollover Unit holders or on the sale of Units subject only to any
remaining deferred sales charge. In addition, dealers and other selling
agents 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.
Dealers and other selling agents who sell Units of a Trust during the
initial offering period in the dollar amounts shown below will be
entitled to the following additional sales concessions as a percentage
of the Public Offering Price:
Total Sales per Trust Additional
(in millions) Concession
_____________________ __________
$ 40 but less than $50 0.050%
$ 50 but less than $75 0.125%
$ 75 but less than $100 0.150%
$100 or more 0.200%
We reserve the right to change the amount of concessions or agency
Page 30
commissions from time to time. If we reacquire, or the Trustee redeems,
Units from brokers, dealers or other selling agents while a market is
being maintained for such Units, such entities agree to immediately
repay to us any concession or agency commission relating to the
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 kept by or given to the banks in
the amounts shown above. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units. However, the Glass-Steagall
Act does allow certain agency transactions. In Texas and certain other
states, any banks making Units available must be registered as
broker/dealers under state law.
Award Programs.
From time to time we may sponsor programs which provide awards to our
dealers' registered representatives who have sold a minimum number of
Units during a specified time period. We may also pay fees to qualifying
dealers for services or activities which are meant to result in sales of
Units of the Trusts. In addition, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable sales charge on Units sold by such persons during such
programs. We make these payments out of our own assets, and not out of
the Trust's assets. These programs will not change the price you pay for
your Units or the amount that a Trust will receive from the Units sold.
Investment Comparisons.
From time to time we may compare the then current estimated returns of a
Trust (which may show performance net of the expenses and charges a
Trust would have incurred) and returns over specified periods of other
similar trusts we sponsor in our advertising and sales materials, with
(1) returns on other taxable investments such as the common stocks
comprising various market indices, corporate or U.S. Government bonds,
bank CDs and money market accounts or funds, (2) performance data from
Morningstar Publications, Inc. or (3) information from publications such
as Money, the New York Times, U.S. News and World Report, Business Week,
Forbes or Fortune. The investment characteristics of each Trust, which
are described more fully elsewhere in this prospectus, differ from and
are often riskier than other comparative investments. You should not
assume that these performance comparisons will be representative of a
Trust's future relative performance.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum sales
charge per Unit for each Trust less any reduced sales charge as stated
in "Public Offering." Also, any difference between our cost to purchase
the Securities and the price we sell them to a Trust is considered a
profit or loss (see Note 2 of Notes to Schedules of Investments). During
the initial offering period, dealers and others may also realize profits
or sustain losses as a result of fluctuations in the Public Offering
Price they receive when they sell the Units.
In maintaining a market for Units, any difference between the price at
which Units are purchased and the price at which they are sold (which
includes a maximum sales charge for each Trust) or redeemed will be a
profit or loss to us. The secondary market public offering price of
Units may be more or less than the cost of those Units to us. We may
also realize profits or sustain losses as we create additional Units for
the Distribution Reinvestment Option.
The Secondary Market
Although we are not obligated to, we intend to maintain a market for the
Units after the initial offering period and continuously offer to
purchase Units at prices based on the Redemption Price per Unit.
We will pay all expenses to maintain a secondary market, except the
Evaluator fees and Trustee costs to transfer and record the ownership of
Units. We may discontinue purchases of Units at any time. If you wish to
dispose of your Units, you should ask us for the current market prices
before making a tender for redemption to the Trustee. IF YOU WISH TO
DISPOSE OF YOUR UNITS, YOU SHOULD ASK US FOR THE CURRENT MARKET PRICES
BEFORE MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE.If you sell Units
or tender them for redemption before you have paid the total deferred
sales charge on your Units, you will have to pay the remainder at that
time.
Page 31
How We Purchase Units
The Trustee will notify us of any tender of Units for redemption. If our
bid in the secondary market at that time is equal to or greater than the
Redemption Price per Unit, we may purchase the Units. You will receive
the proceeds from the sale of Units we purchase no later than if they
were redeemed by the Trustee. We may tender Units we hold to the Trustee
for redemption as any other Units. If we elect not to purchase Units,
the Trustee may sell tendered Units in the over-the-counter market, if
any. However, the amount you will receive is the same as you would have
received on redemption of the Units.
The Public Offering Price of any Units we acquire will be consistent
with the Public Offering Price described in the then effective
prospectus. Any profit or loss from the resale or redemption of such
Units will belong to us.
Expenses and Charges
The estimated annual expenses of the Trusts are listed under "Fee
Table." If actual expenses exceed the estimate, the appropriate Trust
will bear the excess. The Trustee will pay operating expenses of the
Trusts from the Income Account of a Trust if funds are available, and
then from the Capital Account. The Income and Capital Accounts are
noninterest-bearing to Unit holders, so the Trustee benefits from the
use of these funds.
As Sponsor, we will be compensated for providing bookkeeping and other
administrative services to the Trusts, and will receive brokerage fees
when a Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. First Trust Advisors L.P., an affiliate of ours,
acts as both Portfolio Supervisor and Evaluator to the Trusts and will
receive the fees set forth under "Fee Table" for providing portfolio
supervisory and evaluation services to the Trusts. In providing
portfolio supervisory services, the Portfolio Supervisor may purchase
research services from a number of sources, which may include
underwriters or dealers of the Trusts.
The fees payable to the Portfolio Supervisor, Evaluator and Trustee are
based on the largest aggregate number of Units of a Trust outstanding at
any time during the calendar year, except during the initial offering
period, in which case these fees are calculated based on the largest
number of Units outstanding during the period for which compensation is
paid. These fees may be adjusted for inflation without Unit holders'
approval, but in no case will the annual fee paid to us or our
affiliates for providing a given service to all unit investment trusts
for which we provide such services be more than the actual cost of
providing such service in such year.
The Trusts may also incur the following charges:
- - A quarterly license fee payable by certain of the Trusts for the use
of certain trademarks and trade names of Dow Jones, Standard & Poor's or
The Nasdaq Stock Market, Inc.;
- - All legal expenses of the Trustee according to its responsibilities
under the Indenture;
- - The expenses and costs incurred by the Trustee to protect a Trust and
the rights and interests of the Unit holders;
- - Fees for any extraordinary services the Trustee performed under the
Indenture;
- - Payment for any loss, liability or expense the Trustee incurred
without negligence, bad faith or willful misconduct on its part, in
connection with its acceptance or administration of a Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of a
Trust;
- - Foreign custodial and transaction fees, if any;
- - All taxes and other government charges imposed upon the Securities or
any part of a Trust. (No such taxes or charges are now in place or
planned as far as we know.)
The above expenses and the Trustee's annual fee (when paid or owing to
the Trustee) are secured by a lien on a Trust. In addition, if there is
not enough cash in the Income or Capital Accounts of a Trust, the
Trustee has the power to sell Securities in a Trust to make cash
available to pay these charges. Since the Securities are all common
stocks and dividend income is unpredictable, we cannot guarantee that
dividends will be sufficient to meet any or all expenses of a Trust. If
dividends are not enough, it is likely that the Trustee will have to
sell Securities to meet Trust expenses. These sales may result in
capital gains or losses to the Unit holders. See "Tax Status."
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Tax Status
United States Taxation.
This section summarizes some of the main U.S. federal income tax
consequences of owning units of the Trusts. This section is current as
of the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a non-U.S. person, a broker-
dealer, or other investor with special circumstances. In addition, this
section does not describe your state or foreign taxes. As with any
investment, you should consult your own tax professional about your
particular consequences.
Trust Status.
The Trusts will not be taxed as corporations for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Securities and other assets held by a Trust, and as
such you will be considered to have received a pro rata share of income
(i.e., dividends and capital gains, if any) from each Security when such
income is considered to be received by a Trust. This is true even if you
elect to have your distributions automatically reinvested into
additional Units. In addition, the income from the Trust which you must
take into account for federal income tax purposes is not reduced for
amounts used to pay a deferred sales charge.
Your Tax Basis and Income or Loss Upon Disposition.
If your Trust disposes of Securities, you will generally recognize gain
or loss. If you dispose of your units or redeem your units for cash, you
will also generally recognize gain or loss. To determine the amount of
this gain or loss, you must subtract your tax basis in the related
Securities from your share of the total proceeds received in the
transaction. You can generally determine your initial tax basis in each
Security or other Trust asset by apportioning the cost of your units,
generally including sales charges, among each Security or other Trust
asset ratably according to their value on the date you purchase your
Units. In certain circumstances, however, you may have to adjust your
tax basis after you purchase your Units (for example, in the case of
certain dividends that exceed a corporation's accumulated earnings and
profits).
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (10% for certain taxpayers in the lowest
tax bracket). Net capital gain equals net long-term capital gain minus
net short-term capital loss for the taxable year. 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. You must exclude the date you purchase your Units to determine the
holding period of your Units. The tax rates for capital gains realized
from assets held for one year or less are generally the same as for
ordinary income. The Tax Code may, however, treat certain capital gains
as ordinary income in special situations.
Rollovers.
If you elect to have your proceeds from a Trust rolled over into the
next series of such Trust, it is considered a sale for federal income
tax purposes, and any gain on the sale will be treated as a capital
gain, and any loss will be treated as a capital loss. However, any loss
you incur in connection with the exchange of your Units of a Trust for
units of the next series will generally be disallowed with respect to
this deemed sale and subsequent deemed repurchase, to the extent the two
trusts have identical Securities under the wash sale provisions of the
Internal Revenue Code.
In-Kind Distributions.
Under certain circumstances, you may request an In-Kind Distribution of
Securities from a Domestic Trust when you redeem your Units or at a
Trust's termination. If you request an In-Kind Distribution you will be
responsible for any expenses related to this distribution. By electing
to receive an In-Kind Distribution, you will receive an undivided
interest in whole shares of stock plus, possibly, cash.
You will not recognize gain or loss if you only receive Securities in
exchange for your pro rata portion of the Securities held by a Trust.
However, if you also receive cash in exchange for a fractional share of
a Security held by such Trust, you will generally recognize gain or loss
based on the difference between the amount of cash you receive and your
tax basis in such fractional share of the Security.
Page 33
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes you must take into account
your full pro rata share of a Trust's income, even if some of that
income is used to pay Trust expenses. You may deduct your pro rata share
of each expense paid by a Trust to the same extent as if you directly
paid the expense. You may, however, be required to treat some or all of
the expenses of a Trust as miscellaneous itemized deductions.
Individuals may only deduct certain miscellaneous itemized deductions to
the extent they exceed 2% of adjusted gross income.
Foreign, State and Local Taxes.
Distributions by a Trust that are treated as U.S. source income (e.g.,
dividends received on Securities of domestic corporations) will
generally be subject to U.S. income taxation and withholding in the case
of Units held by non-resident alien individuals, foreign corporations or
other non-U.S. persons, subject to any applicable treaty. However,
distributions by a Trust that are derived from dividends of Securities
of a foreign corporation and that are not effectively connected to your
conduct of a trade or business within the United States will generally
not be subject to U.S. income taxation and withholding in the case of
Units held by non-resident alien individuals, foreign corporations or
other U.S. persons, provided that less than 25 percent of the gross
income of the foreign corporation over the three-year period ending with
the close of the taxable year preceding payment was effectively
connected to the conduct of a trade or business within the United
States. Some distributions by a Trust may be subject to foreign
withholding taxes. Any dividends withheld will nevertheless be treated
as income to you. However, because you are deemed to have paid directly
your share of foreign taxes that have been paid or accrued by a Trust,
you may be entitled to a foreign tax credit or deduction for U.S. tax
purposes with respect to such taxes.
Under the existing income tax laws of the State and City of New York,
the Trusts will not be taxed as corporations, and the income of the
Trusts will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes. You should consult your tax
advisor regarding potential foreign, state or local taxation with
respect to your Units.
United Kingdom Taxation.
The following summary describes certain important U.K. tax consequences
for certain U.S. Unit holders who hold Units in the Global Target 15
Portfolio as capital assets. This summary is intended to be a general
guide only and is subject to any changes in law occurring after the date
of this prospectus. You should consult your own tax advisor about your
particular circumstances.
Taxation of Dividends. A U.K. resident individual who receives a
dividend from a U.K. company is generally entitled to a tax credit,
which is either offset against U.K. tax liabilities or, in certain
circumstances, repaid.
You will not be able to claim any refund of the tax credit for dividends
paid on or after April 6, 1999. If you are resident in the United States
for the purposes of the income tax treaty between the United States and
the United Kingdom (the "Treaty") you may be able to claim a refund of
part of the tax credit for dividends paid before April 6, 1999. This is
explained in more detail in the following paragraph.
Although a U.S. investor who is resident in the United States for the
purposes of the Treaty and who holds shares directly in a U.K. company
can generally claim a refund of part of the tax credit from the U.K.
Inland Revenue, it is unclear whether you will be entitled to any refund
since you invest indirectly in U.K. companies through the Global Target
15 Portfolio. Unless a special procedure is agreed with the U.K. Inland
Revenue in advance, you may not be able to claim any refund.
A U.K. company may elect for a dividend paid before April 6, 1999 to be
paid as a "foreign income dividend" rather than an ordinary dividend. A
foreign income dividend does not carry a tax credit and so you will not
be entitled to any refund.
Taxation of Capital Gains. U.S. investors who are neither resident nor
ordinarily resident in the United Kingdom will not generally be liable
for U.K. tax on gains arising on the disposal of Units in the Global
Target 15 Portfolio. However, they may be liable if the Units are used,
held or acquired for the purposes of a trade, profession or vocation
carried on in the United Kingdom. Individual U.S. investors may also be
liable if they have previously been resident or ordinarily resident in
Page 34
the United States and become resident or ordinarily resident in the
United Kingdom in the future.
Inheritance Tax. Individual U.S. investors who are domiciled in the
United States and who are not U.K. nationals will generally not be
subject to U.K. inheritance tax on death or on gifts of the Units made
during their lifetimes, provided any applicable U.S. federal gift or
estate tax is paid. They may be subject to U.K. inheritance tax if the
Units are used in a business in the United Kingdom or relate to the
performance of personal services in the United Kingdom.
Where the Units are held on trust, the Units will generally not be
subject to U.K. inheritance tax unless the settlor, at the time of
settlement, was domiciled in the United Kingdom, in which case they may
be subject to tax.
It is very unlikely that the Units will be subject to both U.K.
inheritance tax and U.S. federal gift or estate tax. If they were, one
of the taxes could generally be credited against the other.
Stamp Tax. A sale of Securities listed in the FT Index will generally
result in either U.K. stamp duty or stamp duty reserve tax being payable
by the purchaser. The Global Target 15 Portfolio paid this tax when it
acquired Securities. When the Global Target 15 Portfolio sells
Securities, it is anticipated that the tax will be paid by the purchaser.
Hong Kong Taxation.
The following summary describes certain important Hong Kong tax
consequences to certain U.S. Unit holders who hold Units in the Global
Target 15 Portfolio as capital assets. This summary assumes that you are
not carrying on a trade, profession or business in Hong Kong and that
you have no profits sourced in Hong Kong arising from the carrying on of
such trade, profession or business. This summary is intended to be a
general guide only and is subject to any changes in Hong Kong or U.S.
law occurring after the date of this prospectus and you should consult
your own tax advisor about your particular circumstances.
Taxation of Dividends. Dividends you receive from the Global Target 15
Portfolio relating to Hong Kong issuers are not taxable and therefore
will not be subject to the deduction of any withholding tax.
Profits Tax. Unless you are carrying on a trade, profession or business
in Hong Kong you will not be subject to profits tax imposed by Hong Kong
on any gain or profits made on the realization or other disposal of your
Units.
Estate Duty. Units of the Global Target 15 Portfolio do not give rise to
Hong Kong estate duty liability.
Retirement Plans
You may purchase Units of the Trusts for:
- - Individual Retirement Accounts
- - Keogh Plans
- - pension funds, and
- - other tax-deferred retirement plans.
Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. Before participating in a plan like this, you should review
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as record owner of Units that person registered
as such on its books. If you request certificates representing the Units
you ordered for purchase they will be delivered three business days
after your order or shortly thereafter. You may transfer or redeem Units
represented by a certificate by endorsing and surrendering it to the
Trustee, along with a written instrument(s) of transfer. You must sign
exactly as your name appears on the face of the certificate with
signature guaranteed by an eligible institution. In certain cases the
Trustee may require additional documentation before they will transfer
or redeem your Units.
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 identification purposes.
You may also choose to hold your Units in uncertificated form. If you
choose this option, the Trustee will keep an account for you and will
Page 35
credit your account with the number of Units you purchase. Within two
business days of the issuance or transfer of Units held in
uncertificated form, the Trustee will send to you, as the registered
owner of Units:
- - a written initial transaction statement containing a description of
your Trust;
- - the number of Units issued or transferred;
- - your name, address and Taxpayer Identification Number ("TIN");
- - a notation of any liens or restrictions of the issuer and any adverse
claims; and
- - the date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
As a Unit holder, you may be required to pay a nominal fee to the
Trustee for each certificate reissued or transferred, and to pay any
government charge that may be imposed for each transfer or exchange. The
Trustee does not require such charge now, nor are they currently
contemplating doing so. If a certificate gets lost, stolen or destroyed,
you may be required to furnish indemnity to the Trustee to receive
replacement certificates. You must surrender mutilated certificates to
the Trustee for replacement.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
1. a summary of transactions in your Trust for the year;
2. any Securities sold during the year and the Securities held at the
end of that year by your Trust;
3. the Redemption Price per Unit, computed on the 31st day of December
of such year (or the last business day before); and
4. amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
federal and state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. It is your responsibility to notify the Trustee
when you become Record Owner of the Units, but normally your
broker/dealer provides this notice. The Trustee will credit any
dividends received on a Trust's Securities to the Income Account of a
Trust. All other receipts, such as return of capital, are credited to
the Capital Account of a Trust. Dividends received on foreign
Securities, if any, are converted into U.S. dollars at the applicable
exchange rate.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." Distribution amounts will vary with changes in a Trust's
fees and expenses, in dividends received and with the sale of
Securities. The Trustee will distribute amounts in the Capital Account
on the last day of each month to Unit holders of record on the fifteenth
day of each month provided the amount equals at least $1.00 per 100
Units. However, amounts in the Capital Account from the sale of
Securities designated to meet redemptions of Units, to pay the deferred
sales charge or to pay expenses will not be distributed. The Trustee is
not required to pay interest on funds held in the Income or Capital
Accounts of a Trust. However, the Trustee may earn interest on these
funds, thus benefiting from the use of such funds.
We anticipate that the deferred sales charge will be collected from the
Capital Account of a Trust and that there will be enough money in the
Capital Account to cover these costs. If there is not enough money in
the Capital Account to pay the deferred sales charge, the Trustee may
sell Securities to meet the shortfall. We will designate an account
where distributions will be made to pay the deferred sales charge.
The Trustee is required by the Internal Revenue Service to withhold a
certain percentage of any distribution a Trust makes and deliver such
amount to the Internal Revenue Service if the Trustee does not have your
Page 36
TIN. You may recover this amount by giving your TIN to the Trustee, or
when you file a tax return. Normally, the selling broker gives your TIN
to the Trustee. However, you should check your statements from the
Trustee to make sure they have the number to avoid this "back-up
withholding." If not, you should provide it to the Trustee as soon as
possible.
Within a reasonable time after a Trust is terminated, unless you are a
Rollover Unit holder, you will receive the pro rata share of the money
from the disposition of the Securities. However, if you own Units of a
Domestic Trust, you may elect to receive an In-Kind Distribution as
described under "Amending or Terminating the Indenture." All Unit
holders will receive a pro rata share of any other assets remaining in
the Trust, excluding any unpaid expenses of that Trust.
The Trustee may establish reserves (the "Reserve Account") within a
Trust for any state and local taxes and any governmental charges to be
paid out of that Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of your Trust by notifying the Trustee at least 10 days before any
Record Date. Each later distribution of income and/or capital on your
Units will be reinvested by the Trustee into additional Units of your
Trust. You will have to pay any remaining deferred sales charge on any
Units acquired pursuant to this distribution reinvestment option. This
option may not be available in all states. Please note that even if you
reinvest distributions, they are still considered distributions for
income tax purposes. PLEASE NOTE THAT EVEN IF YOU REINVEST
DISTRIBUTIONS, THEY ARE STILL CONSIDERED DISTRIBUTIONS FOR INCOME TAX
PURPOSES.
Redeeming Your Units
You may redeem all or a portion of your Units at any time by sending the
certificates representing the Units you want to redeem to the Trustee at
its unit investment trust office. If your Units are held in
uncertificated form, you need only to deliver a request for redemption
to the Trustee. In either case, the certificates or the redemption
request you send to the Trustee must be properly endorsed with proper
instruments of transfer and signature guarantees as explained in "Rights
of Unit Holders-Unit Ownership" (or by providing satisfactory indemnity
if the certificates were lost, stolen, or destroyed). No redemption fee
will be charged, but you are responsible for any governmental charges
that apply. Three business days after the day you tender your Units (the
"Date of Tender") you will receive cash in an amount for each Unit equal
to the Redemption Price per Unit calculated at the Evaluation Time on
the Date of Tender.
The Date of Tender is considered to be the date on which the Trustee
receives your certificates or redemption request (if such day is a day
the NYSE is open for trading). However, if your certificates or
redemption request are received after 4:00 p.m. Eastern time (or after
any earlier closing time on a day on which the NYSE is scheduled in
advance to close at such earlier time), the Date of Tender is the next
day the NYSE is open for trading.
Any amounts paid on redemption representing income will be withdrawn
from the Income Account of a Trust if funds are available for that
purpose, or from the Capital Account. All other amounts paid on
redemption will be taken from the Capital Account of a Trust.
If you are tendering 1,000 Units or more of a Domestic Trust for
redemption, rather than receiving cash, you may elect to receive a
distribution of shares of Securities (an "In-Kind Distribution") in an
amount and value equal to the Redemption Price per Unit by making this
request in writing to the Trustee at the time of tender. However, no In-
Kind Distribution requests submitted during the nine business days prior
to a Trust's Mandatory Termination Date will be honored. Where possible,
the Trustee will make an In-Kind Distribution by distributing each of
the Securities in book-entry form to your bank or broker/dealer account
at the Depository Trust Company. The Trustee will subtract any customary
transfer and registration charges from your In-Kind Distribution. As a
tendering Unit holder, you will receive your pro rata number of whole
shares of the Securities that make up the portfolio, and cash from the
Capital Account equal to the fractional shares to which you are
entitled. If there is not enough money in the Capital Account to pay the
required cash distribution, the Trustee may have to sell Securities.
The Internal Revenue Service will require the Trustee to withhold a
portion of your redemption proceeds if the Trustee has not previously
been provided your TIN. For more information about this withholding, see
"Income and Capital Distributions." If the Trustee does not have your
Page 37
TIN, you must provide it at the time of the redemption request.
The Trustee may sell Securities of a Trust to make funds available for
redemption. If Securities are sold, the size and diversity of a Trust
will be reduced. These sales may result in lower prices than if the
Securities were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
1. if the NYSE is closed (other than customary weekend and holiday
closings);
2. if the Securities and Exchange Commission ("SEC") determines that
trading on the NYSE is restricted or that an emergency exists making
sale or evaluation of the Securities not reasonably practical; or
3. for any other period permitted by SEC order.
The Trustee is not liable to any person for any loss or damage which may
result from such a suspension or postponement.
The Redemption Price.
The Redemption Price per Unit is determined by the Trustee by:
adding
1. cash in the Income and Capital Accounts of a Trust not designated to
purchase Securities;
2. the aggregate underlying U.S. dollar value of the Securities held in
that Trust; and
3. dividends receivable on the Securities trading ex-dividend as of the
date of computation.
deducting
1. any applicable taxes or governmental charges that need to be paid out
of such Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of such Trust, if any;
4. cash held for distribution to Unit holders of record of such Trust as
of the business day before the evaluation being made;
5. liquidation costs for foreign Securities, if any; and
6. other liabilities incurred by such Trust; and
dividing
1. the result by the number of outstanding Units of such Trust.
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, during the
initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
The aggregate underlying U.S. dollar value of the Securities for
purposes of calculating the Redemption Price during the secondary market
is determined in the same manner as that used to calculate the secondary
market Public Offering Price as discussed in "Public Offering-The Value
of the Securities."
Reinvesting in a New Trust
Each Trust's portfolio has been selected on the basis of capital
appreciation potential for a limited time period. When each Trust is
about to terminate, you may have the option to roll your proceeds into
the next series of a Trust (the "New Trusts") if one is available. We
intend to create the New Trusts in conjunction with the termination of
the Trusts and plan to apply the same strategy we used to select the
portfolio for the Trusts to the New Trusts.
If you wish to have the proceeds from your Units rolled into a New Trust
you must notify the Trustee in writing of your election by the Rollover
Notification Date stated in the "Summary of Essential Information." As a
Rollover Unit holder, your Units will be redeemed and the underlying
Securities sold by the Trustee, in its capacity as Distribution Agent,
during the Special Redemption and Liquidation Period. The Distribution
Agent may engage us or other brokers as its agent to sell the Securities.
Once all of the Securities are sold, your proceeds, less any brokerage
fees, governmental charges or other expenses involved in the sales, will
be used to buy units of a New Trust or trust with a similar investment
strategy that you have selected, provided such trusts are registered and
being offered. Accordingly, proceeds may be uninvested for up to several
days. Units purchased with rollover proceeds will generally be purchased
subject only to the maximum remaining deferred sales charge on such
units (currently expected to be $.175 per unit).
We intend to create New Trust units as quickly as possible, depending on
the availability of the Securities contained in a New Trust's portfolio.
Rollover Unit holders will be given first priority to purchase New Trust
Page 38
units. We cannot, however, assure the exact timing of the creation of
New Trust units or the total number of New Trust units we will create.
Any proceeds not invested on behalf of Rollover Unit holders in New
Trust units will be distributed within a reasonable time after such
occurrence. Although we believe that enough New Trust units can be
created, monies in a New Trust may not be fully invested on the next
business day.
Please note that there are certain tax consequences associated with
becoming a Rollover Unit holder. See "Tax Status." If you elect not to
participate as a Rollover Unit holder ("Remaining Unit holders"), you
will not incur capital gains or losses due to the Special Redemption and
Liquidation, nor will you be charged any additional sales charge. We may
modify, amend or terminate this rollover option upon 60 days notice.
Removing Securities from a Trust
The portfolios of the Trusts are not managed. However, we may, but are
not required to, direct the Trustee to dispose of a Security in certain
limited circumstances, including situations in which:
- - the issuer of the Security defaults in the payment of a declared
dividend;
- - any action or proceeding prevents the payment of dividends;
- - there is any legal question or impediment affecting the Security;
- - the issuer of the Security has breached a covenant which would affect
the payment of dividends, the issuer's credit standing, or otherwise
damage the sound investment character of the Security;
- - the issuer has defaulted on the payment of any other of its
outstanding obligations; or
the price of the Security has declined to such an extent, or such other
credit factors exist, that in our opinion keeping the Security would be
harmful to a Trust.
Except in the limited instance in which a Trust acquires Replacement
Securities to replace failed contracts to purchase Securities, as
described in "The FT Series," a Trust may not acquire any securities or
other property other than the Securities. The Trustee, on behalf of a
Trust, will reject any offer for new or exchanged securities or property
in exchange for a Security, such as those acquired in a merger or other
transaction. If such exchanged securities or property are nevertheless
acquired by a Trust, at our instruction they will either be sold or held
in the Trust. In making the determination as to whether to sell or hold
the exchanged securities or property we may get advice from the
Portfolio Supervisor. Any proceeds received from the sale of Securities,
exchanged securities or property will be credited to the Capital Account
of a Trust for distribution to Unit holders or to meet redemption
requests. The Trustee may retain and pay us or an affiliate of ours to
act as agent for the Trusts to facilitate selling Securities, exchanged
securities or property from the Trusts. If we or our affiliate act in
this capacity, we will be held subject to the restrictions under the
Investment Company Act of 1940, as amended.
The Trustee may sell Securities that we designate; or, without our
direction, in its own discretion, in order to meet redemption requests
or pay expenses. In designating which Securities should be sold, we will
try to maintain the proportionate relationship among the Securities. If
this is not possible, the composition and diversification of a Trust may
be changed. To get the best price for a Trust we may have to specify
minimum amounts (generally 100 shares) in which blocks of Securities are
to be sold. We may consider sales of Units of unit investment trusts
which we sponsor in making recommendations to the Trustee on the
selection of broker/dealers to execute the Trusts' portfolio
transactions, or when acting as agent for the Trusts in acquiring or
selling Securities on behalf of the Trusts.
Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - to cure ambiguities;
- - to correct or supplement any defective or inconsistent provision;
- - to make any amendment required by any governmental agency; or
- - to make other changes determined not to be materially adverse to your
best interests (as determined by us and the Trustee).
Termination. As provided by the Indenture, each Trust will terminate on
Page 39
the Mandatory Termination Date. A Trust may be terminated prior to the
Mandatory Termination Date:
- - upon the consent of 100% of the Unit holders;
- - if the value of the Securities owned by such Trust as shown by any
evaluation is 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
- - in the event that Units of a Trust not yet sold aggregating more than
60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor.
In the event of termination, the Trustee will send prior written notice
thereof to all Unit holders which will specify how you should tender
your certificates, if any, to the Trustee. If a Trust is terminated due
to this last reason, we will refund to each purchaser of Units of such
Trust the entire sales charge paid by such purchaser; however,
termination of a Trust prior to the Mandatory Termination Date for any
other stated reason will result in all remaining unpaid deferred sales
charges on your Units being deducted from your termination proceeds. For
various reasons, including Unit holders' participating as Rollover Unit
holders, a Trust may be reduced below the Discretionary Liquidation
Amount and could therefore be terminated prior to the Mandatory
Termination Date.
Unless terminated earlier, the Trustee will begin to sell Securities in
connection with the termination of a Trust during the period beginning
nine business days prior to, and no later than, the Mandatory
Termination Date. We will determine the manner, timing and execution of
the sale of Securities as part of the termination of a Trust. Because
the Trustee must sell the Securities within a relatively short period of
time, the sale of Securities as part of the termination process may
result in a lower amount than might otherwise be realized if such sale
were not required at this time.
If you own at least 1,000 Units of a Domestic Trust the Trustee will
send you a form at least 30 days prior to the Mandatory Termination Date
which will enable you to receive an In-Kind Distribution of Securities
(reduced by customary transfer and registration charges) rather than the
typical cash distribution. You must notify the Trustee at least ten
business days prior to the Mandatory Termination Date if you elect this
In-Kind Distribution option. If you do not elect to participate in
either the Rollover Option, or the In-Kind Distribution option for
eligible Unit holders of Domestic Trusts, you will receive a cash
distribution from the sale of the remaining Securities, along with your
interest in the Income and Capital Accounts of a Trust, within a
reasonable time after your Trust is terminated. Regardless of the
distribution involved, the Trustee will deduct from a Trust any accrued
costs, expenses, advances or indemnities provide by the Indenture,
including estimated compensation of the Trustee and costs of liquidation
and any amounts required as a reserve to pay any taxes or other
governmental charges.
Information on the Sponsor, Trustee and Evaluator
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
wholesale distribution of unit investment trusts under the "First Trust"
brand name and other securities. An Illinois limited partnership formed
in 1991, we act 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
First Trust introduced the first insured unit investment trust in 1974.
To date we have deposited more than $20 billion in First Trust unit
investment trusts. Our employees include a team of professionals with
many years of experience in the unit investment trust industry.
We are a member of the National Association of Securities Dealers, Inc.
and Securities Investor Protection Corporation. Our principal offices
are 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 information refers only to the Sponsor and not to the Trusts or to
any series of the Trusts or to any other dealer. We are including this
information only to inform you of our financial responsibility and our
ability to carry out our contractual obligations. We will provide more
detailed financial information on request.
Page 40
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. If you have questions regarding the Trusts, you may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
supervised 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 has not participated in selecting the Securities; it only
provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable to Unit holders for taking any
action or for not taking any action in good faith according to the
Indenture. We will also not be accountable for errors in judgment. We
will only be liable for our own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the Trustee's case) or reckless
disregard of our obligations and duties. The Trustee is not liable for
any loss or depreciation when the Securities are sold. If we fail to act
under the Indenture, the Trustee may do so, and the Trustee will not be
liable for any action it takes in good faith under the Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - appoint a successor Sponsor, paying them a reasonable rate not more
than that stated by the SEC,
- - terminate the Indenture and liquidate the Trust, or
- - continue to act as Trustee without terminating the Indenture.
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 Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information.
However, the Evaluator will not be liable to the Trustee, Sponsor or
Unit holders for errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trusts.
Experts.
Ernst & Young LLP, independent auditors, have audited the Trusts'
statements of net assets, including the schedules of investments, at the
opening of business on the Initial Date of Deposit, as set forth in
their report. We've included the Trusts' statements of net assets,
including the schedules of investments, in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific risk information about the Trusts.
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Page 43
FIRST TRUST(registered trademark)
The Dow sm Target 5 Portfolio, March 1999 Series
The Dow sm Target 10 Portfolio, March 1999 Series
Target 25 Portfolio, March 1999 Series
Target Small-Cap Portfolio, March 1999 Series
Global Target 15 Portfolio, March 1999 Series
European Target 20 Portfolio, March 1999 Series
The S&P Target 10 Portfolio, March 1999 Series
The Nasdaq Target 15 Portfolio, March 1999 Series
FT 311
Sponsor:
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 prospectus contains information relating to the eight unit
investment trusts listed above, but does not contain all of the
information about this investment company as filed with the Securities
and Exchange Commission in Washington, D.C. under the:
- - Securities Act of 1933 (file no. 333-64005) and
- - Investment Company Act of 1940 (file no. 811-05903)
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W., Washington, D.C. 20549-6009
Call: 1-800-SEC-0330
Visit: http://www.sec.gov
February 26, 1999
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 44
First Trust (registered trademark)
TARGET 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 Target Portfolio Series not found in the prospectus 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").
This Information Supplement is dated February 26, 1999. Capitalized
terms have been defined in the prospectus.
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Dow Jones & Company, Inc. 1
Standard & Poor's 2
The Nasdaq Stock Market, Inc. 2
Risk Factors 3
Securities 3
Dividends 3
Foreign Issuers 4
United Kingdom 4
Hong Kong 5
Exchange Rate 6
Litigation 10
Tobacco Industry 10
Microsoft Corporation 10
Concentrations 10
Banks and Thrifts 10
Petroleum Refining Companies 12
Real Estate Companies 13
Technology Companies 15
Small-Cap Companies 16
Portfolios 16
Equity Securities Selected for The Dow (sm) Target 5 Portfolio, March 1999 Series 16
Equity Securities Selected for The Dow (sm) Target 10 Portfolio, March 1999 Series 16
Equity Securities Selected for Target 25 Portfolio, March 1999 Series 17
Equity Securities Selected for Target Small-Cap Portfolio, March 1999 Series 19
Equity Securities Selected for Global Target 15 Portfolio, March 1999 Series 21
Equity Securities Selected for European Target 20 Portfolio, March 1999 Series 22
Equity Securities Selected for The S&P Target 10 Portfolio, March 1999 Series 23
Equity Securities Selected for The Nasdaq Target 15 Portfolio, March 1999 Series 24
</TABLE>
Dow Jones & Company, Inc.
The Trusts are not sponsored, endorsed, sold or promoted by Dow Jones &
Company, Inc. ("Dow Jones"). Dow Jones 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. Dow Jones' only relationship to
the Sponsor is the licensing of certain trademarks, trade names and
service marks of Dow Jones and of the Dow Jones Industrial Average (SM),
which is determined, composed and calculated by Dow Jones without regard
Page 1
to the Sponsor or the Trusts. Dow Jones has no obligation to take the
needs of the Sponsor or the owners of the Trusts into consideration in
determining, composing or calculating the Dow Jones Industrial Average
(SM). Dow Jones is not responsible for and has not participated in the
determination of the timing of, prices at, or quantities of the Trusts
to be issued or in the determination or calculation of the equation by
which the Trusts are to be converted into cash. Dow Jones has no
obligation or liability in connection with the administration, marketing
or trading of the Trusts.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGE (SM) OR ANY DATA INCLUDED THEREIN AND DOW
JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, OWNERS OF THE TRUSTS, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL
AVERAGE (SM) OR ANY DATA INCLUDED THEREIN. DOW JONES 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 DOW JONES INDUSTRIAL AVERAGE (SM) OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
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
Nasdaq Target 15 Portfolio Series. The Corporations make no
representation or warranty, express or implied, to the owners of Units
Page 2
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.
Risk Factors
Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the
risk that the financial condition of the issuers of the Securities or
the general condition of the relevant stock market may worsen, and the
value of the Securities and therefore the value of the Units may
decline. 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. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors. From September
30, 1997 through October 30, 1997, amid record trading volume, the S&P
500 Index, DJIA, FT Index and Hang Seng Index declined 4.60%, 7.09%,
6.19% and 31.14%, respectively. In addition, against a backdrop of
continued uncertainty regarding the current global currency crisis and
falling commodity prices, during the period between July 31, 1998 and
September 30, 1998, the S&P 500, DJIA and FT Index declined by 8.97%,
11.32% and 17.80%, respectively, while the Hang Seng Index increased .20%.
Dividends. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Shareholders of common stocks of the type held
by the Trusts have a right to receive dividends only when and if, and in
the amounts, declared by the issuer's board of directors and have a
right to participate in amounts available for distribution by the issuer
only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy.
Page 3
Cumulative preferred stock dividends must be paid before common stock
dividends, and any cumulative preferred stock dividend omitted is added
to future dividends payable to the holders of cumulative preferred
stock. Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Foreign Issuers. Since certain or all of the Securities included in the
International Trusts consist of securities of foreign issuers, an
investment in such Trusts involves certain investment risks that are
different in some respects from an investment in a trust which invests
entirely in the securities of domestic issuers. These investment risks
include future political or governmental restrictions which might
adversely affect the payment or receipt of payment of dividends on the
relevant Securities, the possibility that the financial condition of the
issuers of the Securities may become impaired or that the general
condition of the relevant stock market may worsen (both of which would
contribute directly to a decrease in the value of the Securities and
thus in the value of the Units), the limited liquidity and relatively
small market capitalization of the relevant securities market,
expropriation or confiscatory taxation, economic uncertainties and
foreign currency devaluations and fluctuations. In addition, for foreign
issuers that are not subject to the reporting requirements of the
Securities Exchange Act of 1934, there may be less publicly available
information than is available from a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to
those applicable to domestic issuers. The securities of many foreign
issuers are less liquid and their prices more volatile than securities
of comparable domestic issuers. In addition, fixed brokerage commissions
and other 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. However, due to
the nature of the issuers of the Securities selected for the
International Trusts, the Sponsor believes that adequate information
will be available to allow the Supervisor to provide portfolio
surveillance for such Trusts.
Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the United States dollar value of these securities
will vary with fluctuations in the U.S. dollar foreign exchange rates
for the various Securities. See "Exchange Rate" below.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the International Trusts are
subject to exchange control restrictions under existing law which would
materially interfere with payment to such Trusts of dividends due on, or
proceeds from the sale of, the Securities. However, there can be no
assurance that exchange control regulations might not be adopted in the
future which might adversely affect payment to such a Trust. The
adoption of exchange control regulations and other legal restrictions
could have an adverse impact on the marketability of international
securities in the International Trusts and on the ability of such Trusts
to satisfy their obligation to redeem Units tendered to the Trustee for
redemption. In addition, restrictions on the settlement of transactions
on either the purchase or sale side, or both, could cause delays or
increase the costs associated with the purchase and sale of the foreign
Securities and correspondingly could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to a Trust relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by a Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by a
Trust will generally be effected only in foreign securities markets.
Although the Sponsor does not believe that the International Trust will
encounter obstacles in disposing of the Securities, investors should
realize that the Securities may be traded in foreign countries where the
securities markets are not as developed or efficient and may not be as
liquid as those in the United States. The value of the Securities will
be adversely affected if trading markets for the Securities are limited
or absent.
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 makes a
significant contribution to the country's balance of payments. The
portfolios of the International Trusts may contain common stocks of
Page 4
British companies engaged in such industries as banking, chemicals,
building and construction, transportation, telecommunications and
insurance. Many of these industries may be subject to government
regulation, which may have a materially adverse effect on the
performance of their stock. In the first quarter of 1998, gross domestic
product (GDP) of the United Kingdom grew to a level 3.0% higher than in
the first quarter of 1997, however the overall rate of GDP growth has
slowed since the third quarter of 1997. The slow down largely reflects a
deteriorating trade position and higher indirect taxes. The average
quarterly rate of GDP growth in the United Kingdom (as well as in Europe
generally) has been decelerating since 1994. The United Kingdom is a
member of the European Union (the "EU") which was created through the
formation of the Maastricht Treaty on European Union in late 1993. It is
expected that the Treaty will have the effect of eliminating most
remaining trade barriers between the 15 member nations and make Europe
one of the largest common markets in the world. However, the effective
implementation of the Treaty provisions and the rate at which trade
barriers are eliminated is uncertain at this time. Furthermore, the
recent rapid political and social change throughout Europe make the
extent and nature of future economic development in the United Kingdom
and Europe and the impact of such development upon the value of
Securities issued by United Kingdom companies impossible to predict.
A majority of the EU members converted their existing sovereign
currencies to a common currency (the "euro") on January 1, 1999. The
United Kingdom did not participate in this conversion 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. In addition, United Kingdom
companies with significant markets or operations in other European
countries (whether or not such countries are participating) 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; affect 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 Securities issued by United
Kingdom companies in the International Trusts.
Hong Kong. Hong Kong, established as a British colony in the 1840's,
reverted to Chinese sovereignty effective July 1, 1997. On such date,
Hong Kong became a Special Administrative Region ("SAR") of China. Hong
Kong's new constitution is the Basic Law (promulgated by China in 1990).
Prior to July 1, 1997, the Hong Kong government followed a laissez-faire
policy toward industry. There were no major import, export or foreign
exchange restrictions. Regulation of business was generally minimal with
certain exceptions, including regulated entry into certain sectors of
the economy and a fixed exchange rate regime by which the Hong Kong
dollar has been pegged to the U.S. dollar. Over the past two decades
through 1996, the gross domestic product (GDP) has tripled in real
terms, equivalent to an average annual growth rate of 6%. However, Hong
Kong's recent economic data has not been encouraging. The full impact of
the Asian financial crisis, as well as current international economic
instability, is likely to continue to have a negative impact on the Hong
Kong economy in the near future.
Although China has committed by treaty to preserve for 50 years the
economic and social freedoms enjoyed in Hong Kong prior to the
reversion, the continuation of the economic system in Hong Kong after
the reversion will be dependent on the Chinese government, and there can
be no assurances that the commitment made by China regarding Hong Kong
will be maintained. Prior to the reversion, legislation was enacted in
Hong Kong designed to extend democratic voting procedures for Hong
Kong's legislature. China has expressed disagreement with this
legislation, which it states is in contravention of the principles
evidenced in the Basic Law of the Hong Kong SAR. The National Peoples'
Congress of China has passed a resolution to the effect that the
Legislative Council and certain other councils and boards of the Hong
Kong Government were to be terminated on June 30, 1997. Such bodies have
subsequently been reconstituted in accordance with China's
interpretation of the Basic Law. Any increase in uncertainty as to the
future economic and political status of Hong Kong could have a
Page 5
materially adverse effect on the value of the Global Target 15
Portfolio. The Sponsor is unable to predict the level of market
liquidity or volatility which may occur as a result of the reversion to
sovereignty, both of which may negatively impact such Trust and the
value of the Units.
China currently enjoys a most favored nation status ("MFN Status") with
the United States. MFN Status is subject to annual review by the
President of the United States and approval by Congress. As a result of
Hong Kong's reversion to Chinese control, U.S. lawmakers have suggested
that they may review China's MFN status on a more frequent basis.
Revocation of the MFN Status would have a severe effect on China's trade
and thus could have a materially adverse effect on the value of the
Global Target 15 Portfolio. The performance of certain companies listed
on the Hong Kong Stock Exchange is linked to the economic climate of
China. The renewal of China's MFN Status in May of 1996 has helped to
reduce the uncertainty for Hong Kong in conducting Sino-U.S. trade, and
the signing of the agreement on copyright protection between the U.S.
and Chinese governments in June of 1996 averted a trade war that would
have affected Hong Kong's re-export trade. In 1997, China and the United
States reached a four-year bilateral agreement on textiles, again
avoiding a Sino-U.S. trade war. More recently, the currency crisis which
has affected a majority of Asian markets since mid-1997 has forced Hong
Kong leaders to address whether to devalue the Hong Kong dollar or
maintain its peg to the U.S. dollar. During the volatile markets of
1998, the Hong Kong Monetary Authority (the "HKMA") acquired the common
stock of certain Hong Kong issuers listed on the Hong Kong Stock
Exchange in an effort to stabilize the Hong Kong dollar and thwart
currency speculators. Government intervention may hurt Hong Kong's
reputation as a free market and increases concerns that authorities are
not willing to let Hong Kong's currency system function autonomously.
This may undermine confidence in the Hong Kong dollar's peg to the U.S.
dollar. Any downturn in economic growth or increase in the rate of
inflation in China or Hong Kong could have a materially adverse effect
on the value of the Global Target 15 Portfolio.
Securities prices on the Hong Kong Stock Exchange, and specifically the
Hang Seng Index, can be highly volatile and are sensitive to
developments in Hong Kong and China, as well as other world markets. For
example, the Hang Seng Index declined by approximately 31% in October,
1997 as a result of speculation that the Hong Kong dollar would become
the next victim of the Asian currency crisis, and in 1989, the Hang Seng
Index dropped 1,216 points (approximately 58%) in early June following
the events at Tiananmen Square. The Hang Seng Index gradually climbed
subsequent to the events at Tiananmen Square, but fell by 181 points on
October 13, 1989 (approximately 6.5%) following a substantial fall in
the U.S. stock markets. During 1994, the Hang Seng Index lost
approximately 31% of its value. From January through August of 1998,
during a period marked by international economic instability and a
global currency crisis, the Hang Seng Index declined by nearly 27%. The
Hang Seng Index is subject to change and delisting of any issues may
have an adverse impact on the performance of the Global Target 15
Portfolio, although delisting would not necessarily result in the
disposal of the stock of these companies, nor would it prevent such
Trust from purchasing additional Securities. In recent years, a number
of companies, comprising approximately 10% of the total capitalization
of the Hang Seng Index, have delisted. In addition, as a result of Hong
Kong's reversion to Chinese sovereignty, an increased number of Chinese
companies could become listed on the Hong Kong Stock Exchange, thereby
changing the composition of the stock market and, potentially, the
composition of the Hang Seng Index.
Exchange Rate. The International Trusts are comprised either totally or
substantially of 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 portfolio (and hence of the Units) and of the
distributions from the portfolio 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.
The post-World War II international monetary system was, until 1973,
Page 6
dominated by the Bretton Woods Treaty which established a system of
fixed exchange rates and the convertibility of the United States dollar
into gold through foreign central banks. Starting in 1971, growing
volatility in the foreign exchange markets caused the United States to
abandon gold convertibility and to effect a small devaluation of the
United States dollar. In 1973, the system of fixed exchange rates
between a number of the most important industrial countries of the
world, among them the United States and most Western European countries,
was completely abandoned. Subsequently, major industrialized countries
have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have
continued to "peg" their currencies to the United States dollar although
there has been some interest in recent years in "pegging" currencies to
"baskets" of other currencies or to a Special Drawing Right administered
by the International Monetary Fund. Since 1983, the Hong Kong dollar has
been pegged to the U.S. dollar. In Europe, the euro has been developed.
Currencies are generally traded by leading international commercial
banks and institutional investors (including corporate treasurers, money
managers, pension funds and insurance companies). From time to time,
central banks in a number of countries also are major buyers and sellers
of foreign currencies, mostly for the purpose of preventing or reducing
substantial exchange rate fluctuations.
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 following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and
end of month equivalent U.S. dollar rates of exchange for the United
Kingdom pound sterling, the Hong Kong dollar and the euro:
Page 7
Range of Fluctuations in Foreign Currencies
United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar U.S. Dollar
_____ ____________ ___________
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
1996 0.583-0.670 7.732-7.742
1997 0.584-0.633 7.708-7.751
1998 0.584-0.620 7.735-7.749
Source: Bloomberg L.P.
Page 8
<TABLE>
<CAPTION>
End of Month Exchange Rates
for Foreign Currencies
United Kingdom Hong
Pound Sterling/ Kong/U.S. Euro/
Monthly Period U.S. Dollar Dollar U.S. Dollar
______________ ______________ __________ ___________
<S> <C> <C> <C>
1992: N.A.
January .559 7.762 N.A.
February .569 7.761 N.A.
March .576 7.740 N.A.
April .563 7.757 N.A.
May .546 7.749 N.A.
June .525 7.731 N.A.
July .519 7.732 N.A.
August .503 7.729 N.A.
September .563 7.724 N.A.
October .641 7.736 N.A.
November .659 7.742 N.A.
December .662 7.744 N.A.
1993: N.A.
January .673 7.734 N.A.
February .701 7.734 N.A.
March .660 7.731 N.A.
April .635 7.730 N.A.
May .640 7.724 N.A.
June .671 7.743 N.A.
July .674 7.761 N.A.
August .670 7.755 N.A.
September .668 7.734 N.A.
October .676 7.733 N.A.
November .673 7.725 N.A.
December .677 7.723 N.A.
1994: N.A.
January .664 7.724 N.A.
February .673 7.727 N.A.
March .674 7.737 N.A.
April .659 7.725 N.A.
May .662 7.726 N.A.
June .648 7.730 N.A.
July .648 7.725 N.A.
August .652 7.728 N.A.
September .634 7.727 N.A.
October .611 7.724 N.A.
November .639 7.731 N.A.
December .639 7.738 N.A.
1995: N.A.
January .633 7.732 N.A.
February .631 7.730 N.A.
March .617 7.733 N.A.
April .620 7.742 N.A.
May .630 7.735 N.A.
June .627 7.736 N.A.
July .626 7.738 N.A.
August .645 7.741 N.A.
September .631 7.732 N.A.
October .633 7.727 N.A.
November .652 7.731 N.A.
December .645 7.733 N.A.
1996: N.A.
January .661 7.728 N.A.
February .653 7.731 N.A.
March .655 7.734 N.A.
April .664 7.735 N.A.
May .645 7.736 N.A.
June .644 7.741 N.A.
July .642 7.735 N.A.
August .639 7.733 N.A.
September .639 7.733 N.A.
October .615 7.732 N.A.
November .595 7.732 N.A.
December .583 7.735 N.A.
1997: N.A.
January .624 7.750 N.A.
February .614 7.744 N.A.
March .611 7.749 N.A.
April .616 7.746 N.A.
May .610 7.748 N.A.
June .600 7.747 N.A.
July .609 7.742 N.A.
August .622 7.750 N.A.
September .619 7.738 N.A.
October .598 7.731 N.A.
November .592 7.730 N.A.
December .607 7.749 N.A.
1998: N.A.
January .613 7.735 N.A.
February .609 7.743 N.A.
March .598 7.749 N.A.
April .598 7.747 N.A.
May .613 7.749 N.A.
June .600 7.748 N.A.
July .613 7.748 N.A.
August .595 7.749 N.A.
September .589 7.749 N.A.
October .596 7.747 N.A.
November .607 7.743 N.A.
December .602 7.746 N.A.
1999:
January .608 7.748 1.1362
February 25 .624 7.748 1.1033
</TABLE>
Source: Bloomberg L.P.
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-
Page 9
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
International Trusts would receive had the Trustee sold any particular
currency in the market. The foreign exchange transactions of the
International Trusts 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).
Litigation
Tobacco Industry. Certain of the issuers of Securities in certain Trusts
may be involved in the manufacture, distribution and sale of tobacco
products. Pending litigation proceedings against such issuers in the
United States and abroad cover a wide range of matters including product
liability and consumer protection. Damages claimed in such litigation
alleging personal injury (both individual and class actions), and in
health cost recovery cases brought by governments, labor unions and
similar entities seeking reimbursement for health care expenditures,
aggregate many billions of dollars.
In November 1998, certain companies in the U.S. tobacco industry entered
into a negotiated settlement with several states which would result in
the resolution of significant litigation and regulatory issues affecting
the tobacco industry generally. The proposed settlement, while extremely
costly to the tobacco industry, would significantly reduce uncertainties
facing the industry and increase stability in business and capital
markets. Future litigation and/or legislation could adversely affect the
value, operating revenues and financial position of tobacco companies.
The Sponsor is unable to predict the outcome of litigation pending
against tobacco companies or how the current uncertainty concerning
regulatory and legislative measures will ultimately be resolved. These
and other possible developments may have a significant impact upon both
the price of such Securities and the value of Units of Trusts containing
such Securities.
Microsoft Corporation. Microsoft Corporation is currently engaged in
litigation with Sun Microsystems, Inc., the U.S. Department of Justice,
several state Attorneys General and Caldera, Inc. The complaints against
Microsoft include copyright infringement, unfair competition and anti-
trust violations. The claims seek injunctive relief and monetary
damages. As of December 31, 1998, Microsoft's management asserted that
resolving these matters will not have a material adverse impact on its
financial position or its results of operation.
Concentrations
Banks and Thrifts. Certain Trusts may be considered to be concentrated
in common stocks of financial institutions. See "Risk Factors" in the
prospectus which will indicate, if applicable, a Trust's concentration
in this industry. Banks, thrifts and their holding companies 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. Banks and thrifts are
highly dependent on net interest margin. Recently, bank profits have
come under pressure as net interest margins have contracted, but volume
gains have been strong in both commercial and consumer products. There
is no certainty that such conditions will continue. Bank and thrift
institutions had received significant consumer mortgage fee income as a
result of activity in mortgage and refinance markets. As initial home
purchasing and refinancing activity subsided, this income diminished.
Economic conditions in the real estate markets, which have been weak in
the past, can have a substantial effect upon banks and thrifts because
they generally have a portion of their assets invested in loans secured
by real estate. Banks, thrifts and their holding companies are subject
to extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
Page 10
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Securities in the Trust's portfolio cannot be predicted
with certainty. Periodic efforts by recent Administrations to introduce
legislation broadening the ability of banks to compete with new products
have not been successful, but if enacted could lead to more failures as
a result of increased competition and added risks. Failure to enact such
legislation, on the other hand, may lead to declining earnings and an
inability to compete with unregulated financial institutions. Efforts to
expand the ability of federal thrifts to branch on an interstate basis
have been initially successful through promulgation of regulations, and
legislation to liberalize interstate banking which has recently been
signed into law. Under the legislation, banks will be able to purchase
or establish subsidiary banks in any state, one year after the
legislation's enactment. Starting in mid-1997, banks were allowed to
turn existing banks into branches. Consolidation is likely to continue.
The Securities and Exchange Commission and the Financial Accounting
Standards Board require the expanded use of market value accounting by
banks and have imposed rules requiring market accounting for investment
securities held in trading accounts or available for sale. Adoption of
additional such rules may result in increased volatility in the reported
health of the industry, and mandated regulatory intervention to correct
such problems. In late 1993 the United States Treasury Department
proposed a restructuring of the banks regulatory agencies which, if
implemented, may adversely affect certain of the Securities in the
Trust's portfolio. Additional legislative and regulatory changes may be
forthcoming. For example, the bank regulatory authorities have proposed
substantial changes to the Community Reinvestment Act and fair lending
laws, rules and regulations, and there can be no certainty as to the
effect, if any, that such changes would have on the Securities in a
Trust's portfolio. In addition, from time to time the deposit insurance
system is reviewed by Congress and federal regulators, and proposed
reforms of that system could, among other things, further restrict the
ways in which deposited moneys can be used by banks or reduce the dollar
amount or number of deposits insured for any depositor. Such reforms
could reduce profitability as investment opportunities available to bank
institutions become more limited and as consumers look for savings
vehicles other than bank deposits. Banks and thrifts face significant
competition from other financial institutions such as mutual funds,
credit unions, mortgage banking companies and insurance companies, and
increased competition may result from legislative broadening of regional
and national interstate banking powers as has been recently enacted.
Among other benefits, the legislation allows banks and bank holding
companies to acquire across previously prohibited state lines and to
consolidate their various bank subsidiaries into one unit. The Sponsor
makes no prediction as to what, if any, manner of bank and thrift
regulatory actions might ultimately be adopted or what ultimate effect
such actions might have on a Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
Page 11
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Securities or whether such approvals, if necessary, will be
obtained.
Petroleum Refining Companies. Certain Trusts may be considered to be
concentrated in common stocks of companies engaged in refining and
marketing oil and related products. See "Risk Factors" in the
prospectus which will indicate, if applicable, the Trust's concentration
in the petroleum industry. According to the U.S. Department of Commerce,
the factors which will most likely shape the industry include the price
and availability of oil from the Middle East, changes in United States
environmental policies and the continued decline in U.S. production of
crude oil. Possible effects of these factors may be increased U.S. and
world dependence on oil from the Organization of Petroleum Exporting
Countries ("OPEC") and highly uncertain and potentially more volatile
oil prices. Factors which the Sponsor believes may increase the
profitability of oil and petroleum operations include increasing demand
for oil and petroleum products as a result of the continued increases in
annual miles driven and the improvement in refinery operating margins
caused by increases in average domestic refinery utilization rates. The
existence of surplus crude oil production capacity and the willingness
to adjust production levels are the two principal requirements for
stable crude oil markets. Without excess capacity, supply disruptions in
some countries cannot be compensated for by others. Surplus capacity in
Saudi Arabia and a few other countries and the utilization of that
capacity prevented during the Persian Gulf crisis, and continues to
prevent, severe market disruption. Although unused capacity contributed
to market stability in 1990 and 1991, it ordinarily creates pressure to
overproduce and contributes to market uncertainty. The likely
restoration of a large portion of Kuwait and Iraq's production and
export capacity over the next few years could lead to such a development
in the absence of substantial growth in world oil demand. Formerly, OPEC
members attempted to exercise control over production levels in each
country through a system of mandatory production quotas. Because of the
crisis in the Middle East, the mandatory system has since been replaced
with a voluntary system. Production under the new system has had to be
curtailed on at least one occasion as a result of weak prices, even in
the absence of supplies from Kuwait and Iraq. The pressure to deviate
from mandatory quotas, if they are reimposed, is likely to be
substantial and could lead to a weakening of prices. In the longer term,
additional capacity and production will be required to accommodate the
expected large increases in world oil demand and to compensate for
expected sharp drops in U.S. crude oil production and exports from the
Soviet Union. Only a few OPEC countries, particularly Saudi Arabia, have
the petroleum reserves that will allow the required increase in
production capacity to be attained. Given the large-scale financing that
is required, the prospect that such expansion will occur soon enough to
meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the industry
over the coming decade. Refiners are likely to be required to make heavy
capital investments and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as
the 1990 amendments to the Clean Air Act. If the cost of these changes
is substantial enough to cut deeply into profits, smaller refiners may
be forced out of the industry entirely. Moreover, lower consumer demand
due to increases in energy efficiency and conservation, gasoline
reformulations that call for less crude oil, warmer winters or a general
slowdown in economic growth in this country and abroad, could negatively
affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will
increase or that any increases will not be marked by great volatility.
Some oil companies may incur large cleanup and litigation costs relating
to oil spills and other environmental damage. Oil production and
Page 12
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the
disposal of hazardous materials. Increasingly stringent environmental
laws and regulations are expected to require companies with oil
production and refining operations to devote significant financial and
managerial resources to pollution control. General problems of the oil
and petroleum products industry include the ability of a few influential
producers significantly to affect production, the concomitant volatility
of crude oil prices and increasing public and governmental concern over
air emissions, waste product disposal, fuel quality and the
environmental effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry
or the environment could have a negative impact on the petroleum
products industry. While legislation has been enacted to deregulate
certain aspects of the oil industry, no assurances can be given that new
or additional regulations will not be adopted. Each of the problems
referred to could adversely affect the financial stability of the
issuers of any petroleum industry stocks in the Trusts.
Real Estate Companies. Certain Portfolios are considered to be
concentrated in common stocks of companies engaged in real estate asset
management, development, leasing, property sales and other related
activities. See "Risk Factors" in the prospectus which will indicate, if
applicable, a Trust's concentration in this industry. Investment in
securities issued by these real estate companies should be made with an
understanding of the many factors which may have an adverse impact on
the credit quality of the particular company or industry. Generally,
these include economic recession, the cyclical nature of real estate
markets, competitive overbuilding, unusually adverse weather conditions,
changing demographics, changes in governmental regulations (including
tax laws and environmental, building, zoning and sales regulations),
increases in real estate taxes or costs of material and labor, the
inability to secure performance guarantees or insurance as required, the
unavailability of investment capital and the inability to obtain
construction financing or mortgage loans at rates acceptable to builders
and purchasers of real estate. Additional risks include an inability to
reduce expenditures associated with a property (such as mortgage
payments and property taxes) when rental revenue declines, and possible
loss upon foreclosure of mortgaged properties if mortgage payments are
not paid when due.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
REITs are differentiated by the types of real estate properties held and
the actual geographic location of properties and fall into two major
categories: equity REITs emphasize direct property investment, holding
their invested assets primarily in the ownership of real estate or other
equity interests, while mortgage REITs concentrate on real estate
financing, holding their assets primarily in mortgages secured by real
estate. REITs obtain capital funds for investment in underlying real
estate assets by selling debt or equity securities in the public or
institutional capital markets or by bank borrowing. Thus, the returns on
common equities of the REITs in which the Trust invests will be
significantly affected by changes in costs of capital and, particularly
in the case of highly "leveraged" REITs (i.e., those with large amounts
of borrowings outstanding), by changes in the level of interest rates.
The objective of an equity REIT is to purchase income-producing real
estate properties in order to generate high levels of cash flow from
rental income and a gradual asset appreciation, and they typically
invest in properties such as office, retail, industrial, hotel and
apartment buildings and healthcare facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distributed at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail
to qualify for such tax status, the related shareholders (including the
Trust) could be adversely affected by the resulting tax consequences.
Page 13
The underlying value of the Securities and a Trust's ability to make
distributions to Unit holders may be adversely affected by changes in
national economic conditions, changes in local market conditions due to
changes in general or local economic conditions and neighborhood
characteristics, increased competition from other properties,
obsolescence of property, changes in the availability, cost and terms of
mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
impediments to raising rents, adverse changes in governmental rules and
fiscal policies, dependency on management skill, civil unrest, acts of
God, including earthquakes and other natural disasters (which may result
in uninsured losses), acts of war, adverse changes in zoning laws, and
other factors which are beyond the control of the issuers of the REITs
in a Trust.
The value of the REITs may at times be particularly sensitive to
devaluation in the event of rising interest rates. Equity REITs are less
likely to be affected by interest rate fluctuations than mortgage REITs
and the nature of the underlying assets of an equity REIT may be
considered more tangible than that of a mortgage REIT. Equity REITs are
more likely to be adversely affected by changes in the value of the
underlying property it owns than mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in a Trust may be
adversely affected by increases or decreases in property tax rates and
assessments or reassessments of the properties underlying the REITs by
taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary.
The issuer of REITs generally maintains comprehensive insurance on
presently owned and subsequently acquired real property assets,
including liability, fire and extended coverage. However, certain types
of losses may be uninsurable or not be economically insurable as to
which the underlying properties are at risk in their particular locales.
There can be no assurance that insurance coverage will be sufficient to
pay the full current market value or current replacement cost of any
lost investment. Various factors might make it impracticable to use
insurance proceeds to replace a facility after it has been damaged or
destroyed. Under such circumstances, the insurance proceeds received by
a REIT might not be adequate to restore its economic position with
respect to such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of
the REITs in a Trust may not be presently liable or potentially liable
for any such costs in connection with real estate assets they presently
own or subsequently acquire while such REITs are held in a Trust.
Recently, in the wake of Chinese economic development and reform,
certain Hong Kong real estate companies and other investors began
purchasing and developing real estate in southern China, including
Beijing, the Chinese capital. By 1992, however, southern China began to
experience a rise in real estate prices, increases in construction costs
and a tightening of credit markets. Any worsening of these conditions
Page 14
could affect the profitability and financial condition of Hong Kong real
estate companies and could have a materially adverse effect on the value
of a Global Target 15 Portfolio.
Technology Companies. Certain Portfolios are considered to be
concentrated in common stocks of technology companies. See "Risk
Factors" in the prospectus which will indicate, if applicable, a Trust's
concentration in this industry.
Technology companies generally include companies involved in the
development, design, manufacture and sale of computers and peripherals,
software and services, data networking/communications equipment,
internet access/information providers, semiconductors and semiconductor
equipment 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
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 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 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
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
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 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 Securities in
a Trust.
Like many areas of technology, the semiconductor business environment is
highly competitive, notoriously cyclical and subject to rapid and often
unanticipated change. Recent industry downturns have resulted, in part,
from weak pricing, persistent overcapacity, slowdown in Asian demand and
a shift in retail personal computer sales toward the low end, or "sub-
$1,000" segment. Industry growth is dependent upon several factors,
Page 15
including: the rate of global economic expansion; demand for products
such as personal computers and networking and communications equipment;
excess productive capacity and the resultant effect on pricing; and the
rate of growth in the market for low-priced personal computers.
Small-Cap Companies. While historically small-cap company stocks have
outperformed the stocks of large companies, the former have customarily
involved more investment risk as well. Small-cap companies may have
limited product lines, markets or financial resources; may lack
management depth or experience; and may be more vulnerable to adverse
general market or economic developments than large companies. Some of
these companies may distribute, sell or produce products which have
recently been brought to market and may be dependent on key personnel.
The prices of small company securities are often more volatile than
prices associated with large company issues, and can display abrupt or
erratic movements at times, due to limited trading volumes and less
publicly available information. Also, because small cap companies
normally have fewer shares outstanding and these shares trade less
frequently than large companies, it may be more difficult for the Trusts
which contain these Securities to buy and sell significant amounts of
such shares without an unfavorable impact on prevailing market prices.
Portfolios
Equity Securities Selected for The Dow sm Target 5 Portfolio
Caterpillar Inc., headquartered in Peoria, Illinois, makes earthmoving,
construction and materials handling machinery and equipment, and diesel
engines. The company also provides various financial products and
services.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
Eastman Kodak Company, headquartered in Rochester, New York, develops,
makes and sells consumer and commercial photographic imaging products.
The company's products include films, photographic papers and chemicals,
cameras, projectors, processing equipment, audiovisual equipment,
copiers, microfilm products, applications software, printers and other
equipment.
Goodyear Tire & Rubber Company, headquartered in Akron, Ohio, develops,
makes and sells tires and related transportation products; participates
in various crude oil transportation and gathering activities; and makes
various industrial rubber and chemical products.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
Equity Securities Selected for The Dow sm Target 10 Portfolio
Caterpillar Inc., headquartered in Peoria, Illinois, makes earthmoving,
construction and materials handling machinery and equipment, and diesel
engines. The company also provides various financial products and
services.
Chevron Corporation, headquartered in San Francisco, California, is an
international oil company with activities in the United States and
abroad. The company is involved in worldwide, integrated petroleum
operations which explore for, develop and produce petroleum liquids and
natural gas, as well as transporting the products. The company is also
involved in the mineral and chemical industries.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
Eastman Kodak Company, headquartered in Rochester, New York, develops,
makes and sells consumer and commercial photographic imaging products.
Page 16
The company's products include films, photographic papers and chemicals,
cameras, projectors, processing equipment, audiovisual equipment,
copiers, microfilm products, applications software, printers and other
equipment.
Exxon Corporation, headquartered in Irving, Texas, is principally
involved in the energy industry. The company explores for and produces
crude oil and natural gas, manufactures petroleum products, explores for
and mines coal and minerals and transports and sells crude oil, natural
gas and petroleum products.
General Motors Corporation, headquartered in Detroit, Michigan,
manufactures and sells cars and trucks worldwide under the trademarks
"Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn," "Cadillac" and
"GMC Trucks."
Goodyear Tire & Rubber Company, headquartered in Akron, Ohio, develops,
makes and sells tires and related transportation products; participates
in various crude oil transportation and gathering activities; and makes
various industrial rubber and chemical products.
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
J.P. Morgan & Company, Inc., headquartered in New York, New York, is a
global investment banking firm that serves clients with complex needs
through an integrated range of advisory, financing, trading, investment
and related capabilities.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
Equity Securities Selected for the Target 25 Portfolio
Allegheny Teledyne, Inc., headquartered in Pittsburgh, Pennsylvania,
produces specialty materials; commercial and government-related aviation
electronics products; specialty metals for consumer, industrial and
aerospace applications; and industrial and consumer products.
Bemis Company, headquartered in Minneapolis, Minnesota, makes flexible
packaging products and pressure sensitive materials. The primary market
for the company's products is the food industry. Other markets include
companies in the chemical, agribusiness, pharmaceutical, medical,
printing and graphics industries.
Cooper Industries, Inc., headquartered in Houston, Texas, manufactures,
markets and sells electrical products, tools and hardware, and
automotive parts. The company's products include compression equipment
for oil and natural gas applications, rotary drilling equipment, mining
and construction machinery, and electrical power transformers.
Cummins Engine Company, Inc., headquartered in Columbus, Indiana,
designs and makes diesel engines, ranging from 76 to 6,000 horsepower;
produces diesel engines over 200 horsepower; and produces natural gas
engines and engine components and subsystems.
Dana Corporation, headquartered in Toledo, Ohio, makes and sells
products and systems for the worldwide vehicular, industrial and off-
highway original equipment markets, and is a major supplier to the
related aftermarkets. The company also provides lease financing.
Federal Signal Corporation, headquartered in Oak Brook, Illinois, makes
and supplies safety, signaling and communications equipment, fire rescue
products, street sweeping and vacuum loader vehicles, parking control
equipment, custom on-premise signage, carbide cutting tools, precision
punches and related die components.
Ford Motor Company, headquartered in Dearborn, Michigan, is the second
largest producer of cars and trucks in the world. The company makes,
assembles and sells cars, vans, trucks and tractors and their related
parts and accessories. The company also provides financing operations,
vehicle and equipment leasing, and insurance operations.
Fortune Brands, Inc., headquartered in Old Greenwich, Connecticut, makes
and sells distilled spirits, office products, hardware and home
improvement products, supplies and accessories, and golf and leisure
products.
General Mills, Inc., headquartered in Minneapolis, Minnesota, makes and
Page 17
markets a variety of consumer foods products, including ready-to-eat
cereals; desserts; flour and baking mixes; dinner and side dish
products; snack products; beverages and yogurt products.
Harris Corporation, headquartered in Melbourne, Florida, through
subsidiaries, researches, develops and produces high-technology systems
for government and commercial organizations, makes data-sheet integrated
circuits and discrete devices, and makes communications equipment. The
company also sells office equipment and business communication products.
Louisiana-Pacific Corporation, headquartered in Portland, Oregon, makes
lumber, pulp, structural and other panel products, hardwood veneers, and
cellulose insulation through facilities throughout the United States,
Canada and Ireland.
Meritor Automotive, Inc., headquartered in Troy, Michigan, makes and
markets products for use in commercial, specialty and light vehicles.
The company provides its truck and trailer products and off-highway and
specialty products to original equipment manufacturers (OEMs), dealers,
distributors, and other end-users in the aftermarket.
Millennium Chemicals, Inc., headquartered in Red Bank, New Jersey,
produces polyethylene products; titanium dioxide; acetic acid and vinyl
acetate monomer; specialty polymers, color concentrates and polymeric
powders, titanium tetrachloride, cadmium/selenium pigments and silica
gel; and aroma and flavor chemicals.
PPG Industries, Inc., headquartered in Pittsburgh, Pennsylvania, makes
protective and decorative coatings, flat glass, fabricated glass
products, continuous strand fiber glass and industrial and specialty
chemicals. Markets for the company's products include manufacturing,
construction, automotive, and chemical processing.
Pall Corporation, headquartered in East Hills, New York, designs,
manufactures and markets fine disposable filters, membranes and other
fluid clarification and separations devices. The company's devices are
used in the healthcare, aeropower and fluid processing markets.
Polaroid Corporation, headquartered in Cambridge, Massachusetts, makes
and markets various products for use in instant image recording fields,
including instant photographic cameras and films, magnetic media, light
polarizing filters and lenses, and diversified chemical, optical and
commercial products.
Rayonier, Inc., headquartered in Stamford, Connecticut, trades,
merchandises and makes logs, timber and wood products; and it produces
and sells high value-added specialty pulps.
Snap-On, Inc., headquartered in Kenosha, Wisconsin, develops,
manufactures and distributes tool and equipment solutions worldwide. The
company's products include hand and power tools, diagnostics and shop
equipment, tool storage products, diagnostics software and other
solutions for the automotive and industrial service industries.
Sonoco Products Company, headquartered in Hartsville, South Carolina,
makes paperboard-based and plastic-based packaging products (carriers
and containers) for both consumer and industrial markets.
TRW, Inc., headquartered in Cleveland, Ohio, provides advanced
technology products and services for the automotive (including occupant
safety systems, automotive electronics and steering systems) and space,
defense and information systems markets (including spacecraft, software,
systems engineering, and systems integration).
Thomas & Betts Corporation, headquartered in Memphis, Tennessee,
designs, makes and sells, on a global basis, electrical and electronic
connectors and components, as well as other related products and
accessories for construction and original equipment manufacturer
markets. Products are sold worldwide through electrical, electronic and
HVAC distributors, mass merchandisers, catalogs and home centers.
Unocal Corporation, headquartered in El Segundo, California, explores
for, develops, produces and markets crude oil and natural gas; explores
for, produces and sells geothermal resources; makes and markets nitrogen-
based fertilizers, petroleum coke, graphites and specialty mine
Wallace Computer Services, Inc., headquartered in Lisle, Illinois, sells
a broad line of products and services including business forms,
commercial and promotional graphics printing, office products, computer
and consumer product labels, machine ribbons, computer hardware and
software, computer accessories and electronic forms.
Weis Markets, Inc., headquartered in Sunbury, Pennsylvania, with
subsidiaries, operates retail food markets in Maryland, New Jersey, New
York, Pennsylvania, Virginia and West Virginia; operates pet supply
Page 18
stores in Alabama, Georgia, Indiana, Kentucky, Maryland, Michigan, Ohio,
Pennsylvania, South Carolina and Tennessee; and operates as a restaurant
and institutional food supplier.
Weyerhaeuser Company, headquartered in Tacoma, Washington, grows and
harvests timber; makes, distributes and sells forest products. The
company builds and develops houses and apartments; develops commercial
and residential lots. The company also provides a broad range of
financial services.
Equity Securities Selected for the Target Small-Cap Portfolio
AVT Corporation, headquartered in Kirkland, Washington, develops, makes,
sells and supports a broad line of open systems-based computer-telephony
software products and systems that automate call answering and enable a
user to manage different types of messages from either a personal
computer or a telephone.
Alpharma, Inc. (Class A), headquartered in Ft. Lee, New Jersey, through
divisions, develops, makes and sells specialty generic and proprietary
human pharmaceuticals and animal health products.
American Freightways Corporation, headquartered in Harrison, Arkansas,
operates as a scheduled common and contract carrier transporting
primarily less-than-truckload shipments of general commodities, serving
mid-Atlantic, midwestern, southeastern and southwestern states.
Atlantic Coast Airlines Holdings, headquartered in Sterling, Virginia,
operates a regional airline serving 17 states and operates mainly from
Dulles International Airport, which serves Washington, D.C. and northern
Virginia.
Atlas Air, Inc., headquartered in Golden, Colorado, provides air cargo
transportation services throughout the world to major international
airlines. The company also provides its own scheduled air cargo flights
on a seasonal basis.
E.W. Blanch Holdings, Inc., headquartered in Minneapolis, Minnesota,
provides integrated risk management services, including reinsurance
intermediary services, risk management consulting and administration
services, and wholesale insurance services.
Books-A-Million, Inc., headquartered in Birmingham, Alabama, operates
bookstores under the names "Books-A-Million," "Books and Co." and
"Bookland," mainly in the southeast. The company sells books through the
Internet; and serves as a wholesaler of bargain books.
CTS Corporation, headquartered in Elkhart, Indiana, designs, makes and
sells a broad line of electronic components principally serving the
electronic needs of original equipment manufacturers.
Celestial Seasonings, Inc., headquartered in Boulder, Colorado, makes
and markets a variety of teas under the "Celestial Seasonings" brand in
the United States and several countries. Products include herb teas,
medicinal herb teas, herbal and specialty black iced teas, hot specialty
black teas and dietary supplements.
ChiRex, Inc., headquartered in Stamford, Connecticut, develops, makes
and sells fine chemicals, including pharmaceutical intermediates and
active ingredients used in the manufacture of drugs; and formulated
generic drugs.
Church & Dwight Company, Inc., headquartered in Princeton, New Jersey,
with subsidiaries, makes sodium bicarbonate and sodium bicarbonate-based
consumer products sold mainly under the "Arm & Hammer" name, including
baking soda, laundry detergent, dryer sheets, tooth powder and
toothpaste, washing soda and deodorizers. The company also makes
ammonium bicarbonate.
Duane Reade Inc., headquartered in New York, New York, owns and operates
retail drugstores in four boroughs of New York City and in New Jersey.
Education Management Corporation, headquartered in Pittsburgh,
Pennsylvania, provides proprietary postsecondary education in the United
States based on student enrollments and revenues, including associate's
and bachelor's degree programs. The company also provides non-degree
programs in the areas of design, media arts, culinary arts, fashion and
paralegal studies.
FPIC Insurance Group, Inc., headquartered in Jacksonville, Florida,
provides medical professional liability insurance for physicians and
dentists in Florida, managed care liability insurance, professional and
comprehensive general liability insurance for healthcare facilities,
AHCA/OSHA insurance coverage, provider stop loss insurance and third
party services.
Forrester Research, Inc., headquartered in Cambridge, Massachusetts,
offers products and services that help its clients assess the effect of
Page 19
technology on their businesses.
Granite Construction Incorporated, headquartered in Watsonville,
California, provides heavy civil construction services throughout the
United States, focusing primarily on the west, southwest and southeast.
The company also owns and leases aggregate reserves and owns
construction materials processing plants and a large heavy construction
contractor equipment fleet.
Great Plains Software, Inc., headquartered in Fargo, North Dakota,
provides Microsoft Windows NT and SQL Server-based client/server
financial management software for mid-sized businesses. The company's
products and services automate essential accounting functions and
enhance the strategic value of financial information.
Hooper Holmes, Inc., headquartered in Basking Ridge, New Jersey,
provides medical and paramedical examinations for applicants seeking
life and health insurance. The company also offers insurance inspection
reports and attending physician statements.
Insight Enterprises, Inc., headquartered in Tempe, Arizona, sells
microcomputers, peripherals and software mainly to small and medium-
sized enterprises, through a combination of targeted direct mail
catalogs, advertising in computer magazines and publications and a
strong outbound telemarketing sales force.
Insituform Technologies, Inc. (Class A), headquartered in Chesterfield,
Missouri, provides proprietary trenchless technologies for the
rehabilitation and improvement of sewer, water, gas and industrial pipes.
Investment Technology Group, Inc., headquartered in New York, New York,
provides technology-based equity trading services and transaction
research to institutional investors and brokers.
Lason, Inc., headquartered in Troy, Michigan, provides integrated
outsourcing services for records management, document management and
business communications. The company primarily serves customers in the
manufacturing, healthcare, financial services and professional services
industries.
Melita International Corporation, headquartered in Norcross, Georgia,
provides integrated customer interaction and intelligent call management
solutions that enable customers to operate efficient call centers.
Metro One Telecommunications, Inc., headquartered in Beaverton, Oregon,
develops and provides enhanced directory assistance (EDA) for the
wireless telecommunications industry. The company contracts with
wireless communications carriers to provide EDA to a carrier's
subscribers.
MICREL, Incorporated, headquartered in San Jose, California, designs,
develops, manufactures and markets a range of high performance analog
integrated circuits that are used in a wide variety of electronic
products, including those in the communications, computer and industrial
markets.
Micro Warehouse, Inc., headquartered in Norwalk, Connecticut, markets
microcomputer software and peripheral products, components and
accessories to users of "Adobe," "Apple," "3Com," "Compaq," "Hewlett-
Packard," "IBM," "Iomega," "Microsoft," "Motorola" and "Toshiba" products.
Monaco Coach Corporation, headquartered in Coburg, Oregon, makes a line
of premium motor coaches, bus conversions and towable recreational
vehicles designed to appeal to customers seeking superior driving
performance and luxurious accommodations. Products are sold to
independent dealers throughout the United States and Canada.
O'Reilly Automotive, Inc., headquartered in Springfield, Missouri, sells
automotive aftermarket parts, tools, supplies, equipment and accessories
mainly through stores in Arkansas, Kansas, Missouri and Oklahoma.
Products are sold to both do-it-yourself customers and professional
mechanics or service technicians.
Perclose, Inc., headquartered in Menlo Park, California, designs,
develops, makes and markets minimally invasive medical devices that
automate the delivery of needles and sutures for the surgical closure or
connection of blood vessels.
Performance Food Group Company, headquartered in Richmond, Virginia,
markets and distributes a wide variety of food and food-related products
to restaurants, hotels, cafeterias, schools, healthcare facilities and
other businesses and institutions, primarily in the southern,
southwestern, midwestern and northeastern United States.
Pharmaceutical Product Development, Inc., headquartered in Wilmington,
North Carolina, with subsidiaries, provides a broad range of integrated
product development services on a global basis to complement the
research and development activities of companies in the pharmaceutical
Page 20
and biotechnology industries. The company also provides assessment and
management of chemical and environmental health risk.
Plantronics, Inc., headquartered in Santa Cruz, California, designs,
makes and sells lightweight communication headsets which can be worn
over the head or on either ear. The company also makes and sells
amplified telephone handsets and specialty telephones for hearing
impaired users, and noise-cancelling handsets for use in high-noise
environments.
Plexus Corporation, headquartered in Neenah, Wisconsin, through
subsidiaries, offers contract development, design, manufacturing and
test services mainly to original equipment manufacturers in the computer
(mainly mainframes and peripherals), medical, industrial,
telecommunications and transportation electronics industries.
Progress Software Corporation, headquartered in Bedford, Massachusetts,
supplies software products including multi-tier, enterprise-class
business applications, Internet transaction processing applications,
Java-based applications, debugging tool and add-on components to
business, government and industry.
Rayovac Corporation, headquartered in Madison, Wisconsin, makes and
sells general batteries, including alkaline, heavy duty and rechargeable
alkaline, and hearing aid batteries.
Ryan's Family Steak Houses, Inc., headquartered in Greer, South
Carolina, owns and operates family-oriented steak house restaurants and
franchises restaurants under the name "Ryan's Family Steakhouse."
SkyWest, Inc., headquartered in Saint George, Utah, operates as a
regional air carrier providing passenger and air freight service in the
western United States. The company also provides air tours and general
aviation services, and provides car rental services.
Stillwater Mining Company, headquartered in Denver, Colorado, explores,
develops, mines and produces platinum, palladium and associated metals
from the J-M Reef located in the Stillwater and Sweet Grass counties of
Montana.
THQ, Inc., headquartered in Calabasas, California, develops, publishes
and distributes interactive entertainment software worldwide for a
variety of hardware platforms.
Techne Corporation, headquartered in Minneapolis, Minnesota, develops
and makes biotechnology products and hematology calibrators and controls.
Equity Securities Selected for the Global Target 15 Portfolio
Dow Jones Industrial Average (SM)
Caterpillar Inc., headquartered in Peoria, Illinois, makes earthmoving,
construction and materials handling machinery and equipment, and diesel
engines. The company also provides various financial products and
services.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
Eastman Kodak Company, headquartered in Rochester, New York, develops,
makes and sells consumer and commercial photographic imaging products.
The company's products include films, photographic papers and chemicals,
cameras, projectors, processing equipment, audiovisual equipment,
copiers, microfilm products, applications software, printers and other
equipment.
Goodyear Tire & Rubber Company, headquartered in Akron, Ohio, develops,
makes and sells tires and related transportation products; participates
in various crude oil transportation and gathering activities; and makes
various industrial rubber and chemical products.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
Financial Times Industrial Ordinary Share Index
Allied Domecq Plc is an international food, drink and hospitality group
which owns the "Baskin Robbins" ice cream and "Dunkin' Donuts" food
Page 21
chains. Through Hiram Walker, the company also produces a wide range of
alcoholic beverage brands.
Blue Circle Industries Plc, through subsidiaries, makes and sells heavy
building materials including cement, concrete and aggregates, and
heating and bathroom products. The company also manages real estate and
develops commercial and residential properties.
British Airways Plc operates international and domestic scheduled
passenger airline services, as well as a worldwide air cargo business.
The company is one of the largest airlines in the world.
Marks & Spencer Plc retails consumer goods and food under the name "St.
Michael." The company sells quality clothing through "Brooks Brothers"
stores in the United States and Japan, sells food through its "Kings
Super Markets" in the United States, and other merchandise through a
chain of retail stores in Canada, Europe and Hong Kong. The company is
also engaged in financial, unit trust, treasury and insurance.
Tate & Lyle Plc is the holding company for an international group of
companies which manufacture, refine, process, distribute and trade
sweeteners, starches and their by-products. Products include white
sugar, molasses and low calorie sweeteners. The company also
manufactures and sells engineered sugar milling equipment and provides
reinsurance services.
Hang Seng Index
Amoy Properties Ltd. is a property investment company. The company's
principal activities are property investment and investment holding, and
through its subsidiaries, property investment for rental income, car
park management and property management.
Guangdong Investment Ltd. has principal activities in investment holding
and investment in marketable securities, property and infrastructure
projects. The subsidiaries are principally engaged in investment
holding, the provision of travel and transportation services, hotel
ownership and operation, hotel management, property holding and
investment, and property for sale. Other activities include the supply
and installation of aluminum products, manufacture of malt for the
production of beer, processing of cow hides and sheep skins, cement
production, investment in infrastructure and energy projects, and
wholesale and retail.
Henderson Investment Ltd. is an investment holding company. The
principal activities of its subsidiaries are property development and
investment, investment holding, retailing and the hotel business.
Hongkong & Shanghai Hotels Ltd. operates hotels in Hong Kong, China,
The United States, the Philippines and Vietnam. It also leases
Apartments and retail space; operates a funicular, entertainment centers
And laundry services; and manages clubs.
Hysan Development Company Ltd. is active in investment holding, property
investment and capital market investments.
Equity Securities Selected for the European Target 20 Portfolio
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.
Page 22
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.
Marks & Spencer Plc, headquartered in London, England, retails consumer
goods and food under the name "St. Michael." The company sells quality
clothing through "Brooks Brothers" stores in the United States and
Japan, sells food through its "Kings Super Markets" in the United
States, and other merchandise through a chain of retail stores in
Canada, Europe and Hong Kong. The company is also engaged in financial,
unit trust, treasury and insurance.
Norwich Union Plc, headquartered in Norwich, England, provides insurance
services in England, Australia, France, Ireland, New Zealand and Spain.
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 & Sun Alliance Insurance Group Plc, headquartered in London,
England, is a holding company for multi-national insurance companies
which provide major classes of general and life insurances to customers
in the United Kingdom, Australia, Canada, Scandinavia, South Africa 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.
Equity Securities Selected for the S&P Target 10 Portfolio
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.
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.
Page 23
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.
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.
Tricon Global Restaurants, Inc., headquartered in Louisville, Kentucky,
operates quick service restaurants in 103 countries and territories,
including "KFC," "Pizza Hut" and "Taco Bell" restaurants.
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.
Walgreen Co., headquartered in Deerfield, Illinois, operates a
nationwide chain of retail "Walgreens" drugstores in 34 states and
Puerto Rico. The company also operates two mail-order facilities.
Equity Securities Selected for the Nasdaq Target 15 Portfolio
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.
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.
Autodesk, Inc., headquartered in San Rafael, California, develops,
markets and supports design automation and multimedia software products
for use on personal computers and workstations. The company's principal
product, "AutoCAD," is a general-purpose design and drafting tool.
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.
COMAIR Holdings, Inc., headquartered in Cincinnati, Ohio, through
subsidiaries, provides scheduled air transportation for passengers and
freight serving airports in the midwestern, southeastern and
northeastern United States as well as Canada and the Bahamas. The
company also provides aircraft leasing; and professional flight training.
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.
Electronics for Imaging, Inc., headquartered in San Mateo, California,
designs and sells a range of color processing and printing solutions,
including application and system software that facilitate color
correction and device-independent color management, and color servers
that enable short production run color printing in an office environment.
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
Page 24
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.
Tellabs, Inc., headquartered in Lisle, Illinois, makes and services
voice, data and video transport and network access systems used by
public telephone companies, long-distance carriers, alternate service
providers, cellular providers, cable operators, government agencies,
utilities and business end-users.
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.
We have obtained the foregoing company descriptions from sources we deem
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Page 25
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 311, 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; The First Trust Special Situations Trust, Series 190
Biotechnology Growth Trust, Series 3; and FT 286 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 311, 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 February 26, 1999.
FT 311
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 ) February 26, 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 February 26, 1999 in
Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-64005) and related Prospectus of FT 311.
ERNST & YOUNG LLP
Chicago, Illinois
February 26, 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 311 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.
3.5 Opinion of counsel as to United Kingdom tax status of
Securities being registered.
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
MEMORANDUM
FT 311
File No. 333-64005
The Prospectus and the Indenture filed with Amendment No. 2
of the Registration Statement on Form S-6 have been revised to
reflect information regarding the execution of the Indenture and
the deposit of Securities on February 26, 1999 and to set forth
certain statistical data based thereon. In addition, there are a
number of other changes described below.
THE PROSPECTUS
Cover Page The date of the Trusts has been added.
Page 3-5 The following information for the Trusts appears:
The Aggregate Value of Securities initially
deposited have been added.
The initial number of units of the Trusts
Sales charge
The Public Offering Price per Unit as of the
business day before the Initial Date of Deposit
The Mandatory Termination Date has been added.
Page 8 The Report of Independent Auditors has been
completed.
Pages 9-10 The Statements of Net Assets have been completed.
Pages 11-18 The Schedules of Investments have been completed.
THE TRUST AGREEMENT AND STANDARD TERMS AND CONDITIONS OF TRUST
The Trust Agreement has been conformed to reflect
the execution thereof.
CHAPMAN AND CUTLER
February 26, 1999
FT 311
TRUST AGREEMENT
Dated: February 26, 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 THE DOW (sm) TARGET 5 PORTFOLIO, MARCH 1999 SERIES ("TARGET 5 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 in the
amount of $.0025 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 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 in the
amount 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 February 26, 1999.
J. The minimum amount of 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 DOW (sm) TARGET 10 PORTFOLIO, MARCH 1999 SERIES ("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 in the
amount of $.0025 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 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 in the
amount 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 February 26, 1999.
J. The minimum amount of 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 TARGET 25 PORTFOLIO, MARCH 1999 SERIES
("TARGET 25 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 in the
amount of $.0025 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 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 in the
amount 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 February 26, 1999.
J. The minimum amount of 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 TARGET SMALL-CAP PORTFOLIO, MARCH 1999 SERIES
("TARGET SMALL-CAP 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 in the
amount of $.0025 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 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 in the
amount 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 February 26, 1999.
J. The minimum amount of 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 GLOBAL TARGET 15 PORTFOLIO, MARCH 1999 SERIES
("GLOBAL 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 in the
amount of $.0025 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 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 in the
amount 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 February 26, 1999.
J. The minimum amount of 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 EUROPEAN TARGET 20 PORTFOLIO, MARCH 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 in the
amount of $.0025 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 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 in the
amount 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 February 26, 1999.
J. The minimum amount of 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, MARCH 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 in the
amount of $.0025 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 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 in the
amount 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 February 26, 1999.
J. The minimum amount of 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, MARCH 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 in the
amount of $.0025 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 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 in the
amount 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 February 26, 1999.
J. The minimum amount of 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 311.
B. Notwithstanding anything to the contrary in the Prospectus,
parties to the trust agreement are hereby advised:
The Trusts are not sponsored, endorsed, sold or promoted by Dow Jones &
Company, Inc. ("Dow Jones"). Dow Jones 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. Dow Jones' only relationship
to the Sponsor is the licensing of certain trademarks, trade names and
service marks of Dow Jones and of the Dow Jones Industrial Average (SM),
which is determined, composed and calculated by Dow Jones without regard
to the Sponsor or the Trusts. Dow Jones has no obligation to take the
needs of the Sponsor or the owners of the Trusts into consideration in
determining, composing or calculating to Dow Jones Industrial Average(SM).
Dow Jones is not responsible for and has not participated in the
determination of the timing of, prices at, or quantities of the Trusts
to be issued or in the determination or calculation of the equation by
which the Trusts are to be converted into cash. Dow Jones has no
obligation or liability in connection with the administration, marketing
or trading of the Trusts.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGE (SM) OR ANY DATA INCLUDED THEREIN AND DOW
JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, OWNERS OF THE TRUSTS, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL
AVERAGE (SM) OR ANY DATA INCLUDED THEREIN. DOW JONES 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 DOW JONES INDUSTRIAL AVERAGE (SM) OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
C. The term "Principal Account" as set forth in the Standard
Terms and Conditions of Trust shall be replaced with the term "Capital
Account."
D. 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.
E. 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."
F. 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."
G. 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."
H. 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."
I. 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."
J. 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 5.05 herein."
K. 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."
L. 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."
M. 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."
N. 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."
O. 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."
P. 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
in an amount certified to the Trustee by the Depositor. In no event
shall the amount paid by the Trustee to the Depositor for the
Depositor's reimbursable expenses of organizing the Trust exceed the
estimated per Unit amount of organization costs set forth in the
Prospectus for the Trust multiplied by the number of Units of the Trust
outstanding at the conclusion of the primary offering period; nor shall
the Depositor be entitled to or request reimbursement for expenses of
organizing the Trust incurred after the conclusion of the primary
offering period. 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. Securities sold or distributed to the Depositor to
reimburse the Depositor pursuant to this Section shall be sold or
distributed by the Trustee, to extent practicable, in the percentage
ratio then existing. 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 Depositor's
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 set forth in the Prospectus, or such lower 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. As used herein, the Depositor's
reimbursable expenses of organizing the Trust 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.
Q. 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."
R. 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."
S. 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."
T. 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."
U. 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.
V. 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."
W. 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 the amount of $.0025 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 Portfolio Supervisor provides services during
less than the whole of such year). Such fee may exceed the actual cost
of providing such portfolio supervision services for the Trust, but at
no time will the total amount received for portfolio supervision
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 Portfolio Supervisor of supplying such services in such year."
X. 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 Section 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 the amount of $0 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 Depositor provides services during less than
the whole of such year). Such fee may exceed the actual cost of
providing such bookkeeping and administrative services for the Trust,
but at not time will the total amount received for bookkeeping and
administrative 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 Depositor of supplying such services in 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 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.
Y. 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."
Z. 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.
AA. 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."
BB. 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 Stock Market, 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 Stock Market 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."
CC. 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, 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 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."
DD. 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."
EE. 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 organization
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 organization 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 organization costs. Upon receipt
of such notice, the Trustee shall use this revised estimated amount per
Unit representing unpaid accrued organization 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."
FF. 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 Target 5 Trust, the Target 10 Trust, the Target 25 Trust, the Target
Small-Cap Trust; the S&P Target 10 Trust or The 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."
GG. 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 Target 5 Trust, the Target 10 Trust, the Target
25 Trust, the Target Small-Cap Trust, the Global Target 15 Trust, The
European Target 20 Trust, The S&P Target 10 Trust, or 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."
HH. 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."
II. 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)"
JJ . 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.
KK. 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 311
(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
February 26, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 311
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 311 in connection with the February
26, 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. 333-64005)
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
February 26, 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 311
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 311 (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 February 26, 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 Securities as such term is defined
in the Prospectus. For purposes of this opinion, it is assumed
that each 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 a 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 Security, and to the extent that
such dividends exceed a Unit holder's tax basis in such 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 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 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
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 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 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 Security owned by
the Trust will depend upon whether or not a Unit holder receives
cash in addition to Securities. A "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 Securities in exchange for his or her pro rata
portion of the Securities held by a Trust. However, if a Unit
holder also receives cash in exchange for a fractional share of a
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 a 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 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 attributable 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 a 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
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. 333-64005)
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
February 26, 1999
The Chase Manhattan Bank, as Trustee of
FT 311
4 New York Plaza, 6th Floor
New York, New York 10004-3113
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 311
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 311 (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. 333-64005) 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
February 26, 1999
The Chase Manhattan Bank, as Trustee of
FT 311
4 New York Plaza, 6th Floor
New York, New York 10004-3113
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 311
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
311 (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
February 26, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 311
Gentlemen:
We have examined the Registration Statement File No.
333-64005 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
LINKLATERS & PAINES (NEW YORK)
885 THIRD AVENUE, SUITE 2600
NEW YORK, NEW YORK 10022
FAX (212) 751-9335
TELEX 127812
26 February 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Dear Sirs
FT 311 GLOBAL TARGET 15 PORTFOLIO-MARCH 1999 SERIES
1. We have acted as special United Kingdom ("UK") taxation
advisers in connection with the issue of units ("Units") in
the Global Target 15 Trust, March 1999 Series (the "Trust")
on the basis of directions given to us by Chapman and
Cutler, counsel to yourselves.
2. This opinion is limited to UK taxation law as applied in
practice on the date hereof by the Inland Revenue and is
given on the basis that it will be governed by and construed
in accordance with English law as enacted.
3. For the purpose of this opinion, the only documentation
which we have examined is a draft prospectus for FT 311
comprising The Dow Target 5 Portfolio, March 1999 Series;
The Dow Target 10 Portfolio, March 1999 Series; the Target
25 Portfolio, March 1999 Series; the Target Small-Cap
Portfolio, March 1999 Series; the European Target 20
Portfolio, March 1999 Series; The S&P Target 10 Portfolio,
March 1999 Series; The Nasdaq Target 15 Portfolio, March
1999 Series and the Trust (together the "Funds") dated 17
February 1999 (the "Prospectus"). We have been advised by
Chapman and Cutler that there are no material differences
between the Prospectus and the final prospectus to be issued
for the Funds to be dated 26 February 1999. Terms defined
in the Prospectus bear the same meaning herein.
4. We have assumed for the purposes of this opinion that:
4.1. a holder of Units ("Unit holder") is, under the terms
of the Indenture governing the Trust, entitled to have
paid to him (subject to a deduction for annual
expenses, including total applicable custodial fees and
certain other costs associated with foreign trading and
annual Trustee's, Sponsor's, portfolio supervisory,
evaluation and administrative fees and expenses) his
pro rata share of all the income which arises to the
Trust from the investments in the Trust, and that,
under the governing law of the Indenture, this is a
right as against the assets of the Trust rather than a
right enforceable in damages only against the Trustee;
4.2. subject as provided in paragraph 11 below, for taxation
purposes the Trustee is not a UK resident and is a US
resident;
4.3. the general administration of the Trust will be carried
out only in the US;
4.4. no Units are registered in a register kept in the UK by
or on behalf of the Trustee;
4.5. the Trust is not treated as a corporation for US tax
purposes;
4.6. the structure, including the investment strategy of the
Trust, will be substantially the same as that set out
in the Prospectus; and
4.7. each Unit holder is neither resident nor ordinarily
resident in the UK (and has not been resident or
ordinarily resident in the UK), nor is any such Unit
holder carrying on a trade in the UK through a branch
or agent in the UK.
5. We understand that the portfolio of the Trust will consist
of the common stock of the five companies with the lowest
per share stock price of the ten companies in each of the
Dow Jones Industrial Average, the Financial Times Industrial
Ordinary Share Index and the Hang Seng Index respectively
that have the highest dividend yield in the respective index
as at the close of business on the business day prior to the
date of the final prospectus to be issued for the Funds in
respect of the stocks comprised in the Dow Jones Industrial
Average and three business days prior to the date of the
final prospectus to be issued for the Funds in respect of
stock comprised in the Financial Times Industrial Ordinary
Share Index and the Hang Seng Index; and that the Trust will
hold such common stocks for a period of approximately one
year, after which time the Trust will terminate and the
stocks will be sold. We address UK tax issues in relation
only to the common stocks of companies in the Financial
Times Industrial Ordinary Share Index comprised in the
portfolio of the Trust (the "UK Equities").
6.
6.1 Where a dividend which carries a tax credit, as
distinct from a foreign income dividend (in relation to
which see 7 and 9 below), or a "special dividend" (in
relation to which see 8 and 9 below), is paid by a UK
resident company to a qualifying US resident which
(either alone or together with one or more associated
corporations) controls directly or indirectly less than
10 percent of the voting stock of that UK company, the
qualifying US resident is entitled, on making a claim
to the UK Inland Revenue, to a payment of a tax credit
currently equal to a quarter of the dividend less a
withholding tax of 15 percent of the aggregate amount
of the tax credit and the dividend. Thus, on payment
by a UK company of a dividend of 80 pounds, a tax
credit of 20 pounds arises and so a qualifying US
resident will be entitled, on making such a claim, to a
payment from the UK Inland Revenue of 5 pounds (being
20 pounds less 15 percent of (20 pounds + 80 pounds)).
6.2 A person will be a qualifying US resident for these
purposes if:
6.2.1.that person is a resident of the US for the
purposes of the double tax treaty between the US
and the UK (the "Treaty").
The Trustee (in its capacity as recipient of the
dividend on behalf of the Trust) will be a
resident of the US for these purposes if it is
resident in the US for the purposes of US tax.
However, it will only be a resident of the US
for Treaty purposes to the extent that the
income derived by the Trust is subject to US tax
as the income of a US resident, either in the
hands of the Trust itself or in the hands of its
beneficiaries.
We have assumed that the Trust will not be
subject to US tax on its income and that such
income will be treated as income of the
beneficiaries of the Trust for US purposes.
Accordingly, the Trust would be a US resident
for the purposes of the Treaty only to the
extent that the beneficiaries would be taxable
in the US on such income or treated as so
taxable by agreement between the relevant
authorities. The provisions of the Treaty have
been extended to grant resident status to tax-
exempt charitable trusts and pension funds. We
understand that this is confirmed on the US
Treasury side by its "Technical Explanation" of
the Treaty issued on March 9, 1977;
6.2.2.the dividend is paid to that person.
We believe that the payment of a dividend to the
Trustee and onward payment by the Trustee to a
Unit holder should qualify as the payment of the
dividend to the Unit holder for these purposes.
The position is however not completely free from
doubt, but this appears to be present Inland
Revenue practice;
6.2.3.the beneficial owner of the dividend is a
resident of the US for the purposes of the
Treaty.
The Trust will not be the beneficial owner of
any dividend for these purposes. Whether a Unit
holder is a beneficial owner will depend upon
the circumstances of his ownership of the Units;
and
6.2.4.that person satisfies the other requirements of
the Treaty including the following:
(i) the dividend is not received in connection with
a UK permanent establishment or fixed base of
that person;
(ii) subject to certain exemptions, that person is
not a US corporation (a) 25 percent or more of
whose capital is owned directly or indirectly by
persons who are not individual residents or
nationals of the US; and (b) which either
(i) suffers US tax on the dividend at a rate
substantially less than that which is generally
imposed on corporate profits or (ii) is an 80:20
corporation for the purposes of the US Internal
Revenue Code of 1954, section 861;
6.2.5.that person is not a corporation resident in
both the US and the UK; and
6.2.6.that person is not exempt from US tax in a case
where (a) that person's interest in the UK
company is not acquired for bona fide commercial
reasons and (b) if the recipient of the dividend
were a resident of the UK and exempt from UK
tax, the UK exemption would be limited or
removed.
6.3 Therefore, although the position is not free from
doubt, a Unit holder, where the requirements set out
above are satisfied, should, on making an appropriate
claim, be entitled to repayment of part of the UK tax
credit. However, since the UK Inland Revenue normally
require claims to be made by the beneficial owner of a
dividend, the Trustee will not, in the absence of
arrangements with the UK Inland Revenue and the Unit
holders, be able to claim any such repayment.
Moreover, in order to make a claim for repayment, the
Unit holder will need to produce evidence of the
payment of the dividend and of his interest in it.
Normally this is achieved by submitting to the UK
Inland Revenue tax vouchers which are derived directly
from the UK company paying a dividend, or which are
prepared by the Trustee and evidence to the
satisfaction of the Inland Revenue the entitlement of
the Unit holder to that dividend. Where the Trustee
provides neither of these, it will in practice be
difficult for the Unit holder to establish his
beneficial interest in any dividend payment and
accordingly his entitlement to any tax credit.
6.4 Section 30 of the Finance Act 1997 provides that the
tax credit attached to a dividend paid by a UK company
on or after April 6, 1999 will be reduced to one-ninth
of the dividend. Therefore, on payment by a UK company
of a dividend of 80 pounds on or after April 6, 1999, a
tax credit of approximately 9 will arise. A qualifying
US resident which (either alone or together with one or
more associated corporations) controls directly or
indirectly less than 10 percent of the voting stock of
that UK company will not be entitled to any payment in
respect of that tax credit under the Treaty in respect
of dividends paid on UK Equities on or after April 6,
1999.
7. Since July 1, 1994, it is possible for a UK resident company
to elect to treat a cash dividend paid by it as a "foreign
income dividend" ("FID"). If a company makes an effective
election to pay a FID in respect of shares which are held in
the Trust, there will be no entitlement to a refundable tax
credit in respect of that FID, notwithstanding 6 above.
8. Section 69 of, and Schedule 7 to, the Finance Act 1997
provide that if, on October 8, 1996, a UK resident company
pays a dividend where there are arrangements by virtue of
which the amount, timing or form of the dividend is
referable to a transaction in shares or securities (a
"special dividend"), that special dividend will be treated
in the same way as FID. Accordingly, if a company pays a
special dividend in respect of UK Equities which are held in
the Trust, there will be no entitlement to a refundable tax
credit in respect of that special dividend, notwithstanding
6 above.
9. Section 36 of the Finance (No. 2) Act 1997 provides that a
UK resident company may not make an election to treat a cash
dividend paid by it on or after April 6, 1999 as a FID.
Section 36 of the Finance (No. 2) Act 1997 further provides
that no dividend paid on or after April 6, 1999 may be
treated as a FID by virtue of Schedule 7 to the Finance Act
1997.
10. The Trust may be held to be trading in stock rather than
holding stock for investment purposes by virtue, inter alia,
of the length of the time for which the stock is held. If
the stock is purchased and sold through a UK resident agent,
then, if the Trust is held to be trading in such stock,
profits made on its subsequent disposal may, subject to 10
below, be liable to United Kingdom tax on income.
11. Under current law, the Trust's liability to tax on such
profits will be limited to the amount of tax (if any)
withheld from the Trust's income provided such profits
derive from transactions carried out on behalf of the Trust
by a UK agent where the following conditions are satisfied:
11.1. the transactions from which the profits are
derived are investment transactions;
11.2. the agent carries on a business of providing
investment management services;
11.3. the transactions are carried out by the agent on
behalf of the Trust in the ordinary course of that
business;
11.4. the remuneration received by the agent is at a
rate which is not less than that which is customary for
the type of business concerned;
11.5. the agent acts for the Trust in an independent
capacity.
The agent will act in an independent capacity if the
relationship between the agent and the Trust, taking
account of its legal, financial and commercial
characteristics, is one which would exist between
independent persons dealing at arm's length. This will
be regarded as the case by the UK Inland Revenue if,
for example, the provision of services by the agent to
the Trust (and any connected person) does not form a
substantial part of the agent's business (namely where
it does not exceed 70 percent of the agent's business,
by reference to fees or some other measure if
appropriate).
In addition, this condition will be regarded as
satisfied by the UK Inland Revenue if interests in the
Trust, a collective fund, are freely marketed;
11.6. the agent (and persons connected with the agent)
do not have a beneficial interest in more than 20
percent of the Trust's income derived from the
investment transactions (excluding reasonable
management fees paid to the agent); and
11.7. the agent acts in no other capacity in the UK for
the Trust.
Further, where stock is purchased and sold by the Trust
through a UK broker in the ordinary course of a
brokerage business carried on in the UK by that broker,
and the remuneration which the broker receives for the
transactions is at a rate which is no less than that
which is customary for that class of business and the
broker acts in no other capacity for the Trust in the
UK, profits arising from transactions carried out
through that broker will not be liable to UK tax.
Accordingly, unless a Unit holder is UK resident or,
being non-UK resident, has a presence in the UK (other
than through an agent or a broker acting in the manner
described above) in connection with which the Units are
held, the Unit holder will not be charged to UK tax on
such profits.
12. If the Trustee has a presence in the UK, then it is
technically possible that income or gains of the Fund could
be assessed upon the Trustee, whether arising from
securities (which includes stock) or from dealings in those
securities. We understand that the Trustee has a branch in
the UK. However, we consider that any such risk should be
remote provided that:
12.1. any income derived by the Trustee will be derived
by it (see 6.1 above) as a resident of the US for the
purposes of the Treaty; and
12.2. the UK branch of the Trustee will not have any
involvement with establishing or managing the Fund or
its assets nor derive income or gains from the Fund or
its assets.
13. Where the Trustee makes capital gains on the disposal of the
UK Equities, a Unit holder will not be liable to UK capital
gains tax on those gains.
14. UK stamp duty will generally be payable at the rate of 50p
per 100 pounds of the consideration (or any part) in respect
of a transfer of the shares in UK incorporated companies or
in respect of transfers to be effected on a UK share
register. UK stamp duty reserve tax will generally be
payable on the entering into of an unconditional agreement
to transfer such shares, or on a conditional agreement to
transfer such shares becoming unconditional, at the rate of
0.5 percent of the consideration to be provided. The tax
will generally be paid by the purchaser of such shares.
No UK stamp duty or stamp duty reserve tax should be payable
on an agreement to transfer nor a transfer of Units,
provided that such transfer is neither executed in nor
brought into the UK.
15. In our opinion, the taxation paragraphs contained on pages 8
to 9 of the Final Prospectus under the heading "United
Kingdom Taxation," as governed by the general words
appearing immediately under the heading "United Kingdom
Taxation - Tax consequences of Ownership of Ordinary
Shares," which relate to the Trust and which are to be
contained in the Final Prospectus to be issued for the Fund,
represent a fair summary of material UK taxation
consequences for a US resident Unit holder.
16. This opinion is addressed to you on the understanding that
you (and only you) may rely upon it in connection with the
issue and sale of the Units (and for no other purpose).
This opinion may not be quoted or referred to in any public
document or filed with any governmental agency or other
person without our written consent. We understand that it
is intended to produce a copy of this opinion to the
Trustee. We consent to the provision of this opinion to the
Trustee and confirm that, insofar as this opinion relates to
the UK tax consequences for the Trust and US persons
holdings Units in the Trust, the Trustee may similarly rely
upon it in connection with the issue and sale of Units.
However you should note that this opinion does not consider
the UK tax consequences for the Trustee arising from its
duties in respect of the Trust under the Indenture.
We consent further to the reference which is made in the
prospectus to be issued for the Fund to our opinion as to
the UK tax consequences to US persons holding Units in the
Trust.
Yours faithfully
Linklaters & Paines
