SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: FT 311
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title of Securities
Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION DATED SEPTEMBER 22, 1998
AS AMENDED FEBRUARY 17, 1999
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 (the "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.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
First Trust (registered trademark)
1-800-621-9533
The date of this prospectus is __________, 1999
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 6
Report of Independent Auditors 9
Statements of Net Assets 10
Schedules of Investments 12
Target Trust Series 20
Portfolios 21
Risk Factors 23
Hypothetical Performance Information 25
Public Offering 28
Distribution of Units 30
The Sponsor's Profits 31
The Secondary Market 31
How We Purchase Units 31
Expenses and Charges 32
Tax Status 32
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-__________, 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>
General Information
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ $ $
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) $ $ $
Less Deferred Sales Charge per Unit $( ) $( ) $( )
Public Offering Price per Unit (4) $ $ $
Sponsor's Initial Repurchase Price per Unit (5) $ $ $
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ $ $
Estimated Net Annual Distributions per Unit (6)
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date _____, 1999
Rollover Notification Date _____, 2000
Special Redemption and Liquidation Period _____, 2000 to _____, 2000
Mandatory Termination Date _____, 2000
Discretionary Liquidation Amount A Trust may be terminated if the value of the Securities is less than
the lower of $2,000,000 or 20% of the total value of Securities
deposited in a Trust during the initial offering period.
Income Distribution Record Date Fifteenth day of June and December, commencing _____, 1999.
Income Distribution Date (7) Last day of June and December, commencing _____, 1999.
______________
<FN>
(1) As of the close of business on _____, 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 do make 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 are 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
organizational and offering 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 organizational and offering 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."
(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. Distributions from the Capital
Account will be made monthly on the last day of the month to Unit
holders of record on the fifteenth day of such month if the amount
available for distribution equals at least $1.00 per 100 Units.
Notwithstanding, distributions of funds in the Capital Account, if any,
will be made as part of the final liquidation distribution.
</FN>
</TABLE>
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-__________, 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
General Information 1999 Series 1999 Series
________________ ________________
<S> <C>
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ $
Maximum Sales Charge 2.75% of the Public Offering Price
per Unit (2.778% of the net amount invested, exclusive of $ $
the deferred sales charge) (3)
Less Deferred Sales Charge per Unit $( ) $( )
Public Offering Price per Unit (4) $ $
Sponsor's Initial Repurchase Price per Unit (5) $ $
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ $
Estimated Net Annual Distributions per Unit (6)
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
First Settlement Date _____, 1999
Rollover Notification Date _____, 2000
Special Redemption and Liquidation Period _____, 2000 to _____, 2000
Mandatory Termination Date _____, 2000
Discretionary Liquidation Amount The 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 the Trust during the initial offering period.
Income Distribution Record Date Fifteenth day of June and December, commencing _____, 1999.
Income Distribution Date (7) Last day of June and December, commencing _____, 1999.
<FN>
(1) As of the close of business on _____, 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 do make 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 are 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
organizational and offering 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 organizational and offering 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."
(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 the month to Unit holders
of record on the fifteenth day of such month if the amount available for
distribution equals at least $1.00 per 100 Units. In any case, we will
distribute any funds from the Capital Account as part of the final
liquidation distribution.
</FN>
</TABLE>
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Securities-__________, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
European Target 20 S&P Target 10 Nasdaq Target 15
Portfolio, March Portfolio, March Portfolio, March
1999 Series 1999 Series 1999 Series
________________ ________________ ________________
General Information
<S> <C>
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ $ $
Maximum Sales Charge 2.75% of the Public Offering Price
per Unit (2.778% of the net amount invested, exclusive of
the deferred sales charge) (3) $ $ $
Less Deferred Sales Charge per Unit $( ) $( ) $( )
Public Offering Price per Unit (4) $ $ $
Sponsor's Initial Repurchase Price per Unit (45 $ $ $
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ $ $
Estimated Net Annual Distributions per Unit (6)
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date _____, 1999
Rollover Notification Date _____, 2000
Special Redemption and Liquidation Period _____, 2000 to _____, 2000
Mandatory Termination Date _____, 2000
Discretionary Liquidation Amount The 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 the Trust during the initial offering period.
Income Distribution Record Date Fifteenth day of June and December, commencing _____, 1999.
Income Distribution Date (7) Last day of June and December, commencing _____, 1999.
<FN>
(1) As of the close of business on _____, 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 do make 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 are 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
organizational and offering 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 organizational and offering 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."
(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 the month to Unit holders
of record on the fifteenth day of such month if the amount available for
distribution equals at least $1.00 per 100 Units. In any case, we will
distribute any funds from 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
======== ======== ======== ======= ======== ======
ORGANIZATIONAL AND OFFERING COSTS
(as a percentage of public offering price)
Estimated Organizational and Offering 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 % $ % $ % $
Trustee's fee and other operating expenses % % %
________ ________ ________ ________ ________ _______
Total % $ % $ % $
======== ======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
TARGET SMALL-CAP GLOBAL TARGET
PORTFOLIO 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
======== ======= ======== ========
ORGANIZATIONAL AND OFFERING COSTS
(as a percentage of public offering price)
Estimated Organizational and Offering Costs .225%(d) $.0225 .150%(d) $.0150
======== ======= ======== ========
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Portfolio supervision, bookkeeping,
administrative and evaluation fees % $ % $
Trustee's fee and other operating expenses % %
________ _______ ________ ________
Total % $ % $
======== ======= ======== ========
</TABLE>
Page 6
<TABLE>
<CAPTION>
EUROPEAN TARGET THE S&P TARGET THE NASDAQ
20 PORTFOLIO 10 PORTFOLIO TARGET 15 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
======== ======== ======== ======= ======== ======
ORGANIZATIONAL AND OFFERING COSTS
(as a percentage of public offering price)
Estimated Organizational and Offering 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 % $ % $ % $
Trustee's fee and other operating expenses % % %
________ ________ ________ ________ ________ _______
Total % $ % $ % $
======== ======== ======== ======== ======== =======
</TABLE>
Page 7
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
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
</TABLE>
You will pay the following expenses if you do not sell your Units at the
end of each period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
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
________________
<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 $.05 per
Unit beginning _________, 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 ______, 1999. 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 organizational and offering 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.
</FN>
</TABLE>
Page 8
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 __________, 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 __________, 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 Trusts listed above, at the opening of business on
__________, 1999 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
__________, 1999
Page 9
Statements of Net Assets
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
The Dow (sm) The Dow (sm) Target 25 Target Small-Cap
Target 5 Portfolio Target 10 Portfolio Portfolio, March Portfolio, March
March 1999 Series March 1999 Series 1999 Series 1999 Series
__________________ ___________________ ________________ ________________
<S> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $ $ $ $
Less accrued organizational
and offering costs (3) ( ) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $ $
Less maximum sales charge (5) ( ) ( ) ( ) ( )
Less estimated organizational
and offering costs (3) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
__________
<FN>
See "Notes to Statements of Net Assets" on page 11.
</FN>
</TABLE>
Page 10
Statements of Net Assets
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Global Target 15 European Target 20 S&P Target 10 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) $ $ $ $
Less accrued organizational
and offering costs (3) ( ) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $ $
Less maximum sales charge (5) ( ) ( )
Less estimated organizational
and offering costs (3) ( ) ( ) ( ) ( )
_________ ________ ________ ________
Net assets $ $ $ $
========= ======== ======== ========
<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 totaling $ issued by
The Chase Manhattan Bank, which 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 Securities in an
amount sufficient to pay for all or a portion of the costs incurred in
establishing the Trusts. These costs have been estimated at $ , $ , $
, $ , $ , $ , $ and $ per Unit for the Target 5 Portfolio, Target 10
Portfolio, Target 25 Portfolio, Target Small-Cap Portfolio, European
Target 20 Portfolio, The S&P Target 10 Portfolio and The Nasdaq Target
15 Portfolio, respectively, based upon our estimate of the number of
Units to be created of each respective Trust. A distribution will be
made at the end of the initial offering period to an account maintained
by the Trustee from which your organizational and offering cost
obligation to us will be paid. If the actual number of Units issued is
larger or smaller than our estimate, the actual distribution per Unit at
the end of the initial offering period may differ from the estimated
costs set forth above.
(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 _____, 1999 and on the twentieth day
of each month thereafter (or if such date is not a business day, on the
preceding business day) through _____, 1999. If you redeem Units before
_____, 1999 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 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 11
Schedules of Investments
THE DOW (SM) TARGET 5 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Approximate
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 (3) Share the Trust (2) Yield (3)
______ _______________________________ ____________ _________ _____________ _________
<C> <S> <C> <C> <C> <C>
20% $ $
20%
20%
20%
20%
_______ _________
Total Investments 100% $
======= =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 19.
</FN>
</TABLE>
Page 12
Schedules of Investments
THE DOW (SM) TARGET 10 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Approximate
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 (3) Share the Trust (2) Yield (3)
______ ________________________ ____________ _________ ___________ _________
<C> <S> <C> <C> <C> <C>
10% $ $
10%
10%
10%
10%
10%
10%
10%
10%
10%
_______ ________
Total Investments 100% $
======= ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 19.
</FN>
</TABLE>
Page 13
Schedules of Investments
TARGET 25 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Approximate
Percentage
Number of Aggregate Market Cost of Current
of Ticker Symbol and Offering Value per Securities Dividend
Shares Name and Issuer of Securities (1) Price (3) Share to Trust (2) Yield (3)
______ _________________________________ ___________ _______ ___________ _________
<C> <S> <C> <C> <C> <C>
4% $ $
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
4%
_______ __________
Total Investments 100% $
======= ==========
_____________
<FN>
See "Notes to Schedules of Investments" on page 19.
</FN>
</TABLE>
Page 14
Schedules of Investments
TARGET SMALL-CAP PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Approximate
Number Percentage Market Cost of
of Ticker Symbol and of Aggregate Value per Securities
Shares Name of Issuer of Securities (1) Offering Price (3) Share to Trust (2)
______ ________________________________ __________________ _________ ____________
<C> <S> <C> <C> <C>
$ $
_____
Total Investments 100%
=====
_____________
<FN>
See "Notes to Schedules of Investments" on page 19.
</FN>
</TABLE>
Page 15
Schedules of Investments
GLOBAL TARGET 15 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Approximate
Number Percentage Market Cost of
of of Aggregate Value per Securities
Shares Name of Issuer of Securities (1) Offering Price (3) Share to Trust (2)
______ ________________________________ __________________ _________ ____________
<C> <S> <C> <C> <C>
DJIA COMPANIES: $ $
______________
FT INDEX COMPANIES:
___________________
HANG SENG INDEX COMPANIES:
_________________________
_______ ________
Total Investments 100% $
======= ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 19.
</FN>
</TABLE>
Page 16
Schedules of Investments
EUROPEAN TARGET 20 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Approximate
Number Percentage Market Cost of Current
of of Aggregate Value Securities Dividend
Shares Name of Issuer of Securities (1) Offering Price per Share to Trust (2) Yield (3)
______ _______________________________ ______________ _______ ____________ _________
<C> <S> <C> <C> <C>
$ $
______ ________
Total Investments 100% $
====== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 19.
</FN>
</TABLE>
Page 17
Schedules of Investments
THE S&P TARGET 10 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Approximate
Percentage
Number of Aggregate Market Cost of
of Ticker Symbol and Offering Value per Securities to
Shares Name of Issuer of Equity Securities Price (3) Share the Trust (2)
______ ___________________________________ ___________ __________ _____________
<C> <S> <C> <C> <C>
$ $
_______ ________
Total Investments 100% $
======= ========
___________
<FN>
See "Notes to Schedules of Investments" on page 19.
</FN>
</TABLE>
Page 18
Schedules of Investments
THE NASDAQ TARGET 15 PORTFOLIO, MARCH 1999 SERIES
FT 311
At the Opening of Business on the
Initial Date of Deposit-__________, 1999
<TABLE>
<CAPTION>
Approximate
Percentage
Number of Aggregate Market Cost of Market
of Ticker Symbol and Offering Value per Securities to Capitalization
Shares Name of Issuer of Equity Securities Price Share the Trust (2) (in millions) (4)
______ ___________________________________ ___________ ________ _____________ _________________
<C> <S> <C> <C> <C> <C>
$ $ $
_______ ________
Total Investments 100% $
======= ========
<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. The purchase contracts for
the Securities were entered into by the Sponsor on _____ and _____,
1999. Each Trust has a mandatory termination date of _____, 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 (converted into U.S. dollars at the offer side of
the exchange rate at the Evaluation Time) at the close of business on
_____, 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 the Sponsor. The cost of the Securities to the Sponsor and
its profit or loss (which is the difference between the cost of the
Securities to the Sponsor and the cost of the Securities to a Trust) are
set forth below.
Cost of
Securities
to Sponsor Profit/Loss
___________ ___________
The Dow (sm) Target 5 Portfolio, March 1999 Series
The Dow (sm) Target 10 Portfolio, March 1999 Series
Target 25 Portfolio, March 1999 Series
Global Target 15 Portfolio, March 1999 Series
Target Small-Cap 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
(3) Current Dividend Yield for each Security was calculated by dividing
the most recent annualized 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 _____, 1999.
</FN>
</TABLE>
Page 19
Target Trust 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 common
stocks ("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 ("the Units").
With the deposit of the contracts to buy Securities on the Initial Date
of Deposit we established a percentage relationship between 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
Page 20
appreciation or depreciation, or if the Securities no longer meet the
criteria by which they were selected. You will not be able to dispose of
any of the Securities in a Trust or vote
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. 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 accounted for a large portion
of the total return on stocks of each comparative index as a group.
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 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 then 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
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.
Page 21
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 the 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 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 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.
Any changes in the components of any of the respective indices or the
pool of stocks from which the Securities were selected made after the
Securities are selected for a Trust will not cause a change in the
identity of the Securities included in a Trust, including any additional
Securities deposited thereafter.
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
will deposit the Securities originally selected by applying the strategy
at such time. This is true even if the Securities would be different if
we applied the strategy at this later date.
Page 22
"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 the Trusts 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 strategy employ a
contrarian strategy in which the Securities selected share qualities
that have caused them to have lower share prices or higher dividend
yields as compared to 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 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.
Technology Industry. The Nasdaq Target 15 Portfolio is considered to be
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
Page 23
unrelated to their operating performance. There is no guarantee that the
Securities selected for this Trust will be able to compete in this
rapidly developing and competitive marketplace.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the U.S. 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
or of the industries represented by such 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 riskier 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 United Kingdom
issuers. The emphasis of the United Kingdom's economy is in the private
services sector, including wholesale and retail trade, banking, finance,
insurance and tourism. 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 on 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 United Kingdom 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. United Kingdom and all European corporations, and other
entities 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 United Kingdom's current political and economic
situation, as well as the implementation of a common currency throughout
a 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 U.S., could have negative
implications 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
Page 24
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) will vary with fluctuations in
foreign exchange rates. Most foreign currencies have fluctuated widely
in value against the U.S. dollar for various economic 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 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).
The returns shown in the following tables 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
will 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 period, 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 ____________
Nasdaq 100 Index. The Nasdaq 100 Index consists of the 100 largest non-
financial companies based on market capitalization which trade on The
Nasdaq Stock Market.
Ibbotson Small-Cap Index. The Ibbotson Small-Cap Index consists of
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 358 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 consists 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 25 Target 10 Target 5 Small-Cap S&P 500 Small-Cap
Year Strategy Strategy Strategy Strategy Index DJIA Index
____ _________ _________ ________ _________ _______ ____ __________
<S> <C> <C> <C> <C> <C> <C> <C>
1972 8.04% 23.76% 22.92% 12.66% 18.89% 18.38% 4.43%
1973 -6.99% 4.01% 20.01% -25.02% -14.57% -13.20% -30.90%
1974 -9.54% -1.02% -5.40% -34.85% -26.33% -23.64% -19.95%
1975 76.02% 56.10% 64.77% 40.13% 36.84% 44.46% 52.82%
1976 44.31% 35.18% 40.96% 45.70% 23.64% 22.80% 57.38%
1977 -4.58% -1.95% 5.49% 16.22% -7.25% -12.91% 25.38%
1978 6.49% 0.03% 1.23% 17.53% 6.49% 2.66% 23.46%
1979 27.68% 13.01% 9.84% 40.78% 18.22% 10.60% 43.46%
1980 26.45% 27.90% 41.69% 61.97% 32.11% 21.90% 38.88%
1981 8.52% 7.46% 3.19% -9.46% -4.92% -3.61% 13.88%
1982 30.83% 27.12% 43.37% 51.26% 21.14% 26.85% 28.01%
1983 32.09% 39.07% 36.38% 31.04% 22.28% 25.82% 39.67%
1984 5.55% 6.22% 11.12% -1.10% 6.22% 1.29% -6.67%
1985 41.89% 29.54% 38.34% 50.81% 31.77% 33.28% 24.66%
1986 25.01% 35.63% 30.89% 23.35% 18.31% 27.00% 6.85%
1987 14.41% 5.59% 10.69% 14.94% 5.33% 5.66% -9.30%
1988 27.18% 24.57% 21.47% 23.19% 16.64% 16.03% 22.87%
1989 22.98% 26.97% 10.55% 26.10% 31.35% 32.09% 10.18%
1990 -0.82% -7.82% -15.74% 1.08% -3.30% -0.73% -21.56%
1991 37.67% 34.20% 62.03% 59.55% 30.40% 24.19% 44.63%
1992 15.14% 7.69% 22.90% 27.81% 7.62% 7.39% 23.35%
1993 15.22% 27.08% 34.01% 22.47% 9.95% 16.87% 20.98%
1994 9.73% 4.21% 8.27% 2.11% 1.34% 5.03% 3.11%
1995 36.69% 36.85% 30.50% 41.65% 37.22% 36.67% 34.66%
1996 28.53% 28.35% 26.20% 34.96% 22.82% 28.71% 17.62%
1997 30.69% 21.68% 19.97% 16.66% 33.21% 24.82% 22.78%
1998 1.83% 10.59% 12.36% 1.85% 28.57% 18.03% -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 25 Strategy,
Target 10 Strategy, Target 5 Strategy and Target Small-Cap Strategy
achieved an average annual total return of ___%, ___%, ___%, and ___%,
respectively. In addition, over this period, each individual strategy
achieved a greater average annual total return than that of its
corresponding index, the S&P 500 Index, DJIA, and Ibbotson Small-Cap
Index which were ___%, ___%, and ___%, respectively.
</FN>
</TABLE>
Page 26
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN (2)
Hypothetical Strategy Total Returns (1) Index Total Returns
______________________________________________ ______________________________________________
S&P Nasdaq European Global MSCI Cumulative
Year Target 10 Target 15 Target 20 Target 15 S&P 500 Nasdaq Europe Hang Seng Index
Strategy Strategy Strategy Strategy Index 100 Index Index FT Index Index DJIA Returns (3)
_____ _________ _________ _________ __________ _______ _________ _____ ________ _________ _____ __________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1979 43.17% 44.70% 18.22% 3.59% 77.99% 10.60% 30.73%
1980 54.15% 52.51% 32.11% 31.77% 65.48% 21.90% 39.72%
1981 -10.59% 0.03% -4.92% -5.30% -12.34% -3.61% -7.08%
1982 38.21% -2.77% 21.14% 0.42% -48.01% 26.85% -6.91%
1983 20.01% 15.61% 22.28% 21.94% -2.04% 25.82% 15.24%
1984 16.34% 2.00% 29.88% 6.22% 1.26% 2.15% 42.61% 1.29% 15.35%
1985 43.49% 79.54% 54.06% 31.77% 79.79% 54.74% 50.95% 33.28% 46.32%
1986 21.81% 22.94% 42.53% 38.11% 18.31% 6.89% 44.46% 24.36% 51.16% 27.00% 34.18%
1987 9.16% 14.10% 14.86% 17.52% 5.33% 10.49% 4.10% 37.13% -6.84% 5.66% 11.99%
1988 20.35% -0.59% 16.77% 24.26% 16.64% 13.54% 16.35% 9.00% 21.04% 16.03% 15.36%
1989 39.62% 37.33% 33.09% 15.98% 31.35% 26.17% 29.06% 20.07% 10.59% 32.09% 20.92%
1990 -5.64% -5.39% -0.49% 3.19% -3.30% -10.41% -3.37% 11.03% 11.71% -0.73% 7.34%
1991 24.64% 109.27% 16.59% 40.40% 30.40% 64.99% 13.66% 8.77% 50.68% 24.19% 27.88%
1992 24.66% -0.15% -4.03% 26.64% 7.62% 8.86% -4.25% -3.13% 34.73% 7.39% 12.99%
1993 42.16% 28.55% 37.38% 65.65% 9.95% 11.67% 29.79% 19.22% 124.95% 1 6.87% 53.68%
1994 8.17% 10.50% -0.51% -7.26% 1.34% 1.74% 2.66% 1.97% -29.34% 5.03% -7.45%
1995 25.26% 53.80% 34.71% 13.45% 37.22% 43.01% 22.13% 16.21% 27.52% 36.67% 26.80%
1996 26.61% 60.03% 24.35% 21.00% 22.82% 42.74% 21.57% 18.35% 37.86% 28.71% 28.31%
1997 61.46% 35.15% 28.91% -6.38% 33.21% 20.76% 24.20% 14.78% -17.69% 24.82% 7.30%
1998 53.85% 123.10% 35.77% 13.50% 28.57% 85.43% 28.80% 12.32% -2.60% 18.03% 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 12/31/87 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 S&P Target 10 Strategy,
Nasdaq Target 15 Strategy, European Target 20 Strategy and Global Target
15 Strategy achieved an average annual total return of ___%, ___%, ___%,
and ___%, respectively. In addition, over each stated period, each
individual strategy achieved a greater average annual total return than
that of its corresponding index, the S&P 500 Index, Nasdaq 100 Index,
MSCI Europe Index and a combination of the FT Index, Hang Seng Index and
DJIA (the "Cumulative Index") which were ___%, ___%, ___%, and ___%,
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; 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 local currency 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.
A portion of the Public Offering Price per Unit during the initial
offering period consists of Securities in an amount sufficient to pay
for all or a portion of the costs incurred in establishing a Trust
(including costs of preparing the registration statement, the Indenture
and other closing documents, registering Units with the Securities and
Exchange Commission and states, the initial audit of a Trust portfolio,
legal fees and the initial fees and expenses of the Trustee.) The
organizational and offering costs will be deducted from the assets of a
Trust as of the close of the initial offering period.
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 deferred
component. The initial sales charge, which you will pay at the time of
purchase, is 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 _____, 1999 through
_____, 1999. 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
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 to qualify
for the reduced sales charges described above. However, we will consider
Page 28
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 tables. 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 Trust
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 dealer for activities
relating to the sale of such 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
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 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.
Page 29
The Evaluator on each business day will appraise or have appraised the
value of the underlying Securities in a Trust as of the Evaluation Time
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'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 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
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 award 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
Page 30
Units of the Trusts. In addition, if a dealer sponsors sales contests or
recognition programs that conform to criteria we establish, or
participates in sales programs we sponsor, we will reallow to that
dealer an amount equal to no more than the total applicable sales
charges on the sales generated by such person at the Public Offering
Price 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 publishers 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 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.
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.
Page 31
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 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 the Sponsor or its
affiliate for providing a given service to all unit investment trusts
for which they 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 fee payable by the Dow (sm) Target 5 Portfolio and the Dow (sm)
Target 10 Portfolio for a license from Dow Jones & Company, Inc. for the
use of certain trademarks and trade names of Dow Jones & Company, Inc.;
A quarterly fee payable by the S&P Target 10 Portfolio for a license
from Standard & Poor's for the use of certain trademarks and tradenames
of Standard & Poor's.
A quarterly fee payable by the Nasdaq Target 15 Portfolio for a license
from The Nasdaq Stock Market, Inc. for the use of certain trademarks and
tradenames of The Nasdaq Stock Market, Inc.
All legal and annual auditing 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;
Any offering costs incurred after the end of the initial offering period;
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."
Tax Status
United States Taxation.
This section summarizes some of the main United States 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. 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
Page 32
investor with special circumstances. In addition, this section does not
describe 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) derived 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 you must take into
account for federal income tax purposes from a Trust is not reduced for
amounts used to pay a deferred sales charge.
Your Tax Basis and Income or Loss Upon Disposition.
You will have a taxable event when a Trust disposes of a Security or
when you redeem or sell your Units. This is because you are deemed to
have disposed of your interest in the Securities or the Trust's other
assets in these situations.
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 acquire your
Units. In certain circumstances, however, you may have to adjust your
tax basis after you acquire 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%. This rate is generally 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 acquire
your Units (your "trade date") 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 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, this is considered a sale for Federal 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 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.
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Limitations on the Deductibility of Trust Expenses.
Generally, you must take into account for federal income tax purposes
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. However, individuals may only deduct certain
miscellaneous itemized deductions to the extent they exceed 2% of
adjusted gross income. You may be required to treat some or all of the
expenses of a Trust as miscellaneous itemized deductions subject to this
limitation.
Foreign, State and Local 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
to 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 U.K. or U.S. law occurring
after the date of this prospectus and you should consult your own tax
adviser 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 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. Although a
United States investor who is resident in the United States for the
purposes of the Treaty between the United States and the United Kingdom
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 of 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
the United Kingdom 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.
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
Page 34
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
adviser. 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
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
respective Trust;
- - the number of Units issued or transferred;
- - your name, address and taxpayer identification number;
- - 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.
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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:
a summary of transactions in your Trust for the year;
any Securities sold during the year and the Securities held at the end
of that year by your Trust;
the Redemption Price per Unit, computed on the 31st day of December of
such year (or the last business day before); and
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." 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
Tax Identification Number. You may recover this amount by giving your
Tax Identification Number to the Trustee, or when you file a tax return.
Normally, the selling broker gives your Tax Identification Number 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.
Page 36
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. The Trustee may adjust the number of shares of any Security
included in your In-Kind Distribution to make distribution of whole
shares easier. This adjustment will be made based on the value of the
Securities on the Date of Tender. 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 Taxpayer Identification Number. For more information
about this withholding, see "Income and Capital Distributions." If the
Trustee does not have your Taxpayer Identification Number, 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
purchase Securities;
2. the aggregate underlying U.S. dollar value of the Securities held in
that Trust; and
Page 37
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 organizational and offering 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 have received exemptive relief from the SEC that allows us to sell
Securities from the terminating Dow Target 5 Portfolio, Dow Target 10
Portfolio and Global Target 15 Portfolio to the next series of such
Trusts if they will be included in the portfolio of such Trusts. This
relief reduces commission costs, thereby saving you money.
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
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. However, 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" for information. 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.
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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. These circumstances include, but are not limited
to, 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 or the issuer's credit standing, or otherwise
damage the sound investment character of the Security; or
the issuer has defaulted on the payment on any other of its outstanding
obligations to such an extent or other such credit factors exist so
that, in our opinion, keeping the Security would be harmful to a Trust.
Except in the limited instance in which a Trust may acquire 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 distributions 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 also 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 diversity of the Securities in 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
the Mandatory Termination Date stated in the "Summary of Essential
Information." 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
Page 39
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 shares of Securities included in the
Domestic Trust (reduced by customary transfer and registration charges)
rather than the typical cash distribution representing your pro rata
interest in the Domestic Trust. 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
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
- - Templeton Growth and Treasury Trust
- - Templeton Foreign Fund & U.S. Treasury Securities Trust
- - The Advantage Growth and Treasury Securities Trust
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.
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
Page 40
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 Securities and Exchange Commission,
- - 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.
Auditors.
Ernst & Young LLP, independent auditors, have audited the statements of
net assets, including the schedule 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 Securities and Exchange Commission and to which we have referred
throughout. This information states more specific risk information about
the Trusts.
Page 41
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Page 42
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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:
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
24-Hour Pricing Line:
1-800-446-0132
This 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
__________, 1999
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 prospectuses for
the Trusts. This Information Supplement is not a prospectus and does not
include all of the information that a prospective investor should
consider before investing in a Trust. This Information Supplement should
be read in conjunction with the prospectus for the Trust in which an
investor is considering investing ("prospectus").
This Information Supplement is dated __________, 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
Equity Securities 2
Foreign Issuers 2
Exchange Rate 3
Concentrations
Banks and Thrifts 6
Petroleum Refining Companies 7
Real Estate Companies 8
Small-Cap Companies 10
Hong Kong 10
Portfolios
Equity Securities Selected for The Dow (sm) Target 5 Portfolio, March 1999 Series 10
Equity Securities Selected for The Dow (sm) Target 10 Portfolio, March 1999 Series 11
Equity Securities Selected for Target 25 Portfolio, March 1999 Series 12
Equity Securities Selected for Target Small-Cap Portfolio, March 1999 Series 13
Equity Securities Selected for Global Target 15 Portfolio, March 1999 Series 16
Equity Securities Selected for European Target 20 Portfolio, March 1999 Series 16
Equity Securities Selected for The S&P Target 10 Portfolio, March 1999 Series 16
Equity Securities Selected for The Nasdaq Target 15 Portfolio, March 1999 Series 16
</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
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
Page 1
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
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
Page 2
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
Equity 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
Equity Securities or the general condition of the relevant stock market
may worsen, and the value of the Equity 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.
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 Equity 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 Equity Securities, the possibility that the financial condition
Page 3
of the issuers of the Equity 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 Equity
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 Equity 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.
Equity 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 Equity Securities. See "Exchange Rate"
below.
On the basis of the best information available to the Sponsor at the
present time, none of the Equity 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 Equity 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 Equity Securities and correspondingly could affect the
price of the Units.
Investors should be aware that it may not be possible to buy all Equity
Securities at the same time because of the unavailability of any Equity
Security, and restrictions applicable to a Trust relating to the
purchase of an Equity 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 Equity Securities by a
Trust in the United States securities markets are subject to severe
restrictions and may not be practicable. Accordingly, sales of these
Equity 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 Equity
Securities, investors should realize that the Equity 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 Equity Securities will be adversely affected if
trading markets for the Equity Securities are limited or absent.
Exchange Rate. The International Trust is comprised either totally or
substantially of Equity Securities that are principally traded in
foreign currencies and as such, involve investment risks that are
substantially different from an investment in a fund which invests in
securities that are principally traded in United States dollars. The
United States dollar value of the 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,
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
Page 4
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 and the Hong Kong dollar:
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 5
<TABLE>
<CAPTION>
End of Month Exchange Rates End of Month Exchange Rates
for Foreign Currencies for Foreign Currencies (continued)
United Kingdom Hong United Kingdom Hong
Pound Sterling/ Kong/U.S. Pound Sterling/ Kong/U.S.
Monthly Period U.S. Dollar Dollar Monthly Period U.S. Dollar Dollar
______________ ______________ __________ ______________ ______________ _________
<S> <C> <C> <C> <C> <C>
1992: September .631 7.732
January .559 7.762 October .633 7.727
February .569 7.761 November .652 7.731
March .576 7.740 December .645 7.733
April .563 7.757 1996:
May .546 7.749 January .661 7.728
June .525 7.731 February .653 7.731
July .519 7.732 March .655 7.734
August .503 7.729 April .664 7.735
September .563 7.724 May .645 7.736
October .641 7.736 June .644 7.741
November .659 7.742 July .642 7.735
December .662 7.744 August .639 7.733
1993: September .639 7.733
January .673 7.734 October .615 7.732
February .701 7.734 November .595 7.732
March .660 7.731 December .583 7.735
April .635 7.730 1997:
May .640 7.724 January .624 7.750
June .671 7.743 February .614 7.744
July .674 7.761 March .611 7.749
August .670 7.755 April .616 7.746
September .668 7.734 May .610 7.748
October .676 7.733 June .600 7.747
November .673 7.725 July .609 7.742
December .677 7.723 August .622 7.750
1994: September .619 7.738
January .664 7.724 October .598 7.731
February .673 7.727 November .592 7.730
March .674 7.737 December .607 7.749
April .659 7.725 1998:
May .662 7.726 January .613 7.735
June .648 7.730 February .609 7.743
July .648 7.725 March .598 7.749
August .652 7.728 April .598 7.747
September .634 7.727 May .613 7.749
October .611 7.724 June .600 7.748
November .639 7.731 July .613 7.748
December .639 7.738 August .595 7.749
1995: September .589 7.749
January .633 7.732 October .596 7.747
February .631 7.730 November .607 7.743
March .617 7.733 December .602 7.746
April .620 7.742 1999:
May .630 7.735 January
June .627 7.736 February 26
July .626 7.738
August .645 7.741
</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 6
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).
Concentrations
Banks and Thrifts. Certain Trusts may be considered to be concentrated
in common stocks of financial institutions. See "Risk Factors" in Part I
of this 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 by banks and thrifts to the
Federal Deposit Insurance Corporation ("FDIC"), can negatively impact
earnings and the ability of a company to pay dividends. Neither federal
insurance of deposits nor governmental regulations, however, insures the
solvency or profitability of banks or their holding companies, or
insures against any risk of investment in the securities issued by such
institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Equity Securities in the Trust's portfolio cannot be
predicted with certainty. Periodic efforts by recent Administrations to
introduce legislation broadening the ability of banks to compete with
new products have not been successful, but if enacted could lead to more
failures as a result of increased competition and added risks. Failure
to enact such legislation, on the other hand, may lead to declining
earnings and an inability to compete with unregulated financial
institutions. Efforts to expand the ability of federal thrifts to branch
on an interstate basis have been initially successful through
promulgation of regulations, and legislation to liberalize interstate
banking has recently been signed into law. Under the legislation, banks
will be able to purchase or establish subsidiary banks in any state, one
year after the legislation's enactment. 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
Page 7
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 Equity 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 Equity Securities in the Trust's portfolio. In
addition, from time to time the deposit insurance system is reviewed by
Congress and federal regulators, and proposed reforms of that system
could, among other things, further restrict the ways in which deposited
moneys can be used by banks or reduce the dollar amount or number of
deposits insured for any depositor. Such reforms could reduce
profitability as investment opportunities available to bank institutions
become more limited and as consumers look for savings vehicles other
than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions,
mortgage banking companies and insurance companies, and increased
competition may result from legislative broadening of regional and
national interstate banking powers as has been recently enacted. Among
other benefits, the legislation allows banks and bank holding companies
to acquire across previously prohibited state lines and to consolidate
their various bank subsidiaries into one unit. The Sponsor makes no
prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions
might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Equity Securities or whether such approvals, if necessary,
will be obtained.
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 Part I of this
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
Page 8
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
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 Part I of this 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
Page 9
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. As of the Initial Date of Deposit, the Trust contains only
equity REITs. 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.
The underlying value of the Securities and the 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 the 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
Page 10
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 the 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. In an effort to reduce the impact of the
risks discussed above, the Underwriter has selected REITs that are
diversified among various real estate sectors and geographic locations.
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 the 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 the Trust.
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.
Hong Kong. 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
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 Hong Kong Portfolio.
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 Equity 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
Page 11
Equity Securities Selected for The Dow (sm) Target 10 Portfolio
Page 12
Equity Securities Selected for the Target 25 Portfolio
Equity Securities Selected for the Target Small-Cap Portfolio
Page 13
Equity Securities Selected for the Global Target 15 Portfolio
Dow Jones Industrial Average (sm)
Financial Times Industrial Ordinary Share Index
Hang Seng Index
Equity Securities Selected for the European Target 20 Portfolio
Equity Securities Selected for the S&P Target 10 Portfolio
Page 15
Equity Securities Selected for the Nasdaq Target 15 Portfolio
The Sponsor has obtained the foregoing company descriptions from sources
it deems reliable. The Sponsor has not independently verified the
provided information either in terms of accuracy or completeness.
Page 16
MEMORANDUM
Re: FT 311
The only difference of consequence (except as described
below) between FT 289, which is the current fund, and FT 311, the
filing of which this memorandum accompanies, is the change in the
series number. The list of securities comprising the Fund, the
evaluation, record and distribution dates and other changes
pertaining specifically to the new series, such as size and
number of Units in the Fund and the statement of condition of the
new Fund, will be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 289 Prospectus relate to the series number and size and
the date and various items of information which will be derived
from and apply specifically to the securities deposited in the
Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 311 has duly caused this Amendment No. 1 to
the 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 17, 1999.
FT 311
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
Robert D. Van Kampen Director of
Nike Securities February 17, 1999
Corporation, the
General Partner of
Nike Securities L.P. Robert M. Porcellino
Attorney-in-Fact**
David J. Allen Director of
Nike Securities
Corporation, the
General Partner of
Nike Securities L.P.
___________________________
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., the Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to form S-6 of The First Trust Combined
Series 258 (File No. 33-63483) and the same is hereby
incorporated by this reference.
S-2
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF ERNST & YOUNG LLP
The consent of Ernst & Young LLP to the use of its name and
to the reference to such firm in the Prospectus included in this
Registration Statement will be filed by amendment.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-3
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 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 Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-43693] filed on behalf of The First Trust
Special Situations Trust, Series 22).
1.1.1* Form of Trust Agreement for Series 311 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee and First Trust Advisors L.P., as Evaluator
and Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5
