Rule 497(b)
Diversified Income & Growth Trust, 1999 Summer Series
FT 315
FT 315 consists of a unit investment trust known as Diversified Income &
Growth Trust, 1999 Summer Series (the "Trust"). The Trust consists of a
diversified portfolio of common stocks ("Securities") with dividend
yields on the Initial Date of Deposit of at least 70% of the dividend
yield on the Standard & Poor's 500 Composite Stock Price Index (the "S&P
500 Index"). The Trust seeks to provide higher income each year and to
reduce risk through diversification.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
First Trust (registered trademark)
1-800-621-9533
The date of this prospectus is June 25, 1999
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 4
Report of Independent Auditors 5
Statement of Net Assets 6
Schedule of Investments 7
The FT Series 8
Portfolio 9
Risk Factors 9
Portfolio Securities Descriptions 10
Public Offering 12
Distribution of Units 14
The Sponsor's Profits 15
The Secondary Market 16
How We Purchase Units 16
Expenses and Charges 16
Tax Status 17
Retirement Plans 18
Rights of Unit Holders 19
Income and Capital Distributions 19
Redeeming Your Units 20
Removing Securities from the Trust 21
Amending or Terminating the Indenture 22
Information on the Sponsor, Trustee and Evaluator 23
Other Information 24
Page 2
Summary of Essential Information
Diversified Income & Growth Trust, 1999 Summer Series
FT 315
At the Opening of Business on the Initial Date of Deposit-June 25, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
<S> <C>
General Information
Initial Number of Units (1) 15,012
Fractional Undivided Interest in the Trust per Unit (1) 1/15,012
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900
Maximum Sales Charge of 3.3% of the Public Offering Price per Unit
(3.333% of the net amount invested, exclusive of the deferred sales charge) (3) $ .330
Less Deferred Sales Charge per Unit $ (.230)
Public Offering Price per Unit (4) $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.670
Redemption Price per Unit (based on aggregate underlying
value of Securities less the deferred sales charge) (5) $ 9.670
Estimated Net Annual Distributions per Unit (6) $ .2788
CUSIP Number 30264W 453
Security Code 57003
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date June 30, 1999
Mandatory Termination Date (7) June 25, 2002
Income Distribution Record Date Fifteenth day of each March, June, September and December,
commencing September 15, 1999.
Income Distribution Date (6) Last day of each March, June, September and December,
commencing September 30, 1999.
______________
<FN>
(1) As of the close of business on the Initial Date of Deposit we may
adjust the number of Units of the Trust so that the Public Offering
Price per Unit will equal approximately $10.00. If we make such an
adjustment, the fractional undivided interest per Unit will vary from
the amount indicated above.
(2) Each Security, if listed on a securities exchange, is valued at its
last closing sale price. If a Security is not listed, or if no closing
sale price exists, it is valued at its closing ask price. 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" for
additional information regarding these charges.
(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) Until the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period the Sponsor's Initial Repurchase
Price per Unit and the Redemption Price per Unit will include the
estimated organization costs per Unit set forth under "Fee Table." After
such date, the Sponsor's Repurchase Price and Redemption Price per Unit
will not include such estimated organization costs. See "Redeeming Your
Units."
(6) The actual net annual distributions you receive will vary from that
set forth above with changes in the Trust's fees and expenses, in
dividends received and with the sale of Securities. See "Fee Table" and
"Expenses and Charges." 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 in December of each
year.
(7) See "Amending or Terminating the Indenture."
</FN>
</TABLE>
Page 3
Fee Table
This Fee Table describes the fees and expenses that you may pay if you
buy and hold Units of the Trust. See "Public Offering" and "Expenses and
Charges." Although the Trust has a term of approximately three years and
is a unit investment trust rather than a mutual fund, this information
allows you to compare fees.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.0%(a) $ .100
Deferred sales charge 2.3%(b) .230
________ ________
Maximum sales charge 3.3% $ .330
======== ========
Maximum sales charge imposed on reinvested dividends 2.3%(c) $ .230
======== ========
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .200%(d) $.0200
======== ========
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and evaluation fees .099% $.0098
Trustee's fee and other operating expenses .152% .0151
________ ________
Total .251% $.0249
======== ========
This example is intended to help you compare the cost of investing in
the Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in the 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 the
Trust's operating expenses stay the same. Although your actual costs may
vary, based on these assumptions your costs would be:
1 Year 3 Years
__________ ___________
$ 375 $ 427
The example will not differ if you hold rather than sell your Units at
the end of each period. The example does not reflect sales charges on
reinvested dividends and other distributions. If these sales charges
were included, your costs would be higher.
_____________
<FN>
(a) The amount of the initial sales charge will vary depending on the
purchase price of your Units. The amount of the initial sales charge is
actually the difference between the maximum sales charge (3.3% of the
Public Offering Price) and the maximum remaining deferred sales charge
(initially $.23 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 $.23 per
Unit, which will be deducted in five monthly installments of $.046 per
Unit beginning February 18, 2000 and on the 20th day of each month
thereafter (or the preceding business day if the 20th day is not a
business day) through June 20, 2000. If you buy Units at a price of less
than $10.00 per Unit, the dollar amount of the deferred sales charge
will not change but the deferred sales charge on a percentage basis will
be more than 2.3% 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
the Trust. These estimated organization costs are included in the price
you pay for your Units and will be deducted from the assets of the Trust
at the earlier of six months after the Initial Date of Deposit or the
end of the initial offering period.
</FN>
</TABLE>
Page 4
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 315
We have audited the accompanying statement of net assets, including the
schedule of investments, of FT 315, comprised of the Diversified Income
& Growth Trust, 1999 Summer Series, as of the opening of business on
June 25, 1999. This statement of net assets is the responsibility of the
Trust's Sponsor. Our responsibility is to express an opinion on this
statement 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 statement of net assets is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the statement
of net assets. Our procedures included confirmation of the letter of
credit held by the Trustee and deposited in the Trust on June 25, 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 statement of net assets. We believe that our
audit of the statement of net assets provides a reasonable basis for our
opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of FT 315,
comprised of the Diversified Income & Growth Trust, 1999 Summer Series,
at the opening of business on June 25, 1999 in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 25, 1999
Page 5
Statement of Net Assets
Diversified Income & Growth Trust, 1999 Summer Series
FT 315
At the Opening of Business on the
Initial Date of Deposit-June 25, 1999
<TABLE>
<CAPTION>
<S> <C>
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $148,617
Less liability for reimbursement to Sponsor for organization costs (3) (300)
Less liability for deferred sales charge (4) (3,453)
________
Net assets $144,864
========
Units outstanding 15,012
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,118
Less maximum sales charge (5) (4,954)
Less estimated reimbursement to Sponsor for organization costs (3) (300)
________
Net assets $144,864
========
_____________
<FN>
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit issued by The Chase Manhattan Bank,
of which $200,000 will be allocated to the Trust, has been deposited
with the Trustee as collateral, covering the monies necessary for the
purchase of the Securities according to their purchase contracts.
(3) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trust. These costs have been estimated at $.0200 per
Unit for the Trust. A payment will be made as of the earlier of six
months after the Initial Date of Deposit or the end of the initial
offering period to an account maintained by the Trustee from which the
obligation of the investors to the Sponsor will be satisfied. To the
extent that actual organization costs are greater than the estimated
amount, only the estimated organization costs added to the Public
Offering Price will be reimbursed to the Sponsor and deducted from the
assets of the Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions from the Trust ($.23 per Unit), payable to us in five
equal monthly installments beginning on February 18, 2000 and on the
twentieth day of each month thereafter (or if such date is not a
business day, on the preceding business day) through June 20, 2000. If
you redeem Units before June 20, 2000 you will have to pay the remaining
amount of the deferred sales charge applicable to such Units when you
redeem them.
(5) The aggregate cost to investors in the Trust includes a maximum
sales charge (comprised of an initial and a deferred sales charge)
computed at the rate of 3.3% of the Public Offering Price per Unit
(equivalent to 3.333% 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 6
Schedule of Investments
Diversified Income & Growth Trust, 1999 Summer Series
FT 315
At the Opening of Business on the Initial Date of Deposit-June 25, 1999
<TABLE>
<CAPTION>
Percentage Market
of Aggregate Value Cost of
Number Ticker Symbol and Offering per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_________ ________________________________ ____________ ______ _________
<S> <C> <C> <C> <C>
CAPITAL GOODS
209 BRC Brady Corporation (Class A) 4.17% $ 29.625 $ 6,192
58 GE General Electric Company 4.17% 106.750 6,192
COMMUNICATIONS/MEDIA
95 AIT Ameritech Corporation (3) 4.18% 65.375 6,211
105 BEL Bell Atlantic Corporation 4.17% 59.000 6,195
120 SBC SBC Communications Inc. (3) 4.18% 51.750 6,210
CONSUMER CYCLICALS
149 FO Fortune Brands, Inc. 4.15% 41.438 6,174
CONSUMER NON-DURABLES
148 NA Nabisco Holdings Corp. (Class A) 4.17% 41.875 6,198
205 SYY SYSCO Corporation 4.16% 30.188 6,189
ENERGY
56 BPA BP Amoco Plc (ADR) 4.16% 110.375 6,181
63 MOB Mobil Corporation (4) 4.15% 98.000 6,174
FINANCIAL-BANKS
148 WFC Wells Fargo Company 4.17% 41.875 6,197
FINANCIAL-REITS
228 HPT Hospitality Properties Trust 4.16% 27.125 6,184
304 JDN JDN Realty Corporation 4.17% 20.375 6,194
158 SPK Spieker Properties, Inc. 4.17% 39.250 6,201
176 SUI Sun Communities, Inc. 4.15% 35.063 6,171
HEALTHCARE
90 BMY Bristol-Myers Squibb Company 4.16% 68.688 6,182
68 JNJ Johnson & Johnson 4.19% 91.563 6,226
90 MRK Merck & Co., Inc. 4.17% 68.938 6,204
128 SGP Schering-Plough Corporation 4.18% 48.500 6,208
RETAIL/APPAREL
151 MAY The May Department Stores Company 4.15% 40.875 6,172
UTILITY
213 AWK American Water Works Company, Inc. 4.16% 29.000 6,177
261 CPG CMS Energy Corporation (Class G) 4.17% 23.750 6,199
149 DQE DQE, Inc. 4.17% 41.563 6,193
276 IPL IPALCO Enterprises, Inc. 4.17% 22.438 6,193
______ _________
Total Investments 100% $148,617
====== =========
_____________
<FN>
(1) All Securities are represented by regular way contracts to purchase
such Securities for the performance of which an irrevocable letter of
credit has been deposited with the Trustee. We entered into purchase
contracts for the Securities on June 25, 1999.
(2) The cost of the Securities to the Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
determined by the closing sale prices of the listed Securities and the
ask prices of the over-the-counter traded Securities at the close of
business on the business day preceding the Initial Date of Deposit). The
valuation of the Securities has been determined by the Evaluator, an
affiliate of ours. The cost of the Securities to us and our loss
(which is the difference between the cost of the Securities to us
and the cost of the Securities to the Trust) are $148,979 and $362,
respectively.
(3) SBC Communications, Inc. ("SBC") has recently announced plans to
acquire Ameritech Corporation ("Ameritech"). As per the terms of the
merger agreement, each shareholder of Ameritech will receive 1.316
shares of SBC for each share of Ameritech held. As a result of this
expected transaction, it is anticipated that the Trust will receive
additional shares of common stock of SBC in exchange for the shares of
Ameritech which it holds. The transaction is subject to the approval of
the shareholders of both companies and various regulatory authorities.
(4) Exxon Corporation ("Exxon") has recently announced plans to acquire
Mobil Corporation ("Mobil"). As per the terms of the merger agreement,
each shareholder of Mobil will receive 1.32015 shares of Exxon for each
share of Mobil held. As a result of this expected transaction, it is
anticipated that the Trust will receive shares of common stock of Exxon
in exchange for the shares of Mobil which it holds. The transaction is
subject to the approval of the shareholders of both companies and
various regulatory authorities.
</FN>
</TABLE>
Page 7
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created several similar
yet separate series of an investment company 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 Trust.
This FT Series consists of a unit investment trust known as Diversified
Income & Growth Trust, 1999 Summer Series.
Mandatory Termination Date.
The Trust will terminate on the Mandatory Termination Date,
approximately three years from the date of this prospectus. This date is
shown in "Summary of Essential Information." The Trust was created under
the laws of the State of New York by 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 Trust.
How We Created the Trust.
On the Initial Date of Deposit, we deposited the Securities (fully
backed by an irrevocable letter of credit of a financial institution)
with the Trustee. In return for depositing the Securities, the Trustee
delivered documents to us representing our ownership of the Trust, in
the form of units ("Units").
With the deposit of the contracts to buy the Securities on the Initial
Date of Deposit we established a percentage relationship among the
Securities in the Trust's portfolio, as stated under "Schedule of
Investments." After the Initial Date of Deposit, we may deposit
additional Securities in the 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 original percentage relationship
established among the Securities on the Initial Date of Deposit, and not
the actual 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 the 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 the 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 brokerage fees to buy
Securities. To reduce this dilution, the Trust 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 our affiliate) to
act as agent for the Trust to buy Securities. If we or an affiliate of
ours act as agent to the Trust, we will be subject to the restrictions
under the Investment Company Act of 1940, as amended.
We cannot guarantee that the 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 Trust will not, however, sell Securities to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if the Securities no longer meet the
criteria by which they were selected. You will not be able to dispose of
or vote any of the Securities in the Trust. As the holder of the
Securities, the Trustee will vote all of the Securities and will do so
based on our instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in the 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
Page 8
from the failed contract on the next Income Distribution Date. Any
Replacement Security the 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.
Portfolio
Objectives.
Through an investment in a portfolio of common stocks which as of the
Initial Date of Deposit have dividend yields of at least 70% of the
dividend yield on the S&P 500 Index, the Trust seeks to achieve two
primary objectives:
- - Provide Higher Stream of Income Year after Year. With a portfolio of
stocks that have the potential to regularly raise their dividends,
conservative equity investors should be better able to keep up with the
rising costs of living.
- - Reduce Volatility and Modify Risk through Diversification and Rising
Dividends. Dividends, which traditionally are a more stable component of
total returns than share price change, have historically had the effect
of cushioning price volatility. Risk is further modified by a well-
constructed portfolio of stocks, diversified across different industries
and sectors.
The Trust consists of a portfolio of Securities selected from the
Diversified Stock Income Plan ("DSIP"). DSIP is a rising dividends
strategy which A.G. Edwards Securities Research analysts have employed
since 1992, scrutinizing the dividend history (when applicable) and long-
term dividend growth potential of hundreds of companies. Only those
companies whose stocks have current dividend yields of at least 70% of
the S&P 500 Composite's dividend yield and which are believed most
likely to consistently raise their annual dividends are placed on A.G.
Edwards' DSIP List. Since the inception of the DSIP List in 1992, 175 of
the 184 companies included in the DSIP List have raised their annual
dividends one or more times through 6/4/99. There is, however, no
guarantee that the companies selected for the Trust, which represent
only a portion of the DSIP List, will declare dividends in the future or
that if declared will either remain at current levels or increase over
time or that they will increase dividends to the same extent as the
entire DSIP List.
We believe investors can meet their goals of income and growth through
an investment strategy designed to capitalize on the power of rising
dividends. In our opinion dividends should be considered an important
ingredient to an investor's overall investment plan. The key is
investing in a portfolio of companies with the potential to pass
earnings on to investors in the form of regular dividend increases. A
company's ability to consistently pay-and increase-dividends is an
important sign of that company's financial strength. Therefore, we
believe investors should look for well-managed and financially sound
companies with the potential to deliver solid returns. Companies that
choose to reward stockholders with greater dividends (and many companies
don't) can help investors increase capital and produce attractive total
returns over time. In addition to rising dividends, this strategy's
defensive benefits have the potential to reduce volatility and stabilize
returns.
In A.G. Edwards' opinion, the Securities chosen for the Trust have the
potential to provide investors increasing dividend income year after
year, regardless of the market environment. There is, however, no
assurance that the Securities will continue to pay or increase dividends
in the future.
The Trust allows investors to make an investment in companies A.G.
Edwards believes will provide long-term income and growth. The Trust
uses a buy and hold philosophy which encourages investors to be
disciplined and patient while holding the Trust until maturity. In doing
so investors can eliminate the emotion of investing and the temptation
to buy or sell for reasons outside their control: stock market
volatility, interest rates, inflation and the latest investment fad.
Of course, as with any similar investments, there can be no guarantee
that the objective of the Trust will be achieved. See "Risk Factors" for
a discussion of the risks of investing in the Trust.
Risk Factors
Price Volatility. The Trust invests in common stocks. The value of the
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
Page 9
issuer or the general condition of the relevant stock market, or when
political or economic events affecting the issuers occur.
Because the Trust is 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 Trust will be positive over any period of time or
that you won't lose money. Units of the Trust are not deposits of any
bank and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Certain of the Securities in the Trust may be 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.
Real Estate Investment Trusts. Certain of the Securities are issued by
Real Estate Investment Trusts ("REITs"). REITs are financial vehicles
that pool investors' capital to purchase or finance real estate. REITs
may concentrate their investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The value of the REITs and the ability
of the REITs to distribute income may be adversely affected by several
factors, including rising interest rates, changes in the national, state
and local economic climate and real estate conditions, perceptions of
prospective tenants of the safety, convenience and attractiveness of the
properties, the ability of the owner to provide adequate management,
maintenance and insurance, the cost of complying with the Americans with
Disabilities Act, increased competition from new properties, the impact
of present or future environmental legislation and compliance with
environmental laws, changes in real estate taxes and other operating
expenses, adverse changes in governmental rules and fiscal policies,
adverse changes in zoning laws, and other factors beyond the control of
the issuers of the REITs.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain companies represented in the Trust. In
addition, litigation regarding any of the issuers of the Securities or
their respective industries may negatively impact the share prices of
these Securities. We cannot predict what impact any pending or proposed
legislation or 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
Trust. 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 of the Securities are issued by foreign
companies which makes the Trust subject to more risks than if it
invested solely in domestic common stocks. These common stocks are
listed on a U.S. securities exchange either directly, or in the form of
an American Depositary Receipt ("ADR"). 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.
Securities Selection. While A.G. Edwards has carefully evaluated and
approved the Securities in the Trust for this purpose, they may choose
for any reason not to recommend any or all of the Securities for another
purpose or at a later date. This may affect the value of your Units. In
addition, A.G. Edwards in its general securities business acts as agent
or principal in connection with buying and selling stocks, including the
Securities, and may have bought the Securities for the Trust, thereby
benefiting. A.G. Edwards also acts as a market maker, underwrites
certain issues, and provides investment banking services to companies,
which may include the issuers of certain of the Securities.
Portfolio Securities Descriptions
CAPITAL GOODS
Brady Corporation (Class A), headquartered in Milwaukee, Wisconsin,
develops, makes and sells stock and customized products, including
Page 10
identification, labeling and marking systems for electrical wires, pipes
and other objects; safety and instructional signs; and specialized tapes
used in audio, video and computer applications.
General Electric Company, headquartered in Fairfield, Connecticut, makes
major appliances, industrial and power systems, aircraft engines,
engineered plastics, silicones, superabrasives, laminates and technical
products. The company also furnishes TV network services, produces
programs, operates VHF and UHF TV stations and provides financial
services.
COMMUNICATIONS/MEDIA
Ameritech Corporation, headquartered in Chicago, Illinois, provides a
wide range of communications services including local and long distance
telephone, cellular, paging, security, cable TV, Internet access and
directory publishing services.
Bell Atlantic Corporation, headquartered in New York, New York, operates
a diversified telecommunications concern that provides voice and data
transport and calling services network access, directory publishing and
public telephone services to customers in the mid-Atlantic and New
England regions.
SBC Communications Inc., headquartered in San Antonio, Texas, provides
landline and wireless telecommunications services and equipment,
directory advertising, publishing and cable television services in
Texas, Arkansas, California, Connecticut, Kansas, Missouri, Nevada and
Oklahoma.
CONSUMER CYCLICALS
Fortune Brands, Inc., headquartered in Old Greenwich, Connecticut, makes
and sells distilled spirits, office products, hardware and home
improvement products, supplies and accessories, and golf and leisure
products.
CONSUMER NON-DURABLES
Nabisco Holdings Corp. (Class A), headquartered in Parsippany, New
Jersey, makes and sells a variety of packaged food products, including
cookies, crackers, packaged nuts, hard roll candy, steak sauce and dog
snacks.
SYSCO Corporation, headquartered in Houston, Texas, markets and
distributes a wide range of food and related products to the foodservice
or "food-prepared-away-from-home" industry.
ENERGY
BP Amoco Plc (ADR), headquartered in London, England, produces,
transports, refines and markets crude oil, natural gas and related
products; and makes and markets petrochemicals and related products. The
company also operates tankers for its own use and for third parties.
Mobil Corporation, headquartered in Fairfax, Virginia, produces,
transports, refines and markets petroleum and natural gas and related
products; and makes and markets chemicals.
FINANCIAL-BANKS
Wells Fargo Company, headquartered in San Francisco, California,
provides banking, insurance, investments, mortgage and consumer finance
services in all 50 states, Canada, the Caribbean, Latin America and
elsewhere internationally.
FINANCIAL-REITS
Hospitality Properties Trust, headquartered in Newton, Massachusetts, is
a self-managed real estate investment trust which acquires, owns and
leases hotel properties throughout the United States.
JDN Realty Corporation, headquartered in Atlanta, Georgia, is a self-
managed real estate investment trust which owns and operates shopping
center properties in 12 states.
Spieker Properties, Inc., headquartered in Menlo Park, California, is a
self-managed real estate investment trust which owns, operates, manages,
leases and develops commercial real estate in Northern California,
Idaho, Oregon and Washington. Properties include warehousing and bulk
distribution centers, single story and mid-rise suburban office
buildings and neighborhood shopping centers and single tenant retail
buildings.
Sun Communities, Inc., headquartered in Farmington Hills, Michigan, is a
self-managed real estate investment trust which, through subsidiaries,
owns and operates manufactured housing and recreational communities
concentrated in the midwestern and southeastern regions of the United
States.
HEALTHCARE
Bristol-Myers Squibb Company, headquartered in New York, New York,
produces and distributes pharmaceuticals, consumer medicines,
nutritionals, medical devices and beauty care products.
Johnson & Johnson, headquartered in New Brunswick, New Jersey, makes and
sells pharmaceuticals, personal healthcare products, medical and
surgical equipment, and contact lenses.
Merck & Co., Inc., headquartered in Whitehouse Station, New Jersey, is a
Page 11
leading pharmaceutical concern that discovers, develops, makes and
markets a broad range of human and animal health products and services.
The company also administers managed prescription drug programs.
Schering-Plough Corporation, headquartered in Madison, New Jersey,
develops, makes and markets pharmaceutical and health care products
worldwide. The company's products include prescription drugs, animal
health, over-the-counter, foot care and sun care products.
RETAIL/APPAREL
The May Department Stores Company, headquartered in St. Louis, Missouri,
operates department stores under the trade names "Lord & Taylor,"
"Hecht's," "Strawbridge's," "Foley's," "Robinsons-May," "Kaufmann's,"
"Filene's," "Famous-Barr," "L.S. Ayres" and "Meier & Frank."
UTILITY
American Water Works Company, Inc., headquartered in Voorhees, New
Jersey, provides water service and professional services as required to
affiliated companies.
CMS Energy Corporation (Class G), headquartered in Dearborn, Michigan,
through subsidiaries, supplies electricity and natural gas in Michigan;
explores for and produces oil and natural gas; invests in, develops,
converts, constructs, operates and acquires non-utility power generation
projects; and owns, develops and manages natural gas transmission,
processing and storage projects.
DQE, Inc., headquartered in Coraopolis, Pennsylvania, through wholly-
owned subsidiaries, supplies electricity in Pennsylvania and provides
energy and utility, environmental, power quality and real estate
services. The company also operates a financial services and a marketing
and development concern.
IPALCO Enterprises, Inc., headquartered in Indianapolis, Indiana,
generates, transmits, distributes and sells electricity in Indiana;
sells steam in certain areas of Indianapolis; and operates cooling and
heating systems in Cleveland, Ohio.
We have obtained the foregoing descriptions from sources we deem
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the per Unit price of
which is comprised of the following:
- - The aggregate underlying value of the Securities;
- - The amount of any cash in the Income and Capital Accounts;
- - Dividends receivable on Securities; and
- - The total sales charge (which combines an initial up-front sales
charge and a deferred sales charge).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities and changes in
the value of the Income and/or Capital Accounts.
The Securities purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for the Trust's
organization costs (including costs of preparing the registration
statement, the Indenture and other closing documents, registering Units
with the Securities and Exchange Commission ("SEC") and states, the
initial audit of the Trust portfolio, legal fees and the initial fees
and expenses of the Trustee) will be purchased in the same proportionate
relationship as all the Securities contained in the Trust. Securities
will be sold to reimburse the Sponsor for the Trust's organization costs
at the earlier of six months after the Initial Date of Deposit or the
end of the initial offering period (a significantly shorter time period
than the life of the Trust). During the period ending with the earlier
of six months after the Initial Date of Deposit or the end of the
initial offering period, there may be a decrease in the value of the
Securities. To the extent the proceeds from the sale of these Securities
are insufficient to repay the Sponsor for the Trust organization costs,
Page 12
the Trustee will sell additional Securities to allow the Trust to fully
reimburse the Sponsor. In that event, the net asset value per Unit will
be reduced by the amount of additional Securities sold. Although the
dollar amount of the reimbursement due to the Sponsor will remain fixed
and will never exceed the per Unit amount set forth for the Trust in
"Statement of Net Assets," this will result in a greater effective cost
per Unit to Unit holders for the reimbursement to the Sponsor. To the
extent actual organization costs are less than the estimated amount,
only the actual organization costs will be deducted from the assets of
the Trust. When Securities are sold to reimburse the Sponsor for
organization costs, the Trustee will sell such Securities, to the extent
practicable, which will maintain the same proportionate relationship
among the Securities contained in the Trust as existed prior to such sale.
Although you are not required to pay for your Units until three business
days following your order (the "date of settlement"), you may pay before
then. You will become the owner of Units ("Record Owner") 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 the Trust is $1,000 worth of
Units ($500 if you are purchasing Units for your Individual Retirement
Account, Roth Individual Retirement Account, Education Individual
Retirement Account or any other qualified retirement plan).
Sales Charges.
The sales charge you will pay has both an initial and a deferred
component. The initial sales charge, which you will pay at the time of
purchase, is initially equal to approximately 1% of the Public Offering
Price of a Unit. This initial sales charge is actually equal to the
difference between the maximum sales charge of 3.3% of the Public
Offering Price and the maximum remaining deferred sales charge
(initially $.23 per Unit). The initial sales charge will vary from 1%
with changes in the aggregate underlying value of the Securities,
changes in the Income and Capital Accounts and as deferred sales charge
payments are made. In addition, five monthly deferred sales charge
payments of $.046 per Unit will be deducted from the Trust's assets on
approximately the twentieth day of each month from February 18, 2000
through June 20, 2000. The maximum sales charge assessed during the
initial offering period will be 3.3% of the Public Offering Price per
Unit (equivalent to 3.333% of the net amount invested, exclusive of the
deferred sales charge).
After the initial offering period, if you purchase Units after the last
deferred sales charge payment has been assessed, your sales charge will
consist of a one-time initial sales charge of 3.3% of the Public
Offering Price (equivalent to 3.413% of the net amount invested), which
will be reduced to a minimum sales charge of 2.8% of the Public Offering
Price on July 1, 2000.
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 The Dealer's
If you invest sales charge concession
(in thousands):* will be: will be:
______________ ____________ ____________
$50 but less than $100 3.05% 2.20%
$100 but less than $150 2.80% 1.95%
$150 but less than $500 2.45% 1.60%
$500 but less than $1,000 2.10% 1.30%
$1,000 or more 1.55% 1.10%
* 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.
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.
You may combine same-day purchases of Trust Units and units of other
similarly structured equity unit trusts for which we act as Principal
Underwriter and which are currently in the initial offering period to
meet the above volume purchase levels. We will consider Units you
purchase in the name of your spouse or your child under 21 years of age
to be purchases by you for determining the reduced sales charge. The
reduced sales charges will also apply to a trustee or other fiduciary
purchasing Units for a single trust estate or single fiduciary account.
You must inform your dealer of any combined purchases before the sale in
order to be eligible for the reduced sales charge. As noted above, a
portion of the reduced sales charge is the responsibility of the
broker/dealer or other selling agent making the sale.
Page 13
If you own units of any other unit investment trusts sponsored by us you
may use your redemption or termination proceeds from these trusts to
purchase Units of the Trust subject only to any remaining deferred sales
charge to be collected on Units of the Trust. 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).
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 Sponsor's retention of the sales charge. 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 value of the Securities in the 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 value of the Securities on the ask side of the
market, or
c) By any combination of the above.
The Evaluator will appraise the value of the Securities in the Trust as
of the Evaluation Time on each business day and will adjust the Public
Offering Price of the Units according to this valuation. This Public
Offering Price will be effective for all orders received before the
Evaluation Time on each such day. If we or the Trustee receive orders
for purchases, sales or redemptions after that time, or on a day which
is not a business day, they will be held until the next determination of
price. The term "business day" as used in this prospectus will exclude
Saturdays, Sundays and the following holidays as observed by the New
York Stock Exchange ("NYSE"): New Year's Day, Martin Luther King, Jr.'s
Birthday, Presidents' 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
value of the Securities in the Trust, plus or minus cash, if any, in the
Income and Capital Accounts of the Trust plus the applicable sales
charge. We calculate the aggregate underlying 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.
Distribution of Units
We intend to qualify Units of the Trust 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
Page 14
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 2.4% of the Public
Offering Price per Unit (or 65% of the maximum sales charge after July
1, 2000). However, dealers and other selling agents will receive a
concession on the sale of Units subject only to any remaining deferred
sales charge equal to $.15 per Unit on Units sold subject to the maximum
deferred sales charge or 65% of the then current maximum remaining
deferred sales charge on Units sold subject to less than the maximum
deferred sales charge.
Dealers and other selling agents who sell at least $15,000,000 on the
Initial Date of Deposit will be entitled to the following additional
sales concessions with respect to total sales:
Total Sales Additional
(in millions): Concession:
_____________ ___________
$15 0.100%
$25 0.200%
$35 0.375%
$45 0.400%
$55 0.425%
$75 0.525%
$100 or more 0.625%
We reserve the right to change the amount of concessions or agency
commissions from time to time. Certain commercial banks may be making
Units of the Trust 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 in
certain other states, any banks making Units available must be
registered as broker/dealers under state law.
Award Programs.
From time to time we may sponsor programs which provide awards to a
dealer's registered representatives who have sold a minimum number of
Units during a specified time period. We may also pay fees to qualifying
dealers for services or activities which are meant to result in sales of
Units of the Trust. In addition, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable sales charges on the unit sales generated by such
persons during such programs. We make these payments out of our own
assets, and not out of the Trust's assets. These programs will not
change the price you pay for your Units or the amount that the Trust
will receive from the Units sold.
Investment Comparisons.
From time to time we may compare the then current estimated returns of
the Trust (which may show performance net of the expenses and charges
the 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 indexes, corporate or U.S. Government bonds,
bank CDs and money market accounts or funds, (2) performance data from
Morningstar Publications, Inc. or (3) information from publications such
as Money, the New York Times, U.S. News and World Report, Business Week,
Forbes or Fortune. The investment characteristics of the Trust, which
are described more fully elsewhere in this prospectus, differ from other
comparative investments. You should not assume that these performance
comparisons will be representative of the Trust's future relative
performance.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum sales
charge per Unit less any reduced sales charge as stated in "Public
Offering." Also, any difference between our cost to purchase the
Securities and the price at which we sell them to the Trust is
considered a profit or loss. (See Note 2 of "Schedule of Investments.")
During the initial offering period, dealers and others may also realize
profits or sustain losses as a result of fluctuations after the Date of
Deposit in the Public Offering Price they receive when they sell the
Units. Pursuant to a licensing agreement with A.G. Edwards & Sons, Inc.,
we will pay A.G. Edwards $.0075 per Unit for allowing us to use the name
"Diversified Stock Income Plan" and for periodic research reports on the
Securities included in the Trust.
In maintaining a market for Units, any difference between the price at
Page 15
which Units are purchased and the price at which they are sold (which
includes a maximum sales charge for the 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.
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 at that time is equal to or greater than the Redemption Price per
Unit, we may purchase the Units. You will receive the proceeds from the
sale of Units we purchase no later than if they were redeemed by the
Trustee. We may tender Units we hold to the Trustee for redemption as
any other Units. If we elect not to purchase Units, the Trustee may sell
tendered Units in the over-the-counter market, if any. However, the
amount you will receive is the same as you would have received on
redemption of the Units.
The Public Offering Price of any Units we acquire will be consistent
with the Public Offering Price described in the then effective
prospectus. Any profit or loss from the resale or redemption of such
Units will belong to us.
Expenses and Charges
The estimated annual expenses of the Trust are listed under "Fee Table."
If actual expenses exceed the estimate, the Trust will bear the excess.
The Trustee will pay operating expenses of the Trust from the Income
Account of the 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 Trust, and will receive brokerage fees
when the 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 Trust and will
receive the fees set forth under "Fee Table" for providing portfolio
supervisory and evaluation services to the Trust. 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 Trust.
The fees payable to the Portfolio Supervisor, Evaluator and Trustee are
based on the largest aggregate number of Units of the 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 fees paid to us or our
affiliates for providing a given service to all unit investment trusts
for which we provide such services be more than the actual cost of
providing such service in such year.
In addition to the Trust's operating expenses, and the fees described
above, the Trust may also incur the following charges:
- - Monthly, quarterly or semiannual statements to Unit holders;
- - 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 the 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
Page 16
connection with its acceptance or administration of the Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of
the Trust; and/or
- - All taxes and other government charges imposed upon the Securities or
any part of the 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 the Trust. In addition, if there
is not enough cash in the Income or Capital Accounts of the Trust, the
Trustee has the power to sell Securities 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 the Trust. These sales may
result in capital gains or losses to the Unit holders. See "Tax Status."
The Trust will be audited on an annual basis. So long as we are making a
secondary market for Units, we will bear the cost of these annual audits
to the extent the cost exceeds $0.0050 per Unit. Otherwise, the Trust
will pay for the audit. You can receive a copy of the audited financial
statements by notifying the Trustee.
Tax Status
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trust. This section is current as of
the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a non-U.S. person, a
broker/dealer, or other investor with special circumstances. In
addition, this section does not describe your state or foreign taxes. As
with any investment, you should consult your own tax professional about
your particular consequences.
Assets of the Trust.
The Trust will hold (i) stock in domestic and foreign corporations (the
"Stocks") and (ii) interests in real estate investment trusts (the "REIT
Shares"). All of the foregoing assets constitute the "Trust Assets." For
purposes of this federal tax discussion, it is assumed that the Stocks
constitute equity, and the REIT Shares constitute qualifying shares in
real estate investment trusts for federal income tax purposes.
Trust Status.
The Trust will not be taxed as a corporation for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of each of the Trust Assets and other assets held by the
Trust, and as such you will be considered to have received a pro rata
share of income (i.e., dividends and capital gains, if any) from each
Trust Asset when such income is considered to be received by the Trust.
This is true even if you elect to have your distributions automatically
reinvested into additional Units. In addition, the income from the Trust
which you must take into account for federal income tax purposes is not
reduced by amounts used to pay the deferred sales charge.
Your Tax Basis and Income or Loss upon Disposition.
If your Trust disposes of Trust Assets, 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 Trust Assets from your share of the total proceeds received in
the transaction. You can generally determine your initial tax basis in
each Trust Asset by apportioning the cost of your Units, generally
including sales charges, among each Trust Asset ratably according to
their value on the date you purchase your Units. In certain
circumstances, however, you may have to adjust your tax basis after you
purchase your Units (for example, in the case of certain dividends that
exceed a corporation's accumulated earnings and profits).
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (10% for certain taxpayers in the lowest
tax bracket). Net capital gain equals net long-term capital gain minus
net short-term capital loss for the taxable year. Capital gain or loss
is long-term if the holding period for the asset is more than one year
and is short-term if the holding period for the asset is one year or
less. You must exclude the date you purchase your Units to determine the
Page 17
holding period of your Units. The tax rates for capital gains realized
from assets held for one year or less are generally the same as for
ordinary income. The tax code may, however, treat certain capital gains
as ordinary income in special situations. In addition, capital gain
received from assets held for more than one year that is considered
"unrecaptured Section 1250 gain" (which may be the case, for example,
with some capital gains attributable to the REIT Shares) is taxed at a
maximum stated tax rate of 25%.
Dividends from REIT Shares.
Some dividends on the REIT Shares may qualify as "capital gain
dividends," taxable to you as long-term capital gains. If you hold a
Unit for six months or less or if the Trust holds a REIT Share for six
months or less, any loss incurred by you related to the disposition of
such REIT Share will be treated as a long-term capital loss to the
extent of any long-term capital gain distributions received (or deemed
to have been received) with respect to such REIT Share. Distributions or
income or capital gains declared on the REIT Shares in October, November
or December will be deemed to have been paid to you on December 31 of
the year they are declared, even when paid by the REIT during the
following January.
Dividends Received Deduction.
A corporation that owns Units will generally not be entitled to the
dividends received deduction with respect to any dividends received by
the Trust attributable to the REIT Shares.
In-Kind Distributions.
Under certain circumstances, you may request an In-Kind Distribution of
Trust Assets when you redeem your Units or at the 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 Trust Assets
plus, possibly, cash.
You will not recognize gain or loss if you only receive Trust Assets in
exchange for your pro rata portion of the Trust Assets held by the
Trust. However, if you also receive cash in exchange for a fractional
share of a Trust Asset held by the 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 Trust Asset.
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes, you must take into account
your full pro rata share of the 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 the Trust to the same extent as if you directly
paid the expense. You may, however, be required to treat some or all of
the expenses of the Trust as miscellaneous itemized deductions.
Individuals may only deduct certain miscellaneous itemized deductions to
the extent they exceed 2% of adjusted gross income.
Foreign, State and Local Taxes.
Dividend payments on the Trust Assets of foreign companies that are paid
to the Trust may be subject to foreign withholding taxes. Any income
withheld will still be treated as income to you. Under the grantor trust
rules, you are considered to have paid directly your share of foreign
taxes. Therefore, for U.S. tax purposes, you may be entitled to a
foreign tax credit or deduction for those foreign taxes.
Under the existing income tax laws of the State and City of New York,
the Trust will not be taxed as a corporation, and the income of the
Trust 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.
Retirement Plans
You may purchase Units of the Trust for:
- - Individual Retirement Accounts,
- - Roth Individual Retirement Accounts,
- - Education 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
Page 18
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as Record Owner of Units persons registered as
such on its books. If you request certificates representing the Units
you ordered 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 your name exactly as
it appears on the face of the certificate with your 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 establish an account for you and
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 Record Owner:
- - A written initial transaction statement containing a description of
your Trust;
- - The number of Units issued or transferred;
- - Your name, address and Taxpayer Identification Number ("TIN");
- - A notation of any liens or restrictions of the issuer and any adverse
claims; and
- - The date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
You may be required to pay a nominal fee to the Trustee for each
certificate reissued or transferred, and to pay any government charge
that may be imposed for each transfer or exchange. The Trustee does not
require such charge now, nor are they currently contemplating doing so.
If a certificate gets lost, stolen or destroyed, you may be required to
furnish indemnity to the Trustee to receive replacement certificates.
You must surrender mutilated certificates to the Trustee for replacement.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. You will also receive a quarterly statement which describes
the Trust's performance. After the end of each calendar year, the Trustee
will provide you with the following information:
- - A summary of transactions in the Trust for the year;
- - Any Securities sold during the year and the Securities held at the
end of that year by the 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 the Trust's Securities to the Income Account of
the Trust. All other receipts, such as return of capital, are credited
to the Capital Account of the Trust.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." Distribution amounts will vary with changes in the Trust's
fees and expenses, in dividends received and with the sale of
Securities. The Trustee will distribute amounts in the Capital Account
Page 19
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 the 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 the 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 the Trust makes and deliver such
amount to the Internal Revenue Service if the Trustee does not have your
TIN. You may recover this amount by giving your TIN to the Trustee, or
when you file a tax return. Normally, the selling broker gives your TIN
to the Trustee. However, you should check your statements from the
Trustee to make sure they have the number to avoid this "back-up
withholding." If not, you should provide it to the Trustee as soon as
possible.
Within a reasonable time after the Trust is terminated you will receive
the pro rata share of the money from the disposition of the Securities.
However, if you are eligible, you may elect to receive a distribution of
shares of Securities (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 the Trust.
The Trustee may establish reserves (the "Reserve Account") within the
Trust for any state and local taxes and any governmental charges to be
paid out of the Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of the 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 the 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.
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 the 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 the Trust.
If you are tendering 1,000 Units or more for redemption, rather than
receiving cash you may elect to receive an In-Kind Distribution of
Page 20
Securities 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 the Trust's Mandatory Termination Date will be
honored. Where possible, the Trustee will make an In-Kind Distribution
by distributing each of the Securities in book-entry form to your bank
or broker/dealer account at the Depository Trust Company. The Trustee
will subtract any customary transfer and registration charges from your
In-Kind Distribution. As a tendering Unit holder, you will receive your
pro rata number of whole shares of the Securities that make up the
portfolio, and cash from the Capital Account equal to the fractional
shares to which you are entitled. If there is not enough money in the
Capital Account to pay the required cash distribution, the Trustee may
have to sell Securities.
The Internal Revenue Service will require the Trustee to withhold a
portion of your redemption proceeds if the Trustee has not previously
been provided your TIN. For more information about this withholding, see
"Income and Capital Distributions." If the Trustee does not have your
TIN, you must provide it at the time of the redemption request.
The Trustee may sell Securities in the Trust to make funds available for
redemption. If Securities are sold, the size and diversification of the
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:
- - If the NYSE is closed (other than customary weekend and holiday
closings);
- - If the 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
- - 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 not designated to purchase
Securities;
2. the aggregate underlying value of the Securities held in the Trust; and
3. dividends receivable on the Securities trading ex-dividend as of the
date of computation; and
deducting
1. any applicable taxes or governmental charges that need to be paid out
of the Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of the Trust, if any;
4. cash held for distribution to Unit holders of record of the Trust as
of the business day before the evaluation being made; and
5. other liabilities incurred by the Trust; and
dividing
1. the result by the number of outstanding Units of the Trust.
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, until the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
The aggregate underlying 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."
Removing Securities from the Trust
The portfolio of the Trust is not managed. However, we may, but are not
required to, direct the Trustee to dispose of a Security in certain
limited circumstances, including situations in which:
- - The issuer of the Security defaults in the payment of a declared
dividend;
- - Any action or proceeding prevents the payment of dividends;
- - There is any legal question or impediment affecting the Security;
- - The issuer of the Security has breached a covenant which would affect
the payment of dividends or the issuer's credit standing, or otherwise
Page 21
damage the sound investment character of the Security; or
- - The issuer has defaulted on the payment on any other of its
outstanding obligations; or
- - The price of the Security has declined to such an extent, or other
such credit factors exist, that in our opinion keeping the Security
would be harmful to the Trust.
Except in the limited instance in which the Trust may acquire
Replacement Securities to replace failed contracts to purchase
Securities, as described in "The FT Series," the Trust may not acquire
any securities or other property other than the Securities. The Trustee,
on behalf of the 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 the 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 the 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 Trust to
facilitate selling Securities, exchanged securities or property from the
Trust. If we or our affiliate act in this capacity, we will be held
subject to the restrictions under the Investment Company Act of 1940, as
amended.
The Trustee may sell Securities that we designate; or, without our
direction, in its own discretion, in order to meet redemption requests
or pay expenses. In designating which Securities should be sold, we will
try to maintain the proportionate relationship among the Securities. If
this is not possible, the composition and diversification of the Securities
in the Trust may be changed. To get the best price for the 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 Trust's
portfolio transactions, or when acting as agent for the Trust in
acquiring or selling Securities on behalf of the Trust.
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, the Trust will terminate on
the Mandatory Termination Date stated in the "Summary of Essential
Information." The 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 the 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 the Trust during the initial offering
period ("Discretionary Liquidation Amount"); or
- - In the event that Units of the 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 the Trust is terminated
due to this last reason, we will refund to each purchaser of Units of
such Trust the entire sales charge paid by such purchaser; however,
termination of the 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, the 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 the 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
Page 22
the sale of Securities as part of the termination of the 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 the Trust the Trustee will send you a
form at least 30 days prior to the Mandatory Termination Date which will
enable you to receive an In-Kind Distribution of Securities included in
the Trust (reduced by customary transfer and registration charges)
rather than the typical cash distribution. You must notify the Trustee
at least ten business days prior to the Mandatory Termination Date if
you elect this In-Kind Distribution option. If you do not elect to
participate in the In-Kind Distribution option for eligible Unit holders
you will receive a cash distribution from the sale of the remaining
Securities, along with your interest in the Income and Capital Accounts
of the Trust, within a reasonable time after the Trust is terminated.
Regardless of the distribution involved, the Trustee will deduct from
the Trust any accrued costs, expenses, advances or indemnities provided
by the Indenture, including estimated compensation of the Trustee and
costs of liquidation and any amounts required as a reserve to pay any
taxes or other governmental charges.
Information on the Sponsor, Trustee and Evaluator
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
wholesale distribution of unit investment trusts under the "First Trust"
brand name and other securities. An Illinois limited partnership formed
in 1991, we act as Sponsor for successive series of:
- - The First Trust Combined Series
- - FT Series (formerly known as The First Trust Special Situations Trust)
- - The First Trust Insured Corporate Trust
- - The First Trust of Insured Municipal Bonds
- - The First Trust GNMA
First Trust introduced the first insured unit investment trust in 1974.
To date we have deposited more than $25 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, 1998, the total partners' capital of
Nike Securities L.P. was $18,506,548 (audited).
This information refers only to the Sponsor and not to the Trust or to
any series of the Trust 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, and its principal executive
office is located at 270 Park Avenue, New York, New York 10017 and its
unit investment trust office at 4 New York Plaza, 6th Floor, New York,
New York, 10004-2413. If you have questions regarding the Trust, 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
Page 23
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - Appoint a successor sponsor, paying them a reasonable rate not more
than that stated by the SEC,
- - Terminate the Indenture and liquidate the Trust, or
- - Continue to act as Trustee without terminating the Indenture.
The Evaluator.
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532.
The Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information.
However, the Evaluator will not be liable to the Trustee, Sponsor or
Unit holders for errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trust.
Experts.
Ernst & Young LLP, independent auditors, have audited the Trust's
statement 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 Trust's statement of net assets,
including the schedule of investments, in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific risk information about the Trust.
Page 24
This page is intentionally left blank.
Page 25
This page is intentionally left blank.
Page 26
This page is intentionally left blank.
Page 27
FIRST TRUST (registered trademark)
Diversified Income & Growth Trust, 1999 Summer Series
FT 315
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 Diversified Income &
Growth Trust, 1999 Summer Series, 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. 333-80533) 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
June 25, 1999
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 28
FIRST TRUST (registered trademark)
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of the unit investment trust
contained in FT 315 not found in the prospectus for the Trust. This
Information Supplement is not a prospectus and does not include all of
the information you should consider before investing in the Trust. This
Information Supplement should be read in conjunction with the prospectus
for the Trust in which you are considering investing.
This Information Supplement is dated June 25, 1999. Capitalized terms
have been defined in the prospectus.
Table of Contents
Risk Factors
Securities 1
Dividends 1
Concentrations 1
REITs 1
Diversified Stock Income Plan 2
Risk Factors
Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the
risk that the financial condition of the issuers of the Securities or
the general condition of the relevant stock market may worsen, and the
value of the Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors.
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. 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.
Concentrations
Real Estate Investment Trusts ("REITs"). An investment in the Trust
should be made with an understanding of risks inherent in an investment
in REITs specifically and real estate generally (in addition to
securities market risks). Generally, these include economic recession,
the cyclical nature of real estate markets, competitive overbuilding,
unusually adverse weather conditions, changing demographics, changes in
governmental regulations (including tax laws and environmental,
building, zoning and sales regulations), increases in real estate taxes
or costs of material and labor, the inability to secure performance
guarantees or insurance as required, the unavailability of investment
capital and the inability to obtain construction financing or mortgage
loans at rates acceptable to builders and purchasers of real estate.
Additional risks include an inability to reduce expenditures associated
with a property (such as mortgage payments and property taxes) when
rental revenue declines, and possible loss upon foreclosure of mortgaged
properties if mortgage payments are not paid when due.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
Equity REITs emphasize direct property investment, holding their
invested assets primarily in the ownership of real estate or other
equity interests. REITs obtain capital funds for investment in
underlying real estate assets by selling debt or equity securities in
Page 1
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 a Trust. The value of the REITs may at times be particularly
sensitive to devaluation in the event of rising interest rates.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in 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.
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.
Diversified Stock Income Plan
The Diversified Stock Income Plan ("DSIP") is a list of companies
recommended by experienced professionals at A.G. Edwards & Sons, Inc.
A.G. Edwards & Sons, Inc. has compiled this list since 1992 by
scrutinizing the dividend histories and long term dividend growth
potential of hundreds of companies. The following is a list of companies
which comprise the current DSIP list:
Page 2
Ticker Company
______ _______
ABT Abbott Laboratories
AJG Arthur J. Gallagher & Co.
ABS Albertson's, Inc.
ALL The Allstate Corporation
AHP American Home Products Corporation
AWR American States Water Company
AWK American Water Works Company, Inc.
AIT Ameritech Corporation
ATO Atmos Energy Corporation
AVB Avalonbay Communities, Inc.
BBT BB&T Corporation
BPA BP Amoco Plc
BRE BRE Properties, Inc.
BEZ Baldor Electric Company
ONE Bank One Corporation
BKB BankBoston Corporation
BK The Bank of New York Company, Inc.
BAC BankAmerica Corporation
BEL Bell Atlantic Corporation
BTR Bradley Real Estate, Inc.
BRCOA Brady Corporation
BGG Briggs & Stratton Corporation
BMY Bristol-Myers Squibb Company
CBL CBL & Associates Properties, Inc.
CCB CCB Financial Corporation
CMS CMS Energy Corporation
CPG CMS Energy Corporation (Class G)
FUN Cedar Fair, L.P.
CNT CenterPoint Properties Corporation
CPJ Chateau Communities, Inc.
C Citigroup Inc.
CLG Colonial Gas Company
CBH Commerce Bancorp, Inc.
CBSH Commerce Bancshares, Inc.
DQE DQE, Inc.
DF Dean Foods Company
DDR Developers Diversified Realty Corporation
DRE Duke Realty Investments, Inc.
EMR Emerson Electric Co.
EGN Energen Corporation
EQR Equity Residential Properties Trust
XON Exxon Corporation
FPL FPL Group, Inc.
FNM Fannie Mae
FITB Fifth Third Bancorp
FMER FirstMerit Corporation
FLT Fleet Financial Group, Inc.
FPC Florida Progress Corporation
FLO Flowers Industries, Inc.
FO Fortune Brands, Inc.
FFA Franchise Finance Corporation of America
FRE Freddie Mac
GE General Electric Company
GPC Genuine Parts Company
HRP HRPT Properties Trust
HRD Hannaford Bros. Co.
HR Healthcare Realty Trust, Inc.
HNZ H.J. Heinz Company
HMN Horace Mann Educators Corporation
HPT Hospitality Properties Trust
HI Household International, Inc.
HUB/B Hubbell Incorporated (Class B)
IPL IPALCO Enterprises, Inc.
IEI Indiana Energy, Inc.
JDN JDN Realty Corporation
JPR JP Realty, Inc.
JNJ Johnson & Johnson
JCI Johnson Controls, Inc.
K Kellogg Company
KEY Key Corp.
KIM Kimco Realty Corporation
LEG Leggett & Platt, Incorporated
LNC Lincoln National Corporation
MDU MDU Resources Group, Inc.
MAC The Macerich Company
MAY The May Department Stores Company
MRK Merck & Co., Inc.
MHX MeriStar Hospitality Corporation
MOB Mobil Corporation
MODI Modine Manufacturing Company
GAS NICOR Inc.
NUI NUI Corporation
NA Nabisco Holdings Corp.
NFG National Fuel Gas Company
NHP Nationwide Health Properties, Inc.
NJR New Jersey Resources Corporation
NWL Newell Co.
OHI OMEGA Healthcare Investors, Inc.
PAG Pacific Gulf Properties, Inc.
PRK Park National Corporation
PKY Parkway Properties, Inc.
PEP PepsiCo, Inc.
PFE Pfizer Inc.
PSC Philadelphia Suburban Corporation
PNY Piedmont Natural Gas Company, Inc.
PP Prentiss Properties Trust
PG The Procter & Gamble Company
STR Questar Corporation
RGBK Regions Financial Corporation
RLR ReliaStar Financial Corp.
Page 3
SBC SBC Communications Inc.
SIG SIGCORP, Inc.
SYY SYSCO Corporation
SLE Sara Lee Corporation
SGP Schering-Plough Corporation
SRP Sierra Pacific Resources
SOTR SouthTrust Corporation
SPK Spieker Properties, Inc.
SUS Storage USA, Inc.
SUI Sun Communities, Inc.
TCB TCF Financial Corporation
TX Texaco Inc.
UNM UNUM Corporation
USB U.S. Bancorp
URB Urban Shopping Centers, Inc.
WIC WICOR, Inc.
WB Wachovia Corporation
WGL Washington Gas Light Company
WRE Washington Real Estate Investment Trust
WKS Weeks Corporation
WFC Wells Fargo Company
WIN Winn-Dixie Stores, Inc.
YES Yankee Energy System, Inc.
ZION Zions Bancorporation
Page 4
