Registration No. 333-90001
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
FT 378
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on November 16, 1999 at 2:00 p.m. pursuant to Rule
487.
________________________________
BANDWIDTH SELECT PORTFOLIO SERIES
BIOTECHNOLOGY SELECT PORTFOLIO SERIES
E-BUSINESS SELECT PORTFOLIO SERIES
E-TAIL SELECT PORTFOLIO SERIES
FINANCIAL SERVICES SELECT PORTFOLIO SERIES
INTERNET SELECT PORTFOLIO SERIES
PHARMACEUTICAL SELECT PORTFOLIO SERIES
TECHNOLOGY SELECT PORTFOLIO SERIES
E-BUSINESS PORTFOLIO SERIES
FT 378
FT 378 is a series of a unit investment trust, the FT Series. Each of
the nine portfolios listed above (each, a "Trust," and collectively, the
"Trusts") is a separate portfolio, or series, of FT 378 consisting of a
diversified portfolio of common stocks ("Securities") issued by
companies in the industry sector or investment focus for which each
Trust is named. The objective of each Trust is to provide above-average
capital appreciation. Each Select Portfolio Series has an expected
maturity of 18 months. The e-Business Portfolio Series has an expected
maturity of five years.
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 November 16, 1999
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 6
Report of Independent Auditors 8
Statements of Net Assets 9
Schedules of Investments 12
The FT Series 22
Portfolios 23
Risk Factors 28
Portfolio Securities Descriptions 31
Public Offering 47
Distribution of Units 49
The Sponsor's Profits 51
The Secondary Market 51
How We Purchase Units 51
Expenses and Charges 51
Tax Status 52
Retirement Plans 53
Rights of Unit Holders 53
Income and Capital Distributions 54
Redeeming Your Units 55
Removing Securities from a Trust 56
Amending or Terminating the Indenture 56
Information on the Sponsor, Trustee and Evaluator 57
Other Information 58
Page 2
Summary of Essential Information
FT 378
At the Opening of Business on the
Initial Date of Deposit-November 16, 1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Bandwidth Biotechnology e-Business e-Tail
Select Portfolio Select Portfolio Select Portfolio Select Portfolio
Series Series Series Series
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Initial Number of Units (1) 14,840 15,050 14,859 14,909
Fractional Undivided Interest
in the Trust per Unit (1) 1/14,840 1/15,050 1/14,859 1/14,909
Public Offering Price:
Aggregate Offering Price Evaluation
of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of
3.25% of the Public Offering Price per Unit
(3.283% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .325 $ .325 $ .325 $ .325
Less Deferred Sales Charge per Unit $ (.225) $ (.225) $ (.225) $ (.225)
Public Offering Price per Unit (4) $ 10.000 $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.675 $ 9.675 $ 9.675 $ 9.675
Redemption Price per Unit
(based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.675 $ 9.675 $ 9.675 $ 9.675
Cash CUSIP Number 30264L 366 30264L 382 30264L 580 30264L 408
Reinvestment CUSIP Number 30264L 374 30264L 390 30264L 598 30264L 416
Security Code 57648 57650 57662 57652
Mandatory Termination Date (6) May 16, 2001 May 16, 2001 May 16, 2001 May 16, 2001
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date November 19, 1999
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
_____________
<FN>
See "Notes to Summary of Essential Information" on page 5.
</FN>
</TABLE>
Page 3
Summary of Essential Information
FT 378
At the Opening of Business on the Initial Date of Deposit-November 16,
1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Financial
Services Internet Select Pharmaceutical Technology
Select Portfolio Portfolio Select Portfolio Select Portfolio
Series Series Series Series
___________ ___________ ___________ ___________
<S> <C> <C> <C> <C>
Initial Number of Units (1) 15,053 14,912 14,991 14,848
Fractional Undivided Interest
in the Trust per Unit (1) 1/15,053 1/14,912 1/14,991 1/14,848
Public Offering Price:
Aggregate Offering Price Evaluation
of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of
3.25% of the Public Offering Price
per Unit (3.283% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .325 $ .325 $ .325 $ .325
Less Deferred Sales Charge per Unit $ (.225) $ (.225) $ (.225) $ (.225)
Public Offering Price per Unit (4) $ 10.000 $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.675 $ 9.675 $ 9.675 $ 9.675
Redemption Price per Unit
(based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.675 $ 9.675 $ 9.675 $ 9.675
Cash CUSIP Number 30264L 424 30264L 440 30264L 465 30264L 481
Reinvestment CUSIP Number 30264L 432 30264L 457 30264L 473 30264L 499
Security Code 57654 57656 57658 57660
Mandatory Termination Date (6) May 16, 2001 May 16, 2001 May 16, 2001 May 16, 2001
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date November 19, 1999
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
_____________
<FN>
See "Notes to Summary of Essential Information" on page 5.
</FN>
</TABLE>
Page 4
Summary of Essential Information
FT 378
At the Opening of Business on the Initial Date of Deposit-November 16,
1999
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
e-Business
Portfolio
Series
___________
<S> <C>
Initial Number of Units (1) 14,859
Fractional Undivided Interest in the Trust per Unit (1) 1/14,859
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900
Maximum Sales Charge of 4.50% of the Public Offering Price per Unit
(4.545% of the net amount invested, exclusive of the deferred sales charge) (3) $ .450
Less Deferred Sales Charge per Unit $ (.350)
Public Offering Price per Unit (4) $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.550
Redemption Price per Unit (based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.550
Cash CUSIP Number 30264L 606
Reinvestment CUSIP Number 30264L 614
Security Code 57664
Mandatory Termination Date (6) October 15, 2004
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date November 19, 1999
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
______________
<FN>
NOTES TO SUMMARY OF ESSENTIAL INFORMATION
(1) As of the close of business on the Initial Date of Deposit, we may
adjust the number of Units of a Trust so that the Public Offering Price
per Unit will equal approximately $10.00. If we make such an adjustment,
the fractional undivided interest per Unit will vary from the amounts
indicated above.
(2) Each listed Security 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 ("NYSE") (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 Tables" and "Public Offering."
(4) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. The price you pay for your
Units will be based on their valuation at the Evaluation Time on the
date you purchase your Units. On the Initial Date of Deposit the Public
Offering Price per Unit will not include any accumulated dividends on
the Securities. After this date a pro rata share of any accumulated
dividends on the Securities will be included.
(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 Tables."
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) See "Amending or Terminating the Indenture."
(7) 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. In any case, we will distribute any funds in the
Capital Account in December of each year.
</FN>
</TABLE>
Page 5
Fee Table
This Fee Table describes the fees and expenses that you may, directly or
indirectly, pay if you buy and hold Units of a Trust. See "Public
Offering" and "Expenses and Charges." Although each Select Portfolio
Series has a term of approximately 18 months, and the e-Business
Portfolio Series has a term of five years, and each is a unit investment
trust rather than a mutual fund, this information allows you to compare
fees.
<TABLE>
<CAPTION>
BANDWIDTH BIOTECHNOLOGY e-BUSINESS
SELECT PORTFOLIO SELECT PORTFOLIO SELECT PORTFOLIO E-TAIL SELECT
SERIES SERIES SERIES PORTFOLIO SERIES
___________________ ___________________ ___________________ ___________________
Amount Amount Amount Amount
per Unit per Unit per Unit per Unit
________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 2.25%(b) .225 2.25%(b) .225 2.25%(b) .225 2.25%(b) .225
_____ ______ _____ ______ _____ ______ _____ ______
Maximum sales charge 3.25% $ .325 3.25% $ .325 3.25% $ .325 3.25% $ .325
===== ====== ===== ====== ====== ====== ===== ======
Maximum sales charge imposed on reinvested
dividends 2.25%(c) $ .225 2.25%(c) $ .225 2.25%(c) $ .225 2.25%(c) $ .225
===== ====== ===== ====== ===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .260%(d) $.0260 .260%(d) $.0260 .260%(d) $.0260 .260%(d) $.0260
===== ====== ===== ====== ===== ====== ===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping,
administrative and evaluation fees .079% $.0080 .079% $.0080 .079% $.0080 .079% $.0080
Trustee's fee and other operating expenses .116%(e) .0117 .116%(e) .0117 .116%(e) .0117 .116%(e) .0117
_____ ______ _____ ______ _____ ______ _____ ______
Total .195% $.0197 .195% $.0197 .195% .0197 .195% $.0197
===== ====== ===== ====== ===== ====== ===== ======
FINANCIAL
SERVICES SELECT INTERNET SELECT
PORTFOLIO SERIES PORTFOLIO SERIES
___________________ ___________________
Amount Amount
per Unit per Unit
________ ________
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 2.25%(b) .225 2.25%(b) .225
_____ ______ _____ ______
Maximum sales charge 3.25% $ .325 3.25% $ .325
===== ====== ===== ======
Maximum sales charge imposed on reinvested dividends 2.25%(c) $ .225 2.25%(c) $ .225
===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .260%(d) $.0260 .260%(d) $.0260
===== ====== ===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .079% $.0080 .079% $.0080
Trustee's fee and other operating expenses .116%(e) .0117 .116%(e) .0117
_____ ______ _____ ______
Total .195% $.0197 .195% $.0197
===== ====== ===== ======
PHARMACEUTICAL TECHNOLOGY
SELECT SELECT
PORTFOLIO SERIES PORTFOLIO SERIES
___________________ ___________________
Amount Amount
per Unit per Unit
________ ________
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 2.25%(b) .225 2.25%(b) .225
_____ ______ _____ ______
Maximum sales charge 3.25% $ .325 3.25% $ .325
===== ====== ===== ======
Maximum sales charge imposed on reinvested dividends 2.25%(c) $ .225 2.25%(c) $ .225
===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .260%(d) $.0260 .260%(d) $.0260
===== ====== ===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .079% $.0080 .079% $.0080
Trustee's fee and other operating expenses .116%(e) .0117 .116%(e) .0117
_____ ______ _____ ______
Total .195% $.0197 .195% $.0197
===== ====== ===== ======
</TABLE>
Page 6
<TABLE>
<CAPTION>
E-BUSINESS
PORTFOLIO SERIES
______________________
Amount
per Unit
_________
<S> <C> <C>
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100
Deferred sales charge 3.50%(b) .350
_____ ______
Maximum sales charge 4.50% $ .450
===== ======
Maximum sales charge imposed on reinvested dividends 3.50%(c) $ .350
===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .225%(d) $.0225
===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and evaluation fees .100% $.0098
Trustee's fee and other operating expenses .152%(e) .0149
_____ ______
Total .252% $.0247
===== ======
</TABLE>
Example
This example is intended to help you compare the cost of investing in a
Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in a Trust for the periods shown
and sell all your Units at the end of those periods. The example also
assumes a 5% return on your investment each year and that a Trust's
operating expenses stay the same. Although your actual costs may vary,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 18 Months (f) 3 Years 5 Years
__________ ____________ __________ __________
<S> <C> <C> <C> <C>
Bandwidth Select Portfolio Series $371 $381 $ - $ -
Biotechnology Select Portfolio Series 371 381 - -
e-Business Select Portfolio Series 371 381 - -
e-Tail Select Portfolio Series 371 381 - -
Financial Services Select Portfolio Series 371 381 - -
Internet Select Portfolio Series 371 381 - -
Pharmaceutical Select Portfolio Series 371 381 - -
Technology Select Portfolio Series 371 381 - -
e-Business Portfolio Series 498 N.A. 549 606
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 of 3.25% of the
Public Offering Price for each Select Portfolio Series (4.50% in the
case of the e-Business Portfolio Series), and the maximum remaining
deferred sales charge (initially $.225 per Unit for each Select
Portfolio Series and $.35 per Unit for the e-Business Portfolio Series).
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 $.225
per Unit for each Select Portfolio Series and $.35 per Unit for the e-
Business Portfolio Series, which will be deducted in monthly
installments of $.045 per Unit for each Select Portfolio Series and $.07
per Unit for the e-Business Portfolio Series on the 20th day of each
month (or the preceding business day if the 20th day is not a business
day) from June 20, 2000 through October 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 2.25% of the Public Offering Price
for each Select Portfolio Series or more than 3.50% for the e-Business
Portfolio Series. 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. If you sell or redeem your Units before you have paid the
total deferred sales charge on your Units, you will have to pay the
remainder at that time.
(c) Reinvested dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "Income and Capital
Distributions."
(d) You will bear all or a portion of the costs incurred in organizing
your respective Trust. These estimated organization costs are included
in the price you pay for your Units and will be deducted from the assets
of a Trust at the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period.
(e) For the e-Business Portfolio Series only, other operating expenses
include the costs incurred by the e-Business Portfolio Series for
annually updating that Trust's registration statement. Other operating
expenses do not include brokerage costs and other portfolio transaction
fees for any of the Trusts. In certain circumstances the Trusts may
incur additional expenses not set forth above. See "Expenses and Charges."
(f) For each Select Portfolio Series, the Example represents the
estimated costs incurred through each Trust's approximate 18-month life.
</FN>
</TABLE>
Page 7
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 378
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 378, comprised of the Bandwidth Select
Portfolio Series; Biotechnology Select Portfolio Series; e-Business
Select Portfolio Series; e-Tail Select Portfolio Series; Financial
Services Select Portfolio Series; Internet Select Portfolio Series;
Pharmaceutical Select Portfolio Series; Technology Select Portfolio
Series; and e-Business Portfolio Series as of the opening of business on
November 16, 1999. These statements of net assets are the responsibility
of the Trusts' Sponsor. Our responsibility is to express an opinion on
these statements of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of net assets
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
statements of net assets. Our procedures included confirmation of the
letter of credit allocated among the Trusts on November 16, 1999. An
audit also includes assessing the accounting principles used and
significant estimates made by the Sponsor, as well as evaluating the
overall presentation of the statements of net assets. We believe that
our audit of the statements of net assets provides a reasonable basis
for our opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of FT 378,
comprised of the Bandwidth Select Portfolio Series; Biotechnology Select
Portfolio Series; e-Business Select Portfolio Series; e-Tail Select
Portfolio Series; Financial Services Select Portfolio Series; Internet
Select Portfolio Series; Pharmaceutical Select Portfolio Series;
Technology Select Portfolio Series; and e-Business Portfolio Series at
the opening of business on November 16, 1999 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
November 16, 1999
Page 8
Statements of Net Assets
FT 378
At the Opening of Business on the
Initial Date of Deposit-November 16, 1999
<TABLE>
<CAPTION>
Bandwidth Biotechnology e-Business e-Tail
Select Portfolio Select Portfolio Select Portfolio Select Portfolio
Series Series Series Series
____________ ____________ __________ __________
<S> <C> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $146,922 $148,996 $147,109 $147,599
Less liability for reimbursement to Sponsor
for organization costs (3) (386) (391) (386) (388)
Less liability for deferred sales charge (4) (3,339) (3,386) (3,343) (3,355)
________ ________ ________ ________
Net assets $143,197 $145,219 $143,380 $143,856
======== ======== ======== ========
Units outstanding 14,840 15,050 14,859 14,909
ANALYSIS OF NET ASSETS
Cost to investors (5) $148,406 $150,501 $148,595 $149,089
Less maximum sales charge (5) (4,823) (4,891) (4,829) (4,845)
Less estimated reimbursement to Sponsor
for organization costs (3) (386) (391) (386) (388)
________ ________ ________ ________
Net assets $143,197 $145,219 $143,380 $143,856
======== ======== ======== ========
______________
<FN>
See "Notes to Statements of Net Assets" on page 11.
</FN>
</TABLE>
Page 9
Statements of Net Assets (cont'd.)
FT 378
At the Opening of Business on the
Initial Date of Deposit-November 16, 1999
<TABLE>
<CAPTION>
Financial Services Internet Select Pharmaceutical Technology
Select Portfolio Portfolio Select Portfolio Select Portfolio
Series Series Series Series
__________ _______________ ______________ ______________
<S> <C> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $149,024 $147,625 $148,416 $146,996
Less liability for reimbursement to Sponsor
for organization costs (3) (391) (388) (390) (386)
Less liability for deferred sales charge (4) (3,387) (3,355) (3,373) (3,341)
________ ________ ________ ________
Net assets $145,246 $143,882 $144,653 $143,269
======== ======== ======== ========
Units outstanding 15,053 14,912 14,991 14,848
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,529 $149,116 $149,915 $148,481
Less maximum sales charge (5) (4,892) (4,846) (4,872) (4,826)
Less estimated reimbursement to Sponsor
for organization costs (3) (391) (388) (390) (386)
________ ________ ________ ________
Net assets $145,246 $143,882 $144,653 $143,269
======== ======== ======== ========
<FN>
______________
See "Notes to Statements of Net Assets" on page 11.
</FN>
</TABLE>
Page 10
Statements of Net Assets (cont'd.)
FT 378
At the Opening of Business on the
Initial Date of Deposit-November 16, 1999
<TABLE>
<CAPTION>
e-Business
Portfolio
Series
______________
<S> <C>
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $147,109
Less liability for reimbursement to Sponsor for organization costs (3) (334)
Less liability for deferred sales charge (4) (5,201)
________
Net assets $141,574
========
Units outstanding 14,859
ANALYSIS OF NET ASSETS
Cost to investors (5) $148,595
Less maximum sales charge (5) (6,687)
Less estimated reimbursement to Sponsor for organization costs (3) (334)
________
Net assets $141,574
========
_____________
<FN>
NOTES TO STATEMENTS OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit issued by The Chase Manhattan Bank,
of which $1,800,000 will be allocated among each of the nine Trusts in
FT 378, has been deposited with the Trustee as collateral, covering the
monies necessary for the purchase of the Securities according to their
purchase contracts.
(3) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trusts. These costs have been estimated at $.0260 per
Unit for each Select Portfolio Series and $.0225 per Unit for the e-
Business Portfolio Series. A payment will be made at 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 of a Trust are greater than the
estimated amount, only the estimated organization costs added to the
Public Offering Price will be reimbursed to the Sponsor and deducted
from the assets of such Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions of $.225 per Unit in the case of each Select Portfolio
Series, or $.35 per Unit in the case of the e-Business Portfolio Series,
payable to us in five equal monthly installments beginning on June 20,
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 October
20, 2000. If you redeem your Units before October 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 includes a maximum sales charge
(comprised of an initial sales charge and a deferred sales charge)
computed at the rate of 3.25% of the Public Offering Price per Unit for
each Select Portfolio Series (equivalent to 3.283% of the net amount
invested, exclusive of the deferred sales charge) or 4.50% of the Public
Offering Price per Unit for the e-Business Portfolio Series (equivalent
to 4.545% of the net amount invested, exclusive of the deferred sales
charge), assuming no reduction of sales charge as set forth under
"Public Offering."
</FN>
</TABLE>
Page 11
Schedule of Investments
Bandwidth Select Portfolio Series
FT 378
At the Opening of Business on the
Initial Date of Deposit-November 16, 1999
<TABLE>
<CAPTION>
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_________ _____________________________________ _________ ______ _________
<S> <C> <C> <C> <C>
Communications Services
_____________________
71 AT ALLTEL Corporation 4% $ 83.438 $ 5,924
129 T AT&T Corp. 4% 46.000 5,934
94 BEL Bell Atlantic Corporation 4% 63.375 5,957
129 BLS BellSouth Corporation 4% 45.938 5,926
78 LVLT Level 3 Communications, Inc. 4% 74.563 5,816
67 WCOM MCI WorldCom, Inc. 4% 87.875 5,888
154 QWST Qwest Communications International Inc. 4% 38.688 5,958
117 SBC SBC Communications Inc. 4% 50.938 5,960
Data Networking/Communications Equipment
_________________________________________
121 ADCT ADC Telecommunications, Inc. 4% 48.688 5,891
68 AMCC Applied Micro Circuits Corporation 4% 84.500 5,746
34 BRCM Broadcom Corporation (Class A) 4% 173.063 5,884
72 CSCO Cisco Systems, Inc. 4% 82.750 5,958
48 CMVT Comverse Technology, Inc. 4% 123.125 5,910
93 CNXT Conexant Systems, Inc. 4% 60.375 5,615
65 CMTN Copper Mountain Networks, Inc. 4% 91.063 5,919
214 ECIL ECI Telecom Limited (3) 4% 27.625 5,912
30 JDSU JDS Uniphase Corporation 4% 195.000 5,850
79 LU Lucent Technologies Inc. 4% 74.125 5,856
79 NT Nortel Networks Corporation (3) 4% 75.000 5,925
54 PMCS PMC-Sierra, Inc. (3) 4% 107.563 5,808
86 TLAB Tellabs, Inc. 4% 69.125 5,945
115 VTSS Vitesse Semiconductor Corporation 4% 51.750 5,951
Wireless Communications
_____________________
52 MOT Motorola, Inc. 4% 115.000 5,980
49 NOK Nokia Oy (ADR) 4% 120.188 5,889
15 QCOM QUALCOMM Incorporated 4% 368.000 5,520
______ _________
Total Investments 100% $146,922
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 20.
</FN>
</TABLE>
Page 12
Schedule of Investments
Biotechnology Select Portfolio Series
FT 378
At the Opening of Business on the Initial Date of Deposit-November 16,
1999
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of
of Ticker Symbol and Offering Value per Securities to
Shares Name of Issuer of Securities (1) Price Share the Trust (2)
______ _______________________________________ __________ ______ _________
<S> <C> <C> <C> <C>
Biotech
_______
61 AFFX Affymetrix, Inc. 3.39% $ 82.750 $ 5,048
55 AMGN Amgen Inc. 3.31% 89.750 4,936
199 BCHE BioChem Pharma Inc. (3) 3.34% 25.000 4,975
70 BGEN Biogen, Inc. 3.33% 70.875 4,961
447 BTGC Bio-Technology General Corp. 3.34% 11.125 4,973
116 CRA Celera Genomics 3.32% 42.625 4,945
166 CHIR Chiron Corporation 3.31% 29.750 4,938
156 ENZN Enzon, Inc. 3.49% 33.375 5,207
68 DNA Genentech, Inc. 3.27% 71.750 4,879
124 GENZ Genzyme Corporation (General Division) 3.34% 40.125 4,975
54 HGSI Human Genome Sciences, Inc. 3.28% 90.375 4,880
43 IDPH IDEC Pharmaceuticals Corporation 3.33% 115.375 4,961
80 IMNX Immunex Corporation 3.36% 62.563 5,005
193 IVGN Invitrogen Corporation 3.34% 25.813 4,982
48 MEDI MedImmune, Inc. 3.31% 102.688 4,929
62 MLNM Millennium Pharmaceuticals, Inc. 3.32% 79.750 4,945
128 PDLI Protein Design Labs, Inc. 3.32% 38.688 4,952
107 TKTX Transkaryotic Therapies, Inc. 3.38% 47.125 5,042
Pharmaceuticals
_____________
90 AHP American Home Products Corporation (4) 3.38% 55.875 5,029
64 BMY Bristol-Myers Squibb Company 3.29% 76.500 4,896
84 GLX Glaxo Wellcome Plc (ADR) 3.30% 58.438 4,909
48 JNJ Johnson & Johnson 3.33% 103.500 4,968
66 LLY Eli Lilly and Company 3.27% 73.875 4,876
66 MRK Merck & Co., Inc. 3.33% 75.188 4,962
64 NVTSY Novartis AG (ADR) 3.32% 77.300 4,947
142 PFE Pfizer Inc. 3.34% 35.000 4,970
42 ROHHY Roche Holdings AG (ADR) 3.37% 119.610 5,024
90 SGP Schering-Plough Corporation 3.36% 55.563 5,001
72 SBH SmithKline Beecham Plc (ADR) 3.33% 68.875 4,959
53 WLA Warner-Lambert Company (4) 3.30% 92.875 4,922
______ ________
Total Investments 100% $148,996
====== ========
_________________
<FN>
See "Notes to Schedules of Investments" on page 20.
</FN>
</TABLE>
Page 13
Schedule of Investments
e-BUSINESS SELECT PORTFOLIO SERIES
FT 378
At the Opening of Business on the
Initial Date of Deposit-November 16, 1999
<TABLE>
<CAPTION>
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_______ _______________________________________ __________ ______ ________
<S> <C> <C> <C> <C>
Horizontal Portals
__________________
39 AOL America Online, Inc. 4% $148.750 $ 5,801
28 ARBA Ariba, Inc. 4% 210.000 5,880
20 CMRC Commerce One, Inc. 4% 295.000 5,900
52 PPRO PurchasePro.com, Inc. 4% 116.250 6,045
63 VERT VerticalNet, Inc. 4% 93.000 5,859
29 YHOO Yahoo! Inc. 4% 205.000 5,945
Infrastructure
______________
66 BVSN BroadVision, Inc. 4% 89.375 5,899
48 CHKP Check Point Software Technologies Ltd. (3) 4% 122.188 5,865
21 ISLD Digital Island 4% 49.438 5,982
62 EXDS Exodus Communications, Inc. 4% 92.875 5,758
78 LVLT Level 3 Communications, Inc. 4% 74.563 5,816
67 WCOM MCI WorldCom, Inc. 4% 87.875 5,888
68 MSFT Microsoft Corporation 4% 87.000 5,916
93 SEBL Siebel Systems, Inc. 4% 62.813 5,841
34 VRSN VeriSign, Inc. 4% 172.375 5,861
Procurement
___________
72 CSCO Cisco Systems, Inc. 4% 82.750 5,958
46 DELL Dell Computer Corporation 4% 40.875 5,968
62 IBM International Business Machines Corporation 4% 93.938 5,824
72 ITWO i2 Technologies, Inc. 4% 82.500 5,940
91 ORCL Oracle Corporation 4% 64.063 5,830
Venture Capital
_______________
58 CMGI CMGI Inc. 4% 101.250 5,872
38 ICGE Internet Capital Group, Inc. 4% 156.000 5,928
Vertical Portals
_______________
89 CMDX Chemdex Corporation 4% 65.750 5,852
155 HLTH Healtheon Corporation 4% 37.875 5,871
83 PCOR pcOrder.com, Inc. 4% 70.000 5,810
______ ________
Total Investments 100% $147,109
====== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 20.
</FN>
</TABLE>
Page 14
Schedule of Investments
e-Tail Select Portfolio Series
FT 378
At the Opening of Business on the
Initial Date of Deposit-November 16, 1999
<TABLE>
<CAPTION>
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_______ _______________________________________ __________ ______ ________
<S> <C> <C> <C> <C>
Access Providers & Portals
______________________
129 T AT&T Corp. 4% $ 46.000 $ 5,934
39 AOL America Online, Inc. 4% 148.750 5,801
67 WCOM MCI WorldCom, Inc. 4% 87.875 5,888
154 QWST Qwest Communications International Inc. 4% 38.688 5,958
29 YHOO Yahoo! Inc. 4% 205.000 5,945
e-Tailers
________
80 AMZN Amazon.com, Inc. 4% 73.500 5,880
101 CDWC CDW Computer Centers, Inc. 4% 59.125 5,972
146 DELL Dell Computer Corporation 4% 40.875 5,968
42 EBAY eBay Inc. 4% 140.688 5,909
158 GPS The Gap, Inc. 4% 37.875 5,984
71 GTW Gateway Inc. 4% 82.500 5,857
155 IBI Intimate Brands, Inc. 4% 38.500 5,967
138 SCH The Charles Schwab Corporation 4% 43.250 5,968
98 WMT Wal-Mart Stores, Inc. 4% 58.938 5,776
Financial/Transactional Services
______________________
38 AXP American Express Company 4% 157.250 5,975
118 COF Capital One Financial Corporation 4% 50.188 5,922
132 FDC First Data Corporation 4% 45.250 5,973
Internet Infrastructure
______________________
66 BVSN BroadVision, Inc. 4% 89.375 5,899
72 CSCO Cisco Systems, Inc. 4% 82.750 5,958
73 EMC EMC Corporation 4% 80.188 5,854
62 EXDS Exodus Communications, Inc. 4% 92.875 5,758
79 INTC Intel Corporation 4% 74.063 5,851
68 MSFT Microsoft Corporation 4% 87.000 5,916
91 ORCL Oracle Corporation 4% 64.063 5,830
49 SUNW Sun Microsystems, Inc. 4% 119.500 5,856
______ ________
Total Investments 100% $147,599
====== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 20.
</FN>
</TABLE>
Page 15
Schedule of Investments
Financial Services Select Portfolio Series
FT 378
At the Opening of Business on the Initial Date of Deposit-November 16,
1999
<TABLE>
<CAPTION>
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_______ _______________________________________ __________ ______ ________
<S> <C> <C> <C> <C>
Banks & Thrifts
_________________
75 BAC Bank of America Corporation 3.31% $ 65.750 $ 4,931
206 COFI Charter One Financial, Inc. 3.33% 24.063 4,957
60 CMB The Chase Manhattan Corporation 3.33% 82.750 4,965
175 FSR Firstar Corporation 3.33% 28.375 4,966
118 FLT Fleet Boston Corporation 3.35% 42.375 5,000
65 STT State Street Corporation 3.36% 77.125 5,013
150 WM Washington Mutual, Inc. 3.32% 33.000 4,950
105 WFC Wells Fargo Company 3.33% 47.250 4,961
Financial Services
_________________
32 AXP American Express Company 3.38% 157.250 5,032
98 COF Capital One Financial Corporation 3.30% 50.188 4,919
89 C Citigroup Inc. 3.33% 55.688 4,956
159 CCR Countrywide Credit Industries, Inc. 3.27% 30.688 4,879
71 FNM Fannie Mae 3.32% 69.750 4,952
95 FRE Freddie Mac 3.35% 52.563 4,994
113 HI Household International, Inc. 3.35% 44.125 4,986
80 ING ING Groep N.V. (ADR) 3.34% 62.313 4,985
182 KRB MBNA Corporation 3.34% 27.313 4,971
61 PVN Providian Financial Corporation 3.35% 81.750 4,987
Insurance
__________
96 AFL AFLAC Incorporated 3.39% 52.688 5,058
142 AXF AXA Financial, Inc. 3.27% 34.313 4,873
173 ALL The Allstate Corporation 3.32% 28.625 4,952
47 AIG American International Group, Inc. 3.29% 104.188 4,897
86 CB The Chubb Corporation 3.29% 57.063 4,907
55 PGR The Progressive Corporation 3.32% 89.875 4,943
Investment Services
_________________
115 NITE Knight/Trimark Group, Inc. (Class A) 3.49% 45.250 5,204
62 LEH Lehman Brothers Holdings Inc. 3.31% 79.500 4,929
60 MER Merrill Lynch & Co., Inc. 3.33% 82.688 4,961
41 MWD Morgan Stanley Dean Witter & Co. 3.33% 121.063 4,964
134 TROW T. Rowe Price Associates, Inc. 3.33% 37.000 4,958
115 SCH The Charles Schwab Corporation 3.34% 43.250 4,974
______ _________
Total Investments 100% $149,024
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 20.
</FN>
</TABLE>
Page 16
Schedule of Investments
Internet Select Portfolio Series
FT 378
At the Opening of Business on the Initial Date of Deposit-November 16,
1999
<TABLE>
<CAPTION>
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_______ _______________________________________ __________ ______ ________
<S> <C> <C> <C> <C>
Access/Information Providers
________________________
107 T AT&T Corp. 3.33% $ 46.000 $ 4,922
32 AOL America Online, Inc. 3.23% 148.750 4,760
56 WCOM MCI WorldCom, Inc. 3.33% 87.875 4,921
128 QWST Qwest Communications International Inc. 3.36% 38.688 4,952
Data Networking/Communications Equipment
____________________________________
60 CSCO Cisco Systems, Inc. 3.36% 82.750 4,965
54 CMTN Copper Mountain Networks, Inc. 3.33% 91.063 4,917
66 LU Lucent Technologies Inc. 3.31% 74.125 4,892
66 NT Nortel Networks Corporation (3) 3.35% 75.000 4,950
45 PMCS PMC-Sierra, Inc. (3) 3.28% 107.563 4,840
72 TLAB Tellabs, Inc. 3.37% 69.125 4,977
96 VTSS Vitesse Semiconductor Corporation 3.37% 51.750 4,968
Computers & Peripherals
_____________________
121 DELL Dell Computer Corporation 3.35% 40.875 4,946
61 EMC EMC Corporation 3.31% 80.188 4,891
60 GTW Gateway Inc. 3.35% 82.500 4,950
66 HWP Hewlett-Packard Company 3.34% 74.625 4,925
66 INTC Intel Corporation 3.31% 74.063 4,888
52 IBM International Business Machines Corporation 3.31% 93.938 4,885
41 SUNW Sun Microsystems, Inc. 3.32% 119.500 4,900
Internet Content
_____________
48 CMGI CMGI Inc. 3.29% 101.250 4,860
31 ICGE Internet Capital Group, Inc. 3.28% 156.000 4,836
52 TMPW TMP Worldwide Inc. 3.32% 94.188 4,898
24 YHOO Yahoo! Inc. 3.33% 205.000 4,920
Online Brokerage
______________
115 NITE Knight/Trimark Group, Inc. (Class A) 3.53% 45.250 5,204
115 SCH The Charles Schwab Corporation 3.37% 43.250 4,974
Software
_______
55 BVSN BroadVision, Inc. 3.33% 89.375 4,916
40 CHKP Check Point Software Technologies Ltd. (3) 3.31% 122.188 4,888
52 EXDS Exodus Communications, Inc. 3.27% 92.875 4,829
148 INTU Intuit Inc. 3.40% 33.938 5,023
57 MSFT Microsoft Corporation 3.36% 87.000 4,959
76 ORCL Oracle Corporation 3.30% 64.063 4,869
______ _________
Total Investments 100% $147,625
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 20.
</FN>
</TABLE>
Page 17
Schedule of Investments
Pharmaceutical Select Portfolio Series
FT 378
At the Opening of Business on the Initial Date of Deposit-November 16,
1999
<TABLE>
<CAPTION>
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_______ _______________________________________ __________ ______ ________
<S> <C> <C> <C> <C>
202 ABT Abbott Laboratories 5% $ 36.563 $ 7,386
82 AMGN Amgen Inc. 5% 89.750 7,360
298 BCHE BioChem Pharma Inc. (3) 5% 25.000 7,450
105 BGEN Biogen, Inc. 5% 70.875 7,442
96 BMY Bristol-Myers Squibb Company 5% 76.500 7,344
249 CHIR Chiron Corporation 5% 29.750 7,408
328 ELN Elan Corporation Plc (ADR) 5% 22.813 7,483
186 GENZ Genzyme Corporation (General Division) 5% 40.125 7,463
126 GLX Glaxo Wellcome Plc (ADR) 5% 58.438 7,363
65 IDPH IDEC Pharmaceuticals Corporation 5% 115.375 7,499
72 JNJ Johnson & Johnson 5% 103.500 7,452
206 JMED Jones Pharma Incorporated 5% 35.875 7,390
99 LLY Eli Lilly and Company 5% 73.875 7,314
99 MRK Merck & Co., Inc. 5% 75.188 7,444
95 NVTSY Novartis AG (ADR) 5% 77.300 7,343
214 PFE Pfizer Inc. 5% 35.000 7,490
62 ROHHY Roche Holdings AG (ADR) 5% 119.610 7,416
135 SGP Schering-Plough Corporation 5% 55.563 7,501
108 SBH SmithKline Beecham Plc (ADR) 5% 68.875 7,438
80 WLA Warner-Lambert Company (4) 5% 92.875 7,430
______ _________
Total Investments 100% $148,416
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 20.
</FN>
</TABLE>
Page 18
Schedule of Investments
Technology Select Portfolio Series
FT 378
At the Opening of Business on the Initial Date of Deposit-November 16,
1999
<TABLE>
<CAPTION>
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_______ _______________________________________ __________ ______ ________
<S> <C> <C> <C> <C>
Computers & Peripherals
_____________________
146 DELL Dell Computer Corporation 4% $ 40.875 $ 5,968
73 EMC EMC Corporation 4% 80.188 5,854
71 GTW Gateway Inc. 4% 82.500 5,858
79 HWP Hewlett-Packard Company 4% 74.625 5,895
62 IBM International Business Machines Corporation 4% 93.938 5,824
69 SLR Solectron Corporation 4% 85.688 5,912
49 SUNW Sun Microsystems, Inc. 4% 119.500 5,855
Computer Software & Services
___________________________
85 BMCS BMC Software, Inc. 4% 68.938 5,860
48 CHKP Check Point Software Technologies Ltd. (3) 4% 122.188 5,865
190 CPWR Compuware Corporation 4% 31.438 5,973
68 MSFT Microsoft Corporation 4% 87.000 5,916
91 ORCL Oracle Corporation 4% 64.063 5,830
Data Networking/Communications Equipment
___________________________________
72 CSCO Cisco Systems, Inc. 4% 82.750 5,958
79 LU Lucent Technologies Inc. 4% 74.125 5,856
49 NOK Nokia Oy (ADR) 4% 120.188 5,889
79 NT Nortel Networks Corporation (3) 4% 75.000 5,925
15 QCOM QUALCOMM Incorporated 4% 368.000 5,520
86 TLAB Tellabs, Inc. 4% 69.125 5,945
Semiconductors & Semiconductor Equipment
___________________________________
93 ALTR Altera Corporation 4% 63.500 5,906
56 AMAT Applied Materials, Inc. 4% 105.250 5,894
79 INTC Intel Corporation 4% 74.063 5,851
70 MXIM Maxim Integrated Products, Inc. 4% 84.563 5,919
48 QLGC QLogic Corporation 4% 122.438 5,877
60 TXN Texas Instruments Incorporated 4% 98.250 5,895
115 VTSS Vitesse Semiconductor Corporation 4% 51.750 5,951
______ _________
Total Investments 100% $146,996
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 20.
</FN>
</TABLE>
Page 19
Schedule of Investments
e-BUSINESS PORTFOLIO SERIES
FT 378
At the Opening of Business on the
Initial Date of Deposit-November 16, 1999
<TABLE>
<CAPTION>
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price Share the Trust (2)
_______ _______________________________________ __________ ______ ________
<S> <C> <C> <C> <C>
Horizontal Portals
__________________
39 AOL America Online, Inc. 4% $148.750 $ 5,801
28 ARBA Ariba, Inc. 4% 210.000 5,880
20 CMRC Commerce One, Inc. 4% 295.000 5,900
52 PPRO PurchasePro.com, Inc. 4% 116.250 6,045
63 VERT VerticalNet, Inc. 4% 93.000 5,859
29 YHOO Yahoo! Inc. 4% 205.000 5,945
Infrastructure
______________
66 BVSN BroadVision, Inc. 4% 89.375 5,899
48 CHKP Check Point Software Technologies Ltd. (3) 4% 122.188 5,865
121 ISLD Digital Island 4% 49.438 5,982
62 EXDS Exodus Communications, Inc. 4% 92.875 5,758
78 LVLT Level 3 Communications, Inc. 4% 74.563 5,816
67 WCOM MCI WorldCom, Inc. 4% 87.875 5,888
68 MSFT Microsoft Corporation 4% 87.000 5,916
93 SEBL Siebel Systems, Inc. 4% 62.813 5,841
34 VRSN VeriSign, Inc. 4% 172.375 5,861
Procurement
____________
72 CSCO Cisco Systems, Inc. 4% 82.750 5,958
146 DELL Dell Computer Corporation 4% 40.875 5,968
62 IBM International Business Machines Corporation 4% 93.938 5,824
72 ITWO i2 Technologies, Inc. 4% 82.500 5,940
91 ORCL Oracle Corporation 4% 64.063 5,830
Venture Capital
_______________
58 CMGI CMGI Inc. 4% 101.250 5,872
38 ICGE Internet Capital Group, Inc. 4% 156.000 5,928
Vertical Portals
________________
89 CMDX Chemdex Corporation 4% 65.750 5,852
155 HLTH Healtheon Corporation 4% 37.875 5,871
83 PCOR pcOrder.com, Inc. 4% 70.000 5,810
______ ________
Total Investments 100% $147,109
====== ========
_____________
<FN>
NOTES TO SCHEDULES OF INVESTMENTS
(1) All Securities are represented by regular way contracts to purchase
such Securities which are backed by an irrevocable letter of credit
deposited with the Trustee. We entered into purchase contracts for the
Securities on November 15, 1999. Each Select Portfolio Series has a
Mandatory Termination Date of May 16, 2001. The e-Business Portfolio
Series has a Mandatory Termination Date of October 15, 2004.
(2) The cost of the Securities to a Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
determined by the closing sale prices of the listed Securities and the
ask prices of the over-the-counter traded Securities at the Evaluation
Page 20
Time 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 profit or
loss (which is the difference between the cost of the Securities to us
and the cost of the Securities to a Trust) are set forth below:
Cost of
Securities Profit
to Sponsor (Loss)
_________ _______
Bandwidth Select Portfolio Series $147,059 $(137)
Biotechnology Select Portfolio Series 149,114 (118)
e-Business Select Portfolio Series 147,269 (160)
e-Tail Select Portfolio Series 147,655 (56)
Financial Services Select Portfolio Series 149,093 (69)
Internet Select Portfolio Series 147,669 (44)
Pharmaceutical Select Portfolio Series 148,544 (128)
Technology Select Portfolio Series 147,031 (35)
e-Business Portfolio Series 147,269 (160)
(3) This Security represents the common stock of a foreign company which
trades directly on a U.S. national securities exchange.
(4) American Home Products Corporation ("American Home") has recently
announced plans to merge with Warner-Lambert Company ("Warner-Lambert")
to create a new company to be called AmericanWarner Inc.
("AmericanWarner"). As per the terms of the merger agreement, each
shareholder of American Home will receive 1 share of AmericanWarner for
each share of American Home held; and each shareholder of Warner-Lambert
will receive 1.4919 shares of AmericanWarner for each share of Warner-
Lambert held. As a result of this expected transaction, it is
anticipated that the Biotechnology Select Portfolio Series will receive
shares of common stock of AmericanWarner in exchange for the shares of
both American Home and Warner-Lambert which it holds and it is
anticipated that the Pharmaceutical Select Portfolio Series will receive
shares of common stock of AmericanWarner in exchange for the shares of
Warner-Lambert which it holds. The transaction is subject to the
approval of shareholders of both companies.
</FN>
</TABLE>
Page 21
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created several similar
yet separate series of a unit investment trust which we have named the
FT Series. We designate each of these series of the FT Series with a
different series number. Each of the following is a separate portfolio,
or series, of FT 378:
- - Bandwidth Select Portfolio Series
- - Biotechnology Select Portfolio Series
- - e-Business Select Portfolio Series
- - e-Tail Select Portfolio Series
- - Internet Select Portfolio Series
- - Financial Services Select Portfolio Series
- - Pharmaceutical Select Portfolio Series
- - Technology Select Portfolio Series
- - e-Business Portfolio Series
YOU MAY GET MORE SPECIFIC DETAILS CONCERNING THE NATURE, STRUCTURE AND
RISKS OF THIS PRODUCT IN AN "INFORMATION SUPPLEMENT" BY CALLING THE
TRUSTEE AT 1-800-682-7520.
Mandatory Termination Date.
Each Trust will terminate on the Mandatory Termination Date set forth in
the "Summary of Essential Information" for each Trust. Each 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 among Nike Securities L.P., as Sponsor, The Chase Manhattan
Bank as Trustee and First Trust Advisors L.P. as Portfolio Supervisor
and Evaluator, governs the operation of the Trusts.
How We Created the Trusts.
On the Initial Date of Deposit, we deposited contracts to buy the
Securities with the Trustee and in turn, the Trustee delivered documents
to us representing our ownership of the Trusts in the form of units
("Units").
With our deposit of Securities on the Initial Date of Deposit we
established a percentage relationship among the Securities in each
Trust's portfolio, as stated under "Schedule of Investments" for each
Trust. After the Initial Date of Deposit, we may deposit additional
Securities in the Trusts, or cash (including a letter of credit) with
instructions to buy more Securities to create new Units for sale. If we
create additional Units, we will attempt, to the extent practicable, to
maintain the percentage relationship established among the Securities on
the Initial Date of Deposit, and not the percentage relationship
existing on the day we are creating Units, since the two may differ.
This difference may be due to the sale, redemption or liquidation of any
of the Securities.
Since the prices of the Securities will fluctuate daily, the ratio of
Securities in the Trusts, on a market value basis, will also change
daily. The portion of Securities represented by each Unit will not
change as a result of the deposit of additional Securities or cash in a
Trust. If we deposit cash, you and new investors may experience a
dilution of your investment. This is because prices of Securities will
fluctuate between the time of the cash deposit and the purchase of the
Securities, and because the Trusts pay the associated brokerage fees. To
reduce this dilution, the Trusts will try to buy the Securities as close
to the Evaluation Time and as close to the evaluation price as possible.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may retain and pay us (or our affiliate) to act as agent for the
Trusts to buy Securities. If we or an affiliate of ours act as agent to
the Trusts, we will be subject to the restrictions under the Investment
Company Act of 1940, as amended.
We cannot guarantee that a Trust will keep its present size and
composition for any length of time. Securities may periodically be sold
under certain circumstances, and the proceeds from these sales will be
used to meet Trust obligations or distributed to Unit holders, but will
not be reinvested. However, Securities will not be sold to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if they 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 Trusts. As the holder of the Securities, the
Trustee will vote all of the Securities and will do so based on our
instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in a Trust fails, unless we can purchase
substitute Securities ("Replacement Securities"), we will refund to you
that portion of the purchase price and sales charge resulting from the
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failed contract on the next Income Distribution Date. Any Replacement
Security a Trust acquires will be identical to those from the failed
contract.
Portfolios
Objectives.
The objective of each Trust is to provide investors with the potential
for above-average capital appreciation through an investment in a
diversified portfolio of common stocks of companies in the industry
sector or investment focus for which the Trust is named. A diversified
portfolio helps to offset the risks normally associated with such an
investment, although it does not eliminate them entirely. The companies
selected for the Trusts have been researched and evaluated using
database screening techniques, fundamental analysis, and the judgment of
the Sponsor's research analysts.
Bandwidth Select Portfolio Series consists of a portfolio of common
stocks of telecommunications companies which are focusing on bandwidth
technologies. The term bandwidth refers to the amount of information
that can be transmitted from one user to another in a given amount of
time. The speed at which these signals travel is often as important to
the end-user as the information that is being transmitted. The growing
demand for bandwidth is being driven by the surge in the volume and
complexity of data communications on the Internet. For example, it would
take more bandwidth to download a video game off the Internet in one
second than a page of text.
Now that the Internet infrastructure is firmly in place, the demand for
bandwidth should continue to grow as more people access the Web
worldwide, and as telecommunications service providers begin to mass
market their newer and faster broadband systems.
The following factors support our positive outlook for the companies in
this portfolio:
- - Communications networks presently carry nearly 30 times more voice
traffic than data. In light of the growth in Internet usage, data
traffic is expected to surpass voice communications in the years ahead.
- - Wireless communications is now the fastest growing segment of the
communications equipment market. The demand for wireless products and
services should continue to grow as analog networks are upgraded to
digital systems. Digital signals will accommodate wireless data
communications and potentially increase demand for bandwidth.
- - The transition from copper wiring to fiber-optics is occurring at a
brisk pace. In 1998, it is estimated that over 20 million miles of fiber
cables were installed across the United States.
- - Internet access revenues are expected to shift from independent
Internet service providers to telecom and cable companies.
Deregulation. The U.S. Telecommunications Act of 1996 and the 1997
Telecommunications Agreement, passed by the World Trade Organization,
have opened markets domestically and internationally to encourage
competition and capital investment. New service providers, such as Level
3 Communications, are investing aggressively in network equipment.
Broadband Systems. The future of high-speed access to the Internet lies
in Digital Subscriber Lines (DSL) and cable modems. A new DSL technology
standard, known as the G.Lite, will allow for high-speed Internet access
concurrent with normal telephone service. The technology can be
installed directly by consumers into their PCs, so there will be no
added cost to the telecommunications carriers.
Communications Equipment. The demand for value-added services, like high-
speed Internet access, should continue to fuel demand for more bandwidth
and communications equipment. On a worldwide basis, demand for
communications equipment was estimated at approximately $250 billion in
1997. With the level of competition intensifying, telecommunications
companies have the potential to spend more on equipment in the future.
Biotechnology Select Portfolio Series consists of a portfolio of common
stocks of biotechnology companies and pharmaceutical companies actively
participating in the biotechnology industry.
The biotechnology industry was founded in the seventies and successfully
launched its first products in the early eighties. By the start of the
nineties, many in the investment community believed that biotechnology
was on the verge of becoming a revolutionary growth industry, somewhat
like the Internet is now. Eventually, however, the demand for biotech
stocks diminished for various reasons, including a limited supply of
products.
As the nineties draw to a close, interest in biotechnology is being
Page 23
reignited thanks to a strong pipeline of promising new medicines. On
average, it takes 10-15 years for a new drug to go from development to
market, and there are currently over 300 products in the late stages of
clinical trials, compared to only 30 back in 1991. Since the first
biotech breakthrough in 1982, which involved genetically engineered
human insulin, another 53 products have come to market. A faster FDA
approval process, an increase in the length of patent protection and
advances in computer technology are improvements which have the
potential to help biotech and pharmaceutical companies expedite the
development and approval of their products and grow their businesses.
Therefore, the outlook for the biotechnology industry has improved due
to a more efficient infrastructure that now incorporates product
development, marketing and distribution.
The following factors support our positive outlook for the biotechnology
industry:
- - The biotechnology industry is projected to generate over $20 billion
in revenues in 1999, approximately a 21% increase over 1998.
- - Currently, there are approximately 140 pharmaceutical and
biotechnology companies testing biotechnology products. The costs
associated with developing these products can range from $250-300
million per drug. The leading biotech companies commit 15-50% of total
revenues to research and development. Such excessive costs have inspired
many biotech firms to seek capital investment from pharmaceutical
companies through licensing agreements and other collaborations. By
combining resources, biotech firms not only receive the capital that
they need to operate, but also gain access to marketing and distribution
channels. Nearly 1,000 such deals have been made since 1993.
- - We believe that future growth prospects for the industry are bright
due to the potential for an increased demand from an aging population
that is facing longer life expectancies.
- - The industry is focusing on society's most pressing healthcare needs.
For example, approximately 151 of the 350 products in the developmental
stage are related to the treatment of cancer, which is currently the
second leading cause of death in the United States, after cardiovascular
disease. That constitutes more than 40% of the new treatments in
development.
e-Business Select Portfolio Series and e-Business Portfolio Series each
consist of a portfolio of common stocks of companies that are either
marketing their goods and services on the Internet or selling their
products and services to those companies transacting business on the
Web. e-Business Select Portfolio Series has a Mandatory Termination Date
of approximately 18 months whereas the e-Business Portfolio Series has a
Mandatory Termination Date of approximately five years.
Until recently, the media has focused its attention primarily on
companies that are engaging in business to consumer e-commerce. It is
now becoming apparent, however, that business-to-business e-commerce is
growing at a much faster rate than the more consumer driven market.
The following factors support our positive outlook for business-to-
business e-commerce:
- - The Internet economy, though still in its formative stages, generated
$300 billion in revenue in the U.S in 1998. To put this new economy into
perspective, the auto and telecommunications industries, far more
mature, generated $350 and $270 billion of revenue respectively, over
the same period.
- - It is estimated that as e-commerce evolves, business-to-business
revenues have the potential to outpace business to consumer revenues by
approximately tenfold. Business to consumer companies may dominate the
total number of e-commerce companies (approximately 64%, compared to
approximately 36% providing business-to-business services in 1998), but
the majority of total revenue is being generated by business to business
e-commerce (approximately 23% of total revenue for business to consumer
compared to approximately 77% of total revenue for business-to-business).
- - The revenues generated by e-commerce are only half the story. The
cost savings associated with transacting business on the Internet could
be substantial. It is estimated that corporations around the world have
the potential to experience an aggregate cost savings in excess of a
trillion dollars over the next several years.
A New Breed Of Middlemen. In the bricks-and-mortar business world they
are known as middlemen, but in the cyber-world they are called
intermediaries. They serve the same purpose, which is to act as market
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makers and help facilitate transactions between businesses.
Intermediaries are essentially network hubs, comparable to airline hubs
that route travelers making connecting flights. They generate revenues
by charging transaction fees for bringing buyers and sellers together.
Intermediaries help make e-Business run faster-better-cheaper.
Technology Makes it Possible. We believe that technology-based
companies, especially those involved in creating the Internet
infrastructure and those that provide access to the Internet, are in an
ideal position to capitalize on the potential growth of business-to-
business e-commerce. More specifically, the emphasis will be on computer
hardware and software companies that design products to improve front
and back-office capabilities, ranging from raw materials procurement to
the delivery of finished goods. It is technology that will allow
companies to communicate effectively in real time with their customers
and suppliers.
No Boundaries. The motivation behind the business-to-business sales
model is to transact business faster-better-cheaper, but it accomplishes
much more. By conducting business online, companies are not only
removing geographical boundaries, both domestically and globally, but
are eliminating many of the boundaries that have long prevented many
smaller companies from engaging in business with their larger
counterparts. As the business-to-business marketplace expands, we
believe that the companies in the e-Business Select Portfolio Series and
e-Business Portfolio Series have the potential to participate in growth
opportunities.
e-Tail Select Portfolio Series consists of a portfolio of common stocks
of retailers that market their goods and services on the Internet and
the technology companies that create the tools to make it possible.
In the past three years, online retail sales have jumped from $1.1
billion in 1996 to approximately $8 billion in 1998. Some companies
believe so strongly in the future of e-tailing that they have abandoned
more traditional business models in favor of a total commitment to e-
commerce, while others are moving quickly to incorporate the Internet
into their existing infrastructures.
The most obvious benefit to companies selling online is that the
Internet provides a new method of product distribution. Because the
Internet allows companies to operate without geographical limitations
and potentially grow their businesses in a cost-effective manner, the
future growth potential of selling goods and services online could
impact more than just the retail industry. We believe that technology-
based companies, especially those involved in creating the Internet
infrastructure and those that provide access to the Internet, are in an
ideal position to capitalize on this growth potential. These companies
include a diversified group of technology companies that are developing
and marketing products and services to help other companies manage their
online businesses more effectively.
Another valuable benefit to engaging in e-commerce is customer
interaction. It is proving to be a very effective way of conducting
marketing research to learn about the buying habits of consumers. In
fact, a recent survey in The Industry Standard stated that more than 50%
of top level executives reported that factors such as data collected for
marketing, improved customer service and the degree of customer
interaction were key elements to the online success of their businesses.
In addition, factors such as cost reduction, sales completed and the
number of Web site hits/visits were also cited as significant.
The following factors support our positive outlook for the online retail
industry:
- - Over 24 million Internet users purchased something online in the
second quarter of 1999, an increase of approximately 10 million over the
second quarter of 1998.
- - It is estimated that there will be a record number of online
purchases this holiday season, with U.S. companies poised to collect a
majority of these e-commerce revenues.
The information technology industry, which includes personal computer
makers, software companies and data networking equipment makers,
generated at least a third of the nation's economic growth between 1995
and 1998.
55% of all Internet-linked machines have been used for e-commerce and
related activities, which include purchases, financial transactions and
shopping.
Like technology, the retail industry has experienced a bit of a
revolution during the nineties. The new buzzword in retail is "value"
and it pertains to consumers demanding higher quality, greater selection
Page 25
and convenience at reasonable prices. Today, the average consumer is
spending less time shopping, but more dollars per visit. We believe the
companies selected are committed to e-commerce and to delivering value
to the consumer.
Financial Services Select Portfolio Series consists of a portfolio of
common stocks of banks and thrifts, financial and investment service
providers and insurance companies. Companies in the financial services
industry continue to prosper as the 1990s draw to a close. Two of the
biggest catalysts cited for the surge in the demand for financial
products and services in recent years are a robust economy and an aging
population.
The U.S. economy is in its ninth year of expansion. The combination of
low interest rates, low inflation and low unemployment has been a boon
for the securities industry, banks, mortgage lenders and credit card
issuers.
With respect to an aging population, nearly three out of ten people in
the United States are baby boomers. As a demographic, they can influence
demand by sheer size alone.
The following factors support our positive outlook for the financial
services industry:
- - A concern of many Americans, especially those nearing retirement, is
the status of Social Security. With government resources vulnerable to
shortfalls, boomers recognize the importance of investing during their
peak earnings years.
- - The commercial banking industry is considered to be as healthy today
as it has ever been. The overcapacity that once prevailed in this
industry has been reduced through mergers and acquisitions.
- - Regulatory changes, such as amendments made to interstate banking
laws and the recently enacted financial-services overhaul legislation,
have opened new markets to banks and other financial services companies
that were previously prohibited by law.
- - An aging population could create higher demand for life and other
insurance products.
The Battle for Consumers. Consumers are becoming increasingly interested
in bundling different financial services from non-traditional sources,
including insurance and brokerage through banks; bank accounts and
credit cards through brokers; and loans through insurance companies.
Cross-Selling Product Lines. Financial services companies are facing
fierce levels of competition in today's marketplace. Regulatory reform
has, in effect, dropped many of the legislative barriers to entry and
has transformed what was once a highly fragmented industry into one that
is more commodity-like. The ability to retain a customer's assets could
hinge on the ability to offer products ranging from savings accounts to
insurance.
New Methods of Distribution. Offering investment products online is a
relatively new concept, but early reports suggest that e-commerce can be
an effective way to attract new customers and cross-sell existing
customers. Wells Fargo, the nation's largest online banker, servicing
approximately one million accounts, is a good example of how financial
services companies are capitalizing on the move towards e-commerce.
Their online customers reportedly maintain higher deposit balances, buy
more products and cost less to service than traditional bank customers.
Industry Leaders Have an Edge. Owning a fixed portfolio of industry
leaders in the financial services sector is worth consideration for a
couple of important reasons. First, implementing a one-stop shopping
strategy is very capital intensive. Second, the need to upgrade
technology is paramount to servicing new product lines and distribution
channels, such as selling online. Many believe these companies are best
positioned to provide consumers with the best products and services in
the new millennium.
Internet Select Portfolio Series consists of a portfolio of common
stocks of technology companies which provide products or services for,
or conduct business on, the Internet.
The number of individuals connecting to the World Wide Web is growing
daily. More people are signing up with Internet access companies, and
still more are upgrading their computers to make Internet linkage
possible. We believe Internet usage will continue to expand and
companies involved in businesses related to the Internet will benefit.
The following factors support our positive outlook for the companies in
the Internet-related industry:
- - More than 58 million adults are online in the United States alone,
and the number of online users is expected to dramatically increase in
the future.
- - A new computer is added to the Internet approximately every four
seconds.
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- - Business-to-business electronic commerce is anticipated to exceed
$291 billion by 2000, up from an estimated $9.5 billion in 1997.
- - Nearly 3,000 new websites are added every day.
- - Improved security measures are helping fuel consumer transactions
over the Web.
- - New technologies are making high-speed data and video connections to
the Internet possible.
- - There has been an increase in consolidation and mergers among
Internet-related companies.
- - Faster, more efficient technology continues to become more affordable.
- - Rising standards of living and more disposable income worldwide make
Internet usage possible for more people.
Pharmaceutical Select Portfolio Series consists of a portfolio of common
stocks of pharmaceutical companies. The pharmaceutical industry
generated over $300 billion in sales worldwide in 1998, nearly $125
billion of which was made by U.S. drugmakers. The industry is highly
competitive and extremely capital intensive. Drugmakers spend in excess
of $21 billion annually on researching and developing new products. The
amount of capital invested in research and development ("R&D") has
nearly doubled every five years since 1970.
There are approximately 78 million baby boomers living in the United
States, some of whom will begin turning 65 after 2010. Currently, it is
estimated that 70% of Americans over the age of 65 suffer from
cardiovascular disease. It is believed that as average life expectancies
increase, the number of people at risk for disease will increase.
The following factors support our positive outlook for the
pharmaceutical industry:
- - Numerous pharmaceutical scientists are currently researching over
1,000 new medicines. Pharmaceutical companies have generated more than
100 new treatments in the last two years.
- - Pharmaceutical companies have staffed up their sales forces to
increase market shares. The top 40 drugmakers currently employ
approximately 59,000 representatives in the United States, up from
34,000 in 1994.
- - Foreign demand for pharmaceuticals is growing, especially in emerging
countries. U.S. drug companies sold an estimated $43 billion abroad in
1998, approximately 54% of total U.S. sales.
- - Managed care providers, especially HMOs, encourage the use of
pharmaceuticals because they are regarded as a relatively inexpensive
form of treatment and are less invasive.
- - Research-based pharmaceutical companies continue to invest record-
setting amounts on research and development. Spending is expected to
increase by 14.1% in 1999 to a new record level of $24.03 billion.
The Food & Drug Administration. In 1997, the Food and Drug
Administration (FDA) relaxed its restrictions on pharmaceutical
companies advertising drugs directly to the public. The FDA, which now
has a faster review process in place, is creating a business environment
that could make it quicker and more economical for some drugmakers to
bring new products to market.
Ad Spending Is On The Rise. Direct-To-Consumer (DTC) advertising totaled
$1.3 billion in 1998. The amount spent on television ads featuring
prescription drugs was $664 million, more than double the amount in
1997. Drugmakers are promoting their products to the public through all
of the major media outlets including television, radio, magazines and
newspapers. Advertising allows companies to educate the public about
diseases and treatments as well as gather information that will help
them target consumers in the future.
Demand Driven By Need. Pharmaceutical companies have initiated a number
of cost-containment measures such as using the Internet to reduce
administrative costs and forging alliances with biotechnology companies
to share expertise and the costs associated with R&D. Ultimately, the
demand for prescription and over-the-counter drugs is driven more by
need than price. An aging population coupled with longer life
expectancies should help support, if not boost, demand for drugs in the
future.
Technology Select Portfolio Series consists of a portfolio of common
stocks of technology companies involved in the manufacturing, sales or
servicing of computers and peripherals, data networking/communications
equipment and software. If you are looking to invest in cutting-edge
technology, you may not need to look any further than the Internet. It
is now estimated that over 100 million people are connected to the Web
Page 27
worldwide. The technology that makes it all possible is developed by
computer, software, networking and communications companies. Now that
the infrastructure is in place, the focus of technology is shifting to e-
commerce.
E-commerce can be divided into two main categories: business-to-consumer
and business-to-business. Business-to-business online revenues totaled
$43 billion in 1998, while business-to-consumer revenues were estimated
to be in the area of $13 billion. The potential of e-commerce is so
great that many computer companies, like IBM, are marketing themselves
as "e-business" companies.
The following factors support our positive outlook for the technology
industry:
- - Half of all U.S. households own a computer. Lower-income households
are buying personal computers at a faster rate than any other segment,
in part because of the introduction of models that retail below $1,000.
- - Approximately 31 million U.S. households are connected to the
Internet. In addition, 28 million offices are connected, an increase of
76% over early 1998.
- - Communications networks presently carry nearly 30 times more voice
traffic than data. In light of the growth in Internet usage, data
traffic is expected to surpass voice communications in the years ahead.
- - Semiconductor sales, tempered in recent years by economic weakness in
Asia, are expected to rebound and experience strong growth in 2000 and
2001.
- - The expanding use of e-commerce is expected to result in significant
cost savings in business-to-consumer transactions.
- - Using the Internet to improve forecasting and replenishment of
products, companies should be able to reduce inventory costs as
suppliers are linked by just-in-time inventory systems.
- - E-commerce should dramatically reduce the amount of time it takes to
process orders. In addition, customer service costs should be reduced
through the use of a Web customer service interface to decrease errors.
Software Solutions. E-commerce is creating demand and opportunity for
software products in many areas including supply-chain management (SCM)
and database software. These software systems can navigate massive
amounts of data to help streamline manufacturing and distribution,
monitor inventories and perform transaction management.
Data Networking. The value of information lies in its application.
Computer networks connect computers and peripheral equipment so that
information can be shared. As e-commerce evolves, the need for
businesses to network with suppliers and customers should create strong
demand for those companies that provide equipment and data networking
services.
Higher Productivity. Technology has played an integral part in the
economic prosperity enjoyed by the United States during the 1990s. It
has helped increase productivity and curb inflation. The Internet should
continue to fuel technological innovation for years to come as
businesses of all sizes go online to increase distributions and boost
efficiency. The Technology Select Portfolio Series invests in companies
that have the potential to benefit from the future growth in e-commerce.
Of course, as with any similar investments, there can be no guarantee
that the objective of the Trusts will be achieved. See "Risk Factors"
for a discussion of the risks of investing in the Trusts.
Risk Factors
Price Volatility. The Trusts invest in common stocks of U.S., and, for
certain Trusts, foreign companies. The value of a Trust's Units will
fluctuate with changes in the value of these common stocks. Common stock
prices fluctuate for several reasons including changes in investors'
perceptions of the financial condition of an issuer or the general
condition of the relevant stock market, or when political or economic
events affecting the issuers occur.
Because the Trusts are not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of any Trust will be positive over any period of time,
especially the relatively short 18-month life of the Select Portfolio
Series, or that you won't lose money. Units of the Trusts are not
deposits of any bank and are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
Certain of the Securities in certain Trusts 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
Page 28
companies as 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.
Bandwidth/Communications Industry. The Bandwidth Select Portfolio Series
consists of telecommunications companies which are focusing on bandwidth
technologies. The market for high technology communications products and
services is characterized by rapidly changing technology, rapid product
obsolescence or loss of patent protection, cyclical market patterns,
evolving industry standards and frequent new product introductions.
Certain communications/bandwidth companies are subject to substantial
governmental regulation, which among other things, regulates permitted
rates of return and the kinds of services that a company may offer. The
communications industry has experienced substantial deregulation in
recent years. Deregulation may lead to fierce competition for market
share and can have a negative impact on certain companies. Competitive
pressures are intense and communications stocks can experience rapid
volatility.
Biotechnology/Pharmaceutical Industries. The Biotechnology Select
Portfolio Series and the Pharmaceutical Select Portfolio Series include
companies involved in drug development and production. Biotech and
pharmaceutical companies are subject to changing government regulation,
including price controls, national health insurance, managed care
regulation and tax incentives or penalties related to medical insurance
premiums, which could have a negative effect on the price and
availability of their products and services. In addition, such companies
face increasing competition from generic drug sales, the termination of
their patent protection for certain drugs and technological advances
which render their products or services obsolete. The research and
development costs required to bring a drug to market are substantial and
may include a lengthy review by the government, with no guarantee that
the product will ever go to market or show a profit. Many of these
companies may not offer certain drugs or products for several years, and
as a result, may have significant losses of revenue and earnings.
e-Commerce Industry (Business to Consumer and Business-to-Business). The
e-Tail Select Portfolio Series includes companies involved in the online
retail industry. General risks of these companies include the general
state of the economy, intense competition and consumer spending trends.
A decline in the economy which results in a reduction of consumers'
disposable income can negatively impact spending habits. Retailers who
sell their products over the Internet have the potential to access more
consumers, but will require the capital to acquire and maintain
sophisticated technology.
The e-Business Select Portfolio Series and the e-Business Portfolio
Series include companies involved with business-to-business online
selling, including companies who are marketing goods and services or
transacting business online. General risks for these companies include
the state of the worldwide economy, intense global competition, and
rapid obsolescence of the utilized technologies and their related
systems, products and services. While business-to-business e-commerce is
evolving rapidly, future demand for individual products and services is
impossible to predict.
E-commerce company stocks have experienced extreme price and volume
fluctuations that are often unrelated to their operating performance.
Many such companies have exceptionally high price-to-earnings ratios
with little or no earnings histories. In addition, numerous e-commerce
companies have only recently begun operations, and may have limited
product lines, markets or financial resources, limited trading histories
and fewer experienced management personnel. Finally, the lack of
barriers to entry suggests a future of intense competition for online
retailers. For additional information regarding the risks associated
with the e-Business Select Portfolio Series, e-Tail Select Portfolio
Series and the e-Business Portfolio Series, see "Risk Factors-Technology
Industry."
Financial Services Industry. The Financial Services Select Portfolio
Series includes banks and thrifts, insurance companies and investment
firms. Banks, thrifts and their holding companies are especially subject
to the adverse effects of economic recession; volatile interest rates;
portfolio concentrations in geographic markets and in commercial and
residential real estate loans; and competition from new entrants in
their fields of business. In addition, banks, thrifts and their holding
Page 29
companies are extensively regulated at both the federal and state level
and may be adversely affected by increased regulations.
Banks and thrifts face increased competition from nontraditional lending
sources as regulatory changes, such as the recently enacted financial-
services overhaul legislation, permit new entrants to offer various
financial products. Technological advances such as the Internet allow
these nontraditional lending sources to cut overhead and permit the more
efficient use of customer data.
Brokerage firms, broker/dealers, investment banks, finance companies and
mutual fund companies are also financial services providers. These
companies compete with banks and thrifts to provide traditional
financial service products, in addition to their traditional services,
such as brokerage and investment advice. In addition, all financial
service companies face shrinking profit margins due to new competitors,
the cost of new technology and the pressure to compete globally.
Companies involved in the insurance industry are engaged in
underwriting, selling, distributing or placing of property and casualty,
life or health insurance. Insurance company profits are affected by many
factors, including interest rate movements, the imposition of premium
rate caps, competition and pressure to compete globally. Property and
casualty insurance profits may also be affected by weather catastrophes
and other disasters. Life and health insurance profits may be affected
by mortality rates. Already extensively regulated, insurance companies'
profits may also be adversely affected by increased government
regulations or tax law changes.
Technology Industry. The e-Business Select Portfolio Series, e-Tail
Select Portfolio Series, Internet Select Portfolio Series, Technology
Select Portfolio Series and e-Business Portfolio Series are concentrated
in Securities issued by companies which are involved in the technology
industry. Technology companies are generally subject to the risks of
rapidly changing technologies; short product life cycles; fierce
competition; aggressive pricing and reduced profit margins; the loss of
patent, copyright and trademark protections; cyclical market patterns;
evolving industry standards and frequent new product introductions.
Technology companies may be smaller and less experienced companies, with
limited product lines, markets or financial resources and fewer
experienced management or marketing personnel. Technology company
stocks, especially those which are Internet-related, have experienced
extreme price and volume fluctuations that are often unrelated to their
operating performance. Also, the stocks of many Internet companies have
exceptionally high price-to-earnings ratios with little or no earnings
histories. For additional information regarding more specific risks
associated with the e-Business Select Portfolio Series, e-Tail Select
Portfolio Series and e-Business Portfolio Series, see "Risk Factors-e-
Commerce Industry."
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain of the companies represented in the Trusts.
In addition, litigation regarding any of the issuers of the Securities,
such as that concerning Microsoft Corporation or of the industries
represented by such issuers, may negatively impact the share prices of
these Securities. We cannot predict what impact any pending or 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
Trusts. However, we are unable to predict what impact the Year 2000
Problem will have on any of the issuers of the Securities, but you
should note that foreign issuers may have greater complications than
other issuers.
Foreign Stocks. Certain of the Securities in certain Trusts are issued
by foreign companies, which makes these Trusts subject to more risks
than if they invested solely in domestic common stocks. These Securities
are either directly listed on a U.S. securities exchange or are in the
form of American Depositary Receipts ("ADRs") which are listed on a U.S.
securities exchange. Risks of foreign common stocks include higher
brokerage costs; different accounting standards; expropriation,
nationalization or other adverse political or economic developments;
currency devaluations, blockages or transfer restrictions; restrictions
on foreign investments and exchange of securities; inadequate financial
information; and lack of liquidity of certain foreign markets.
Page 30
Portfolio Securities Descriptions
Bandwidth Select Portfolio Series.
Communications Services
________________________
ALLTEL Corporation, headquartered in Little Rock, Arkansas, through
subsidiaries, provides wireline local, long-distance, network access and
Internet services; wireless communications and information processing
management services; and advanced applications software. The company
also publishes telephone directories.
AT&T Corp., headquartered in New York, New York, provides voice, data
and video telecommunications services; regional, domestic, international
and local communication transmission services; cellular telephone and
other wireless services; and billing, directory and calling card 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.
BellSouth Corporation, headquartered in Atlanta, Georgia, through its
two wholly-owned subsidiaries, BellSouth Telecommunications, Inc. and
BellSouth Enterprises, Inc., provides wireline telecommunications to
substantial portions of the population in the southeastern United States
including the states of Georgia, Alabama, Florida, Kentucky, Louisiana,
Mississippi, North Carolina, South Carolina and Tennessee. The company
also provides wireless communications, publishes telephone directories
and holds interests in communications ventures overseas.
Level 3 Communications, Inc., headquartered in Broomfield, Colorado,
provides telecommunications and information services, including local,
long distance and data transmission. The company is building the first
international network optimized for Internet Protocol technology. The
network will combine both local and long distance networks, connecting
customers end-to-end across the United States and in Europe and Asia.
MCI WorldCom, Inc., headquartered in Clinton, Mississippi, operates as a
global communications company which provides facilities-based and fully-
integrated local, long distance, international and Internet services in
over 65 countries encompassing the Americas, Europe and the Asia-Pacific
regions. The company also offers wireless and 800 services, calling
cards, private lines and debit cards.
Qwest Communications International Inc., headquartered in Denver,
Colorado, provides broadband Internet-based data, voice and image
communications for businesses and consumers. The company also constructs
and installs fiber optic systems for other communications providers and
its own use.
SBC Communications Inc., headquartered in San Antonio, Texas, provides
landline and wireless telecommunications services and equipment,
directory advertising, publishing and cable television services.
Data Networking/Communications Equipment
_________________________________________
ADC Telecommunications, Inc., headquartered in Minnetonka, Minnesota,
designs, makes and markets a broad range of products and services that
enable its customers to construct and upgrade their telecommunications
networks to support increasing user demand for voice, data and video
services.
Applied Micro Circuits Corporation, headquartered in San Diego,
California, designs, makes and markets high-performance, high-bandwidth
silicon products for automated test equipment, high-speed computing and
military markets throughout the world.
Broadcom Corporation (Class A), headquartered in Irvine, California,
develops highly integrated silicon solutions that enable broadband
digital data transmission to the home and within the business enterprise.
Cisco Systems, Inc., headquartered in San Jose, California, provides
networking solutions that connect computing devices and computer
networks. The company offers various products to utilities,
corporations, universities, governments and small to medium businesses
worldwide.
Comverse Technology, Inc., headquartered in Woodbury, New York, makes
and sells computer and telecommunications systems for multimedia
communications and information processing applications, which are used
by telephone network operators, government agencies, call centers,
financial institutions and other public and commercial organizations
worldwide.
Conexant Systems, Inc., headquartered in Newport Beach, California,
makes semiconductor products for communications applications. The
Page 31
company's applications include personal computing, digital information
and entertainment, wireless communications and network access.
Copper Mountain Networks, Inc., headquartered in Palo Alto, California,
develops and markets Digital Subscriber Line (DSL) solutions that enable
high-speed Internet connectivity over the existing copper wire telephone
infrastructure.
ECI Telecom Limited, headquartered in Petah Tikva, Israel, designs,
makes, sells and supports a range of advanced products that are designed
to enhance the effectiveness of existing telecommunications networks by
enabling carriers to increase transmission capacity and provide
additional services without new or additional communications
infrastructure. The company's equipment supports traffic in service
networks worldwide.
JDS Uniphase Corporation, headquartered in San Jose, California,
designs, develops, makes and markets laser subsystems, laser-based
semiconductor wafer defect examination and analysis equipment and fiber
optic telecommunications equipment products.
Lucent Technologies Inc., headquartered in Murray Hill, New Jersey,
designs, develops and manufactures communications systems, software and
products worldwide. The company's research and development activities
are conducted through Bell Laboratories.
Nortel Networks Corporation, headquartered in Brampton, Ontario, Canada,
makes fully-digital telecommunications switching equipment and
communications equipment and systems for business and residential use.
The company operates worldwide.
PMC-Sierra, Inc., headquartered in Burnaby, British Columbia, Canada,
designs, develops, markets and supports high-performance semiconductor
system solutions used in broadband communications infrastructures, high-
bandwidth networks and multimedia personal computers.
Tellabs, Inc., headquartered in Lisle, Illinois, makes and services
voice, data and video transport and network access systems used by
public telephone companies, long-distance carriers, alternate service
providers, cellular providers, cable operators, government agencies,
utilities and business end-users.
Vitesse Semiconductor Corporation, headquartered in Camarillo,
California, designs, develops, makes and sells digital gallium arsenide
integrated circuits primarily for telecommunications, data
communications and automated test equipment systems providers.
Wireless Communications
________________________
Motorola, Inc., headquartered in Schaumburg, Illinois, designs, makes
and sells, mainly under the "Motorola" brand name, two-way land mobile
communication systems, paging and wireless data systems, personal
communications equipment and systems; semiconductors; and electronic
equipment for military and aerospace use.
Nokia Oy (ADR), headquartered in Espoo, Finland, supplies
telecommunications systems and equipment, including mobile phones,
battery chargers for mobile phones, computer monitors, multimedia
network terminals and satellite receivers. The company provides its
products and services worldwide.
QUALCOMM Incorporated, headquartered in San Diego, California, designs,
develops, makes, sells, licenses and operates advanced communications
systems and products based on proprietary digital wireless technology.
The company's products include "CDMA" integrated circuits, wireless
phones and infrastructure products, transportation management
information systems and ground stations, and phones for the low-earth-
orbit satellite communications system.
Biotechnology Select Portfolio Series.
Biotech
________
Affymetrix, Inc., headquartered in Santa Clara, California, develops and
manufactures DNA chip technology which consists of DNA probe arrays
containing gene sequences on a chip; a scanner to process probe arrays;
and software to analyze the information. The company's "GeneChip" system
acquires, analyzes and manages complex genetic information in order to
improve the diagnosis, monitoring and treatment of disease.
Amgen Inc., headquartered in Thousand Oaks, California, is a global
biotechnology concern which develops, makes and markets human
therapeutics based on advanced cellular and molecular biology, including
a protein that stimulates red blood cell production and a protein that
stimulates white blood cell production.
BioChem Pharma Inc., headquartered in Laval, Quebec, Canada, is an
international biopharmaceutical company that researches and develops
Page 32
therapeutic products. The company also researches, develops, makes and
sells vaccine and diagnostic products for a broad range of infectious
and other diseases.
Biogen, Inc., headquartered in Cambridge, Massachusetts, develops and
makes pharmaceuticals for human healthcare through genetic engineering.
The company's primary focus is on developing and testing products for
the treatment of multiple sclerosis, inflammatory and respiratory
diseases, kidney diseases and certain viruses and cancers.
Bio-Technology General Corp., headquartered in Iselin, New Jersey,
develops, makes and markets human healthcare products, including
therapeutic products for conditions such as endocrine/metabolic and
ophthalmic/skin disorders and cardio/pulmonary diseases. The company
distributes its products in the United States and internationally.
Celera Genomics, headquartered in Rockville, Maryland, is a subsidiary
of PE Corporation. The company is involved in the sequencing of the
human genome (and other biologically important model organisms) and
generates, sells and supports genomic information and related
information management and analysis software. The company also
discovers, validates and licenses proprietary gene products, genetic
markets and information concerning genetic variability.
Chiron Corporation, headquartered in Emeryville, California, develops,
produces and sells products related to the diagnosis, prevention and
treatment of human diseases, including certain types of cancer and
cardiovascular and infectious diseases. The company participates in
markets for biopharmaceuticals, blood testing and vaccines.
Enzon, Inc., headquartered in Piscataway, New Jersey, researches,
develops, makes and sells enhanced therapeutics based on the application
of proprietary technologies in the areas of blood substitutes, genetic
diseases and oncology.
Genentech, Inc., headquartered in South San Francisco, California,
discovers, develops, makes and sells human pharmaceuticals based on
recombinant DNA technology (gene splicing). The company also makes and
markets certain products within the United States which are sold to F.
Hoffmann-La Roche Ltd. (HLR) for distribution outside the United States.
Genzyme Corporation (General Division), headquartered in Cambridge,
Massachusetts, develops and markets specialty therapeutic, surgical and
diagnostic products, pharmaceuticals and genetic diagnostic services.
The company also develops, makes and markets biological products for the
treatment of cartilage damage, severe burns, chronic skin ulcers and
neurodegenerative diseases.
Human Genome Sciences, Inc., headquartered in Rockville, Maryland,
researches and develops potential proprietary drug and diagnostic
products based on the discovery and understanding of the medical uses of
genes.
IDEC Pharmaceuticals Corporation, headquartered in San Diego,
California, develops products for the long-term management of immune
system cancers and autoimmune and inflammatory diseases. The company's
lead immune system cancer and rheumatoid arthritis products are
genetically engineered to combat disease through the patient's immune
system.
Immunex Corporation, headquartered in Seattle, Washington, discovers,
develops, makes and markets therapeutic products for the treatment of
cancer, infectious diseases and immunological disorders. The company's
products are sold worldwide.
Invitrogen Corporation, headquartered in Carlsbad, California, develops,
manufactures and sells research kits and provides research services to
corporate, academic and government entities. The company's kits and
products are used in gene cloning, expression and analysis techniques as
well as other molecular biology activities.
MedImmune, Inc., headquartered in Gaithersburg, Maryland, develops and
markets products for the prevention and treatment of infectious
diseases, autoimmune diseases and cancer. The company's products are
also used in transplantation medicine.
Millennium Pharmaceuticals, Inc., headquartered in Cambridge,
Massachusetts, is a drug discovery and development company that
researches and develops a broad range of therapeutic and diagnostic
products for the commercial application of genetics, genomics and
bioinformatics.
Protein Design Labs, Inc., headquartered in Fremont, California,
develops human and humanized antibodies and other products to treat or
prevent a variety of viral, immune-mediated and inflammatory diseases as
well as certain cancers and cardiovascular conditions.
Transkaryotic Therapies, Inc., headquartered in Cambridge,
Massachusetts, develops and commercializes therapeutic proteins and gene
Page 33
therapy products for the long-term treatment and cure of a broad range
of human diseases.
Pharmaceuticals
_______________
American Home Products Corporation, headquartered in Madison, New
Jersey, makes nutritionals, cardiovascular and metabolic disease
therapies, mental health products, anti-inflammatory/analgesic products
and vaccines, and over-the-counter drugs. The company also makes crop
protection and pest control products.
Bristol-Myers Squibb Company, headquartered in New York, New York,
through divisions and subsidiaries, produces and distributes
pharmaceutical and non-prescription health products, toiletries and
beauty aids, and medical devices.
Glaxo Wellcome Plc (ADR), headquartered in London, England, conducts
research into and develops, makes and markets ethical pharmaceuticals
around the world. Products include gastrointestinal, respiratory, anti-
emesis, anti-migraine, systemic antibiotics, cardiovascular,
dermatological, foods and animal health.
Johnson & Johnson, headquartered in New Brunswick, New Jersey, makes and
sells pharmaceuticals, personal healthcare products, medical and
surgical equipment, and contact lenses.
Eli Lilly and Company, headquartered in Indianapolis, Indiana, with
subsidiaries, develops, makes and markets pharmaceutical and animal
health products sold in countries around the world. The company also
provides healthcare management services in the United States.
Merck & Co., Inc., headquartered in Whitehouse Station, New Jersey, is a
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.
Novartis AG (ADR), headquartered in Basel, Switzerland, manufactures
healthcare products for use in a broad range of medical fields, as well
as nutritional and agricultural products. The company markets its
products worldwide.
Pfizer Inc., headquartered in New York, New York, produces and
distributes anti-infectives, anti-inflammatory agents, cardiovascular
agents, antifungal drugs, central nervous system agents, orthopedic
implants, food science products, animal health products, toiletries,
baby care products, dental rinse and other proprietary health items.
Roche Holdings AG (ADR), headquartered in Basel, Switzerland, develops
and manufactures pharmaceutical and chemical products. Through its
subsidiaries, the company develops pharmaceuticals and drugs, fine
chemicals and vitamins, fragrances and flavors, diagnostic equipment and
liquid crystals. Products are distributed throughout Europe, Asia, Latin
America and the United States.
Schering-Plough Corporation, headquartered in Madison, New Jersey,
develops, makes and markets pharmaceutical and healthcare products
worldwide. Products include prescription drugs, animal health products
and over-the-counter foot care and sun care products.
SmithKline Beecham Plc (ADR), headquartered in Middlesex, England,
discovers, develops, makes and sells pharmaceuticals, vaccines, over-the-
counter medicines and health-related consumer products. The company also
provides healthcare services, including disease management, clinical
laboratory testing and pharmaceutical benefit management.
Warner-Lambert Company, headquartered in Morris Plains, New Jersey,
makes consumer healthcare products including over-the-counter health
products, shaving products and pet care products; confectionery products
including chewing gums, breath mints and hard candies; and ethical
pharmaceuticals, biologicals and empty gelatin capsules.
e-Business Select Portfolio Series.
Horizontal Portals
_________________________
America Online, Inc., headquartered in Dulles, Virginia, provides online
services to consumers in the United States, Canada, Europe and Japan
offering subscribers a wide variety of services, including electronic
mail, conferencing, news, sports, Internet access, entertainment,
weather, stock quotes, software, computing support and online classes.
Ariba, Inc., headquartered in Sunnyvale, California, provides Internet-
and intranet-based business-to-business e-commerce solutions for
operating resources that include information technology and
telecommunications equipment, professional services, facilities and
office equipment, and expense items.
Commerce One, Inc., headquartered in Walnut Creek, California, provides
business-to-business electronic procurement solutions. The company's
"The Commerce Chain Solution" dynamically links buying and supplying
Page 34
organizations into real-time trading communities, increasing efficiency
and significantly reducing operational costs across the entire indirect
supply chain.
PurchasePro.com, Inc., headquartered in Las Vegas, Nevada, provides
Internet business-to-business e-commerce services. The company's
solution is a standard platform for small- and medium-sized businesses
as well as corporate purchasing departments to buy and sell products in
secure, online, open and private marketplaces.
VerticalNet, Inc., headquartered in Horsham, Pennsylvania, is one of the
Internet's leading creators and operators of vertical trade communities.
The company leverages the interactive features and global reach of the
Internet to create multi-national, targeted business-to-business
communities. These narrowly focused Web sites attract buyers and sellers
from around the world by catering to individuals with similar
professional interests. The company's communities include industries
such as electronics, environment and services.
Yahoo! Inc., headquartered in Santa Clara, California, is a global
Internet media company that offers a family of branded on-line media
properties, including "YAHOO!" The company's Web site enables users to
locate and access information and services through hypertext links from
a hierarchical, subject-based directory of Web sites.
Infrastructure
______________
BroadVision, Inc., headquartered in Redwood City, California, develops,
markets and supports application software solutions. The company
provides an integrated software application system, "BroadVision One-To-
One," that enables businesses to create applications for interactive
marketing and selling services on the World Wide Web.
Check Point Software Technologies Ltd., headquartered in Ramat-Gan,
Israel, develops, sells and supports secure enterprise networking
solutions. The company's integrated architecture includes network
security ("FireWall-1," "VPN-1," "Open Security Manager" and "Provider-
1"), traffic control ("FloodGate-1" and "ConnectControl") and Internet
protocol address management ("Meta IP")
Digital Island, headquartered in San Francisco, California, is a leading
provider of network services for globalizing e-Business applications.
The Company serves corporations which operate in multiple countries that
need to securely and consistently extend business-critical applications
for marketing, selling, servicing or distributing products via the
Internet.
Exodus Communications, Inc., headquartered in Santa Clara, California,
provides Internet system and network management solutions for
enterprises with mission-critical Internet operations. The company's
data centers are located throughout the United States and in England.
Level 3 Communications, Inc., headquartered in Broomfield, Colorado,
provides telecommunications and information services, including local,
long distance and data transmission. The company is building the first
international network optimized for Internet Protocol technology. The
network will combine both local and long distance networks, connecting
customers end-to-end across the United States and in Europe and Asia.
MCI WorldCom, Inc., headquartered in Clinton, Mississippi, operates as a
global communications company which provides facilities-based and fully-
integrated local, long distance, international and Internet services in
over 65 countries encompassing the Americas, Europe and the Asia-Pacific
regions. The company also offers wireless and 800 services, calling
cards, private lines and debit cards.
Microsoft Corporation, headquartered in Redmond, Washington, develops,
manufactures, licenses and supports a wide range of software products.
The company offers operating system software, server application
software, business and consumer applications software, software
development tools and Internet and intranet software. "Windows" is the
company's flagship PC operating system. The company also develops the
MSN network of Internet products and services.
Siebel Systems, Inc., headquartered in San Mateo, California, designs,
sells and supports enterprise-class sales and marketing information
software systems. The company also designs, develops and markets a Web-
based application software product.
VeriSign, Inc., headquartered in Mountain View, California, provides
digital certificate solutions and infrastructure needed by companies,
government agencies, trading partners and individuals to conduct trusted
and secure communications and commerce over the Internet and over
intranets and extranets using the Internet Protocol.
Page 35
Procurement
___________
Cisco Systems, Inc., headquartered in San Jose, California, provides
networking solutions that connect computing devices and computer
networks. The company offers various products to utilities,
corporations, universities, governments and small to medium businesses
worldwide.
Dell Computer Corporation, headquartered in Round Rock, Texas, designs,
develops, makes, sells, services and supports a broad range of computer
systems, including desktops, notebooks and servers compatible with
industry standards under the "Dell" brand name. The company also sells
software, peripheral equipment, and service and support programs.
International Business Machines Corporation, headquartered in Armonk,
New York, provides customer solutions through the use of advanced
information technologies. The company offers a variety of solutions that
include services, software, systems, products, financing and technologies.
i2 Technologies, Inc., headquartered in Dallas, Texas, provides supply
chain management software, which encompasses the planning and scheduling
of manufacturing and related logistics from raw materials procurement
through work-in-process to customer delivery. The company's product,
"RHYTHM," generates integrated solutions to planning and scheduling
problems.
Oracle Corporation, headquartered in Redwood City, California, designs,
develops, markets and supports computer software products with a wide
variety of uses, including database management, application development
and business intelligence, and business applications.
Venture Capital
_______________
CMGI Inc., headquartered in Andover, Massachusetts, invests in and
develops Internet companies; operates direct marketing companies and
venture funds focused on the Internet; and, through subsidiaries,
provides fulfillment services.
Internet Capital Group, Inc., headquartered in Wayne, Pennsylvania, is
an Internet holding company primarily engaged in business-to-business,
or B2B, e-commerce through a network of partner companies.
Vertical Portals
________________
Chemdex Corporation, headquartered in Palo Alto, California, is the
leading provider of business-to-business e-commerce solutions for the
life sciences industry. The company offers a complete solution that
allows its customers to identify, locate and purchase life sciences
research products.
Healtheon Corporation, headquartered in Santa Clara, California,
provides advanced Internet technology to connect healthcare participants
and enable them to communicate, exchange information and perform
transactions which cut across the healthcare maze. The company's
services include the areas of membership, healthcare administration,
financial management and clinical information.
pcOrder.com, Inc., headquartered in Austin, Texas, is a leading provider
of Internet-based electronic commerce solutions that enable the computer
industry's suppliers, resellers and end-users to buy and sell computer
products online.
e-Tail Select Portfolio Series.
Access Providers & Portals
_________________________
AT&T Corp., headquartered in New York, New York, provides voice, data
and video telecommunications services; regional, domestic, international
and local communication transmission services; cellular telephone and
other wireless services; and billing, directory and calling card services.
America Online, Inc., headquartered in Dulles, Virginia, provides online
services to consumers in the United States, Canada, Europe and Japan
offering subscribers a wide variety of services, including electronic
mail, conferencing, news, sports, Internet access, entertainment,
weather, stock quotes, software, computing support and online classes.
MCI WorldCom, Inc., headquartered in Clinton, Mississippi, operates as a
global communications company which provides facilities-based and fully-
integrated local, long distance, international and Internet services in
over 65 countries encompassing the Americas, Europe and the Asia-Pacific
regions. The company also offers wireless and 800 services, calling
cards, private lines and debit cards.
Qwest Communications International Inc., headquartered in Denver,
Colorado, provides broadband Internet-based data, voice and image
communications for businesses and consumers. The company also constructs
and installs fiber optic systems for other communications providers and
its own use.
Yahoo! Inc., headquartered in Santa Clara, California, is a global
Internet media company that offers a family of branded on-line media
Page 36
properties, including "YAHOO!" The company's Web site enables users to
locate and access information and services through hypertext links from
a hierarchical, subject-based directory of Web sites.
e-Tailers
_________
Amazon.com, Inc., headquartered in Seattle, Washington, operates as an
on-line retailer of books, music, videotapes, audiotapes and other
products via a commercial site on the World Wide Web. Additionally, the
company is involved in hosting on-line auctions.
CDW Computer Centers, Inc., headquartered in Vernon Hills, Illinois,
sells microcomputer hardware and peripherals to business, government,
educational, institutional and home office users in the United States.
The company's products include desktop computers, notebooks and laptops,
printing devices, video monitors, communication equipment, add-on boards
and memory and data storage devices; accessories; networking products;
and software.
Dell Computer Corporation, headquartered in Round Rock, Texas, designs,
develops, makes, sells, services and supports a broad range of computer
systems, including desktops, notebooks and servers compatible with
industry standards under the "Dell" brand name. The company also sells
software, peripheral equipment, and service and support programs.
eBay Inc., headquartered in San Jose, California, operates an online
person-to-person trading community on the Internet, bringing together
buyers and sellers in an auction format to trade personal items such as
antiques, coins, collectibles, computers, memorabilia, stamps and toys.
The Gap, Inc., headquartered in San Francisco, California, operates
specialty retail stores in the United States, Canada, France, Germany,
Japan and the United Kingdom. The company's stores sell casual apparel,
shoes and other accessories for men, women and children under a variety
of brand names, including "Gap," "GapKids," "babyGap," "Banana Republic"
and "Old Navy."
Gateway Inc., headquartered in San Diego, California, markets personal
computers (PCs) and related products and services. The company develops,
manufactures, markets and supports a broad line of desktop and portable
personal computers, digital media (convergence) PCs, servers,
workstations and PC-related products for use by individuals, businesses,
government agencies and educational institutions.
Intimate Brands, Inc., headquartered in San Francisco, California, sells
women's intimate apparel and related products under the "Victoria's
Secret" name; personal care products under the "Bath and Body Works"
name; and lingerie and sleepwear under the "Cacique" name. The company
sells its products throughout the United States and also owns Gryphon
Development, Inc., which creates, sources and develops personal care
products.
The Charles Schwab Corporation, headquartered in San Francisco,
California, through subsidiaries, provides discount securities brokerage
and related financial services, and offers trade execution services for
Nasdaq securities to broker-dealers and institutional customers.
Wal-Mart Stores, Inc., headquartered in Bentonville, Arkansas, is one of
the largest retailers in the United States measured by total revenues.
The company operates "Wal-Mart" retail discount department stores, "Wal-
Mart Supercenters" and "Sam's" wholesale clubs in the United States and
several other countries.
Financial/Transactional Services
______________________________
American Express Company, headquartered in New York, New York, through
subsidiaries, provides travel-related services (including travelers'
cheques, American Express cards, consumer lending, tour packages and
itineraries, and publications); investors' diversified financial
products and services; and international banking services.
Capital One Financial Corporation, headquartered in Falls Church,
Virginia, through subsidiaries, issues Visa and MasterCard credit card
products to customers in the United States and the United Kingdom. The
company also provides consumer lending and deposit services.
First Data Corporation, headquartered in Atlanta, Georgia, provides
processing services to issuers of VISA and MasterCards; payment
instrument processing services to institutions and consumers; telephone
and information processing services; shareholder services; information
systems; and data processing.
Internet Infrastructure
______________________
BroadVision, Inc., headquartered in Redwood City, California, develops,
markets and supports application software solutions. The company
provides an integrated software application system, "BroadVision One-To-
Page 37
One," that enables businesses to create applications for interactive
marketing and selling services on the World Wide Web.
Cisco Systems, Inc., headquartered in San Jose, California, provides
networking solutions that connect computing devices and computer
networks. The company offers various products to utilities,
corporations, universities, governments and small to medium businesses
worldwide.
EMC Corporation, headquartered in Hopkinton, Massachusetts, designs,
manufactures, markets and supports hardware, software and service
products for the enterprise storage market. The company's products are
sold as integrated storage solutions for customers on various computing
platforms including "UNIX" and "Windows NT."
Exodus Communications, Inc., headquartered in Santa Clara, California,
provides Internet system and network management solutions for
enterprises with mission-critical Internet operations. The company's
data centers are located throughout the United States and in England.
Intel Corporation, headquartered in Santa Clara, California, designs,
develops, makes and markets advanced microcomputer components and
related products at various levels of integration. Principal components
consist of silicon-based semiconductors etched with complex patterns of
transistors.
Microsoft Corporation, headquartered in Redmond, Washington, develops,
manufactures, licenses and supports a wide range of software products.
The company offers operating system software, server application
software, business and consumer applications software, software
development tools and Internet and intranet software. "Windows" is the
company's flagship PC operating system. The company also develops the
MSN network of Internet products and services.
Oracle Corporation, headquartered in Redwood City, California, designs,
develops, markets and supports computer software products with a wide
variety of uses, including database management, application development
and business intelligence, and business applications.
Sun Microsystems, Inc., headquartered in Palo Alto, California, supplies
network computing products, including desktop systems, storage
subsystems, network switches, servers, software, microprocessors and a
full range of services and support, using the UNIX operating system.
Financial Services Select Portfolio Series.
Banks & Thrifts
_______________
Bank of America Corporation, headquartered in Charlotte, North Carolina,
is the holding company for Bank of America and NationsBank and conducts
a general banking business in 22 states and the District of Columbia.
The company also has offices in nearly 40 countries overseas.
Charter One Financial, Inc., headquartered in Cleveland, Ohio, through
wholly-owned Charter One Bank, F.S.B., operates a banking business in
Ohio, Massachusetts, Michigan, New York and Vermont. The company also
operates loan production offices in 13 states.
The Chase Manhattan Corporation, headquartered in New York, New York,
conducts domestic and international financial services business with
operations in more than 50 countries and clients throughout the world.
Firstar Corporation, headquartered in Milwaukee, Wisconsin, is the
holding company for Firstar Bank. The company offers banking, trust,
investment, insurance and securities brokerage services. The company
also operates a consumer finance company and an investment advisory firm.
Fleet Boston Corporation, headquartered in Boston, Massachusetts,
conducts a general commercial banking and trust business through a
network of branch offices, ATMs and telephone banking centers. The
company also provides other activities related to banking and finance.
State Street Corporation, headquartered in Boston, Massachusetts,
through subsidiaries, provides banking, global custody, investment
management, administration and securities processing services to both
U.S. and non-U.S. customers.
Washington Mutual, Inc., headquartered in Seattle, Washington, through
subsidiaries, provides financial services to individuals and small- to
mid-sized businesses, including accepting deposits from the general
public and making residential and other loans. The company's operations
are conducted through offices throughout the United States.
Wells Fargo Company, headquartered in San Francisco, California,
operates a general banking business in a number of states and operates
mortgage banking offices throughout the United States. The company also
provides consumer finance services throughout the United States and in
Canada, the Caribbean, Central America and Guam; and offers various
other financial services.
Page 38
Financial Services
_______________
American Express Company, headquartered in New York, New York, through
subsidiaries, provides travel-related services (including travelers'
cheques, American Express cards, consumer lending, tour packages and
itineraries, and publications); investors' diversified financial
products and services; and international banking services.
Capital One Financial Corporation, headquartered in Falls Church,
Virginia, through subsidiaries, issues Visa and MasterCard credit card
products to customers in the United States and the United Kingdom. The
company also provides consumer lending and deposit services.
Citigroup Inc., headquartered in New York, New York, operates the
largest financial services company in the United States. The company
offers consumer, investment and private banking, life insurance,
property and casualty insurance and consumer finance products.
Countrywide Credit Industries, Inc., headquartered in Calabasas,
California, originates, buys, sells and services mortgage loans,
including first-lien mortgage loans secured by single (one to four)
family residences; and offers home equity loans in conjunction with
newly produced first-lien mortgages as a separate product.
Fannie Mae, headquartered in Washington, DC, provides ongoing assistance
to the secondary market for residential mortgages by providing liquidity
for residential mortgage investments, thereby improving the distribution
of investment capital available for such mortgage financing.
Freddie Mac, headquartered in McLean, Virginia, was chartered by
Congress in 1970 to create a continuous flow of funds to mortgage
lenders in support of home ownership and rental housing. The company
purchases first lien, conventional and residential mortgages, including
both whole loans and participation interests in such mortgages.
Household International, Inc., headquartered in Prospect Heights,
Illinois, through subsidiaries, provides consumer financial services,
primarily consumer lending products to middle market consumers, in the
United States, Canada and the United Kingdom.
ING Groep N.V. (ADR), headquartered in Amsterdam, the Netherlands,
offers a comprehensive range of financial services worldwide, including
life and non-life insurance, commercial and investment banking, asset
management and related products. One of its subsidiaries, Equitable of
Iowa Companies, a financial holding company based in Des Moines, Iowa,
is active throughout the United States in the annuity, life insurance
and investment markets.
MBNA Corporation, headquartered in Wilmington, Delaware, is the holding
company for MBNA America Bank, N.A. The company issues premium and
standard MasterCard or Visa bank credit cards marketed mainly through
endorsements of membership associations and financial institutions. The
company also makes other consumer loans and offers deposit products.
Providian Financial Corporation, headquartered in San Francisco,
California, provides consumer loans, deposit products and other banking
services to consumers nationwide, including credit cards, revolving
lines of credit, home loans, secured credit cards and fee-based services.
Insurance
__________
AFLAC Incorporated, headquartered in Columbus, Georgia, writes
supplemental health insurance, mainly limited to reimbursement for
medical, non-medical and surgical expenses of cancer. The company also
sells individual and group life, and accident and health insurance.
AXA Financial, Inc., headquartered in New York, New York, through wholly-
owned subsidiary The Equitable Life Assurance Society of the U.S.,
provides a broad range of financial services and products, including
individual insurance, annuities, mutual funds, investment management,
investment banking, securities transaction and brokerage services. The
company's other subsidiaries include Alliance Capital Management L.P.
and Donaldson, Lufkin & Jenrette, Inc.
The Allstate Corporation, headquartered in Northbrook, Illinois, through
subsidiaries, writes property-liability insurance, primarily private
passenger automobile and homeowners policies; and offers life insurance,
annuity and group pension products.
American International Group, Inc., headquartered in New York, New York,
through subsidiaries, provides a broad range of insurance and insurance-
related activities and financial services in the United States and
abroad. The company writes property and casualty and life insurance, and
also provides financial services.
The Chubb Corporation, headquartered in Warren, New Jersey, writes
property and casualty insurance, including personal and commercial
Page 39
insurance coverage; and develops real estate, mainly in New Jersey and
Florida.
The Progressive Corporation, headquartered in Mayfield Village, Ohio,
through subsidiaries, provides personal auto insurance and other
specialty property-casualty insurance and related services, sold
primarily through independent insurance agents in the United States and
Canada.
Investment Services
___________________
Knight/Trimark Group, Inc. (Class A), headquartered in Jersey City, New
Jersey, through its subsidiaries, Trimark Securities, Inc., and Knight
Securities, Inc., operates as a market maker in Nasdaq securities, other
over-the-counter (OTC) equity securities, and equity securities listed
on the NYSE and the American Stock Exchange (AMEX).
Lehman Brothers Holdings Inc., headquartered in New York, New York,
through wholly-owned Lehman Brothers Inc., provides securities
underwriting, financial advisory and investment and merchant banking
services, securities and commodities trading as principal and agent, and
asset management to institutional, corporate, government and high-net-
worth individual clients throughout the United States and the world.
Merrill Lynch & Co., Inc., headquartered in New York, New York, through
subsidiaries, provides brokering, trading and underwriting; investment
banking and corporate finance advisory services; asset management;
trading of foreign exchange instruments, futures, commodities and
derivatives; securities clearance services; banking, trust, and lending
services; and insurance services.
Morgan Stanley Dean Witter & Co., headquartered in New York, New York,
provides a broad range of nationally-marketed credit and investment
products, with a principal focus on individual customers. The company
provides investment banking, transaction processing, private-label
credit card and various other investment advice services.
T. Rowe Price Associates, Inc., headquartered in Baltimore, Maryland,
serves as investment advisor to the T. Rowe Price family of no-load
mutual funds, other sponsored investment portfolios and institutional
and individual private accounts; and provides certain administrative and
shareholder services to the Price funds and other mutual funds.
The Charles Schwab Corporation, headquartered in San Francisco,
California, through subsidiaries, provides discount securities brokerage
and related financial services, and offers trade execution services for
Nasdaq securities to broker-dealers and institutional customers.
Internet Select Portfolio Series.
Access/Information Providers
___________________________
AT&T Corp., headquartered in New York, New York, provides voice, data
and video telecommunications services; regional, domestic, international
and local communication transmission services; cellular telephone and
other wireless services; and billing, directory and calling card services.
America Online, Inc., headquartered in Dulles, Virginia, provides online
services to consumers in the United States, Canada, Europe and Japan
offering subscribers a wide variety of services, including electronic
mail, conferencing, news, sports, Internet access, entertainment,
weather, stock quotes, software, computing support and online classes.
MCI WorldCom, Inc., headquartered in Clinton, Mississippi, operates as a
global communications company which provides facilities-based and fully-
integrated local, long distance, international and Internet services in
over 65 countries encompassing the Americas, Europe and the Asia-Pacific
regions. The company also offers wireless and 800 services, calling
cards, private lines and debit cards.
Qwest Communications International Inc., headquartered in Denver,
Colorado, provides broadband Internet-based data, voice and image
communications for businesses and consumers. The company also constructs
and installs fiber optic systems for other communications providers and
its own use.
Data Networking/Communications Equipment
__________________________________________
Cisco Systems, Inc., headquartered in San Jose, California, provides
networking solutions that connect computing devices and computer
networks. The company offers various products to utilities,
corporations, universities, governments and small to medium businesses
worldwide.
Copper Mountain Networks, Inc., headquartered in Palo Alto, California,
develops and markets Digital Subscriber Line (DSL) solutions that enable
high-speed Internet connectivity over the existing copper wire telephone
infrastructure.
Lucent Technologies Inc., headquartered in Murray Hill, New Jersey,
designs, develops and manufactures communications systems, software and
Page 40
products worldwide. The company's research and development activities
are conducted through Bell Laboratories.
Nortel Networks Corporation, headquartered in Brampton, Ontario, Canada,
makes fully-digital telecommunications switching equipment and
communications equipment and systems for business and residential use.
The company operates worldwide.
PMC-Sierra, Inc., headquartered in Burnaby, British Columbia, Canada,
designs, develops, markets and supports high-performance semiconductor
system solutions used in broadband communications infrastructures, high-
bandwidth networks and multimedia personal computers.
Tellabs, Inc., headquartered in Lisle, Illinois, makes and services
voice, data and video transport and network access systems used by
public telephone companies, long-distance carriers, alternate service
providers, cellular providers, cable operators, government agencies,
utilities and business end-users.
Vitesse Semiconductor Corporation, headquartered in Camarillo,
California, designs, develops, makes and sells digital gallium arsenide
integrated circuits primarily for telecommunications, data
communications and automated test equipment systems providers.
Computers & Peripherals
________________________
Dell Computer Corporation, headquartered in Round Rock, Texas, designs,
develops, makes, sells, services and supports a broad range of computer
systems, including desktops, notebooks and servers compatible with
industry standards under the "Dell" brand name. The company also sells
software, peripheral equipment, and service and support programs.
EMC Corporation, headquartered in Hopkinton, Massachusetts, designs,
manufactures, markets and supports hardware, software and service
products for the enterprise storage market. The company's products are
sold as integrated storage solutions for customers on various computing
platforms including "UNIX" and "Windows NT."
Gateway Inc., headquartered in San Diego, California, markets personal
computers (PCs) and related products and services. The company develops,
manufactures, markets and supports a broad line of desktop and portable
personal computers, digital media (convergence) PCs, servers,
workstations and PC-related products for use by individuals, businesses,
government agencies and educational institutions.
Hewlett-Packard Company, headquartered in Palo Alto, California,
designs, makes and services equipment and systems for measurement,
computation and communications including computer systems, personal
computers, printers, calculators, electronic test equipment, medical
electronic equipment, electronic components and instrumentation for
chemical analysis.
Intel Corporation, headquartered in Santa Clara, California, designs,
develops, makes and markets advanced microcomputer components and
related products at various levels of integration. Principal components
consist of silicon-based semiconductors etched with complex patterns of
transistors.
International Business Machines Corporation, headquartered in Armonk,
New York, provides customer solutions through the use of advanced
information technologies. The company offers a variety of solutions that
include services, software, systems, products, financing and technologies.
Sun Microsystems, Inc., headquartered in Palo Alto, California, supplies
network computing products, including desktop systems, storage
subsystems, network switches, servers, software, microprocessors and a
full range of services and support, using the UNIX operating system.
Internet Content
________________
CMGI Inc., headquartered in Andover, Massachusetts, invests in and
develops Internet companies; operates direct marketing companies and
venture funds focused on the Internet; and, through subsidiaries,
provides fulfillment services.
Internet Capital Group, Inc., headquartered in Wayne, Pennsylvania, is
an Internet holding company primarily engaged in business-to-business,
or B2B, e-commerce through a network of partner companies.
TMP Worldwide Inc., headquartered in New York, New York, provides
comprehensive, individually tailored advertising services, including
development of creative content, media planning, production and
placement of corporate advertising, market research, direct marketing
and other ancillary products and services.
Yahoo! Inc., headquartered in Santa Clara, California, is a global
Internet media company that offers a family of branded on-line media
properties, including "YAHOO!" The company's Web site enables users to
Page 41
locate and access information and services through hypertext links from
a hierarchical, subject-based directory of Web sites.
Online Brokerage
_________________
Knight/Trimark Group, Inc. (Class A), headquartered in Jersey City, New
Jersey, through its subsidiaries, Trimark Securities, Inc., and Knight
Securities, Inc., operates as a market maker in Nasdaq securities, other
over-the-counter (OTC) equity securities, and equity securities listed
on the NYSE and the AMEX.
The Charles Schwab Corporation, headquartered in San Francisco,
California, through subsidiaries, provides discount securities brokerage
and related financial services, and offers trade execution services for
Nasdaq securities to broker-dealers and institutional customers.
Software
_________
BroadVision, Inc., headquartered in Redwood City, California, develops,
markets and supports application software solutions. The company
provides an integrated software application system, "BroadVision One-To-
One," that enables businesses to create applications for interactive
marketing and selling services on the World Wide Web.
Check Point Software Technologies Ltd., headquartered in Ramat-Gan,
Israel, develops, sells and supports secure enterprise networking
solutions. The company's integrated architecture includes network
security ("FireWall-1," "VPN-1," "Open Security Manager" and "Provider-
1"), traffic control ("FloodGate-1" and "ConnectControl") and Internet
protocol address management ("Meta IP").
Exodus Communications, Inc., headquartered in Santa Clara, California,
provides Internet system and network management solutions for
enterprises with mission-critical Internet operations. The company's
data centers are located throughout the United States and in England.
Intuit Inc., headquartered in Mountain View, California, develops, sells
and supports personal finance, small business accounting, tax
preparation and other consumer software products, and related electronic
services and supplies that enable users to automate commonly performed
financial tasks. The company sells its products worldwide.
Microsoft Corporation, headquartered in Redmond, Washington, develops,
manufactures, licenses and supports a wide range of software products.
The company offers operating system software, server application
software, business and consumer applications software, software
development tools and Internet and intranet software. "Windows" is the
company's flagship PC operating system. The company also develops the
MSN network of Internet products and services.
Oracle Corporation, headquartered in Redwood City, California, designs,
develops, markets and supports computer software products with a wide
variety of uses, including database management, application development
and business intelligence, and business applications.
Pharmaceutical Select Portfolio Series.
Abbott Laboratories, headquartered in Abbott Park, Illinois, discovers,
develops, makes and sells a broad and diversified line of healthcare
products and services.
Amgen Inc., headquartered in Thousand Oaks, California, is a global
biotechnology concern which develops, makes and markets human
therapeutics based on advanced cellular and molecular biology, including
a protein that stimulates red blood cell production and a protein that
stimulates white blood cell production.
BioChem Pharma Inc., headquartered in Laval, Quebec, Canada, is an
international biopharmaceutical company that researches and develops
therapeutic products. The company also researches, develops, makes and
sells vaccine and diagnostic products for a broad range of infectious
and other diseases.
Biogen, Inc., headquartered in Cambridge, Massachusetts, develops and
makes pharmaceuticals for human healthcare through genetic engineering.
The company's primary focus is on developing and testing products for
the treatment of multiple sclerosis, inflammatory and respiratory
diseases, kidney diseases and certain viruses and cancers.
Bristol-Myers Squibb Company, headquartered in New York, New York,
through divisions and subsidiaries, produces and distributes
pharmaceutical and non-prescription health products, toiletries and
beauty aids, and medical devices.
Chiron Corporation, headquartered in Emeryville, California, develops,
produces and sells products related to the diagnosis, prevention and
treatment of human diseases, including certain types of cancer and
cardiovascular and infectious diseases. The company participates in
Page 42
markets for biopharmaceuticals, blood testing and vaccines.
Elan Corporation Plc (ADR), headquartered in Dublin, Ireland, is a
specialty pharmaceutical company whose products focus on the areas of
acute care, pain management and neurological disorders.
Genzyme Corporation (General Division), headquartered in Cambridge,
Massachusetts, develops and markets specialty therapeutic, surgical and
diagnostic products, pharmaceuticals and genetic diagnostic services.
The company also develops, makes and markets biological products for the
treatment of cartilage damage, severe burns, chronic skin ulcers and
neurodegenerative diseases.
Glaxo Wellcome Plc (ADR), headquartered in London, England, conducts
research into and develops, makes and markets ethical pharmaceuticals
around the world. Products include gastrointestinal, respiratory, anti-
emesis, anti-migraine, systemic antibiotics, cardiovascular,
dermatological, foods and animal health.
IDEC Pharmaceuticals Corporation, headquartered in San Diego,
California, develops products for the long-term management of immune
system cancers and autoimmune and inflammatory diseases. The company's
lead immune system cancer and rheumatoid arthritis products are
genetically engineered to combat disease through the patient's immune
system.
Johnson & Johnson, headquartered in New Brunswick, New Jersey, makes and
sells pharmaceuticals, personal healthcare products, medical and
surgical equipment, and contact lenses.
Jones Pharma Incorporated, headquartered in St. Louis, Missouri, markets
a variety of pharmaceutical products used in hospital operating rooms,
for emergency and skin care, and for veterinary use.
Eli Lilly and Company, headquartered in Indianapolis, Indiana, with
subsidiaries, develops, makes and markets pharmaceutical and animal
health products sold in countries around the world. The company also
provides healthcare management services in the United States.
Merck & Co., Inc., headquartered in Whitehouse Station, New Jersey, is a
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.
Novartis AG (ADR), headquartered in Basel, Switzerland, manufactures
healthcare products for use in a broad range of medical fields, as well
as nutritional and agricultural products. The company markets its
products worldwide.
Pfizer Inc., headquartered in New York, New York, produces and
distributes anti-infectives, anti-inflammatory agents, cardiovascular
agents, antifungal drugs, central nervous system agents, orthopedic
implants, food science products, animal health products, toiletries,
baby care products, dental rinse and other proprietary health items.
Roche Holdings AG (ADR), headquartered in Basel, Switzerland, develops
and manufactures pharmaceutical and chemical products. Through its
subsidiaries, the company develops pharmaceuticals and drugs, fine
chemicals and vitamins, fragrances and flavors, diagnostic equipment and
liquid crystals. Products are distributed throughout Europe, Asia, Latin
America and the United States.
Schering-Plough Corporation, headquartered in Madison, New Jersey,
develops, makes and markets pharmaceutical and healthcare products
worldwide. Products include prescription drugs, animal health products
and over-the-counter foot care and sun care products.
SmithKline Beecham Plc (ADR), headquartered in Middlesex, England,
discovers, develops, makes and sells pharmaceuticals, vaccines, over-the-
counter medicines and health-related consumer products. The company also
provides healthcare services, including disease management, clinical
laboratory testing and pharmaceutical benefit management.
Warner-Lambert Company, headquartered in Morris Plains, New Jersey,
makes consumer healthcare products including over-the-counter health
products, shaving products and pet care products; confectionery products
including chewing gums, breath mints and hard candies; and ethical
pharmaceuticals, biologicals and empty gelatin capsules.
Technology Select Portfolio Series.
Computers & Peripherals
________________________
Dell Computer Corporation, headquartered in Round Rock, Texas, designs,
develops, makes, sells, services and supports a broad range of computer
systems, including desktops, notebooks and servers compatible with
industry standards under the "Dell" brand name. The company also sells
software, peripheral equipment, and service and support programs.
Page 43
EMC Corporation, headquartered in Hopkinton, Massachusetts, designs,
manufactures, markets and supports hardware, software and service
products for the enterprise storage market. The company's products are
sold as integrated storage solutions for customers on various computing
platforms including "UNIX" and "Windows NT."
Gateway Inc., headquartered in San Diego, California, markets personal
computers (PCs) and related products and services. The company develops,
manufactures, markets and supports a broad line of desktop and portable
personal computers, digital media (convergence) PCs, servers,
workstations and PC-related products for use by individuals, businesses,
government agencies and educational institutions.
Hewlett-Packard Company, headquartered in Palo Alto, California,
designs, makes and services equipment and systems for measurement,
computation and communications including computer systems, personal
computers, printers, calculators, electronic test equipment, medical
electronic equipment, electronic components and instrumentation for
chemical analysis.
International Business Machines Corporation, headquartered in Armonk,
New York, provides customer solutions through the use of advanced
information technologies. The company offers a variety of solutions that
include services, software, systems, products, financing and technologies.
Solectron Corporation, headquartered in Milpitas, California, is a
worldwide provider of electronics manufacturing services to leading
original equipment manufacturers.
Sun Microsystems, Inc., headquartered in Palo Alto, California, supplies
network computing products, including desktop systems, storage
subsystems, network switches, servers, software, microprocessors and a
full range of services and support, using the UNIX operating system.
Computer Software & Services
_____________________________
BMC Software, Inc., headquartered in Houston, Texas, produces
applications that manage and monitor information technology
environments, enabling around-the-clock availability of business-
critical applications. The company also sells and provides maintenance,
enhancement and support services for its products.
Check Point Software Technologies Ltd., headquartered in Ramat-Gan,
Israel, develops, sells and supports secure enterprise networking
solutions. The company's integrated architecture includes network
security ("FireWall-1," "VPN-1," "Open Security Manager" and "Provider-
1"), traffic control ("FloodGate-1" and "ConnectControl") and Internet
protocol address management ("Meta IP").
Compuware Corporation, headquartered in Farmington Hills, Michigan,
provides applications software products and services that help
information technology professionals to develop, implement and support
the applications that run their businesses.
Microsoft Corporation, headquartered in Redmond, Washington, develops,
manufactures, licenses and supports a wide range of software products.
The company offers operating system software, server application
software, business and consumer applications software, software
development tools and Internet and intranet software. "Windows" is the
company's flagship PC operating system. The company also develops the
MSN network of Internet products and services.
Oracle Corporation, headquartered in Redwood City, California, designs,
develops, markets and supports computer software products with a wide
variety of uses, including database management, application development
and business intelligence, and business applications.
Data Networking/Communications Equipment
__________________________________________
Cisco Systems, Inc., headquartered in San Jose, California, provides
networking solutions that connect computing devices and computer
networks. The company offers various products to utilities,
corporations, universities, governments and small to medium businesses
worldwide.
Lucent Technologies Inc., headquartered in Murray Hill, New Jersey,
designs, develops and manufactures communications systems, software and
products worldwide. The company's research and development activities
are conducted through Bell Laboratories.
Nokia Oy (ADR), headquartered in Espoo, Finland, supplies
telecommunications systems and equipment, including mobile phones,
battery chargers for mobile phones, computer monitors, multimedia
network terminals and satellite receivers. The company provides its
products and services worldwide.
Nortel Networks Corporation, headquartered in Brampton, Ontario, Canada,
makes fully-digital telecommunications switching equipment and
Page 44
communications equipment and systems for business and residential use.
The company operates worldwide.
QUALCOMM Incorporated, headquartered in San Diego, California, designs,
develops, makes, sells, licenses and operates advanced communications
systems and products based on proprietary digital wireless technology.
The company's products include "CDMA" integrated circuits, wireless
phones and infrastructure products, transportation management
information systems and ground stations, and phones for the low-earth-
orbit satellite communications system.
Tellabs, Inc., headquartered in Lisle, Illinois, makes and services
voice, data and video transport and network access systems used by
public telephone companies, long-distance carriers, alternate service
providers, cellular providers, cable operators, government agencies,
utilities and business end-users.
Semiconductors & Semiconductor Equipment
_________________________________________
Altera Corporation, headquartered in San Jose, California, designs,
manufactures and markets programmable logic devices and associated
development tools to the telecommunications, data communications and
industrial applications markets.
Applied Materials, Inc., headquartered in Santa Clara, California,
develops, manufactures and markets semiconductor wafer fabrication
equipment and related spare parts to semiconductor wafer manufacturers
and semiconductor integrated circuit manufacturers.
Intel Corporation, headquartered in Santa Clara, California, designs,
develops, makes and markets advanced microcomputer components and
related products at various levels of integration. Principal components
consist of silicon-based semiconductors etched with complex patterns of
transistors.
Maxim Integrated Products, Inc., headquartered in Sunnyvale, California,
designs and makes linear and mixed-signal integrated circuits. The
company's products include data converters, interface circuits,
microprocessor-supervisors and amplifiers.
QLogic Corporation, headquartered in Costa Mesa, California, designs and
supplies semiconductor products that provide interface connections
between computer systems and their attached data storage peripherals
such as hard disk drives, tape drives and subsystems.
Texas Instruments Incorporated, headquartered in Dallas, Texas, provides
semiconductor products and designs and supplies digital signal
processing and analog technologies. The company has worldwide
manufacturing and sales operations.
Vitesse Semiconductor Corporation, headquartered in Camarillo,
California, designs, develops, makes and sells digital gallium arsenide
integrated circuits primarily for telecommunications, data
communications and automated test equipment systems providers.
e-Business Portfolio Series.
Horizontal Portals
_________________________
America Online, Inc., headquartered in Dulles, Virginia, provides online
services to consumers in the United States, Canada, Europe and Japan
offering subscribers a wide variety of services, including electronic
mail, conferencing, news, sports, Internet access, entertainment,
weather, stock quotes, software, computing support and online classes.
Ariba, Inc., headquartered in Sunnyvale, California, provides Internet-
and intranet-based business-to-business e-commerce solutions for
operating resources that include information technology and
telecommunications equipment, professional services, facilities and
office equipment, and expense items.
Commerce One, Inc., headquartered in Walnut Creek, California, provides
business-to-business electronic procurement solutions. The company's
"The Commerce Chain Solution" dynamically links buying and supplying
organizations into real-time trading communities, increasing efficiency
and significantly reducing operational costs across the entire indirect
supply chain.
PurchasePro.com, Inc., headquartered in Las Vegas, Nevada, provides
Internet business-to-business e-commerce services. The company's
solution is a standard platform for small- and medium-sized businesses
as well as corporate purchasing departments to buy and sell products in
secure, online, open and private marketplaces.
VerticalNet, Inc., headquartered in Horsham, Pennsylvania, is one of the
Internet's leading creators and operators of vertical trade communities.
The company leverages the interactive features and global reach of the
Internet to create multi-national, targeted business-to-business
communities. These narrowly focused Web sites attract buyers and sellers
from around the world by catering to individuals with similar
Page 45
professional interests. The company's communities include industries
such as electronics, environment and services.
Yahoo! Inc., headquartered in Santa Clara, California, is a global
Internet media company that offers a family of branded on-line media
properties, including "YAHOO!" The company's Web site enables users to
locate and access information and services through hypertext links from
a hierarchical, subject-based directory of Web sites.
Infrastructure
_________________________
BroadVision, Inc., headquartered in Redwood City, California, develops,
markets and supports application software solutions. The company
provides an integrated software application system, "BroadVision One-To-
One," that enables businesses to create applications for interactive
marketing and selling services on the World Wide Web.
Check Point Software Technologies Ltd., headquartered in Ramat-Gan,
Israel, develops, sells and supports secure enterprise networking
solutions. The company's integrated architecture includes network
security ("FireWall-1," "VPN-1," "Open Security Manager" and "Provider-
1"), traffic control ("FloodGate-1" and "ConnectControl") and Internet
protocol address management ("Meta IP")
Digital Island, headquartered in San Francisco, California, is a leading
provider of network services for globalizing e-Business applications.
The Company serves corporations which operate in multiple countries that
need to securely and consistently extend business-critical applications
for marketing, selling, servicing or distributing products via the
Internet.
Exodus Communications, Inc., headquartered in Santa Clara, California,
provides Internet system and network management solutions for
enterprises with mission-critical Internet operations. The company's
data centers are located throughout the United States and in England.
Level 3 Communications, Inc., headquartered in Broomfield, Colorado,
provides telecommunications and information services, including local,
long distance and data transmission. The company is building the first
international network optimized for Internet Protocol technology. The
network will combine both local and long distance networks, connecting
customers end-to-end across the United States and in Europe and Asia.
MCI WorldCom, Inc., headquartered in Clinton, Mississippi, operates as a
global communications company which provides facilities-based and fully-
integrated local, long distance, international and Internet services in
over 65 countries encompassing the Americas, Europe and the Asia-Pacific
regions. The company also offers wireless and 800 services, calling
cards, private lines and debit cards.
Microsoft Corporation, headquartered in Redmond, Washington, develops,
manufactures, licenses and supports a wide range of software products.
The company offers operating system software, server application
software, business and consumer applications software, software
development tools and Internet and intranet software. "Windows" is the
company's flagship PC operating system. The company also develops the
MSN network of Internet products and services.
Siebel Systems, Inc., headquartered in San Mateo, California, designs,
sells and supports enterprise-class sales and marketing information
software systems. The company also designs, develops and markets a Web-
based application software product.
VeriSign, Inc., headquartered in Mountain View, California, provides
digital certificate solutions and infrastructure needed by companies,
government agencies, trading partners and individuals to conduct trusted
and secure communications and commerce over the Internet and over
intranets and extranets using the Internet Protocol.
Procurement
___________
Cisco Systems, Inc., headquartered in San Jose, California, provides
networking solutions that connect computing devices and computer
networks. The company offers various products to utilities,
corporations, universities, governments and small to medium businesses
worldwide.
Dell Computer Corporation, headquartered in Round Rock, Texas, designs,
develops, makes, sells, services and supports a broad range of computer
systems, including desktops, notebooks and servers compatible with
industry standards under the "Dell" brand name. The company also sells
software, peripheral equipment, and service and support programs.
International Business Machines Corporation, headquartered in Armonk,
New York, provides customer solutions through the use of advanced
information technologies. The company offers a variety of solutions that
include services, software, systems, products, financing and technologies.
Page 46
i2 Technologies, Inc., headquartered in Dallas, Texas, provides supply
chain management software, which encompasses the planning and scheduling
of manufacturing and related logistics from raw materials procurement
through work-in-process to customer delivery. The company's product,
"RHYTHM," generates integrated solutions to planning and scheduling
problems.
Oracle Corporation, headquartered in Redwood City, California, designs,
develops, markets and supports computer software products with a wide
variety of uses, including database management, application development
and business intelligence, and business applications.
Venture Capital
_______________
CMGI Inc., headquartered in Andover, Massachusetts, invests in and
develops Internet companies; operates direct marketing companies and
venture funds focused on the Internet; and, through subsidiaries,
provides fulfillment services.
Internet Capital Group, Inc., headquartered in Wayne, Pennsylvania, is
an Internet holding company primarily engaged in business-to-business,
or B2B, e-commerce through a network of partner companies.
Vertical Portals
________________
Chemdex Corporation, headquartered in Palo Alto, California, is the
leading provider of business-to-business e-commerce solutions for the
life sciences industry. The company offers a complete solution that
allows its customers to identify, locate and purchase life sciences
research products.
Healtheon Corporation, headquartered in Santa Clara, California,
provides advanced Internet technology to connect healthcare participants
and enable them to communicate, exchange information and perform
transactions which cut across the healthcare maze. The company's
services include the areas of membership, healthcare administration,
financial management and clinical information.
pcOrder.com, Inc., headquartered in Austin, Texas, is a leading provider
of Internet-based electronic commerce solutions that enable the computer
industry's suppliers, resellers and end-users to buy and sell computer
products online.
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 upfront 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.
Securities purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for a Trust's organization
costs (including costs of preparing the registration statement, the
Indenture and other closing documents, registering Units with the
Securities and Exchange Commission ("SEC") and states, the initial audit
of each Trust portfolio, legal fees and the initial fees and expenses of
the Trustee) will be purchased in the same proportionate relationship as
all the Securities contained in a Trust. Securities will be sold to
reimburse the Sponsor for a Trust's organization costs at the 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 Trusts). 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 Trust organization costs, the Trustee will sell
additional Securities to allow a Trust to fully reimburse the Sponsor.
In that event, the net asset value per Unit of a Trust will be reduced
by the amount of additional Securities sold. Although the dollar amount
of the reimbursement due to the Sponsor will remain fixed and will never
exceed the per Unit amount set forth for a Trust in "Notes to Statements
of Net Assets," this will result in a greater effective cost per Unit to
Page 47
Unit holders for the reimbursement to the Sponsor. To the extent actual
organization costs are less than the estimated amount, only the actual
organization costs will be deducted from the assets of a Trust. When
Securities are sold to reimburse the Sponsor for organization costs, the
Trustee will sell Securities, to the extent practicable, which will
maintain the same proportionate relationship among the Securities
contained in a Trust as existed prior to such sale.
Although you are not required to pay for your Units until three business
days following your order (the "date of settlement"), you may pay before
then. You will become the owner of Units ("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 a Trust is $1,000 worth of Units
($500 if you are purchasing Units for your Individual Retirement Account
or any other qualified retirement plan).
Sales Charges.
The sales charge you will pay has both an initial and a deferred
component. The initial sales charge, which you will pay at the time of
purchase, is initially equal to approximately 1.00% of the Public
Offering Price of a Unit. This initial sales charge is actually equal to
the difference between the maximum sales charge for each Trust (3.25% of
the Public Offering Price for the Select Portfolio Series and 4.50% of
the Public Offering Price for e-Business Portfolio Series) and the
maximum remaining deferred sales charge (initially $.225 per Unit for
the Select Portfolio Series and $.35 per Unit for e-Business Portfolio
Series). The initial sales charge will vary from 1.00% 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 $.045 per Unit
in the case of the Select Portfolio Series or $.07 per Unit in the case
of the e-Business Portfolio Series will be deducted on the 20th day of
each month from June 20, 2000 through October 20, 2000.
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 3.25% of the Public Offering Price per Unit (equivalent
to 3.359% of the net amount invested) for each Select Portfolio Series
and 4.50% of the Public Offering Price per Unit (equivalent to 4.712% of
the net amount invested) for the e-Business Portfolio Series. For the
e-Business Portfolio Series, the sales charge will be reduced by 1/2
of 1% on each subsequent November 30, commencing November 30, 2000, to a
minimum sales charge of 3.00%.
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 for each Select Portfolio Series:
Your maximum
If you invest sales charge
(in thousands):* will be:
_________________ ________________
$50 but less than $100 3.00%
$100 but less than $150 2.75%
$150 but less than $500 2.40%
$500 but less than $1,000 2.25%
$1,000 or more 1.50%
For the e-Business Portfolio Series:
Your maximum
If you invest sales charge
(in thousands):* will be:
_________________ ________________
$50 but less than $100 4.25%
$100 but less than $250 4.00%
$250 but less than $500 3.50%
$500 or more 2.50%
* 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. To
help you reach the above levels, you can combine the Units you purchase
of the Trusts in this prospectus with any other same day purchases of
other trusts for which we are Principal Underwriter and are currently in
Page 48
the initial offering period. In addition, we will also consider Units
you purchase in the name of your spouse or child under 21 years of age
to be purchases by you. The reduced sales charges will also apply to a
trustee or other fiduciary purchasing Units for a single trust estate or
single fiduciary account. You must inform your dealer of any combined
purchases before the sale in order to be eligible for the reduced sales
charge. Any reduced sales charge is the responsibility of the party
making the sale.
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 Trusts subject only to any remaining deferred
sales charge to be collected on Units of the Trusts. 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 at the Public Offering Price, subject only to the
Sponsor's retention of the sales charge. See "Distribution of Units-
Dealer Concessions."
You 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 Evaluator will appraise the aggregate underlying value of the
Securities in a Trust as of the Evaluation Time on each business day and
will adjust the Public Offering Price of the Units according to this
valuation. This Public Offering Price will be effective for all orders
received before the Evaluation Time on each such day. If we or the
Trustee receive orders for purchases, sales or redemptions after that
time, or on a day which is not a business day, they will be held until
the next determination of price. The term "business day" as used in this
prospectus will exclude Saturdays, Sundays and certain national holidays
on which the NYSE is closed.
The aggregate underlying value of the Securities in a Trust will be
determined as follows: if the Securities are listed on a securities
exchange or The Nasdaq Stock Market, their value is generally based on
the closing sale prices on that exchange or system (unless it is
determined that these prices are not appropriate as a basis for
valuation). However, if there is no closing sale price on that exchange
or system, they are valued based on the closing ask prices. If the
Securities are not so listed, or, if so listed and the principal market
for them is other than on that exchange or system, their value 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 valuation). If current ask prices are unavailable, the
valuation 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.
After the initial offering period is over, the aggregate underlying
value of the Securities will be determined as set forth above, except
that bid prices are used instead of ask prices when necessary.
Distribution of Units
We intend to qualify Units of the Trusts for sale in a number of states.
All Units will be sold at the then current Public Offering Price.
Dealer Concessions.
For the Select Portfolio Series, dealers and other selling agents can
purchase Units at prices which reflect a concession or agency commission
Page 49
of 2.75% of the Public Offering Price per Unit. However, for Units sold
subject only to any remaining deferred sales charge, the amount will be
reduced to $0.175 per Unit for Units sold subject to the maximum
deferred sales charge or 63% 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 Units of the Select Portfolio
Series during the initial offering period in the dollar amounts shown below
will be entitled to the following additional sales concessions as a
percentage of the Public Offering Price:
Total Sales
per Trust Additional
(in millions): Concession:
_________________ ________________
$15 but less than $25 .015%
$25 but less than $40 .025%
$40 but less than $50 .050%
$50 but less than $75 .125%
$75 but less than $100 .150%
$100 or more .200%
For the e-Business Portfolio Series, dealers and other selling agents
can purchase Units at prices which reflect a concession or agency
commission of 3.2% of the Public Offering Price per Unit (or 65% of the
maximum sales charge after November 30, 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 $.22 per
Unit on Units sold subject to the maximum deferred sales charge or 63%
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 will receive an additional volume concession or
agency commission on the sale of e-Business Portfolio Series Units
equal to .30% of the Public Offering Price if they purchase at
least $100,000 worth of Units of the e-Business Portfolio Series on
the Initial Date of Deposit or $250,000 on any day thereafter or if they
were eligible to receive a similar concession in connection with sales
of similarly structured trusts sponsored by us which are currently in
the initial offering period.
Dealers and other selling agents who sell Units of the e-Business
Portfolio Series during the initial offering period in the dollar
amounts shown below will be entitled to the following additional sales
concessions as a percentage of the Public Offering Price:
Total Sales Additional
(in millions): Concession:
_________________ ________________
$1 but less than $2 .10%
$2 but less than $3 .15%
$3 but less than $10 .20%
$10 or more .30%
For all Trusts, dealers and other selling agents who, during any
consecutive 12-month period, sell at least $2 billion worth of primary
market units of unit investment trusts sponsored by us will receive a
concession of $30,000 in the month following the achievement of this
level. 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 Trusts available to their customers on an agency
basis. A portion of the sales charge paid by these customers is kept by
or given to the banks in the amounts shown above.
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 Trusts. In addition, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable sales charge on Units sold by such persons during such
programs. We make these payments out of our own assets and not out of
Trust assets. These programs will not change the price you pay for your
Units.
Investment Comparisons.
From time to time we may compare the estimated returns of the Trusts
(which may show performance net of the expenses and charges the Trusts
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,
Page 50
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, BusinessWeek,
Forbes or Fortune. The investment characteristics of each Trust differ
from other comparative investments. You should not assume that these
performance comparisons will be representative of a Trust's future
performance.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum sales
charge per Unit of a Trust 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 a Trust is considered
a profit or loss (see Note 2 of "Notes to Schedules of Investments").
During the initial offering period, dealers and others may also realize
profits or sustain losses as a result of fluctuations in the Public
Offering Price they receive when they sell the Units.
In maintaining a market for the Units, any difference between the price
at which we purchase Units and the price at which we sell or redeem them
will be a profit or loss to us.
The Secondary Market
Although not obligated, 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, Trustee costs to transfer and record the ownership of
Units and in the case of the e-Business Portfolio Series, costs incurred
in annually updating the Trust's registration statement. 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 or redeem
your Units 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 your proceeds from the
sale no later than if they were redeemed by the Trustee. We may tender
Units that 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.
Expenses and Charges
The estimated annual expenses of each Trust are listed under "Fee
Table." If actual expenses of a Trust exceed the estimate, that Trust
will bear the excess. The Trustee will pay operating expenses of a Trust
from the Income Account of such 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 may earn interest on
these funds, thus benefiting from their use.
As Sponsor, we will be compensated for providing bookkeeping and other
administrative services to the Trusts, and will receive brokerage fees
when a Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. For the e-Business Portfolio Series, legal and
regulatory filing fees and expenses associated with updating that
Trust's registration statement yearly are also now chargeable to that
Trust. Historically, we paid these fees and expenses. There are no such
fees and expenses that will be charged to the Select Portfolio Series.
First Trust Advisors L.P., an affiliate of ours, acts as both Portfolio
Supervisor and Evaluator to the Trusts and will receive the fees set
forth under "Fee Table" for providing portfolio supervisory and
evaluation services to the Trusts. In providing portfolio supervisory
services, the Portfolio Supervisor may purchase research services from a
number of sources, which may include underwriters or dealers of the
Trusts.
The fees payable to us, First Trust Advisors L.P. and the Trustee are
based on the largest aggregate number of Units of a Trust outstanding at
Page 51
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 services in such year.
In addition to a Trust's operating expenses and those fees described
above, each Trust may also incur the following charges:
- - All legal and annual auditing expenses of the Trustee according to its
responsibilities under the Indenture;
- - The expenses and costs incurred by the Trustee to protect a Trust and
your rights and interests;
- - Fees for any extraordinary services the Trustee performed under the
Indenture;
- - Payment for any loss, liability or expense the Trustee incurred
without negligence, bad faith or willful misconduct on its part, in
connection with its acceptance or administration of a Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of a
Trust; and/or
- - All taxes and other government charges imposed upon the Securities or
any part of a Trust.
The above expenses and the Trustee's annual fee are secured by a lien on
the Trusts. 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 Trusts. If there is not
enough cash in the Income or Capital Account, the Trustee has the power
to sell Securities in a Trust to make cash available to pay these
charges which may result in capital gains or losses to you. See "Tax
Status."
The e-Business Portfolio Series will be audited annually. So long as we
are making a secondary market for Units, we will bear the cost of these
annual audits to the extent the costs exceed $0.0050 per Unit.
Otherwise, the e-Business Portfolio Series will pay for the audit. You
can request a copy of the audited financial statements from the Trustee.
Tax Status
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trusts. This section is current as
of the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a non-U.S. person, a
broker/dealer, or other investor with special circumstances. In
addition, this section does not describe your state or foreign taxes. As
with any investment, you should consult your own tax professional about
your particular consequences.
Trust Status.
The Trusts will not be taxed as corporations for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Securities and other assets held by your Trust, and
as such you will be considered to have received a pro rata share of
income (i.e., dividends and capital gains, if any) from each Security
when such income is considered to be received by your Trust. This is
true even if you elect to have your distributions automatically
reinvested into additional Units. In addition, the income from a Trust
which you must take into account for federal income tax purposes is not
reduced by amounts used to pay a deferred sales charge.
Your Tax Basis and Income or Loss upon Disposition.
If your Trust disposes of Securities, you will generally recognize gain
or loss. If you dispose of your Units or redeem your Units for cash, you
will also generally recognize gain or loss. To determine the amount of
this gain or loss, you must subtract your tax basis in the related
Securities from your share of the total proceeds received in the
transaction. You can generally determine your initial tax basis in each
Security or other Trust asset by apportioning the cost of your Units
among each Security or other Trust asset ratably according to their
value on the date you purchase your Units. In certain circumstances,
however, you may have to adjust your tax basis after you purchase your
Units (for example, in the case of certain dividends that exceed a
corporation's accumulated earnings and profits).
Page 52
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (10% for certain taxpayers in the lowest
tax bracket). Net capital gain equals net long-term capital gain minus
net short-term capital loss for the taxable year. Capital gain or loss
is long-term if the holding period for the asset is more than one year
and is short-term if the holding period for the asset is one year or
less. You must exclude the date you purchase your Units to determine the
holding period of your Units. The tax rates for capital gains realized
from assets held for one year or less are generally the same as for
ordinary income. The tax code may, however, treat certain capital gains
as ordinary income in special situations.
In-Kind Distributions.
Under certain circumstances, you may request a distribution of shares of
Securities (an "In-Kind Distribution") when you redeem your Units or at
a Trust's termination. If you request an In-Kind Distribution you will
be responsible for any expenses related to this distribution. By
electing to receive an In-Kind Distribution, you will receive an
undivided interest in whole shares of stock plus, possibly, cash.
You will not recognize gain or loss if you only receive Securities in
exchange for your pro rata portion of the Securities held by a Trust.
However, if you also receive cash in exchange for a fractional share of
a Security held by a Trust, you will generally recognize gain or loss
based on the difference between the amount of cash you receive and your
tax basis in such fractional share of the Security.
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes, you must take into account
your full pro rata share of a Trust's income, even if some of that
income is used to pay Trust expenses. You may deduct your pro rata share
of each expense paid by a Trust to the same extent as if you directly
paid the expense. You may, however, be required to treat some or all of
the expenses of the Trusts 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.
Some distributions by a Trust may be subject to foreign withholding
taxes. Any dividends withheld will nevertheless be treated as income to
you. However, because you are deemed to have paid directly your share of
foreign taxes that have been paid or accrued by a Trust, you may be
entitled to a foreign tax credit or deduction for U.S. tax purposes with
respect to such taxes.
Under the existing income tax laws of the State and City of New York,
the Trusts will not be taxed as corporations, and the income of the
Trusts will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes. You should consult your tax
advisor regarding potential foreign, state or local taxation with
respect to your Units.
Retirement Plans
You may purchase Units of the Trusts for:
- - Individual Retirement Accounts;
- - Keogh Plans;
- - Pension funds; and
- - Other tax-deferred retirement plans.
Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. Before participating in a plan like this, you should review
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as Record Owner of Units persons registered as
such on its books. It is your responsibility to notify the Trustee when
you become Record Owner, but normally your broker/dealer provides this
notice. You may elect to hold your Units in either certificated or
uncertificated form.
Certificated Units. When you purchase your Units you can request that
they be evidenced by certificates, which will be delivered shortly after
your order. Certificates will be issued in fully registered form,
transferable only on the books of the Trustee in denominations of one
Page 53
Unit or any multiple thereof. You can transfer or redeem your
certificated Units by endorsing and surrendering the certificate to the
Trustee, along with a written instrument 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.
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. 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.
Uncertificated Units. 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 you:
- - A written initial transaction statement containing a description of
the 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.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
- - A summary of transactions in your Trust for the year;
- - Any Securities sold during the year and the Securities held at the
end of that year by your Trust;
- - The Redemption Price per Unit, computed on the 31st day of December
of such year (or the last business day before); and
- - Amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
federal and state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. The Trustee will credit dividends received on a
Trust's Securities to the Income Account of such Trust. All other
receipts, such as return of capital, are credited to the Capital Account
of such 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." No income distribution will be paid if accrued expenses of
a Trust exceed amounts in the Income Account on the Income Distribution
Dates. Distribution amounts will vary with changes in a Trust's fees and
expenses, in dividends received and with the sale of Securities. The
Trustee will distribute amounts in the Capital Account, net of amounts
designated to meet redemptions, pay the deferred sales charge or pay
expenses 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. If the Trustee does not have your TIN, it is required to
withhold a certain percentage of your distribution and deliver such
amount to the Internal Revenue Service ("IRS"). You may recover this
amount by giving your TIN to the Trustee, or when you file a tax return.
However, you should check your statements to make sure the Trustee has
your TIN to avoid this "back-up withholding."
We anticipate that there will be enough money in the Capital Account of
a Trust to pay the deferred sales charge. If not, the Trustee may sell
Securities to meet the shortfall.
Within a reasonable time after a Trust is terminated, you will receive
the pro rata share of the money from the sale of the Securities.
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However, if you are eligible, you may elect to receive an In-Kind
Distribution as described under "Amending or Terminating the Indenture."
You will receive a pro rata share of any other assets remaining in your
Trust after deducting any unpaid expenses.
The Trustee may establish reserves (the "Reserve Account") within a
Trust to cover anticipated state and local taxes or any governmental
charges to be paid out of such Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of your Trust by notifying the Trustee at least 10 days before any
Record Date. Each later distribution of income and/or capital on your
Units will be reinvested by the Trustee into additional Units of your
Trust. You will have to pay the 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 uncertificated, you
need only deliver a request for redemption to the Trustee. In either
case, the certificates or the redemption request 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 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. The IRS will require the Trustee to withhold a
portion of your redemption proceeds if it does not have your TIN, as
generally discussed under "Income and Capital Distributions."
If you tender 1,000 Units or more for redemption, rather than receiving
cash, you may elect to receive an In-Kind Distribution in an amount
equal to the Redemption Price per Unit by making this request in writing
to the Trustee at the time of tender. However, no In-Kind Distribution
requests submitted during the nine business days prior to a Trust's
Mandatory Termination Date will be honored. Where possible, the Trustee
will make an In-Kind Distribution by distributing each of the Securities
in book-entry form to your bank or broker/dealer account at the
Depository Trust Company. The Trustee will subtract any customary
transfer and registration charges from your In-Kind Distribution. As a
tendering Unit holder, you will receive your pro rata number of whole
shares of the Securities that make up the portfolio, and cash from the
Capital Account equal to the fractional shares to which you are entitled.
The Trustee may sell Securities to make funds available for redemption.
If Securities are sold, the size and diversification of a Trust will be
reduced. These sales may result in lower prices than if the Securities
were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
- - 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:
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adding
1. cash in the Income and Capital Accounts of a Trust not designated to
purchase Securities;
2. the aggregate value of the Securities held in a 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 a Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of a Trust, if any;
4. cash held for distribution to Unit holders of record of a Trust as of
the business day before the evaluation being made; and
5. other liabilities incurred by a Trust; and
dividing
1. the result by the number of outstanding Units of a 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."
Removing Securities from a Trust
The portfolios of the Trusts are not managed. However, we may, but are
not required to, direct the Trustee to dispose of a Security in certain
limited circumstances, including situations in which:
- - The issuer of the Security defaults in the payment of a declared
dividend;
- - Any action or proceeding prevents the payment of dividends;
- - There is any legal question or impediment affecting the Security;
- - The issuer of the Security has breached a covenant which would affect
the payment of dividends, the issuer's credit standing, or otherwise
damage the sound investment character of the Security;
- - The issuer has defaulted on the payment of any other of its
outstanding obligations; or
- - The price of the Security has declined to such an extent, or such
other credit factors exist, that in our opinion keeping the Security
would be harmful to a Trust.
Except in the limited instance in which a Trust acquires Replacement
Securities, as described in "The FT Series," a Trust may not acquire any
securities or other property other than the Securities. The Trustee, on
behalf of the Trusts, will reject any offer for new or exchanged
securities or property in exchange for a Security, such as those
acquired in a merger or other transaction. If such exchanged securities
or property are nevertheless acquired by a Trust, at our instruction,
they will either be sold or held in such 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 for distribution to Unit holders
or to meet redemption requests. The Trustee may retain and pay us or an
affiliate of ours to act as agent for a Trust to facilitate selling
Securities, exchanged securities or property from the Trusts. If we or
our affiliate act in this capacity, we will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may sell Securities designated by us or, absent our
direction, at its own discretion, in order to meet redemption requests
or pay expenses. In designating Securities to be sold, we will try to
maintain the proportionate relationship among the Securities. If this is
not possible, the composition and diversification of a Trust may be
changed. To get the best price for a Trust we may 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 when we make recommendations to the Trustee as to which
broker/dealers they select to execute a Trust's portfolio transactions,
or when acting as agent for a Trust in acquiring or selling Securities
on behalf of the Trusts.
Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - To cure ambiguities;
- - To correct or supplement any defective or inconsistent provision;
- - To make any amendment required by any governmental agency; or
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- - 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 Trusts will terminate on
the Mandatory Termination Date as stated in the "Summary of Essential
Information" for each Trust. The Trusts may be terminated earlier:
- - Upon the consent of 100% of the Unit holders of a Trust;
- - If the value of the Securities owned by a Trust as shown by any
evaluation is less than the lower of $2,000,000 or 20% of the total
value of Securities deposited in such Trust during the initial offering
period ("Discretionary Liquidation Amount"); or
- - In the event that Units of a Trust not yet sold aggregating more than
60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor.
Prior to termination, the Trustee will send written notice to all Unit
holders which will specify how you should tender your certificates, if
any, to the Trustee. If a Trust is terminated due to this last reason,
we will refund your entire sales charge; however, termination of a Trust
before 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, a
Trust may be reduced below the Discretionary Liquidation Amount and
could therefore be terminated before the Mandatory Termination Date.
Unless terminated earlier, the Trustee will begin to sell Securities in
connection with the termination of a Trust during the period beginning
nine business days prior to, and no later than, the Mandatory
Termination Date. We will determine the manner and timing of the sale of
Securities. 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 sales price than might
otherwise be realized if such sale were not required at this time.
If you own at least 1,000 Units of a 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 (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, you will receive a cash distribution from the sale
of the remaining Securities, along with your interest in the Income and
Capital Accounts, within a reasonable time after such Trust is
terminated. Regardless of the distribution involved, the Trustee will
deduct from the Trusts any accrued costs, expenses, advances or
indemnities provided for 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 us and not to the Trusts or to any
series of the Trusts or to any other dealer. We are including this
information only to inform you of our financial responsibility and our
ability to carry out our contractual obligations. We will provide more
detailed financial information on request.
Page 57
The Trustee.
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th Floor, New York, New
York, 10004-2413. If you have questions regarding the Trusts, you may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
supervised by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System.
The Trustee has not participated in selecting the Securities for the
Trusts; it only provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable for taking any action or for
not taking any action in good faith according to the Indenture. We will
also not be accountable for errors in judgment. We will only be liable
for our own willful misfeasance, bad faith, gross negligence (ordinary
negligence in the Trustee's case) or reckless disregard of our
obligations and duties. The Trustee is not liable for any loss or
depreciation when the Securities are sold. If we fail to act under the
Indenture, the Trustee may do so, and the Trustee will not be liable for
any action it takes in good faith under the Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - Appoint a successor sponsor, paying them a reasonable rate not more
than that stated by the SEC;
- - Terminate the Indenture and liquidate the Trusts; 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,
but will not be liable to the Trustee, Sponsor or Unit holders for
errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trusts.
Experts.
Ernst & Young LLP, independent auditors, have audited the Trusts'
statements of net assets, including the schedules of investments, at the
opening of business on the Initial Date of Deposit, as set forth in
their report. We've included the Trusts' statements of net assets,
including the schedules of investments, in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific details concerning the nature, structure and risks
of this product.
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Page 59
FIRST TRUST (registered trademark)
Bandwidth Select Portfolio Series
Biotechnology Select Portfolio Series
e-Business Select Portfolio Series
e-Tail Select Portfolio Series
Financial Services Select Portfolio Series
Internet Select Portfolio Series
Pharmaceutical Select Portfolio Series
Technology Select Portfolio Series
e-Business Portfolio Series
FT 378
Sponsor:
NIKE SECURITIES L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
24-Hour Pricing Line:
1-800-446-0132
This prospectus contains information relating to the above-mentioned
unit investment trusts, 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. 333-90001) 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
November 16, 1999
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 60
First Trust (registered trademark)
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of unit investment trusts ("Trusts")
contained in FT 378 not found in the prospectus for the Trusts. This
Information Supplement is not a prospectus and does not include all of
the information that a prospective investor should consider before
investing in a Trust. This Information Supplement should be read in
conjunction with the prospectus for the Trust in which an investor is
considering investing.
This Information Supplement is dated November 16, 1999. Capitalized
terms have been defined in the prospectus.
Table of Contents
Risk Factors
Securities 1
Dividends 1
Foreign Issuers 1
Litigation
Microsoft Corporation 2
Concentrations
Biotechnology/Pharmaceutical 2
Communications 3
Electronic Commerce 3
Financial Services 4
Technology 6
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.
Foreign Issuers. Since certain of the Securities included in the Trusts
consist of securities of foreign issuers, an investment in the Trusts
involves certain investment risks that are different in some respects
from an investment in a trust which invests entirely in the securities
of domestic issuers. These investment risks include future political or
governmental restrictions which might adversely affect the payment or
receipt of payment of dividends on the relevant Securities, the
possibility that the financial condition of the issuers of the
Securities may become impaired or that the general condition of the
relevant stock market may worsen (both of which would contribute
directly to a decrease in the value of the Securities and thus in the
value of the Units), the limited liquidity and relatively small market
capitalization of the relevant securities market, expropriation or
confiscatory taxation, economic uncertainties and foreign currency
devaluations and fluctuations. In addition, for foreign issuers that are
not subject to the reporting requirements of the Securities Exchange Act
Page 1
of 1934, there may be less publicly available information than is
available from a domestic issuer. Also, foreign issuers are not
necessarily subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers. The securities of many foreign issuers
are less liquid and their prices more volatile than securities of
comparable domestic issuers. In addition, fixed brokerage commissions
and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers
in foreign countries than there is in the United States. However, due to
the nature of the issuers of the Securities selected for the Trusts, the
Sponsor believes that adequate information will be available to allow
the Supervisor to provide portfolio surveillance for the Trusts.
Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the U.S. dollar value of these securities will vary
with fluctuations in the U.S. dollar foreign exchange rates for the
various Securities.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trusts are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trusts of dividends due on, or proceeds
from the sale of, the Securities. However, there can be no assurance
that exchange control regulations might not be adopted in the future
which might adversely affect payment to the Trusts. The adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the
Trusts and on the ability of the Trusts to satisfy its obligation to
redeem Units tendered to the Trustee for redemption. In addition,
restrictions on the settlement of transactions on either the purchase or
sale side, or both, could cause delays or increase the costs associated
with the purchase and sale of the foreign Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to the Trusts relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by a Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by
the Trusts will generally be effected only in foreign securities
markets. Although the Sponsor does not believe that the Trusts will
encounter obstacles in disposing of the Securities, investors should
realize that the Securities may be traded in foreign countries where the
securities markets are not as developed or efficient and may not be as
liquid as those in the United States. The value of the Securities will
be adversely affected if trading markets for the Securities are limited
or absent.
Litigation
Microsoft Corporation. Microsoft Corporation is currently engaged in
litigation with Sun Microsystems, Inc., the U.S. Department of Justice,
several state Attorneys General and Caldera, Inc. The complaints against
Microsoft include copyright infringement, unfair competition and anti-
trust violations. The claims seek injunctive relief and monetary
damages. As of September 28, 1999, Microsoft's management asserted that
resolving these matters will not have a material adverse impact on its
financial position or its results of operation.
Concentrations
Biotechnology/Pharmaceutical. An investment in Units of the
Biotechnology Portfolio and Pharmaceutical Portfolio should be made with
an understanding of the problems and risks such an investment may entail.
Companies involved in advanced medical devices and instruments, drugs
and biotech have potential risks unique to their sector of the
healthcare field. These companies are subject to governmental regulation
of their products and services, a factor which could have a significant
and possibly unfavorable effect on the price and availability of such
products or services. Furthermore, such companies face the risk of
increasing competition from new products or services, generic drug
sales, the termination of patent protection for drug or medical supply
products and the risk that technological advances will render their
products obsolete. The research and development costs of bringing a drug
to market are substantial, and include lengthy governmental review
processes with no guarantee that the product will ever come to market.
Many of these companies may have losses and may not offer certain
products for several years. Such companies may also have persistent
losses during a new product's transition from development to production,
and revenue patterns may be erratic.
As the population of the United States ages, the companies involved in
the healthcare field will continue to search for and develop new drugs,
medical products and medical services through advanced technologies and
diagnostics. On a worldwide basis, such companies are involved in the
development and distributions of drugs, vaccines, medical products and
medical services. These activities may make the
biotechnology/pharmaceuticals sector very attractive for investors
Page 2
seeking the potential for growth in their investment portfolio. However,
there are no assurances that the Trust's objectives will be met.
Legislative proposals concerning healthcare are proposed in Congress
from time to time. These proposals span a wide range of topics,
including cost and price controls (which might include a freeze on the
prices of prescription drugs). The Sponsor is unable to predict the
effect of any of these proposals, if enacted, on the issuers of
Securities in the Trust.
Communications. An investment in Units of the Bandwidth Portfolio should
be made with an understanding of the problems and risks such an
investment may entail. The market for high-technology communications
products and services is characterized by rapidly changing technology,
rapid product obsolescence, cyclical market patterns, evolving industry
standards and frequent new product introductions. The success of the
issuers of the Securities depends in substantial part on the timely and
successful introduction of new products and services. An unexpected
change in one or more of the technologies affecting an issuer's products
or in the market for products based on a particular technology could
have a material adverse affect on an issuer's operating results.
Furthermore, there can be no assurance that the issuers of the
Securities will be able to respond in a timely manner to compete in the
rapidly developing marketplace.
The communications industry is subject to governmental regulation.
However, as market forces develop, the government will continue to
deregulate the communications industry, promoting vigorous economic
competition and resulting in the rapid development of new communications
technologies. The products and services of communications companies may
be subject to rapid obsolescence. These factors could affect the value
of the Trust's Units. For example, while telephone companies in the
United States are subject to both state and federal regulations
affecting permitted rates of returns and the kinds of services that may
be offered, the prohibition against phone companies delivering video
services has been lifted. This creates competition between phone
companies and cable operators and encourages phone companies to
modernize their communications infrastructure. Certain types of
companies represented in the Trust's portfolio are engaged in fierce
competition for a share of the market of their products. As a result,
competitive pressures are intense and the stocks are subject to rapid
price volatility.
Many communications companies rely on a combination of patents,
copyrights, trademarks and trade secret laws to establish and protect
their proprietary rights in their products and technologies. There can
be no assurance that the steps taken by the issuers of the Securities to
protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology.
Electronic Commerce. An investment in Units of the e-Tail Portfolio and
the e-Business Portfolios should be made with an understanding of the
characteristics of the problems and risks such an investment may entail.
The e-Tail Portfolio and the e-Business Portfolios consist of common
stocks of retailers that market their goods and services on the Internet
and technology companies that create the tools to make it possible. The
profitability of companies engaged in the retail industry will be
affected by various factors including the general state of the economy
and consumer spending trends. Recently, there have been major changes in
the retail environment due to the declaration of bankruptcy by some of
the major corporations involved in the retail industry, particularly the
department store segment. The continued viability of the retail industry
will depend on the industry's ability to adapt and to compete in
changing economic and social conditions, to attract and retain capable
management, and to finance expansion. Weakness in the banking or real
estate industry, a recessionary economic climate with the consequent
slowdown in employment growth, less favorable trends in unemployment or
a marked deceleration in real disposable personal income growth could
result in significant pressure on both consumer wealth and consumer
confidence, adversely affecting consumer spending habits. In addition,
competitiveness of the retail industry will require large capital
outlays for investment in the installation of automated checkout
equipment to control inventory, to track the sale of individual items
and to gauge the success of sales campaigns. Increasing employee and
retiree benefit costs may also have an adverse effect on the industry.
In many sectors of the retail industry, competition may be fierce due to
market saturation, converging consumer tastes and other factors. Because
of these factors and the recent increase in trade opportunities with
other countries, American retailers are now entering global markets
which entail added risks such as sudden weakening of foreign economies,
difficulty in adapting to local conditions and constraints and added
research costs.
Retailers who sell their products over the Internet have the potential
to access more consumers, but will require the capital to acquire and
maintain sophisticated technology. E-commerce company stocks have
experienced extreme price and volume fluctuations that are often
unrelated to their operating performance. Many such companies have
exceptionally high price-to-earnings ratios with little or no earnings
histories. In addition, numerous e-commerce companies have only recently
begun operations, and may have limited product lines, markets or
financial resources, as well as fewer experienced management personnel.
Finally, the lack of barriers to entry suggests a future of intense
competition for online retailers.
See "Technology" below, for additional information concerning the risks
Page 3
of companies engaged in the technology industry.
Financial Services. An investment in Units of the Financial Services
Portfolio Series should be made with an understanding of the problems
and risks inherent in the bank and financial services sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in
their fields of business. Banks and thrifts are highly dependent on net
interest margin. Recently, bank profits have come under pressure as net
interest margins have contracted, but volume gains have been strong in
both commercial and consumer products. There is no certainty that such
conditions will continue. Bank and thrift institutions had received
significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic
conditions in the real estate markets, which have been weak in the past,
can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by
real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Securities in the Trust's portfolio cannot be predicted
with certainty. The recently enacted financial-services overhaul
legislation will allow banks, securities firms and insurance companies
to form one-stop financial conglomerates marketing a wide range of
financial service products to investors. This legislation will likely
result in increased merger activity and heightened competition among
existing and new participants in the field. Efforts to expand the
ability of federal thrifts to branch on an interstate basis have been
initially successful through promulgation of regulations, and
legislation to liberalize interstate banking has recently been signed
into law. Under the legislation, banks will be able to purchase or
establish subsidiary banks in any state, one year after the
legislation's enactment. Since mid-1997, banks have been allowed to turn
existing banks into branches. Consolidation is likely to continue. The
Securities and Exchange Commission and the Financial Accounting
Standards Board require the expanded use of market value accounting by
banks and have imposed rules requiring market accounting for investment
securities held in trading accounts or available for sale. Adoption of
additional such rules may result in increased volatility in the reported
health of the industry, and mandated regulatory intervention to correct
such problems. Additional legislative and regulatory changes may be
forthcoming. For example, the bank regulatory authorities have proposed
substantial changes to the Community Reinvestment Act and fair lending
laws, rules and regulations, and there can be no certainty as to the
effect, if any, that such changes would have on the Securities in the
Trust's portfolio. In addition, from time to time the deposit insurance
system is reviewed by Congress and federal regulators, and proposed
reforms of that system could, among other things, further restrict the
ways in which deposited moneys can be used by banks or reduce the dollar
amount or number of deposits insured for any depositor. Such reforms
could reduce profitability as investment opportunities available to bank
institutions become more limited and as consumers look for savings
vehicles other than bank deposits. Banks and thrifts face significant
competition from other financial institutions such as mutual funds,
credit unions, mortgage banking companies and insurance companies, and
increased competition may result from legislative broadening of regional
and national interstate banking powers as has been recently enacted.
Among other benefits, the legislation allows banks and bank holding
companies to acquire across previously prohibited state lines and to
consolidate their various bank subsidiaries into one unit. The Sponsor
makes no prediction as to what, if any, manner of bank and thrift
regulatory actions might ultimately be adopted or what ultimate effect
such actions might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
Page 4
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Securities or whether such approvals, if necessary, will be
obtained.
Some of the nation's largest banks, already working to upgrade their own
computer systems to meet the Year 2000 deadline, are concerned that some
borrowers may fail to upgrade their computers in time, creating problem
loans and increasing overall loan losses. Banks considered most
vulnerable by analysts include those lending primarily to small
businesses, which aren't as likely as large businesses to have a plan
for upgrading their computers. Also at risk are banks with significant
exposure overseas, where many foreign businesses are not moving as
quickly to resolve this problem. Analysts warn that it will be difficult
for banks to determine their potential loan losses related to Year 2000
credit risk.
Companies involved in the insurance industry are engaged in
underwriting, reinsuring, selling, distributing or placing of property
and casualty, life or health insurance. Other growth areas within the
insurance industry include brokerage, reciprocals, claims processors and
multiline insurance companies. Insurance company profits are affected by
interest rate levels, general economic conditions, and price and
marketing competition. Property and casualty insurance profits may also
be affected by weather catastrophes and other disasters. Life and health
insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation,
including the imposition of maximum rate levels, which may not be
adequate for some lines of business. Proposed or potential tax law
changes may also adversely affect insurance companies' policy sales, tax
obligations, and profitability. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including
those applicable to regulated insurance companies, such as: (i) the
inherent uncertainty in the process of establishing property-liability
loss reserves, particularly reserves for the cost of environmental,
asbestos and mass tort claims, and the fact that ultimate losses could
materially exceed established loss reserves which could have a material
adverse effect on results of operations and financial condition; (ii)
the fact that insurance companies have experienced, and can be expected
in the future to experience, catastrophe losses which could have a
material adverse impact on their financial condition, results of
operations and cash flow; (iii) the inherent uncertainty in the process
of establishing property-liability loss reserves due to changes in loss
payment patterns caused by new claims settlement practices; (iv) the
need for insurance companies and their subsidiaries to maintain
appropriate levels of statutory capital and surplus, particularly in
light of continuing scrutiny by rating organizations and state insurance
regulatory authorities, and in order to maintain acceptable financial
strength or claims-paying ability rating; (v) the extensive regulation
and supervision to which insurance companies' subsidiaries are subject,
various regulatory initiatives that may affect insurance companies, and
regulatory and other legal actions; (vi) the adverse impact that
increases in interest rates could have on the value of an insurance
company's investment portfolio and on the attractiveness of certain of
its products; (vii) the need to adjust the effective duration of the
assets and liabilities of life insurance operations in order to meet the
anticipated cash flow requirements of its policyholder obligations; and
(vii) the uncertainty involved in estimating the availability of
reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have
considered or enacted laws that alter and, in many cases, increase state
Page 5
authority to regulate insurance companies and insurance holding company
systems. Further, the National Association of Insurance Commissioners
("NAIC") and state insurance regulators are re-examining existing laws
and regulations, specifically focusing on insurance companies,
interpretations of existing laws and the development of new laws. In
addition, Congress and certain federal agencies have investigated the
condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is
unable to predict whether any state or federal legislation will be
enacted to change the nature or scope of regulation of the insurance
industry, or what effect, if any, such legislation would have on the
industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the
amount of investments in certain investment categories. Failure to
comply with these laws and regulations would cause non-conforming
investments to be treated as non-admitted assets for purposes of
measuring statutory surplus and, in some instances, would require
divestiture.
Environmental pollution clean-up is the subject of both federal and
state regulation. By some estimates, there are thousands of potential
waste sites subject to clean up. The insurance industry is involved in
extensive litigation regarding coverage issues. The Comprehensive
Environmental Response Compensation and Liability Act of 1980
("Superfund") and comparable state statutes ("mini-Superfund") govern
the clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund and the mini-Superfunds ("Environmental Clean-up
Laws or "ECLs") establish a mechanism to pay for clean-up of waste sites
if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
The extent of clean-up necessary and the assignment of liability has not
been fully established. The insurance industry is disputing many such
claims. Key coverage issues include whether Superfund response costs are
considered damages under the policies, when and how coverage is
triggered, applicability of pollution exclusions, the potential for
joint and several liability and definition of an occurrence. Similar
coverage issues exist for clean up and waste sites not covered under
Superfund. To date, courts have been inconsistent in their rulings on
these issues. An insurer's exposure to liability with regard to its
insureds which have been, or may be, named as PRPs is uncertain.
Superfund reform proposals have been introduced in Congress, but none
have been enacted. There can be no assurance that any Superfund reform
legislation will be enacted or that any such legislation will provide
for a fair, effective and cost-efficient system for settlement of
Superfund related claims.
While current federal income tax law permits the tax-deferred
accumulation of earnings on the premiums paid by an annuity owner and
holders of certain savings-oriented life insurance products, no
assurance can be given that future tax law will continue to allow such
tax deferrals. If such deferrals were not allowed, consumer demand for
the affected products would be substantially reduced. In addition,
proposals to lower the federal income tax rates through a form of flat
tax or otherwise could have, if enacted, a negative impact on the demand
for such products.
Companies engaged in investment banking/brokerage and investment
management include brokerage firms, broker/dealers, investment banks,
finance companies and mutual fund companies. Earnings and share prices
of companies in this industry are quite volatile, and often exceed the
volatility levels of the market as a whole. Recently, ongoing
consolidation in the industry and the strong stock market has benefited
stocks which investors believe will benefit from greater investor and
issuer activity. Major determinants of future earnings of these
companies are the direction of the stock market, investor confidence,
equity transaction volume, the level and direction of long-term and
short-term interest rates, and the outlook for emerging markets.
Negative trends in any of these earnings determinants could have a
serious adverse effect on the financial stability, as well as the stock
prices, of these companies. Furthermore, there can be no assurance that
the issuers of the Securities included in the e-Tail Portfolio will be
able to respond in a timely manner to compete in the rapidly developing
marketplace. In addition to the foregoing, profit margins of these
companies continue to shrink due to the commoditization of traditional
businesses, new competitors, capital expenditures on new technology and
the pressures to compete globally.
Technology. An investment in Units of the Internet Portfolio, the
Technology Portfolio, the e-Tail Portfolio and the e-Business Portfolios
should be made with an understanding of the characteristics of the
problems and risks such an investment may entail. Technology companies
generally include companies involved in the development, design,
manufacture and sale of computers and peripherals, software and
services, data networking/communications equipment, internet
access/information providers, semiconductors and semiconductor equipment
and other related products, systems and services. The market for these
products, especially those specifically related to the Internet, is
characterized by rapidly changing technology, rapid product
obsolescence, cyclical market patterns, evolving industry standards and
frequent new product introductions. The success of the issuers of the
Securities depends in substantial part on the timely and successful
introduction of new products. An unexpected change in one or more of the
technologies affecting an issuer's products or in the market for
products based on a particular technology could have a material adverse
affect on an issuer's operating results. Furthermore, there can be no
assurance that the issuers of the Securities will be able to respond in
a timely manner to compete in the rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements
of new products or development of new technologies and general
Page 6
conditions of the industry have caused and are likely to cause the
market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to
the operating performance of such companies. This market volatility may
adversely affect the market price of the Securities and therefore the
ability of a Unit holder to redeem Units at a price equal to or greater
than the original price paid for such Units.
Some key components of certain products of technology issuers are
currently available only from single sources. There can be no assurance
that in the future suppliers will be able to meet the demand for
components in a timely and cost effective manner. Accordingly, an
issuer's operating results and customer relationships could be adversely
affected by either an increase in price for, or an interruption or
reduction in supply of, any key components. Additionally, many
technology issuers are characterized by a highly concentrated customer
base consisting of a limited number of large customers who may require
product vendors to comply with rigorous industry standards. Any failure
to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies of technology
companies are incorporated into other related products, such companies
are often highly dependent on the performance of the personal computer,
electronics and telecommunications industries. There can be no assurance
that these customers will place additional orders, or that an issuer of
Securities will obtain orders of similar magnitude as past orders from
other customers. Similarly, the success of certain technology companies
is tied to a relatively small concentration of products or technologies.
Accordingly, a decline in demand of such products, technologies or from
such customers could have a material adverse impact on issuers of the
Securities.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their
proprietary rights in their products and technologies. There can be no
assurance that the steps taken by the issuers of the Securities to
protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology. In addition, due to the increasing
public use of the Internet, it is possible that other laws and
regulations may be adopted to address issues such as privacy, pricing,
characteristics, and quality of Internet products and services. For
example, recent proposals would prohibit the distribution of obscene,
lascivious or indecent communications on the Internet. The adoption of
any such laws could have a material adverse impact on the Securities in
the Trust.
Like many areas of technology, the semiconductor business environment is
highly competitive, notoriously cyclical and subject to rapid and often
unanticipated change. Recent industry downturns have resulted, in part,
from weak pricing, persistent overcapacity, slowdown in Asian demand and
a shift in retail personal computer sales toward the low end, or "sub-
$1,000" segment. Industry growth is dependent upon several factors,
including: the rate of global economic expansion; demand for products
such as personal computers and networking and communications equipment;
excess productive capacity and the resultant effect on pricing; and the
rate of growth in the market for low-priced personal computers.
Page 7
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
The Registrant, FT 378, hereby identifies The First Trust
Special Situations Trust, Series 4; The First Trust Special
Situations Trust, Series 18; The First Trust Special Situations
Trust, Series 69; The First Trust Special Situations Trust,
Series 108; The First Trust Special Situations Trust, Series 119;
The First Trust Special Situations Trust, Series 190; FT 286; and
The First Trust Combined Series 272 for purposes of the
representations required by Rule 487 and represents the
following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 378, has duly caused this Amendment to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on November 16, 1999.
FT 378
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
David J. Allen Sole Director )
of Nike Securities )
Corporation, the ) November 16, 1999
General Partner of )
Nike Securities L.P.)
)
)
) Robert M. Porcellino
) Attorney-in-Fact**
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney
was filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Combined Series 258 (File No. 33-63483) and
the same is hereby incorporated herein by this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated November 16, 1999 in
Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-90001) and related Prospectus of FT 378.
ERNST & YOUNG LLP
Chicago, Illinois
November 16, 1999
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 378 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee, First Trust Advisors L.P., as Evaluator, and
First Trust Advisors L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
63483] filed on behalf of The First Trust Combined
Series 258).
S-6
MEMORANDUM
FT 378
File No. 333-90001
The Prospectus and the Indenture filed with Amendment No. 2
of the Registration Statement on Form S-6 have been revised to
reflect information regarding the execution of the Indenture and
the deposit of Securities on November 16, 1999 and to set forth
certain statistical data based thereon. In addition, there are a
number of other changes described below.
THE PROSPECTUS
Cover Page The date of the Trusts has been added.
Pages 3-5 The following information for the Trusts appears:
The Aggregate Value of Securities initially
deposited have been added.
The initial number of units of the Trusts
Sales charge
The Public Offering Price per Unit as of the
business day before the Initial Date of Deposit
The Mandatory Termination Date has been added.
Page 8 The Report of Independent Auditors has been
completed.
Pages 9-11 The Statements of Net Assets have been completed.
Pages 12-21 The Schedules of Investments have been completed.
Back Cover The date of the Prospectus has been included.
THE TRUST AGREEMENT AND STANDARD TERMS AND CONDITIONS OF TRUST
The Trust Agreement has been conformed to reflect
the execution thereof.
CHAPMAN AND CUTLER
November 16, 1999
FT 378
TRUST AGREEMENT
Dated: November 16, 1999
The Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank, as Trustee and First Trust
Advisors L.P., as Evaluator and Portfolio Supervisor, sets forth
certain provisions in full and incorporates other provisions by
reference to the document entitled "Standard Terms and Conditions
of Trust for The First Trust Special Situations Trust, Series 22
and certain subsequent Series, Effective November 20, 1991"
(herein called the "Standard Terms and Conditions of Trust"), and
such provisions as are incorporated by reference constitute a
single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR BANDWIDTH SELECT PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR BIOTECHNOLOGY SELECT PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR E-BUSINESS SELECT PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR E-TAIL SELECT PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR FINANCIAL SERVICES SELECT PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR INTERNET SELECT PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR PHARMACEUTICAL SELECT PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR TECHNOLOGY SELECT PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0015 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR E-BUSINESS PORTFOLIO SERIES
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0030 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0095 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
16, 1999.
J. The minimum amount of Securities to be sold by the
Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
K. The Depositors compensation for providing bookkeeping
and other administrative services as described in Section 3.14 of
the Standard Terms and Conditions of Trust shall be an annual fee
in the amount of $.0033 per Unit.
PART III
A. Notwithstanding anything to the contrary in the
Standard Terms and Conditions of Trust, references to subsequent
Series established after the date of effectiveness of the First
Trust Special Situations Trust, Series 24 shall include FT 378.
B. The term "Principal Account" as set forth in the
Standard Terms an Conditions of Trust shall be replaced with the
term "Capital Account."
C. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or
any successor trustee appointed as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank.
D. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided."
E. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
F. Paragraph (b) of Section 2.01 shall be restated in its
entirety as follows:
(b)(1)From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its
discretion, to assign, convey to and deposit with the
Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form, (ii) Contract Obligations relating
to such additional Securities, accompanied by cash and/or
Letter(s) of Credit as specified in paragraph (c) of this
Section 2.01, or (iii) cash (or a Letter of Credit in lieu
of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchased in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur within 20 days from the date of a
failure occurring within such initial 90-day period) shall
maintain exactly the Percentage Ratio existing immediately
prior to such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "Cash" means,
as to the Capital Account, cash or other property (other
than Securities) on hand in the Capital Account or
receivable and to be credited to the Capital Account as of
the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units
created by the deposit) and, as to the Income Account, cash
or other property (other than Securities) received by the
Trust as of the date of the deposit or receivable by the
Trust in respect of a record date for a payment on a
Security which has occurred or will occur before the Trust
will be the holder of record of a Security, reduced by the
amount of any cash or other property received or receivable
on any Security allocable (in accordance with the Trustee's
calculations of distributions from the Income Account
pursuant to Section 3.05) to a distribution made or to be
made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units
created by the deposit and the denominator of which is the
number of Units which are outstanding immediately prior to
the deposit."
G. The following shall be added immediately following the
first sentence of paragraph (c) of Section 2.01:
"The Trustee may allow the Depositor to substitute for
any Letter(s) of Credit deposited with the Trustee in
connection with the deposits described in Section 2.01(a)
and (b) cash in an amount sufficient to satisfy the
obligations to which the Letter(s) of Credit relates. Any
substituted Letter(s) of Credit shall be released by the
Trustee."
H. Section 2.03(a) of the Standard Terms and Conditions of
Trust shall be amended by adding the following sentence after the
first sentence of such section:
"The number of Units may be increased through a split
of the Units or decreased through a reverse split thereof,
as directed in writing by the Depositor, at any time when
the Depositor is the only beneficial holder of Units, which
revised number of Units shall be recorded by the Trustee on
its books. The Trustee shall be entitled to rely on the
Depositor's direction as certification that no person other
than the Depositor has a beneficial interest in the Units
and the Trustee shall have no liability to any person for
action taken pursuant to such direction."
I. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. Subject to reimbursement
as hereinafter provided, the cost of organizing the Trust
and the sale of the Trust Units shall be borne by the
Depositor, provided, however, that the liability on the part
of the Depositor under this section shall not include any
fees or other expenses incurred in connection with the
administration of the Trust subsequent to the deposit
referred to in Section 2.01. At the earlier of six months
after the Initial Date of Deposit or the conclusion of the
primary offering period (as certified by the Depositor to
the Trustee), the Trustee shall withdraw from the Account or
Accounts specified in the Prospectus or, if no Account is
therein specified, from the Capital Account, and pay to the
Depositor the Depositor's reimbursable expenses of
organizing the Trust in an amount certified to the Trustee
by the Depositor. In no event shall the amount paid by the
Trustee to the Depositor for the Depositors reimbursable
expenses of organizing the Trust exceed the estimated per
Unit amount of organization costs set forth in the
Prospectus for the Trust multiplied by the number of Units
of the Trust outstanding at the earlier of six months after
the Initial Date of Deposit or the conclusion of the primary
offering period; nor shall the Depositor be entitled to or
request reimbursement for expenses of organizing the Trust
incurred after the earlier of six months after the Initial
Date of Deposit or the conclusion of the primary offering
period. If the cash balance of the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, sell Securities identified by the
Depositor, or distribute to the Depositor Securities having
a value, as determined under Section 4.01 as of the date of
distribution, sufficient for such reimbursement. Securities
sold or distributed to the Depositor to reimburse the
Depositor pursuant to this Section shall be sold or
distributed by the Trustee, to the extent practicable, in
the percentage ratio then existing. The reimbursement
provided for in this section shall be for the account of the
Unit holders of record at the earlier of six months after
the Initial Date of Deposit or the conclusion of the primary
offering period. Any assets deposited with the Trustee in
respect of the expenses reimbursable under this Section 3.01
shall be held and administered as assets of the Trust for
all purposes hereunder. The Depositor shall deliver to the
Trustee any cash identified in the Statement of Net Assets
of the Trust included in the Prospectus not later than the
expiration of the Delivery Period and the Depositors
obligation to make such delivery shall be secured by the
letter of credit deposited pursuant to Section 2.01. Any
cash which the Depositor has identified as to be used for
reimbursement of expenses pursuant to this Section 3.01
shall be held by the Trustee, without interest, and reserved
for such purpose and, accordingly, prior to the earlier of
the six months after the Initial Date of Deposit or the
conclusion of the primary offering period, shall not be
subject to distribution or, unless the Depositor otherwise
directs, used for payment of redemptions in excess of the
per Unit amount payable pursuant to the next sentence. If a
Unit holder redeems Units prior to the earlier of six months
after the Initial Date of Deposit or the conclusion of the
primary offering period, the Trustee shall pay to the Unit
holder, in addition to the Redemption Value of the tendered
Units, unless otherwise directed by the Depositor, an amount
equal to the estimated per Unit cost of organizing the Trust
set forth in the Prospectus, or such lower revision thereof
most recently communicated to the Trustee by the Depositor
pursuant to Section 5.01, multiplied by the number of Units
tendered for redemption; to the extent the cash on hand in
the Trust is insufficient for such payment, the Trustee
shall have the power to sell Securities in accordance with
Section 5.02. As used herein, the Depositor's reimbursable
expenses of organizing the Trust shall include the cost of
the initial preparation and typesetting of the registration
statement, prospectuses (including preliminary
prospectuses), the indenture, and other documents relating
to the Trust, SEC and state blue sky registration fees, the
cost of the initial valuation of the portfolio and audit of
the Trust, the initial fees and expenses of the Trustee, and
legal and other out-of-pocket expenses related thereto, but
not including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses incurred
in the preparation and printing of brochures and other
advertising materials and any other selling expenses.
J. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
K. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Capital
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Capital Account unless the amount available for
distribution shall equal $1.00 per 100 Units.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) the following
reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the third
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
L. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
M. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Capital Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I."
N. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05.I.(e) deduct from the Income Account or,
to the extent funds are not available in such Account, from
the Capital Account and pay to the Depositor the amount that
it is entitled to receive pursuant to Section 3.14."
O. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
Capital Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by
reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11.
Whenever new securities or property is received and
retained by a Trust pursuant to this Section 3.11, the
Trustee shall provide to all Unit holders of such Trust
notices of such acquisition in the Trustee's annual report
unless prior notice is directed by the Depositor."
P. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in the amount of $.0035 per Unit,
calculated based on the largest number of Units outstanding
during the calendar year except during the initial offering
period as determined in Section 4.01 of this Indenture, in
which case the fee is calculated based on the largest number
of Units outstanding during the period for which the
compensation is paid (such annual fee to be pro rated for
any calendar year in which the Portfolio Supervisor provides
services during less than the whole of such year). Such fee
may exceed the actual cost of providing such portfolio
supervision services for the Trust, but at no time will the
total amount received for portfolio supervision services
rendered to unit investment trusts of which Nike Securities
L.P. is the sponsor in any calendar year exceed the
aggregate cost to the Portfolio Supervisor of supplying such
services in such year."
Q. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.14.:
"Section 3.14. Bookkeeping and Administrative Expenses.
As compensation for providing bookkeeping and other
administrative services of a character described in
26(a)(2)(C) of the Investment Company Act of 1940 to the
extent such services are in addition to, and do not
duplicate, the services to be provided hereunder by the
Trustee or the Portfolio Supervisor, the Depositor shall
receive against a statement or statements therefor submitted
to the Trustee monthly or annually an aggregate annual fee
in the per Unit amount set forth in Part II of the Trust
Agreement, calculated based on the largest number of Units
outstanding during the calendar year except during the
initial offering period as determined in Section 4.01 of
this Indenture, in which case the fee is calculated based on
the largest number of Units outstanding during the period
for which the compensation is paid (such annual fee to be
pro rated for any calendar year in which the Depositor
provides services during less than the whole of such year).
Such fee may exceed the actual cost of providing such
bookkeeping and administrative services for the Trust, but
at not time will the total amount received for bookkeeping
and administrative services rendered to unit investment
trusts of which Nike Securities L.P. is the sponsor in any
calendar year exceed the aggregate cost to the Depositor of
supplying such services in such year. Such compensation
may, from time to time, be adjusted provided that the total
adjustment upward does not, at the time of such adjustment,
exceed the percentage of the total increase, after the date
hereof, in consumer prices for services as measured by the
United States Department of Labor consumer Price Index
entitled "All Services Less Rent of Shelter" or similar
index, if such index should no longer be published. The
consent or concurrence of any Unit holder hereunder shall
not be required for any such adjustment or increase. Such
compensation shall be paid by the Trustee, upon receipt of
an invoice therefor from the Depositor, upon which, as to
the cost incurred by the Depositor of providing services
hereunder the Trustee may rely, and shall be charged against
the Income and Capital Accounts on or before the
Distribution Date following the Monthly Record Date on which
such period terminates. The Trustee shall have no liability
to any Certificateholder or other person for any payment
made in good faith pursuant to this Section.
If the cash balance in the Income and Capital Accounts
shall be insufficient to provide for amounts payable
pursuant to this Section 3.14, the Trustee shall have the
power to sell (i) Securities from the current list of
Securities designated to be sold pursuant to Section 5.02
hereof, or (ii) if no such Securities have been so
designated, such Securities as the Trustee may see fit to
sell in its own discretion, and to apply the proceeds of any
such sale in payment of the amounts payable pursuant to this
Section 3.14.
Any moneys payable to the Depositor pursuant to this
Section 3.14 shall be secured by a prior lien on the Trust
Fund except that no such lien shall be prior to any lien in
favor of the Trustee under the provisions of Section 6.04
herein."
R. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.15:
"Section 3.15. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus (the "Deferred Sales Charge
Payment Dates"), withdraw from the Capital Account, an
amount per Unit specified in such Prospectus and credit such
amount to a special non-Trust account designated by the
Depositor out of which the deferred sales charge will be
distributed to or on the order of the Depositor on such
Deferred Sales Charge Payment Dates (the "Deferred Sales
Charge Account"). If the balance in the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Capital Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. In the
absence of such direction by the Depositor, the Trustee
shall sell Securities sufficient to pay the deferred sales
charge (and any unreimbursed advance then outstanding) in
full, and shall select Securities to be sold in such manner
as will maintain (to the extent practicable) the relative
proportion of number of shares of each Security then held.
The proceeds of such sales, less any amounts paid to the
Trustee in reimbursement of its advances, shall be credited
to the Deferred Sales Charge Account. If a Unit holder
redeems Units prior to full payment of the deferred sales
charge, the Trustee shall, if so provided in the related
Prospectus, on the Redemption Date, withhold from the
Redemption Price payable to such Unit holder an amount equal
to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated for reasons other than that set
forth in Section 6.01(g), the Trustee shall, if so provided
in the related Prospectus, on the termination of the Trust,
withhold from the proceeds payable to Unit holders an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated pursuant to Section 6.01(g), the
Trustee shall not withhold from the proceeds payable to Unit
holders any amounts of unpaid deferred sales charges. If
pursuant to Section 5.02 hereof, the Depositor shall
purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered
Unit, the Depositor shall pay to the Unit holder the amount
specified under Section 5.02 less the unpaid portion of the
deferred sales charge. All advances made by the Trustee
pursuant to this Section shall be secured by a lien on the
Trust prior to the interest of the Unit holders."
S. Notwithstanding anything to the contrary in Sections
3.15 and 4.05 of the Standard Terms and Conditions of Trust, so
long as Nike Securities L.P. is acting as Depositor, the Trustee
shall have no power to remove the Portfolio Supervisor.
T. The first sentence of Section 4.03. shall be amended to
read as follows:
"As compensation for providing evaluation services under
this Indenture, the Evaluator shall receive, in arrears, against
a statement or statements therefor submitted to the Trustee
monthly or annually an aggregate annual fee equal to the amount
specified as compensation for the Evaluator in the Trust
Agreement, calculated based on the largest number of Units
outstanding during the calendar year except during the initial
offering period as determined in Section 4.01 of this Indenture,
in which case the fee is calculated based on the largest number
of Units outstanding during the period for which the compensation
is paid (such annual fee to be pro rated for any calendar year in
which the Evaluator provides services during less than the whole
of such year). Such compensation may, from time to time, be
adjusted provided that the total adjustment upward does not, at
the time of such adjustment, exceed the percentage of the total
increase, after the date hereof, in consumer prices for services
as measured by the United States Department of Labor Consumer
Price Index entitled "All Services Less Rent of Shelter" or
similar index, if such index should no longer be published. The
consent or concurrence of any Unit holder hereunder shall not be
required for any such adjustment or increase. Such compensation
shall be paid by the Trustee, upon receipt of invoice therefor
from the Evaluator, upon which, as to the cost incurred by the
Evaluator of providing services hereunder the Trustee may rely,
and shall be charged against the Income and/or Capital Accounts,
in accordance with Section 3.05."
U. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The second sentence of the first paragraph of Section
5.01 shall be amended by deleting the phrase "and (iii)" and
adding the following "(iii) amounts representing unpaid accrued
organization costs and (iv)"; and
(ii) The following text shall immediately precede the last
sentence of the first paragraph of Section 5.01:
"Prior to the payment to the Depositor of its
reimbursable organization costs to be made at the
earlier of six months after the Initial Date of Deposit
or the conclusion of the primary offering period in
accordance with Section 3.01, for purposes of
determining the Trust Fund Evaluation under this
Section 5.01, the Trustee shall rely upon the amounts
representing unpaid accrued organization costs in the
estimated amount per Unit set forth in the Prospectus
until such time as the Depositor notifies the Trustee
in writing of a revised estimated amount per Unit
representing unpaid accrued organization costs. Upon
receipt of such notice, the Trustee shall use this
revised estimated amount per Unit representing unpaid
accrued organization costs in determining the Trust
Fund Evaluation but such revision of the estimated
expenses shall not effect calculations made prior
thereto and no adjustment shall be made in respect
thereof."
V. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Subject to the restrictions set forth in the
prospectus, Unit holders may redeem 1,000 Units or more of a
Trust and request a distribution in kind of (i) such Unit
holder's pro rata portion of each of the Securities in such
Trust, in whole shares, and (ii) cash equal to such Unit
holder's pro rata portion of the Income and Capital Accounts
as follows: (x) a pro rata portion of the net proceeds of
sale of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Principal Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section. Subject
to 5.05, with respect to rollover Unit holders, if applicable,
to the extent possible, distributions of Securities pursuant to
an in kind redemption of Units shall be made by the Trustee
through the distribution of each of the Securities in book-
entry form to the account of the Unit holder's bank or
broker-dealer at the Depository Trust Company. Any
distribution in kind will be reduced by customary transfer
and registration charges."
W. Paragraph (g) of Section 6.01 of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
after the first word thereof:
"(i) the value of any Trust as shown by an evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less
than the lower of $2,000,000 or 20% of the total value of
Securities deposited in such Trust during the initial
offering period, or (ii)"
X. The third paragraph of Section 6.02 of the Standard
Terms and Conditions of Trust shall be deleted in its entirety
and replaced with the following:
"The Trustee shall pay, or reimburse to the Depositor, the
expenses related to the updating of the Trusts registration
statement, to the extent of legal fees, typesetting fees,
electronic filing expenses and regulatory filing fees. Such
expenses shall be paid from the Income Account, or to the extent
funds are not available in such Account, from the Capital
Account, against an invoice or invoices therefor presented to the
Trustee by the Depositor. By presenting such invoice or
invoices, the Depositor shall be deemed to certify, upon which
certification the Trustee is authorized conclusively to rely,
that the amounts claimed therein are properly payable pursuant to
this paragraph. The Depositor shall provide the Trustee, from
time to time as requested, an estimate of the amount of such
expenses, which the Trustee shall use for the purpose of
estimating the accrual of Trust expenses. The amount paid by the
Trust pursuant to this paragraph in each year shall be separately
identified in the annual statement provided to Unitholders. The
Depositor shall assure that the Prospectus for the Trust contains
such disclosure as shall be necessary to permit payment by the
Trust of the expenses contemplated by this paragraph under
applicable laws and regulations.
The provisions of this paragraph shall not limit the
authority of the Trustee to pay, or reimburse to the Depositor or
others, such other or additional expenses as may be determined to
be payable from the Trust as provided in Section 6.02 of the
Standard Terms and Conditions of Trust."
Y. The third sentence of paragraph (a) of Section 6.05 of
the Standard Terms and Conditions of Trust shall be replaced in
its entirety by the following:
"In case at any time the Trustee shall become incapable of
acting, or if a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Trustee in
an involuntary case, or the Trustee shall commence a voluntary
case, under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or any receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) for the Trustee or for any substantial part of
its property shall be appointed, or the Trustee shall make any
general assignment for the benefit of creditors, or shall
generally fail to pay its debts as they become due, or if the
Sponsor shall determine in good faith that there has occurred
either (1) a material deterioration in the creditworthiness of
the Trustee or (2) one or more negligent acts on the part of the
Trustee having a materially adverse effect, either singly or in
the aggregate, on the Trust or on one or more Trusts of one or
more Funds, such that the replacement of the Trustee is in the
best interests of the Unit holders, the Sponsor may remove the
Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which shall be delivered to the Trustee so
removed and one copy to the successor trustee."
Z. Section 8.02 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the second paragraph shall
be deleted and replaced with the following:
"The Trustee will honor duly executed requests for in-
kind distributions received (accompanied by the electing
Unit holder's Certificate, if issued) by the close of
business ten business days prior to the Mandatory
Termination Date."
(ii) The first sentence of the fourth paragraph shall
be deleted and replaced with the following:
"Commencing no earlier than the business day following
that date on which Unit holders must submit to the Trustee
notice of their request to receive an in-kind distribution
of Securities at termination, the Trustee will liquidate the
Securities not segregated for in-kind distributions during
such period and in such daily amounts as the Depositor shall
direct."
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank and First Trust Advisors L.P. have each caused
this Trust Agreement to be executed and the respective corporate
seal to be hereto affixed and attested (if applicable) by
authorized officers; all as of the day, month and year first
above written.
NIKE SECURITIES L.P.,
Depositor
By Robert M. Porcellino
Senior Vice President
THE CHASE MANHATTAN BANK,
Trustee
By Rosalia Raviele
Vice President
[SEAL]
ATTEST:
Rachelle Cohen
Assistant Treasurer
FIRST TRUST ADVISORS L.P.,
Evaluator
By Robert M. Porcellino
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
FT 378
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 16, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 378
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 378 in connection with the November
16, 1999 among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank, as Trustee and First Trust Advisors L.P. as
Evaluator and Portfolio Supervisor, pursuant to which the
Depositor has delivered to and deposited the Securities listed in
Schedule A to the Trust Agreement with the Trustee and pursuant
to which the Trustee has issued to or on the order of the
Depositor a certificate or certificates representing units of
fractional undivided interest in and ownership of the Fund
created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-90001)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:erg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 16, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Re: FT 378
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 378 (the "Fund"), in connection with the issuance of units
of fractional undivided interest in the Trusts of said Fund (the
"Trust"), under a Trust Agreement, dated November 16, 1999 (the
"Indenture"), among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank, as Trustee and First Trust Advisors L.P., as
Evaluator and Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trusts will be administered, and
investments by a Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
Each Trust holds Equity Securities as such term is defined in the
Prospectus. For purposes of the following discussion and
opinion, it is assumed that each Equity Security is equity for
Federal income tax purposes.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing United States Federal income tax
law:
I. Each Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit holder
will be treated as the owner of a pro rata portion of each of the
assets of the Trust under the Internal Revenue Code of 1986 (the
"Code") in the proportion that the number of Units held by him
bears to the total number of Units outstanding; under Subpart E,
Subchapter J of Chapter 1 of the Code, income of a Trust will be
treated as income of the Unit holders in the proportion described
above; and an item of Trust income will have the same character
in the hands of a Unit holder as it would have in the hands of
the Trustee. Each Unit holder will be considered to have
received his pro rata share of income derived from each Trust
asset when such income is considered to be received by a Trust.
II. The price a Unit holder pays for his Units, generally
including sales charges, is allocated among his pro rata portion
of each Equity Security held by a Trust (in proportion to the
fair market values thereof on the valuation date closest to the
date the Unit holder purchases his Units) in order to determine
his tax basis for his pro rata portion of each Equity Security
held by a Trust. For Federal income tax purposes, a Unit
holder's pro rata portion of distributions of cash or property by
a corporation with respect to an Equity Security ("dividends" as
defined by Section 316 of the Code) is taxable as ordinary income
to the extent of such corporation's current and accumulated
"earnings and profits." A Unit holder's pro rata portion of
dividends paid on such Equity Security which exceeds such current
and accumulated earnings and profits will first reduce a Unit
holder's tax basis in such Equity Security, and to the extent
that such dividends exceed a Unit holder's tax basis in such
Equity Security shall be treated as gain from the sale or
exchange of property.
III. Gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code)
upon redemption or sale of his Units, except to the extent an in
kind distribution of stock is received by such Unit holder from a
Trust as discussed below. Such gain or loss is measured by
comparing the proceeds of such redemption or sale with the
adjusted basis of his Units. Before adjustment, such basis would
normally be cost if the Unit holder had acquired his Units by
purchase. Such basis will be reduced, but not below zero, by the
Unit holder's pro rata portion of dividends with respect to each
Equity Security which is not taxable as ordinary income.
IV. If the Trustee disposes of a Trust asset (whether by
sale, taxable exchange, liquidation, redemption, payment on
maturity or otherwise) gain or loss will be recognized to the
Unit holder (subject to various nonrecognition provisions under
the Code) and the amount thereof will be measured by comparing
the Unit holder's aliquot share of the total proceeds from the
transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning the
tax basis for his Units (as of the date on which his Units were
acquired) among each of a Trust's assets (as of the date on which
his Units were acquired) ratably according to their values as of
the valuation date nearest the date on which he purchased such
Units. A Unit holder's basis in his Units and of his fractional
interest in each Trust asset must be reduced, but not below zero,
by the Unit holder's pro rata portion of dividends with respect
to each Equity Security which is not taxable as ordinary income.
V. Under the Indenture, under certain circumstances, a
Unit holder tendering Units for redemption may request an in kind
distribution of Equity Securities upon the redemption of Units or
upon the termination of a Trust. As previously discussed, prior
to the redemption of Units or the termination of a Trust, a Unit
holder is considered as owning a pro rata portion of each of a
Trust's assets. The receipt of an in kind distribution will
result in a Unit holder receiving an undivided interest in whole
shares of stock and possibly cash. The potential federal income
tax consequences which may occur under an in kind distribution
with respect to each Equity Security owned by a Trust will depend
upon whether or not a Unit holder receives cash in addition to
Equity Securities. An "Equity Security" for this purpose is a
particular class of stock issued by a particular corporation. A
Unit holder will not recognize gain or loss if a Unit holder only
receives Equity Securities in exchange for his or her pro rata
portion of the Equity Securities held by a Trust. However, if a
Unit holder also receives cash in exchange for a fractional share
of an Equity Security held by a Trust, such Unit holder will
generally recognize gain or loss based upon the difference
between the amount of cash received by the Unit holder and his
tax basis in such fractional share of an Equity Security held by
a Trust. The total amount of taxable gains (or losses)
recognized upon such redemption will generally equal the sum of
the gain (or loss) recognized under the rules described above by
the redeeming Unit holder with respect to each Equity Security
owned by a Trust.
A domestic corporation owning Units in a Trust may be
eligible for the 70% dividends received deduction pursuant to
Section 243(a) of the Code with respect to such Unit holder's pro
rata portion of dividends received by such Trust (to the extent
such dividends are taxable as ordinary income, as discussed
above, and are attributable to domestic corporations), subject to
the limitations imposed by Sections 246 and 246A of the Code.
To the extent dividends received by a Trust are attributable
to foreign corporations, a corporation that owns Units will not
be entitled to the dividends received deduction with respect to
its pro rata portion of such dividends since the dividends
received deduction is generally available only with respect to
dividends paid by domestic corporations.
Section 67 of the Code provides that certain miscellaneous
itemized deductions, such as investment expenses, tax return
preparation fees and employee business expenses will be
deductible by an individual only to the extent they exceed 2% of
such individual's adjusted gross income. Unit holders may be
required to treat some or all of the expenses of a Trust as
miscellaneous itemized deductions subject to this limitation.
A Unit holder will recognize taxable gain (or loss) when all
or part of the pro rata interest in an Equity Security is either
sold by a Trust or redeemed or when a Unit holder disposes of his
Units in a taxable transaction, in each case for an amount
greater (or less) than his tax basis therefor; subject to various
nonrecognition provisions of the Code.
It should be noted that payments to a Trust of dividends on
Equity Securities that are attributable to foreign corporations
may be subject to foreign withholding taxes and Unit holders
should consult their tax advisers regarding the potential tax
consequences relating to the payment of any such withholding
taxes by a Trust. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unit holders.
Because under the grantor trust rules, an investor is deemed to
have paid directly his share of foreign taxes that have been paid
or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect
to such taxes. The Taxpayer Relief Act of 1997 imposes a required
holding period for such credits.
Any gain or loss recognized on a sale or exchange will,
under current law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including foreign, state or local taxes or collateral tax
consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-90001)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
November 16, 1999
The Chase Manhattan Bank, as Trustee of
FT 378
4 New York Plaza, 6th Floor
New York, New York 10004-3113
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 378
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for the unit investment trust or trusts included in
FT 378 (each, a "Trust"), which will be established under a
certain Standard Terms and Conditions of Trust dated November 20,
1991, and a related Trust Agreement dated as of today
(collectively, the "Indenture") among Nike Securities L.P., as
Depositor (the "Depositor"), First Trust Advisors L.P., as
Evaluator, First Trust Advisors L.P., as Portfolio Supervisor,
and The Chase Manhattan Bank as Trustee (the "Trustee").
Pursuant to the terms of the Indenture, units of fractional
undivided interest in the Trust (the "Units") will be issued in
the aggregate number set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that the
Trust will not constitute an association taxable as a corporation
under New York law, and accordingly will not be subject to the
New York State franchise tax or the New York City general
corporation tax.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-90001) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name in such Registration Statement and the preliminary
prospectus included therein.
Very truly yours,
CARTER, LEDYARD & MILBURN
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
November 16, 1999
The Chase Manhattan Bank, as Trustee of
FT 378
4 New York Plaza, 6th Floor
New York, New York 10004-3113
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 378
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
("Chase") in connection with the execution and delivery of a
Trust Agreement ("the Trust Agreement") dated today's date (which
Trust Agreement incorporates by reference certain Standard Terms
and Conditions of Trust dated November 20, 1991, and the same are
collectively referred to herein as the "Indenture") among Nike
Securities L.P., as Depositor (the "Depositor"), First Trust
Advisors L.P., as Evaluator, First Trust Advisors L.P., as
Portfolio Supervisor, and Chase, as Trustee (the "Trustee"),
establishing the unit investment trust or trusts included in FT
378 (each, a "Trust"), and the confirmation by Chase, as Trustee
under the Indenture, that it has registered on the registration
books of the Trust the ownership by the Depositor of a number of
units constituting the entire interest in the Trust (such
aggregate units being herein called "Units"), each of which
represents an undivided interest in the respective Trust which
consists of common stocks (including, confirmations of contracts
for the purchase of certain stocks not delivered and cash, cash
equivalents or an irrevocable letter of credit or a combination
thereof, in the amount required for such purchase upon the
receipt of such stocks), such stocks being defined in the
Indenture as Securities and referenced in the Schedule to the
Indenture.
We have examined the Indenture, a specimen of the
certificates to be issued thereunder (the "Certificates"), the
Closing Memorandum dated today's date, and such other documents
as we have deemed necessary in order to render this opinion.
Based on the foregoing, we are of the opinion that:
1. Chase is a duly organized and existing corporation
having the powers of a Trust Company under the laws of the State
of New York.
2. The Trust Agreement has been duly executed and
delivered by Chase and, assuming due execution and delivery by
the other parties thereto, constitutes the valid and legally
binding obligation of Chase.
3. The Certificates are in proper form for execution and
delivery by Chase, as Trustee.
4. Chase, as Trustee, has registered on the registration
books of the Trust the ownership of the Units by the Depositor.
Upon receipt of confirmation of the effectiveness of the
registration statement for the sale of the Units filed with the
Securities and Exchange Commission under the Securities Act of
1933, the Trustee may deliver Certificates for such Units, in
such names and denominations as the Depositor may request, to or
upon the order of the Depositor as provided in the Closing
Memorandum.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, Illinois 60532
November 16, 1999
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 378
Gentlemen:
We have examined the Registration Statement File No.
333-90001 for the above captioned fund. We hereby consent to the
use in the Registration Statement of the references to First
Trust Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Robert M. Porcellino
Senior Vice President
