Registration No. 333-94483
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 399
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on February 29, 2000 at 2:00 p.m. pursuant to Rule 487.
________________________________
The Dow(sm) Target 5 Portfolio, March 2000 Series
The Dow(sm) Target 10 Portfolio, March 2000 Series
Global Target 15 Portfolio, March 2000 Series
The S&P Target 10 Portfolio, March 2000 Series
The Nasdaq Target 15 Portfolio, March 2000 Series
The Dow(sm) Dividend And Repurchase Target 5
Portfolio, March 2000 Series
The Dow(sm) Dividend And Repurchase Target 10
Portfolio, March 2000 Series
FT 399
FT 399 is a series of a unit investment trust, the FT Series. FT 399
consists of seven separate portfolios listed above (each, a "Trust," and
collectively, the "Trusts"). Each Trust invests in a diversified
portfolio of common stocks ("Securities") selected by applying a
specialized strategy. The objective of each Trust is to provide above-
average total return.
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 February 29, 2000
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 19
Portfolios 20
Risk Factors 22
Hypothetical Performance Information 24
Public Offering 27
Distribution of Units 29
The Sponsor's Profits 30
The Secondary Market 30
How We Purchase Units 30
Expenses and Charges 30
Tax Status 31
Retirement Plans 33
Rights of Unit Holders 34
Income and Capital Distributions 34
Redeeming Your Units 35
Investing in a New Trust 36
Removing Securities from a Trust 37
Amending or Terminating the Indenture 37
Information on the Sponsor, Trustee and Evaluator 38
Other Information 39
Page 2
Summary of Essential Information
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
The Dow(sm) The Dow(sm) Global
Target 5 Target 10 Target 15
Portfolio Portfolio Portfolio
March March March
2000 Series 2000 Series 2000 Series
____________ ____________ ___________
<S> <C> <C> <C>
Initial Number of Units (1) 15,003 15,008 14,945
Fractional Undivided Interest in the Trust per Unit (1) 1/15,003 1/15,008 1/14,945
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of 2.75% of the Public Offering
Price per Unit (2.778% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .275 $ .275 $ .275
Less Deferred Sales Charge per Unit $ (.175) $ (.175) $ (.175)
Public Offering Price per Unit (4) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.725 $ 9.725 $ 9.725
Redemption Price per Unit (based on aggregate underlying value
of Securities less the deferred sales charge) (5) $ 9.725 $ 9.725 $ 9.725
Estimated Net Annual Distribution per Unit (6) $ .3837 $ .3150 $ .4929
Cash CUSIP Number 30265H 554 30265H 570 30265H 596
Reinvestment CUSIP Number 30265H 562 30265H 588 30265H 604
Wrap CUSIP Number 30265H 695 30265H 703 30265H 711
Security Code 58276 58279 58235
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date March 3, 2000
Mandatory Termination Date (7) March 30, 2001
Rollover Notification Date March 1, 2001
Special Redemption and Liquidation Period March 15, 2001 to March 30, 2001
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 2000.
Income Distribution Date (6) Last day of 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 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
The S&P The Nasdaq
Target 10 Target 15
Portfolio, March Portfolio, March
2000 Series 2000 Series
________________ ________________
<S> <C> <C>
Initial Number of Units (1) 15,004 15,434
Fractional Undivided Interest in the Trust per Unit (1) 1/15,004 1/15,434
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900
Maximum Sales Charge of 2.75% of the Public Offering
Price per Unit (2.778% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .275 $ .275
Less Deferred Sales Charge per Unit $ (.175) $ (.175)
Public Offering Price per Unit (4) $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.725 $ 9.725
Redemption Price per Unit (based on aggregate underlying value of
Securities less the deferred sales charge) (5) $ 9.725 $ 9.725
Estimated Net Annual Distribution per Unit (6) $ N.A. $ N.A.
Cash CUSIP Number 30265H 612 30265H 638
Reinvestment CUSIP Number 30265H 620 30265H 646
Wrap CUSIP Number 30265H 729 30265H 737
Security Code 58282 58285
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date March 3, 2000
Mandatory Termination Date (7) March 30, 2001
Rollover Notification Date March 1, 2001
Special Redemption and Liquidation Period March 15, 2001 to March 30, 2001
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 2000.
Income Distribution Date (6) Last day of 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 399
At the Opening of Business on the Initial Date of Deposit-February 29, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
The Dow(sm) The Dow(sm)
DART 5 DART 10
Portfolio Portfolio
March March
2000 Series 2000 Series
__________ __________
<S> <C> <C>
Initial Number of Units (1) 15,003 15,007
Fractional Undivided Interest in the Trust per Unit (1) 1/15,003 1/15,007
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900
Maximum Sales Charge of 2.75% of the Public Offering
Price per Unit (2.778% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .275 $ .275
Less Deferred Sales Charge per Unit $ (.175) $ (.175)
Public Offering Price per Unit (4) $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.725 $ 9.725
Redemption Price per Unit (based on aggregate underlying value of
Securities less the deferred sales charge) (5) $ 9.725 $ 9.725
Estimated Net Annual Distribution per Unit (6) $ .2081 $ .2975
Cash CUSIP Number 30265H 653 30265H 679
Reinvestment CUSIP Number 30265H 661 30265H 687
Wrap CUSIP Number 30265H 745 30265H 752
Security Code 58288 58291
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date March 3, 2000
Mandatory Termination Date (7) March 30, 2001
Rollover Notification Date March 1, 2001
Special Redemption and Liquidation Period March 15, 2001 to March 30, 2001
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 2000.
Income Distribution Date (6) Last day of June and December, commencing June 30, 2000.
_____________
<FN>
NOTES TO SUMMARY OF ESSENTIAL INFORMATION
(1) As of the close of business on March 1, 2000, 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 on the
relevant stock exchange on the business day prior to the Initial Date of
Deposit. If a Security is not listed, or if no closing sale price
exists, it is valued at its closing ask price. The value of foreign
Securities trading in non-U.S. currencies is determined by converting
the value of such Securities to their U.S. dollar equivalent based on
the offering side of the currency exchange rate for the currency in
which a Security is generally denominated at the Evaluation Time on the
business day prior to the Initial Date of Deposit. Evaluations for
purposes of determining the purchase, sale or redemption price of Units
are made as of the close of trading on the New York Stock Exchange
("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 Table" and "Public Offering."
(4) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. 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) During the initial offering period the Sponsor's Initial Repurchase
Price per Unit and Redemption Price per Unit will include the estimated
organization costs per Unit set forth under "Fee Table." After the
initial offering period, the Sponsor's Initial Repurchase Price per Unit
and Redemption Price per Unit will not include such estimated
organization costs. See "Redeeming Your Units."
(6) The actual net annual distribution per Unit you receive will vary
from that set forth above with changes in a Trust's fees and expenses,
dividends received, currency exchange rates, foreign withholding and
with the sale of Securities. See "Fee Table" and "Expenses and Charges."
Dividend yield was not a selection criteria for The S&P Target 10
Portfolio or The Nasdaq Target 15 Portfolio. At the Rollover
Notification Date for Rollover Unit holders or upon termination of a
Trust for Remaining Unit holders, amounts in the Income Account (which
consist of dividends on the Securities) will be included in amounts
distributed to Unit holders. We will distribute money from the Capital
Account monthly on the last day of each month to Unit holders of record
on the fifteenth day of such month if the amount available for
distribution equals at least $1.00 per 100 Units. In any case, we will
distribute any funds in the Capital Account as part of the final
liquidation distribution.
(7) See "Amending or Terminating the Indenture."
</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 the Trusts have a term of
approximately 13 months and are unit investment trusts rather than
mutual funds, this information allows you to compare fees.
<TABLE>
<CAPTION>
THE DOW (SM) THE DOW (SM) GLOBAL TARGET 15
TARGET 5 PORTFOLIO TARGET 10 PORTFOLIO PORTFOLIO
MARCH 2000 SERIES MARCH 2000 SERIES MARCH 2000 SERIES
____________________ ____________________ ____________________
<S> <C> <C> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
(as a percentage of public offering price)
Maximum sales charge 2.75% $ .275 2.75% $ .275 2.75% $ .275
====== ====== ====== ====== ====== ======
Initial sales charge (paid at time of purchase) 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge
(paid in installments or at redemption) 1.75%(b) .175 1.75%(b) .175 1.75%(b) .175
Maximum sales charge imposed on reinvested dividends 1.75% $ .175 1.75% $ .175 1.75% $ .175
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated organization costs .135%(c) $.0135 .135%(c) $.0135 .205%(c) $.0205
====== ====== ====== ====== ====== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .050% $.0050 .050% $.0050 .060% $.0060
Creation and development fee .250%(d) .0249 .250%(d) .0249 .250%(d) .0249
Trustee's fee and other operating expenses .094%(e) .0094 .094%(e) .0094 .172%(e) .0171
______ ______ ______ ______ ______ ______
Total .394% $.0393 .394% $.0393 .482% $.0480
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
THE S&P TARGET THE NASDAQ
10 PORTFOLIO TARGET 15 PORTFOLIO
MARCH 2000 SERIES MARCH 2000 SERIES
____________________ ____________________
<S> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
as a percentage of public offering price)
Maximum sales charge 2.75 % $ .275 2.75% $ .275
====== ====== ====== ======
Initial sales charge (paid at time of purchase) 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge
(paid in installments or at redemption) 1.75%(b) .175 1.75%(b) .175
Maximum sales charge imposed on reinvested dividends 1.75% $ .175 1.75% $ .175
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated organization costs .165%(c) $.0165 .155%(c) $.0155
====== ====== ====== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .060% $.0060 .060% $.0060
Creation and development fee .250%(d) .0249 .250%(d) .0249
Trustee's fee and other operating expenses .128%(e) .0128 .117%(e) .0117
______ ______ ______ ______
Total .438% $.0437 .427% $.0426
====== ====== ====== ======
</TABLE>
Page 6
<TABLE>
<CAPTION>
THE DOW(sm) THE DOW(sm)
DART 5 PORTFOLIO DART 10 PORTFOLIO
MARCH 2000 SERIES MARCH 2000 SERIES
____________________ ____________________
<S> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
(as a percentage of public offering price)
Maximum sales charge 2.75% $ .275 2.75% $ .275
====== ====== ====== ======
Initial sales charge (paid at time of purchase) 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge
(paid in installments or at redemption) 1.75%(b) .175 1.75%(b) .175
Maximum sales charge imposed on reinvested dividends 1.75% $ .175 1.75% $ .175
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated organization costs .180%(c) $.0180 .180%(c) $.0180
====== ====== ====== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .060% $.0060 .060% $.0060
Creation and development fee .250%(d) .0249 .250%(d) .0249
Trustee's fee and other operating expenses .098%(e) .0098 .098%(e) .0098
______ ______ ______ ______
Total .408% $.0407 .408% $.0407
====== ====== ====== ======
</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 then sell your Units at the end of those periods. The example also
assumes a 5% return on your investment each year and that a Trust's
operating expenses stay the same. Although your actual costs may vary,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
The Dow(sm) Target 5 Portfolio, March 2000 Series $328 $798 $1,294 $2,656
The Dow(sm) Target 10 Portfolio, March 2000 Series 328 798 1,294 2,656
Global Target 15 Portfolio, March 2000 Series 344 845 1,372 2,814
The S&P Target 10 Portfolio, March 2000 Series 335 820 1,331 2,730
The Nasdaq Target 15 Portfolio, March 2000 Series 333 814 1,320 2,709
The Dow(sm) DART 5 Portfolio, March 2000 Series 334 815 1,323 2,715
The Dow(sm) DART 10 Portfolio, March 2000 Series 334 815 1,323 2,715
The example assumes that the principal amount and distributions are
rolled annually into a New Trust, and you pay only the deferred sales
charge. 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 initial sales charge is the difference between the maximum sales
charge (2.75% of the Public Offering Price) and any remaining deferred
sales charge.
(b) The deferred sales charge is a fixed dollar amount equal to $.175
per Unit which, as a percentage of the Public Offering Price, will vary
over time. The deferred sales charge will be deducted in ten monthly
installments commencing April 20, 2000.
(c) Estimated organization costs will be deducted from the assets of a
Trust at the end of the initial offering period.
(d) The creation and development fee compensates the Sponsor for
creating and developing the Trusts. Each Trust will be assessed this
amount at the end of the initial offering period and will pay the
Sponsor at such time. The creation and development fee is based on the
net asset value of a Trust at the end of the initial offering period. In
connection with the creation and development fee, in no event will the
Sponsor collect more than .75% of a Unit holder's initial investment.
(e) Other operating expenses for certain Trusts include estimated per
Unit costs associated with a license fee as described in "Expenses and
Charges," but 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."
</FN>
</TABLE>
Page 7
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 399
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 399, comprised of The Dow (sm) Target 5
Portfolio, March 2000 Series; The Dow (sm) Target 10 Portfolio, March
2000 Series; Global Target 15 Portfolio, March 2000 Series; The S&P
Target 10 Portfolio, March 2000 Series; The Nasdaq Target 15 Portfolio,
March 2000 Series; The Dow (sm) Dividend And Repurchase Target 5
Portfolio, March 2000 Series; and The Dow (sm) Dividend And Repurchase
Target 10 Portfolio, March 2000 Series as of the opening of business on
February 29, 2000. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
statements of net assets are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statements of net assets. Our procedures included
confirmation of the letter of credit allocated among the Trusts on
February 29, 2000. 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 399,
comprised of The Dow (sm) Target 5 Portfolio, March 2000 Series; The Dow
(sm) Target 10 Portfolio, March 2000 Series; Global Target 15 Portfolio,
March 2000 Series; The S&P Target 10 Portfolio, March 2000 Series; The
Nasdaq Target 15 Portfolio, March 2000 Series; The Dow (sm) Dividend And
Repurchase Target 5 Portfolio, March 2000 Series; and The Dow (sm)
Dividend And Repurchase Target 10 Portfolio, March 2000 Series, at the
opening of business on February 29, 2000 in conformity with accounting
principles generally accepted in the United States.
ERNST & YOUNG LLP
Chicago, Illinois
February 29, 2000
Page 8
Statements of Net Assets
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
The Dow(sm) The Dow(sm) Global
Target 5 Target 10 Target 15
Portfolio Portfolio Portfolio
March March March
2000 Series 2000 Series 2000 Series
_____________ ____________ ___________
<S> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $148,531 $148,577 $147,952
Less liability for reimbursement to Sponsor
for organization costs (3) (203) (203) (306)
Less liability for deferred sales charge (4) (2,626) (2,626) (2,615)
________ ________ ________
Net assets $145,702 $145,748 $145,031
======== ======== ========
Units outstanding 15,003 15,008 14,945
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,031 $150,078 $149,447
Less maximum sales charge (5) (4,126) (4,127) (4,110)
Less estimated reimbursement to Sponsor
for organization costs (3) (203) (203) (306)
________ ________ ________
Net assets $145,702 $145,748 $145,031
======== ======== ========
__________
<FN>
See "Notes to Statements of Net Assets" on page 11.
</FN>
</TABLE>
Page 9
Statements of Net Assets
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
The S&P The Nasdaq
Target 10 Portfolio Target 15 Portfolio
March March
2000 Series 2000 Series
____________ ______________
<S> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $148,537 $152,794
Less liability for reimbursement to Sponsor
for organization costs (3) (248) (239)
Less liability for deferred sales charge (4) (2,626) (2,701)
_______ ________
Net assets $145,663 $149,854
======= ========
Units outstanding 15,004 15,434
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,037 $154,337
Less maximum sales charge (5) (4,126) (4,244)
Less estimated reimbursement to Sponsor
for organization costs (3) (248) (239)
_______ ________
Net assets $145,663 $149,854
======= ========
__________
<FN>
See "Notes to Statements of Net Assets" on page 11.
</FN>
</TABLE>
Page 10
Statements of Net Assets
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
The Dow(sm) The Dow(sm)
DART 5 DART 10
Portfolio Portfolio
March March
2000 Series 2000 Series
____________ ____________
<S> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $148,527 $148,572
Less liability for reimbursement to Sponsor
for organization costs (3) (270) (270)
Less liability for deferred sales charge (4) (2,626) (2,626)
________ ________
Net assets $145,631 $145,676
======== ========
Units outstanding 15,003 15,007
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,027 $150,073
Less maximum sales charge (5) (4,126) (4,127)
Less estimated reimbursement to Sponsor
for organization costs (3) (270) (270)
_______ ________
Net assets $145,631 $145,676
======= ========
______________
<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 $1,400,000 will be allocated among each of the seven Trusts in
FT 399, 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 $.0135,
$.0135, $.0205, $.0165, $.0155, $.0180 and $.0180 per Unit for the
Target 5 Portfolio, Target 10 Portfolio, Global Target 15 Portfolio, The
S&P Target 10 Portfolio, The Nasdaq Target 15 Portfolio, DART 5
Portfolio and DART 10 Portfolio, respectively. A payment will be made at
the end of the initial offering period to an account maintained by the
Trustee from which the obligation of the investors to the Sponsor will
be satisfied. To the extent that actual organization costs of a Trust
are greater than the estimated amount, only the estimated organization
costs added to the Public Offering Price will be reimbursed to the
Sponsor and deducted from the assets of such Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions from a Trust ($.175 per Unit), payable to us in ten equal
monthly installments beginning on April 20, 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 January 19, 2001. If you redeem
Units before January 19, 2001 you will have to pay the remaining amount
of the deferred sales charge applicable to such Units when you redeem
them.
(5) The aggregate cost to investors in a Trust includes a maximum sales
charge (comprised of an initial and a deferred sales charge) computed at
the rate of 2.75% of the Public Offering Price (equivalent to 2.778% of
the net amount invested, exclusive of the deferred sales charge),
assuming no reduction of sales charge as set forth under "Public
Offering."
</FN>
</TABLE>
Page 11
Schedule of Investments
The Dow(sm) Target 5 Portfolio, March 2000 Series
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
Percentage Market
Number of Aggregate Value Cost of Current
of Ticker Symbol and Name of Offering per Securities to Dividend
Shares Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ ____________ _________ _____________ _________
<C> <S> <C> <C> <C> <C>
834 CAT Caterpillar Inc. 20% $35.625 $ 29,711 3.65%
573 DD E.I. du Pont de Nemours & Company 20% 51.875 29,724 2.70%
826 IP International Paper Company 20% 35.938 29,685 2.78%
1,485 MO Philip Morris Companies, Inc. 20% 20.000 29,700 9.60%
803 SBC SBC Communications Inc. 20% 37.000 29,711 2.64%
____ _________
Total Investments 100% $148,531
==== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 12
Schedule of Investments
The Dow(sm) Target 10 Portfolio, March 2000 Series
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
Percentage Market
Number of Aggregate Value Cost of Current
of Ticker Symbol and Name of Offering per Securities to Dividend
Shares Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ ____________ _________ ___________ _________
<C> <S> <C> <C> <C> <C>
417 CAT Caterpillar Inc. 10% $ 35.625 $ 14,856 3.65%
286 DD E.I. du Pont de Nemours & Company 10% 51.875 14,836 2.70%
262 EK Eastman Kodak Company 10% 56.750 14,869 3.10%
202 XOM Exxon Mobil Corporation 10% 73.625 14,872 2.39%
191 GM General Motors Corporation 10% 77.688 14,839 2.57%
413 IP International Paper Company 10% 35.938 14,842 2.78%
172 MMM Minnesota Mining & Manufacturing Company 10% 86.438 14,867 2.68%
137 JPM J.P. Morgan & Company, Inc. 10% 108.750 14,899 3.68%
743 MO Philip Morris Companies, Inc. 10% 20.000 14,860 9.60%
401 SBC SBC Communications Inc. 10% 37.000 14,837 2.64%
_______ ________
Total Investments 100% $148,577
======= ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 13
Schedule of Investments
Global Target 15 Portfolio, March 2000 Series
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Current
of Offering Value per Securities to Dividend
Shares Name of Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________________ ___________ ________ _____________ ________
<C> <S> <C> <C> <C> <C>
DJIA COMPANIES:
_______________
278 Caterpillar Inc. 6.69% $35.625 $ 9,904 3.65%
191 E.I. du Pont de Nemours & Company 6.70% 51.875 9,908 2.70%
275 International Paper Company 6.68% 35.938 9,883 2.78%
495 Philip Morris Companies, Inc. 6.69% 20.000 9,900 9.60%
268 SBC Communications Inc. 6.70% 37.000 9,916 2.64%
FT INDEX COMPANIES:
___________________
2,351 Allied Domecq Plc 6.69% 4.211 9,899 5.66%
2,132 British Airways Plc 6.69% 4.643 9,899 6.81%
2,689 Marks & Spencer Plc 6.69% 3.681 9,898 6.91%
1,842 Royal & Sun Alliance Insurance Group Plc 6.69% 5.375 9,900 7.76%
2,367 Tate & Lyle Plc 6.69% 4.182 9,899 7.52%
HANG SENG INDEX COMPANIES:
_________________________
16,500 Amoy Properties Ltd. 6.59% 0.591 9,753 7.39%
7,000 Great Eagle Holdings Ltd. 6.33% 1.336 9,355 3.85%
12,000 Hang Lung Development Company Ltd. 6.67% 0.822 9,869 5.94%
14,000 Henderson Investment Ltd. 6.51% 0.687 9,625 4.11%
10,000 Hysan Development Co. Ltd. 6.99% 1.034 10,344 4.60%
______ ________
Total Investments 100% $147,952
====== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 14
Schedule of Investments
The S&P Target 10 Portfolio, March 2000 Series
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of
of Ticker Symbol and Offering Value per Securities to
Shares Name of Issuer of Securities (1) Price Share the Trust (2)
______ ________________________ ___________ ________ _____________
<C> <S> <C> <C> <C>
468 AL Alcan Aluminum Ltd. (4) 10.62% $ 33.688 $ 15,766
222 AA Alcoa Inc. 10.62% 71.063 15,776
624 BHI Baker Hughes Incorporated 10.61% 25.250 15,756
440 CC Circuit City Stores-Circuit City Group 10.61% 35.813 15,758
234 EDS Electronic Data Systems Corporation 10.61% 67.375 15,766
243 ENE Enron Corp. 10.60% 64.813 15,750
99 LEH Lehman Brothers Holdings Inc. 4.52% 67.813 6,713
330 SEG Seagate Technology, Inc. 10.60% 47.688 15,737
253 SLR Solectron Corporation 10.60% 62.250 15,749
429 TAN Tandy Corporation 10.61% 36.750 15,766
______ ________
Total Investments 100% $148,537
====== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 15
Schedule of Investments
The Nasdaq Target 15 Portfolio, March 2000 Series
FT 399
At the Opening of Business on the Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Market
of Ticker Symbol and Offering Value per Securities to Capitalization
Shares Name of Issuer of Securities (1) Price Share the Trust (2) (in millions) (5)
______ _______________________________________ ___________ ________ _____________ _________________
<C> <S> <C> <C> <C> <C>
113 COMS 3Com Corporation 5.85% $ 79.063 $ 8,934 $ 27,067
39 ADBE Adobe Systems Incorporated 2.50% 97.813 3,815 11,689
51 AAPL Apple Computer, Inc. 3.78% 113.250 5,776 18,308
19 AMCC Applied Micro Circuits Corporation 3.18% 255.438 4,853 13,839
26 BVSN BroadVision, Inc. 3.96% 233.063 6,060 18,090
56 CTXS Citrix Systems, Inc. 3.78% 103.063 5,771 18,471
85 CMGI CMGI Inc. 6.47% 116.375 9,892 32,562
20 MEDI MedImmune, Inc. 2.45% 187.000 3,740 11,833
50 NTAP Network Appliance, Inc. 6.02% 184.000 9,200 27,478
557 ORCL Oracle Corporation 24.99% 68.563 38,190 193,453
46 PMCS PMC-Sierra, Inc. (4) 5.38% 178.750 8,222 24,330
48 QLGC QLogic Corporation 4.45% 141.625 6,798 20,809
212 QCOM QUALCOMM Incorporated 19.90% 143.438 30,409 101,589
21 RFMD RF Micro Devices, Inc. 1.91% 138.938 2,918 11,089
61 SEBL Siebel Systems, Inc. 5.38% 134.688 8,216 25,464
______ ________
Total Investments 100% $152,794
====== ========
______________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 16
Schedule of Investments
The Dow(sm) Dividend And Repurchase Target 5 Portfolio, March 2000 Series
FT 399
At the Opening of Business on the
Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Current
of Ticker Symbol and Offering Value per Securities to Dividend
Shares Name of Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________________ ___________ ________ _____________ _________
<C> <S> <C> <C> <C> <C>
803 BA The Boeing Company 20% $37.000 $ 29,711 1.51%
573 DD E.I. du Pont de Nemours & Company 20% 51.875 29,724 2.70%
523 EK Eastman Kodak Company 20% 56.750 29,680 3.10%
382 GM General Motors Corporation 20% 77.688 29,677 2.57%
344 MMM Minnesota Mining & Manufacturing Company 20% 86.438 29,735 2.68%
______ ________
Total Investments 100% $148,527
====== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 18.
</FN>
</TABLE>
Page 17
Schedule of Investments
The Dow(sm) Dividend And Repurchase Target 10 Portfolio, March 2000 Series
FT 399
At the Opening of Business on the Initial Date of Deposit-February 29, 2000
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Current
of Ticker Symbol and Offering Value per Securities to Dividend
Shares Name of Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________________ ___________ ________ _____________ _________
<C> <S> <C> <C> <C> <C>
401 BA The Boeing Company 10% $ 37.000 $ 14,837 1.51%
417 CAT Caterpillar Inc. 10% 35.625 14,856 3.65%
286 DD E.I. du Pont de Nemours & Company 10% 51.875 14,836 2.70%
262 EK Eastman Kodak Company 10% 56.750 14,869 3.10%
191 GM General Motors Corporation 10% 77.688 14,838 2.57%
413 IP International Paper Company 10% 35.938 14,842 2.78%
242 MRK Merck & Co., Inc. 10% 61.438 14,868 1.89%
172 MMM Minnesota Mining & Manufacturing Company 10% 86.438 14,867 2.68%
137 JPM J.P. Morgan & Company, Inc. 10% 108.750 14,899 3.68%
743 MO Philip Morris Companies, Inc. 10% 20.000 14,860 9.60%
______ ________
Total Investments 100% $148,572
====== ========
______________
<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 February 29, 2000. Each Trust has a Mandatory Termination
Date of March 30, 2001.
(2) The cost of the Securities to a Trust represents the aggregate
underlying value with respect to the Securities acquired-generally
determined by the closing sale prices of the Securities on the
applicable exchange (where applicable, converted into U.S. dollars at
the offer side of the exchange rate at the Evaluation Time) at the
Evaluation Time on February 28, 2000, the business day prior to the
Initial Date of Deposit. The valuation of the Securities has been
determined by the Evaluator, an affiliate of ours. The cost of the
Securities to us and our profit or loss (which is the difference between
the cost of the Securities to us and the cost of the Securities to a
Trust) are set forth below:
Cost of
Securities Profit
to Sponsor (Loss)
___________ ______
The Dow(sm) Target 5 Portfolio, March 2000 Series $148,958 $ (427)
The Dow(sm) Target 10 Portfolio, March 2000 Series 148,428 149
Global Target 15 Portfolio, March 2000 Series 148,633 (681)
The S&P Target 10 Portfolio, March 2000 Series 152,257 (3,720)
The Nasdaq Target 15 Portfolio, March 2000 Series 158,714 (5,920)
The Dow(sm) DART 5 Portfolio, March 2000 Series 148,835 (308)
The Dow(sm) DART 10 Portfolio, March 2000 Series 148,692 (120)
(3) Current Dividend Yield for each Security was calculated by dividing
the most recent annualized ordinary dividend paid on a Security by that
Security's closing sale price at the Evaluation Time on the business day
prior to the Initial Date of Deposit.
(4) This Security represents the common stock of a foreign company which
trades directly on a U.S. national securities exchange.
(5) Market capitalization is based on the market value as of the close of
business on February 28, 2000.
</FN>
</TABLE>
Page 18
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created hundreds of
similar yet separate series of a unit investment trust which we have
named the FT Series. The series to which this prospectus relates, FT
399, consists of seven separate portfolios set forth below:
- - The Dow(sm) Target 5 Portfolio
- - The Dow(sm) Target 10 Portfolio
- - Global Target 15 Portfolio
- - The S&P Target 10 Portfolio
- - The Nasdaq Target 15 Portfolio
- - The Dow(sm) DART 5 Portfolio
- - The Dow(sm) DART 10 Portfolio
Trusts containing only U.S. listed stocks may be called "Domestic
Trusts" and those which contain primarily foreign stocks may be called
"International Trusts."
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.
The Trusts will terminate on the Mandatory Termination Date set forth in
"Summary of Essential Information." 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 portfolios of common stocks
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 a Trust, 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 new 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 a Trust, on a market value basis, will also change daily.
The portion of Securities represented by each Unit will not change as a
result of the deposit of additional Securities or cash in a Trust. If we
deposit cash, you and new investors may experience a dilution of your
investment. This is because prices of Securities will fluctuate between
the time of the cash deposit and the purchase of the Securities, and
because the Trust pays 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 a
Trust to buy Securities. If we or an affiliate of ours act as agent to a
Trust we will be subject to the restrictions under the Investment
Company Act of 1940, as amended.
We cannot guarantee that a Trust will keep its present size and
composition for any length of time. Securities may periodically be sold
under certain circumstances, and the proceeds from these sales will be
used to meet Trust obligations or distributed to Unit holders, but will
not be reinvested. 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 a Trust. As the holder of the Securities, the
Trustee will vote all of the Securities and will do so based on our
instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in a Trust fails, unless we can purchase
substitute Securities ("Replacement Securities") we will refund to you
that portion of the purchase price and sales charge resulting from the
failed contract on the next Income Distribution Date. Any Replacement
Security a Trust acquires will be identical to those from the failed
contract.
Page 19
Portfolios
Objectives.
When you invest in a Trust you are purchasing a quality portfolio of
attractive common stocks in one convenient purchase. The objective of
each Trust is to provide an above-average total return. To achieve this
objective, each Trust will invest in the common stocks of companies
which are selected by applying a unique specialized strategy. While the
Trusts seek to provide above-average return, each follows a different
investment strategy. Because the Trusts' lives are short (approximately
13 months), we cannot guarantee that a Trust will achieve its objective
or that a Trust will make money once expenses are deducted.
Dividend Yield Strategies.
The Dow(sm) Target 5 Strategy, the Dow(sm) Target 10 Strategy and the
Global Target 15 Strategy all invest in stocks with high dividend
yields. By selecting stocks with the highest dividend yields, each
Strategy seeks to uncover stocks that may be out of favor or
undervalued. Investing in stocks with high dividend yields may be
effective in achieving the investment objective of these Trusts, because
regular dividends are common for established companies, and dividends
have historically accounted for a large portion of the total return on
stocks. The Dow(sm) Target 5 Portfolio and the Global Target 15
Portfolio each seek to amplify this dividend yield strategy by selecting
the five lowest priced stocks of the 10 highest dividend-yielding stocks
in a particular index.
The Target 5 Portfolio Strategy.
The Dow(sm) Target 5 Portfolio stocks are determined as follows:
Step 1: We rank all 30 stocks contained in the Dow Jones Industrial
Average ("DJIA") by dividend yield as of the business day prior to the
date of this prospectus.
Step 2: We then select the ten highest dividend-yielding stocks from
this group.
Step 3: From the ten stocks selected in Step 2, we select the five stocks
with the lowest per share stock price for The Target 5 Portfolio.
The Target 10 Portfolio Strategy.
The Dow(sm) Target 10 Portfolio stocks are determined as follows:
Step 1: We rank all 30 stocks contained in the DJIA by dividend yield as
of the business day prior to the date of this prospectus.
Step 2: We then select the ten highest dividend-yielding stocks for The
Target 10 Portfolio.
Global Target 15 Portfolio Strategy.
The Global Target 15 Portfolio stocks are determined as follows:
Step 1: We rank all stocks contained in the DJIA, the Financial Times
Industrial Ordinary Share Index ("FT Index") and the Hang Seng Index by
dividend yield as of the business day prior to the date of this
prospectus in the case of DJIA stocks or three business days prior to
the date of this prospectus in the case of FT Index and Hang Seng Index
stocks.
Step 2: We select the ten highest dividend-yielding stocks in each
respective index.
Step 3: We select the five stocks with the lowest per share stock price
of the ten highest-dividend yielding stocks in each respective index as
of their respective selection date for the Global Target 15 Portfolio.
Companies which, on or before their respective selection date, are
subject to any of the limited circumstances which warrant removal of a
Security from a Trust as described under "Removing Securities from a
Trust" have been excluded from the Global Target 15 Portfolio Strategy.
The S&P Target 10 Portfolio Strategy.
The S&P Target 10 Portfolio Strategy selects a portfolio of 10 of the
largest Standard & Poor's 500 Composite Price Index ("S&P 500 Index")
stocks with the lowest price-to-sales ratios and greatest one-year price
appreciation as a means to achieving its investment objective. The S&P
Target 10 Portfolio stocks are determined as follows:
Step 1: We select the 250 largest companies based on market
capitalization which are components of the S&P 500 Index as of two
business days prior to the date of this prospectus.
Step 2: From the above list, the 125 companies with the lowest price to
sales ratios are selected.
Step 3: The 10 companies which had the greatest 1-year stock price
Page 20
appreciation are selected for The S&P Target 10 Portfolio.
During the initial offering period The S&P Target 10 Portfolio will not
invest more than 5% of its portfolio in shares of any one securities-
related issuer.
The Nasdaq Target 15 Portfolio Strategy.
The Nasdaq Target 15 Portfolio Strategy selects a portfolio of the 15
Nasdaq 100 Index stocks with the best overall ranking on both 12- and 6-
month price appreciation, return on assets and price to cash flow as a
means to achieving its investment objective. The Nasdaq Target 15
Portfolio stocks are determined as follows:
Step 1: We select stocks which are components of the Nasdaq 100 Index as
of two business days prior to the date of this prospectus and
numerically rank them by 12-month price appreciation (best (1) to worst
(100)).
Step 2: We then numerically rank the stocks by six-month price
appreciation.
Step 3: The stocks are then numerically ranked by return on assets ratio.
Step 4: We then numerically rank the stocks by the ratio of cash flow
per share to stock price.
Step 5: We add up the numerical ranks achieved by each company in the
above steps and select the 15 stocks with the lowest sums for The Nasdaq
Target 15 Portfolio.
The stocks which comprise The Nasdaq Target 15 Portfolio are weighted by
market capitalization subject to the restriction that only whole shares
are purchased and that no stock will comprise less than 1% or 25% or
more of the portfolio on the date of this prospectus. The Securities
will be adjusted on a proportionate basis to accommodate this constraint.
Companies which, based on publicly available information as of two
business days prior to the date of this prospectus, are the subject of
an announced business combination which we expect will happen within six
months of date of this prospectus have been excluded from The Nasdaq
Target 15 Portfolio.
The Dow(sm) Dividend and Repurchase Target Portfolio Strategies.
Both the Dow(sm) Dividend and Repurchase Target ("DART") 5 Portfolio
Strategy and the Dow(sm) DART 10 Portfolio Strategy select a portfolio
of DJIA stocks with high dividend yields and/or high buyback ratios and,
for the Dow(sm) DART 5 Portfolio Strategy, high return on assets, as a
means to achieving each Strategy's investment objective. By analyzing
dividend yields, each Strategy seeks to uncover stocks that may be out
of favor or undervalued. More recently, many companies have turned to
stock reduction programs as a tax efficient way to bolster their stock
prices and reward shareholders. Companies which have reduced their
shares through a share buyback program may provide a strong cash flow
position and, in turn, high quality earnings. Buyback ratio is the ratio
of a company's shares of common stock outstanding 12 months prior to the
date of this prospectus divided by a company's shares outstanding as of
the business day prior to the date of this prospectus, minus "1."
The Dow(sm) Dividend and Repurchase Target 5 Portfolio Strategy.
The Dow(sm) DART 5 Portfolio stocks are determined as follows:
Step 1: We rank all 30 stocks contained in the DJIA by the sum of their
dividend yield and buyback ratio as of the business day prior to the
date of this prospectus.
Step 2: We then select the ten stocks with the highest combined dividend
yields and buyback ratios.
Step 3: From the ten stocks selected in Step 2, we select the five
stocks with the greatest increase in the percentage change in return on
assets in the most recent year as compared to the previous year for The
Dow(sm) DART 5 Portfolio.
The Dow(sm) Dividend and Repurchase Target 10 Portfolio Strategy.
The Dow(sm) DART 10 Portfolio stocks are determined as follows:
Step 1: We rank all 30 stocks contained in the DJIA by the sum of their
dividend yield and buyback ratio as of the business day prior to the
date of this prospectus.
Step 2: We then select the ten stocks with the highest combined dividend
yields and buyback ratios for The Dow(sm) DART 10 Portfolio.
Please note that we applied the strategies which make up the portfolio
for each Trust at a particular time. If we create additional Units of a
Trust after the Initial Date of Deposit we will deposit the Securities
originally selected by applying the strategy at such time. This is true
Page 21
even if a later application of a strategy would have resulted in the
selection of different securities.
"Dow Jones Industrial Average(sm) ," "Dow(sm)" and "DJIA(sm)" are
service marks of Dow Jones & Company, Inc. ("Dow Jones") and have been
licensed for use for certain purposes by First Trust Advisors L.P., an
affiliate of ours. Dow Jones does not endorse, sell or promote any of
the Trusts, in particular, The Dow(sm) Target 5 Portfolio, The Dow(sm)
Target 10 Portfolio, The Dow(sm) DART 5 Portfolio and The Dow(sm) DART
10 Portfolio. Dow Jones makes no representation regarding the
advisability of investing in such products.
"S&P," "S&P 500," and "Standard & Poor's" are trademarks of The McGraw-
Hill Companies, Inc. and have been licensed for use by us. The S&P
Target 10 Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in such Trust. Please see the
Information Supplement which sets forth certain additional disclaimers
and limitations of liabilities on behalf of Standard & Poor's.
The "Nasdaq 100(registered trademark)," "Nasdaq 100 Index(registered
trademark)," and "Nasdaq(registered trademark)" are trade or service
marks of The Nasdaq Stock Market, Inc. (which with its affiliates are
the "Corporations") and are licensed for use by us. The Nasdaq Target 15
Portfolio has not been passed on by the Corporations as to its legality
or suitability. The Nasdaq Target 15 Portfolio is not issued, endorsed,
sold, or promoted by the Corporations. The Corporations make no
warranties and bear no liability with respect to The Nasdaq Target 15
Portfolio.
Dow Jones, Standard & Poor's and The Nasdaq Stock Market, Inc., as well
as the publishers of the FT Index and Hang Seng Index, are not
affiliated with us and have not participated in creating the Trusts or
selecting the Securities for the Trusts. Except as noted above, none of
the index publishers have given us a license to use their index nor have
they approved of any of the information in this prospectus.
Of course, as with any similar investments, there can be no assurance
that the objective of a Trust will be achieved. See "Risk Factors" for a
discussion of the risks of investing in a Trust.
Risk Factors
Price Volatility. The Trusts invest in common stocks of U.S., and, for
certain Trusts, foreign companies. The value of a Trust's Units will
fluctuate with changes in the value of these common stocks. Common
stock prices fluctuate for several reasons including changes in
investors' perceptions of the financial condition of an issuer or the
general condition of the relevant stock market, or when political or
economic events affecting the issuers occur.
Because the Trusts are not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of any Trust will be positive over any period of time or
that you won't lose money. Units of the Trusts are not deposits of any
bank and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Trusts which use dividend yield as a selection criteria employ a
contrarian strategy in which the Securities selected share qualities
that have caused them to have lower share prices or higher dividend
yields than other common stocks in their peer group. There is no
assurance that negative factors affecting the share price or dividend
yield of these Securities will be overcome over the life of the Trusts
or that these Securities will increase in value.
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.
Strategy. Please note that we applied the strategies which make up the
portfolio for each Trust at a particular time. If we create additional
Units of a Trust after the Initial Date of Deposit we will deposit the
Securities originally selected by applying the strategy at such time.
This is true even if a later application of a strategy would have
resulted in the selection of different securities. There is no guarantee
that the strategy or the investment objective of a Trust will be
achieved. The actual performance of the Trusts will be different than
the hypothetical returns of each Trust's comparative index. Because the
Trusts are unmanaged and follow a strategy, the Trustee will not buy or
sell Securities in the event a strategy is not achieving the desired
results.
Technology Industry. Because more than 25% of The Nasdaq Target 15
Portfolio is invested in common stocks of companies in the technology
industry, this Trust is considered to be concentrated in technology
stocks. A portfolio concentrated in a single industry may present more
Page 22
risks than a portfolio which is broadly diversified over several
industries. Technology companies are generally subject to the risks of
rapidly changing technologies; short product life cycles; fierce
competition; aggressive pricing; frequent introduction of new or
enhanced products; the loss of patent, copyright and trademark
protections; 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. Technology company stocks have experienced extreme
price and volume fluctuations that are often unrelated to their
operating performance.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain of the companies represented in the Trusts.
In addition, litigation regarding any of the issuers of the Securities,
such as that concerning Philip Morris Companies, Inc., or of the
industries represented by these issuers may negatively impact the share
prices of these Securities. We cannot predict what impact any pending or
threatened litigation will have on the share prices of the Securities.
Year 2000 Problem. Many computer systems were not designed to properly
process information and data involving dates of January 1, 2000 and
thereafter. This is commonly known as the "Year 2000 Problem." The
Trusts and their service providers do not appear to have been adversely
affected by computer problems related to the transition to the year
2000. However, these problems could arise or be discovered in the
future. We are unable to determine what impact, if any, the Year 2000
Problem has had or 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. 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; lack of liquidity of
certain foreign markets; and less government supervision and regulation
of exchanges, brokers, and issuers in foreign countries.
The purchase and sale of the foreign Securities will generally occur
only in foreign securities markets. Although we do not believe that the
Trusts will have problems buying and selling these Securities, certain
of the factors stated above may make it impossible to buy or sell them
in a timely manner.
United Kingdom. The Global Target 15 Portfolio is considered to be
concentrated in common stocks of U.K. issuers. The United Kingdom is one
of 15 members of the European Union ("EU") which was formed by the
Maastricht Treaty on European Union. It is expected that the Treaty will
have the effect of eliminating most remaining trade barriers between the
member nations and make Europe one of the largest common markets in the
world. However, the uncertain implementation of the Treaty provisions
and recent rapid political and social change throughout Europe make the
extent and nature of future economic development in the United Kingdom
and Europe and their effect on Securities issued by U.K. issuers
impossible to predict.
Unlike a majority of EU members, the United Kingdom did not convert its
currency to the new common European currency, the euro, on January 1,
1999. All companies with significant markets or operations in Europe
face strategic challenges as these entities adapt to a single currency.
The euro conversion may materially impact revenues, expenses or income;
increase competition; affect issuers' currency exchange rate risk and
derivatives exposure; cause issuers to increase spending on information
technology updates; and result in potentially adverse tax consequences.
We cannot predict when or if the United Kingdom will convert to the euro
or what impact the implementation of the euro throughout a majority of
EU countries will have on U.K. or European issuers.
Hong Kong. The Global Target 15 Portfolio is also considered to be
concentrated in common stocks of Hong Kong issuers. Hong Kong issuers
are subject to risks related to Hong Kong's political and economic
environment, the volatility of the Hong Kong stock market, and the
concentration of real estate companies in the Hang Seng Index. Hong Kong
reverted to Chinese control on July 1, 1997 and any increase in
uncertainty as to the future economic and political status of Hong Kong,
Page 23
or a deterioration of the relationship between China and the United
States, could have negative implications on stocks listed on the Hong
Kong stock market. Securities prices on the Hong Kong Stock Exchange,
and specifically the Hang Seng Index, can be highly volatile and are
sensitive to developments in Hong Kong and China, as well as other world
markets.
Exchange Rates. Because securities of foreign issuers generally pay
dividends and trade in foreign currencies, the U.S. dollar value of
these Securities (and therefore Units of the International Trusts) will
vary with fluctuations in foreign exchange rates. Most foreign
currencies have fluctuated widely in value against the U.S. dollar for
various economic and political reasons. The recent conversion by eleven
of the fifteen EU members of their national currencies to the euro could
negatively impact the market rate of exchange between such currencies
(or the newly created euro) and the U.S. dollar.
To determine the value of foreign Securities or their dividends, the
Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, these markets can be quite volatile, depending on the activity
of the large international commercial banks, various central banks,
large multi-national corporations, speculators and other buyers and
sellers of foreign currencies. Since actual foreign currency
transactions may not be instantly reported, the exchange rates estimated
by the Evaluator may not reflect the amount the International Trusts
would receive, in U.S. dollars, had the Trustee sold any particular
currency in the market.
Hypothetical Performance Information
The following table compares hypothetical performance information for
the strategies employed by each Trust and the actual performance of the
DJIA, S&P 500 Index, Nasdaq 100 Index, FT Index, Hang Seng Index and a
combination of the FT Index, Hang Seng Index and the DJIA (the
"Cumulative Index Returns") in each of the full years listed below (and
as of the most recent quarter).
These hypothetical returns should not be used to predict future
performance of the Trusts. Returns from a Trust will differ from its
strategy for several reasons, including the following:
- - Total Return figures shown do not reflect sales charges, commissions,
Trust expenses or taxes.
- - Strategy returns are for calendar years (and through the most recent
quarter), while the Trusts begin and end on various dates.
- - Trusts have a maturity longer than one year.
- - Trusts may not be fully invested at all times or equally weighted in
all stocks comprising a strategy.
- - Securities are often purchased or sold at prices different from the
closing prices used in buying and selling Units.
- - For Trusts investing in foreign Securities, currency exchange rates
may differ.
You should note that the Trusts are not designed to parallel movements
in any index or combination of indexes, and it is not expected that they
will do so. In fact, each Trust's strategy underperformed its
comparative index, or combination thereof, in certain years and we
cannot guarantee that a Trust will outperform its respective index over
the life of a Trust or over consecutive rollover periods, if available.
Each index differs widely in size and focus, as described below.
DJIA. The DJIA consists of 30 U.S. stocks chosen by the editors of The
Wall Street Journal as being representative of the broad market and of
American industry. Changes in the component stocks of the DJIA are made
entirely by the editors of The Wall Street Journal without consulting
the companies, the stock exchange or any official agency. For the sake
of continuity, changes are made rarely.
S&P 500 Index. The S&P 500 Index consists of 500 stocks chosen by
Standard and Poor's to be representative of the leaders of various
industries.
Nasdaq 100 Index. The NASDAQ 100 Index consists of the 100 largest and
most active non-financial domestic and international companies listed on
the NASDAQ National Market System. As of December 18, 1998, the
constituents are constructed using a modified market capitalization approach.
Financial Times Industrial Ordinary Share Index. The FT Index consists
of 30 common stocks chosen by the editors of The Financial Times as
being representative of British industry and commerce.
Page 24
Hang Seng Index. The Hang Seng Index consists of 33 of the stocks
currently listed on the Stock Exchange of Hong Kong Ltd. and is intended
to represent four major market sectors: commerce and industry, finance,
property and utilities.
Page 25
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN(2)
Hypothetical Strategy Total Returns(1)
_______________________________________________________
Global S&P Nasdaq The Dow(sm) The Dow(sm)
Target 5 Target 10 Target 15 Target 10 Target 15 DART 5 DART 10
Year Strategy Strategy Strategy Strategy Strategy Strategy Strategy
____ ________ _________ _________ _________ _________ ___________ ___________
<S> <C> <C> <C> <C> <C> <C> <C>
1972 22.92% 23.76% 18.16% 23.76%
1973 20.01% 4.01% 10.84% -2.26%
1974 -5.40% -1.02% 2.22% -7.11%
1975 64.77% 56.10% 47.74% 57.78%
1976 40.96% 35.18% 30.10% 35.18%
1977 5.49% -1.95% 3.37% -1.95%
1978 1.23% 0.03% 11.00% -1.95%
1979 9.84% 13.01% 44.70% 43.17% 17.64% 13.01%
1980 41.69% 27.90% 52.51% 54.15% 44.01% 24.80%
1981 3.19% 7.46% 0.03% -10.59% -6.01% 2.02%
1982 43.37% 27.12% -2.77% 38.21% 22.07% 27.46%
1983 36.38% 39.07% 15.61% 20.01% 37.02% 40.44%
1984 11.12% 6.22% 29.88% 16.34% 13.40% 6.22%
1985 38.34% 29.54% 54.06% 43.49% 43.24% 39.31%
1986 30.89% 35.63% 38.11% 21.81% 22.94% 49.49% 41.95%
1987 10.69% 5.59% 17.52% 9.16% 14.10% 6.03% 5.24%
1988 21.47% 24.57% 24.26% 20.35% -0.59% 18.40% 19.02%
1989 10.55% 26.97% 15.98% 39.62% 37.33% 40.15% 28.49%
1990 -15.74% -7.82% 3.19% -5.64% -5.39% 5.78% 1.27%
1991 62.03% 34.20% 40.40% 24.64% 109.27% 42.59% 43.84%
1992 22.90% 7.69% 26.64% 24.66% -0.15% 12.91% 8.53%
1993 34.01% 27.08% 65.65% 42.16% 28.55% 19.89% 21.15%
1994 8.27% 4.21% -7.26% 8.17% 10.50% -5.73% 0.17%
1995 30.50% 36.85% 13.45% 25.26% 53.80% 46.58% 38.14%
1996 26.20% 28.35% 21.00% 26.61% 60.03% 35.45% 34.93%
1997 19.97% 21.68% -6.38% 61.46% 35.15% 21.68% 25.64%
1998 12.36% 10.59% 13.50% 53.85% 123.10% 27.43% 19.96%
1999 -7.28% 5.06% 8.88% 3.49% 100.55% 19.81% 18.47%
</TABLE>
<TABLE>
<CAPTION>
Index Total Returns
____________________________________________________
Cumulative
Hang Seng S&P 500 Nasdaq Index
Year DJIA FT Index Index Index 100 Index Returns(3)
____ ______ ________ _________ _______ _________ __________
<S> <C> <C> <C> <C> <C> <C>
1972 18.38%
1973 -13.20%
1974 -23.64%
1975 44.46%
1976 22.80%
1977 -12.91%
1978 2.66%
1979 10.60% 3.59% 77.99% 18.22% 30.73%
1980 21.90% 31.77% 65.48% 32.11% 39.72%
1981 -3.61% -5.30% -12.34% -4.92% -7.08%
1982 26.85% 0.42% -48.01% 21.14% -6.91%
1983 25.82% 21.94% -2.04% 22.28% 15.24%
1984 1.29% 2.15% 42.61% 6.22% 15.35%
1985 33.28% 54.74% 50.95% 31.77% 46.32%
1986 27.00% 24.36% 51.16% 18.31% 6.89% 34.18%
1987 5.66% 37.13% -6.84% 5.33% 10.49% 11.99%
1988 16.03% 9.00% 21.04% 16.64% 13.54% 15.36%
1989 32.09% 20.07% 10.59% 31.35% 26.17% 20.92%
1990 -0.73% 11.03% 11.71% -3.30% -10.41% 7.34%
1991 24.19% 8.77% 50.68% 30.40% 64.99% 27.88%
1992 7.39% -3.13% 34.73% 7.62% 8.86% 12.99%
1993 16.87% 19.22% 124.95% 9.95% 11.67% 53.68%
1994 5.03% 1.97% -29.34% 1.34% 1.74% -7.45%
1995 36.67% 16.21% 27.52% 37.22% 43.01% 26.80%
1996 28.71% 18.35% 37.86% 22.82% 42.74% 28.31%
1997 24.82% 14.78% -17.69% 33.21% 20.76% 7.30%
1998 18.03% 12.32% -2.60% 28.57% 85.43% 9.25%
1999 27.06% 15.25% 71.34% 20.94% 102.08% 37.88%
____________
<FN>
(1) The Strategy stocks for each Strategy for a given year consist of
the common stocks selected by applying the respective Strategy as of the
beginning of the period (and not the date the Trusts actually sell Units).
(2) Total Return represents the sum of the change in market value of
each group of stocks between the first and last trading day of a period
plus the total dividends paid on each group of stocks during such period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return figures assume that all
dividends are reinvested semi-annually (except for the FT Index and Hang
Seng Index from 12/31/78 through 12/31/86, during which time annual
reinvestment was assumed) and all returns are stated in terms of U.S.
dollars. Based on the year-by-year returns contained in the table, over
the full years listed above, the Target 5 Strategy, the Target 10
Strategy, the Global Target 15 Strategy, The S&P Target 10 Strategy, The
Nasdaq Target 15 Strategy, The Dow(sm) DART 5 Strategy and The Dow(sm)
DART 10 Strategy achieved an average annual total return of 19.95%,
17.83%, 20.70%, 25.20%, 36.76%, 21.59% and %, respectively. In addition,
over each stated period, each individual strategy achieved a greater
average annual total return than that of its corresponding index, the
DJIA; the combination of the FT Index, Hang Seng Index and DJIA (the
"Cumulative Index"); the S&P 500 Index; and the Nasdaq 100 Index which
were 13.91%, 18.82%, 17.77% and 27.06%, respectively.
(3) Cumulative Index Returns represent the weighted average of the
annual returns of the stocks contained in the FT Index, Hang Seng Index
and DJIA. Cumulative Index Returns do not represent an actual index.
</FN>
</TABLE>
Page 26
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the price per Unit of
which is comprised of the following:
- - The aggregate underlying value of the Securities;
- - The amount of any cash in the Income and Capital Accounts;
- - Dividends receivable on Securities; and
- - The total sales charge (which combines an initial up-front sales
charge and a deferred sales charge).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities, changes in the
relevant currency exchange rates, changes in the applicable commissions,
stamp taxes, custodial fees and other costs associated with foreign
trading, and changes in the value of the Income and/or Capital Accounts.
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.
Organization Costs. 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 end of the initial offering period (a
significantly shorter time period than the life of the Trusts). During
the initial offering period, there may be a decrease in the value of the
Securities. To the extent the proceeds from the sale of these Securities
are insufficient to repay the Sponsor for Trust organization costs, the
Trustee will sell additional Securities to allow a Trust to fully
reimburse the Sponsor. In that event, the net asset value per Unit of a
Trust will be reduced by the amount of additional Securities sold.
Although the dollar amount of the reimbursement due to the Sponsor will
remain fixed and will never exceed the per Unit amount set forth for a
Trust in "Statements of Net Assets," this will result in a greater
effective cost per Unit to Unit holders for the reimbursement to the
Sponsor. To the extent actual organization costs are less than the
estimated amount, only the actual organization costs will be deducted
from the assets of a Trust. When Securities are sold to reimburse the
Sponsor for organization costs, the Trustee will sell Securities, to the
extent practicable, which will maintain the same proportionate
relationship among the Securities contained in a Trust as existed prior
to such sale.
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, but will vary with the purchase price of your
Unit. When the Public Offering Price per Unit exceeds $10.00 per Unit,
the initial sales charge will exceed 1.00% of the Public Offering Price.
This initial sales charge is actually equal to the difference between
the maximum sales charge of 2.75% and the maximum remaining deferred
sales charge (initially $.175 per Unit) and will vary from 1.00% 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.
Monthly Deferred Sales Charge. In addition, ten monthly deferred sales
charges of $.0175 per Unit will be deducted from a Trust's assets on
approximately the twentieth day of each month from April 20, 2000
through January 19, 2001. If you buy Units at a price of less than
$10.00 per Unit, the dollar amount of the deferred sales charge will not
change, but the deferred sales charge on a percentage basis will be more
than 1.75% of the Public Offering Price.
Page 27
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for a "wrap
fee account" as described below) the maximum sales charge is reduced, as
follows:
Your maximum
If you invest sales charge
(in thousands) will be
___________________________ ____________
$50 but less than $100 2.50%
$100 but less than $150 2.25%
$150 but less than $500 1.90%
$500 but less than $1,000 1.75%
$1,000 or more 1.00%
*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
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 commit to purchase Units of the Trusts, or subsequent series of
the Trusts, valued at $1,000,000 or more over a 12-month period,
commencing with your first purchase you will receive the reduced sales
charge set forth above on all individual purchases over $83,000.
If you purchase Units with rollover proceeds from a previous series of a
Trust, you will be subject only to the maximum deferred sales charge on
such Units (for rollover purchases of $1,000,000 or more, the charge
will be a deferred sales charge limited to 1.00% of the Public Offering
Price), but you will not be eligible to receive the reduced sales
charges described in the above table. In addition, you may use
termination proceeds from other unit investments trusts with a similar
strategy as a Trust, or redemption or termination proceeds from any unit
investment trust we sponsor, to purchase Units of the Trusts subject
only to any remaining deferred sales charge. Please note that you will
be charged the amount of any remaining deferred sales charge on Units
you redeem when you redeem them.
The following persons may purchase Units at the Public Offering Price
less the applicable dealer concession:
- - Employees, officers and directors of the Sponsor, our related
companies, dealers and their affiliates, and vendors providing services
to us.
- - Immediate family members of the above (spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-
in-law, sons-in-law, daughters-in-law, brothers-in-law and sisters-in-
law, and trustees, custodians or fiduciaries for the benefit of such
persons).
The Sponsor and certain dealers may establish a schedule where
employees, officers and directors of such dealers can purchase Units of
a Trust at the Public Offering Price less the established schedule
amount, which is designed to compensate such dealers for activities
relating to the sale of Units (the "Employee Dealer Concession").
If you purchase Units through registered broker/dealers who charge
periodic fees in lieu of commissions or who charge 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, your Units will only be assessed that
portion of the sales charge retained by the Sponsor, .5% of the Public
Offering Price. This discount for "wrap fee" purchases is available
whether or not you purchase Units with the Wrap CUSIP. However, if you
purchase Units with the Wrap CUSIP, you should be aware that all
distributions of income and/or capital will be automatically reinvested
into additional Units of your Trust subject only to that portion of the
sales charge retained by the Sponsor. 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.
Page 28
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.
The total value of the Securities in the Global Target 15 Portfolio
during the initial offering period is computed on the basis of the
offering side value of the relevant currency exchange rate expressed in
U.S. dollars as of the Evaluation Time.
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. In
addition, during this period the aggregate underlying value of the
Securities is computed on the basis of the bid side value of the
relevant currency exchange rate expressed in U.S. dollars as of the
Evaluation Time.
Distribution of Units
We intend to qualify Units of the Trusts for sale in a number of states.
All Units will be sold at the then current Public Offering Price.
Dealer Concessions.
Dealers and other selling agents can purchase Units at prices which
reflect a concession or agency commission of 2.25% of the Public
Offering Price per Unit. However, this amount will be reduced to $0.13
per Unit on purchases by Rollover Unit holders or on the sale of Units
subject only to any remaining deferred sales charge. In addition,
dealers and other selling agents will receive a maximum concession of up
to $0.10 per Unit on purchases of Units resulting from the automatic
reinvestment of income or capital distributions into additional Units.
Dealers and other selling agents who sell Units of a Trust during the
initial offering period in the dollar amounts shown below will be
entitled to the following additional sales concessions as a percentage
of the Public Offering Price:
Total sales per Trust Additional
(in millions) Concession
_________________________ __________
$1 but less than $3 0.050%
$3 but less than $5 0.100%
$5 or more 0.150%
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. If we reacquire, or the Trustee redeems, Units from
brokers, dealers or other selling agents while a market is being
maintained for such Units, such entities agree to immediately repay to
us any concession or agency commission relating to the reacquired Units.
Certain commercial banks may be making Units of the Trusts available to
their customers on an agency basis. A portion of the sales charge paid
by these customers is kept by or given to the banks in the amounts shown
above.
Page 29
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 a Trust (which
may show performance net of the expenses and charges a Trust would have
incurred) and returns over specified periods of other similar trusts we
sponsor in our advertising and sales materials, with (1) returns on
other taxable investments such as the common stocks comprising various
market indices, corporate or U.S. Government bonds, bank CDs and money
market accounts or funds, (2) performance data from Morningstar
Publications, Inc. or (3) information from publications such as Money,
The New York Times, U.S. News and World Report, 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 for each Trust less any reduced sales charge as stated
in "Public Offering." Also, any difference between our cost to purchase
the Securities and the price 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 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 and Trustee costs to transfer and record the ownership of
Units. We may discontinue purchases of Units at any time. IF YOU WISH TO
DISPOSE OF YOUR UNITS, YOU SHOULD ASK US FOR THE CURRENT MARKET PRICES
BEFORE MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. If you sell 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 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 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 the Trusts 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 the
Trusts from the Income Account of a Trust if funds are available, and
then from the Capital Account. The Income and Capital Accounts are
noninterest-bearing to Unit holders, so the Trustee 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
Page 30
when a Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. First Trust Advisors L.P., an affiliate of ours,
acts as both Portfolio Supervisor and Evaluator to the Trusts and will
receive the fees set forth under "Fee Table" for providing portfolio
supervisory and evaluation services to the Trusts. In providing
portfolio supervisory services, the Portfolio Supervisor may purchase
research services from a number of sources, which may include
underwriters or dealers of the Trusts.
The fees payable to us, First Trust Advisors L.P. and the Trustee are
based on the largest aggregate number of Units of a Trust outstanding at
any time during the calendar year, except during the initial offering
period, in which case these fees are calculated based on the largest
number of Units outstanding during the period for which compensation is
paid. These fees may be adjusted for inflation without Unit holders'
approval, but in no case will the annual fee paid to us or our
affiliates for providing a given service to all unit investment trusts
for which we provide such services be more than the actual cost of
providing such service in such year.
As Sponsor, we will receive a fee from each Trust for creating and
developing the Trusts, including determining each Trust's objectives,
policies, composition and size, selecting service providers and
information services and for providing other similar administrative and
ministerial functions. Each Trust pays this "creation and development
fee" as a percentage of that Trust's net asset value at the end of the
initial offering period. In connection with the creation and development
fee, in no event will the Sponsor collect more than .75% of a Unit
holder's initial investment. We do not use this fee to pay distribution
expenses or as compensation for sales efforts.
In addition to a Trust's operating expenses, and the fees described
above, the Trusts may also incur the following charges:
- - A quarterly license fee (which will fluctuate with a Trust's net asset
value) payable by certain of the Trusts for the use of certain
trademarks and trade names of Dow Jones, Standard & Poor's or The Nasdaq
Stock Market, Inc.;
- - All legal expenses of the Trustee according to its responsibilities
under the Indenture;
- - The expenses and costs incurred by the Trustee to protect a Trust and
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;
- - Foreign custodial and transaction fees, if any; 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
a Trust. Since the Securities are all common stocks and dividend income
is unpredictable, we cannot guarantee that dividends will be sufficient
to meet any or all expenses of a Trust. If there is not enough cash in
the Income or Capital Accounts of a Trust, the Trustee has the power to
sell Securities in a Trust to make cash available to pay these charges
which may result in capital gains or losses to you. See "Tax Status."
Tax Status
United States Taxation.
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trusts. This section is current as
of the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a non-U.S. person, a broker-
dealer, or other investor with special circumstances. In addition, this
section does not describe your state or foreign taxes. As with any
investment, you should consult your own tax professional about your
particular consequences.
Trust Status.
The Trusts will not be taxed as corporations for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Securities and other assets held by a Trust, and as
such you will be considered to have received a pro rata share of income
(i.e., dividends and capital gains, if any) from each Security when such
income is considered to be received by a Trust. This is true even if you
elect to have your distributions automatically reinvested into
additional Units. In addition, the income from the Trust which you must
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take into account for federal income tax purposes is not reduced for
amounts used to pay the 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 amount received in the
transaction. You can generally determine your initial tax basis in each
Security or other Trust asset by apportioning the cost of your Units,
generally including sales charges, among each Security or other Trust
asset ratably according to their value on the date you purchase your
Units. In certain circumstances, however, you may have to adjust your
tax basis after you purchase your Units (for example, in the case of
certain dividends that exceed a corporation's accumulated earnings and
profits).
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (10% for certain taxpayers in the lowest
tax bracket). Net capital gain equals net long-term capital gain minus
net short-term capital loss for the taxable year. Capital gain or loss
is long-term if the holding period for the asset is more than one year
and is short-term if the holding period for the asset is one year or
less. You must exclude the date you purchase your Units to determine the
holding period of your Units. The tax rates for capital gains realized
from assets held for one year or less are generally the same as for
ordinary income. The Tax Code may, however, treat certain capital gains
as ordinary income in special situations.
Rollovers.
If you elect to have your proceeds from a Trust rolled over into the
next series of such Trust, it is considered a sale for federal income
tax purposes, and any gain on the sale will be treated as a capital
gain, and any loss will be treated as a capital loss. However, any loss
you incur in connection with the exchange of your Units of a Trust for
units of the next series will generally be disallowed with respect to
this deemed sale and subsequent deemed repurchase, to the extent the two
trusts have substantially identical Securities under the wash sale
provisions of the Internal Revenue Code.
In-Kind Distributions.
Under certain circumstances, you may request a distribution of
Securities (an "In-Kind Distribution") from a Domestic Trust when you
redeem your Units or at a Trust's termination. If you request an In-Kind
Distribution you will be responsible for any expenses related to this
distribution. By electing to receive an In-Kind Distribution, you will
receive whole shares of stock plus, possibly, cash.
You will not recognize gain or loss if you only receive Securities in
exchange for your pro rata portion of the Securities held by a Trust.
However, if you also receive cash in exchange for a fractional share of
a Security held by such Trust, you will generally recognize gain or loss
based on the difference between the amount of cash you receive and your
tax basis in such fractional share of the Security.
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes you must take into account
your full pro rata share of a Trust's income, even if some of that
income is used to pay Trust expenses. You may deduct your pro rata share
of each expense paid by a Trust to the same extent as if you directly
paid the expense. You may, however, be required to treat some or all of
the expenses of a Trust as miscellaneous itemized deductions.
Individuals may only deduct certain miscellaneous itemized deductions to
the extent they exceed 2% of adjusted gross income.
Foreign, State and Local Taxes.
Distributions by a Trust that are treated as U.S. source income (e.g.,
dividends received on Securities of domestic corporations) will
generally be subject to U.S. income taxation and withholding in the case
of Units held by non-resident alien individuals, foreign corporations or
other non-U.S. persons, subject to any applicable treaty. However,
distributions by a Trust that are derived from dividends of Securities
of a foreign corporation and that are not effectively connected to your
conduct of a trade or business within the United States will generally
not be subject to U.S. income taxation and withholding in the case of
Units held by non-resident alien individuals, foreign corporations or
other U.S. persons, provided that less than 25 percent of the gross
income of the foreign corporation over the three-year period ending with
the close of the taxable year preceding payment was effectively
connected to the conduct of a trade or business within the United States.
Some distributions by a Trust may be subject to foreign withholding
taxes. Any dividends withheld will nevertheless be treated as income to
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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.
United Kingdom Taxation.
The following summary describes certain important U.K. tax consequences
for certain U.S. Unit holders who hold Units in the Global Target 15
Portfolio as capital assets. This summary is intended to be a general
guide only and is subject to any changes in law occurring after the date
of this prospectus. You should consult your own tax advisor about your
particular circumstances.
Taxation of Dividends. A U.K. resident individual who receives a
dividend from a U.K. company is generally entitled to a tax credit,
which is either offset against U.K. tax liabilities or, in certain
circumstances, repaid.
You will not be able to claim any refund of the tax credit for dividends
paid by U.K. companies.
Taxation of Capital Gains. U.S. investors who are neither resident nor
ordinarily resident in the United Kingdom will not generally be liable
for U.K. tax on gains arising on the disposal of Units in the Global
Target 15 Portfolio. However, they may be liable if the Units are used,
held or acquired for the purposes of a trade, profession or vocation
carried on in the United Kingdom. Individual U.S. investors may also be
liable if they have previously been resident or ordinarily resident in
the United Kingdom and become resident or ordinarily resident in the
United Kingdom in the future.
Inheritance Tax. Individual U.S. investors who are domiciled in the
United States and who are not U.K. nationals will generally not be
subject to U.K. inheritance tax on death or on gifts of the Units made
during their lifetimes, provided any applicable U.S. federal gift or
estate tax is paid. They may be subject to U.K. inheritance tax if the
Units are used in a business in the United Kingdom or relate to the
performance of personal services in the United Kingdom.
Where the Units are held on trust, the Units will generally not be
subject to U.K. inheritance tax unless the settlor, at the time of
settlement, was domiciled in the United Kingdom, in which case they may
be subject to tax.
It is very unlikely that the Units will be subject to both U.K.
inheritance tax and U.S. federal gift or estate tax. If they were, one
of the taxes could generally be credited against the other.
Stamp Tax. A sale of Securities listed in the FT Index will generally
result in either U.K. stamp duty or stamp duty reserve tax being payable
by the purchaser. The Global Target 15 Portfolio paid this tax when it
acquired Securities. When the Global Target 15 Portfolio sells
Securities, it is anticipated that the tax will be paid by the purchaser.
Hong Kong Taxation.
The following summary describes certain important Hong Kong tax
consequences to certain U.S. Unit holders who hold Units in the Global
Target 15 Portfolio as capital assets. This summary assumes that you are
not carrying on a trade, profession or business in Hong Kong and that
you have no profits sourced in Hong Kong arising from the carrying on of
such trade, profession or business. This summary is intended to be a
general guide only and is subject to any changes in Hong Kong or U.S.
law occurring after the date of this prospectus and you should consult
your own tax advisor about your particular circumstances.
Taxation of Dividends. Dividends you receive from the Global Target 15
Portfolio relating to Hong Kong issuers are not taxable and therefore
will not be subject to the deduction of any withholding tax.
Profits Tax. Unless you are carrying on a trade, profession or business
in Hong Kong you will not be subject to profits tax imposed by Hong Kong
on any gain or profits made on the realization or other disposal of your
Units.
Estate Duty. Units of the Global Target 15 Portfolio do not give rise to
Hong Kong estate duty liability.
Retirement Plans
You may purchase Units of the Trusts for:
- - Individual Retirement Accounts;
- - Keogh Plans;
- - Pension funds; and
- - Other tax-deferred retirement plans.
Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
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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
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 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
your Trust;
- - The number of Units issued or transferred;
- - Your name, address and Taxpayer Identification Number ("TIN");
- - A notation of any liens or restrictions of the issuer and any adverse
claims; and
- - The date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
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:
- - A summary of transactions in your Trust for the year;
- - A list of 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. Dividends received on foreign Securities, if any, are
converted into U.S. dollars at the applicable exchange rate.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." No income distribution will be paid if accrued expenses of
a Trust exceed amounts in the Income Account on the Income Distribution
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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, unless you are a
Rollover Unit holder, you will receive the pro rata share of the money
from the sale of the Securities. However, if you own Units of a Domestic
Trust, you may elect to receive an In-Kind Distribution as described
under "Amending or Terminating the Indenture." All Unit holders will
receive a pro rata share of any other assets remaining in their 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 that Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of your Trust by notifying the Trustee at least 10 days before any
Record Date. Distributions on Units identified by the Wrap CUSIP will be
automatically reinvested into additional Units of your Trust. Each later
distribution of income and/or capital on your Units will be reinvested
by the Trustee into additional Units of your Trust. You will have to pay
any remaining deferred sales charge on any Units acquired pursuant to
this distribution reinvestment option. This option may not be available
in all states. PLEASE NOTE THAT EVEN IF YOU REINVEST DISTRIBUTIONS,
THEY ARE STILL CONSIDERED DISTRIBUTIONS FOR INCOME TAX PURPOSES.
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 of a Trust if funds are available for that
purpose, or from the Capital Account. All other amounts paid on
redemption will be taken from the Capital Account of a Trust. The IRS
will require the Trustee to withhold a portion of your redemption
proceeds if the Trustee does not have your TIN as generally discussed
under "Income and Capital Distributions."
If you tender 1,000 Units or more of a Domestic Trust 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
Page 35
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:
adding
1. cash in the Income and Capital Accounts of a Trust not designated to
purchase Securities;
2. the aggregate underlying value of the Securities held in that 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 such Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of such Trust, if any;
4. cash held for distribution to Unit holders of record of such Trust as
of the business day before the evaluation being made;
5. liquidation costs for foreign Securities, if any; and
6. other liabilities incurred by such Trust; and
dividing
1. the result by the number of outstanding Units of such Trust.
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, during the
initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
Investing in a New Trust
Each Trust's portfolio has been selected on the basis of capital
appreciation potential for a limited time period. When each Trust is
about to terminate, you may have the option to roll your proceeds into
the next series of a Trust (the "New Trusts") if one is available. We
intend to create the New Trusts in conjunction with the termination of
the Trusts and plan to apply the same strategy we used to select the
portfolio for the Trusts to the New Trusts.
If you wish to have the proceeds from your Units rolled into a New Trust
you must notify the Trustee in writing of your election by the Rollover
Notification Date stated in the "Summary of Essential Information." As a
Rollover Unit holder, your Units will be redeemed and the underlying
Securities sold by the Trustee, in its capacity as Distribution Agent,
during the Special Redemption and Liquidation Period. The Distribution
Agent may engage us or other brokers as its agent to sell the Securities.
Once all of the Securities are sold, your proceeds, less any brokerage
fees, governmental charges or other expenses involved in the sales, will
be used to buy units of a New Trust or trust with a similar investment
strategy that you have selected, provided such trusts are registered and
being offered. Accordingly, proceeds may be uninvested for up to several
days. Units purchased with rollover proceeds will generally be purchased
subject only to the maximum remaining deferred sales charge on such
units (currently expected to be $.175 per unit).
We intend to create New Trust units as quickly as possible, depending on
the availability of the Securities contained in a New Trust's portfolio.
Rollover Unit holders will be given first priority to purchase New Trust
units. We cannot, however, assure the exact timing of the creation of
New Trust units or the total number of New Trust units we will create.
Any proceeds not invested on behalf of Rollover Unit holders in New
Trust units will be distributed within a reasonable time after such
occurrence. Although we believe that enough New Trust units can be
Page 36
created, monies in a New Trust may not be fully invested on the next
business day.
Please note that there are certain tax consequences associated with
becoming a Rollover Unit holder. See "Tax Status." If you elect not to
participate as a Rollover Unit holder ("Remaining Unit holders"), you
will not incur capital gains or losses due to the Special Redemption and
Liquidation, nor will you be charged any additional sales charge. We may
modify, amend or terminate this rollover option upon 60 days notice.
Removing Securities from a Trust
The portfolios of the Trusts are not managed. However, we may, but are
not required to, direct the Trustee to dispose of a Security in certain
limited circumstances, including situations in which:
- - The issuer of the Security defaults in the payment of a declared
dividend;
- - Any action or proceeding prevents the payment of dividends;
- - There is any legal question or impediment affecting the Security;
- - The issuer of the Security has breached a covenant which would affect
the payment of dividends, the issuer's credit standing, or otherwise
damage the sound investment character of the Security;
- - The issuer has defaulted on the payment of any other of its
outstanding obligations;
- - There has been a public tender offer made for a Security or a merger
or acquisition is announced affecting a Security, and that in our
opinion the sale or tender of the Security is in the best interest of
Unit holders; 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 a Trust, will reject any offer for new or exchanged securities
or property in exchange for a Security, such as those acquired in a
merger or other transaction. If such exchanged securities or property
are nevertheless acquired by a Trust, at our instruction they will
either be sold or held in 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 of a Trust for distribution to Unit holders or to
meet redemption requests. The Trustee may retain and pay us or an
affiliate of ours to act as agent for the Trusts to facilitate selling
Securities, exchanged securities or property from the Trusts. If we or
our affiliate act in this capacity, we will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may sell Securities 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 the Trusts' portfolio
transactions, or when acting as agent for the Trusts in acquiring or
selling Securities on behalf of the Trusts.
Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - To cure ambiguities;
- - To correct or supplement any defective or inconsistent provision;
- - To make any amendment required by any governmental agency; or
- - To make other changes determined not to be materially adverse to your
best interests (as determined by us and the Trustee).
Termination. As provided by the Indenture, each Trust will terminate on
the Mandatory Termination Date. A Trust may be terminated prior to the
Mandatory Termination Date:
- - Upon the consent of 100% of the Unit holders;
- - If the value of the Securities owned by such Trust as shown by any
evaluation is less than the lower of $2,000,000 or 20% of the total
value of Securities deposited in such Trust during the initial offering
period ("Discretionary Liquidation Amount"); or
Page 37
- - 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,
including Unit holders' participation as Rollover Unit holders, 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 Domestic Trust the Trustee will
send you a form at least 30 days prior to the Mandatory Termination Date
which will enable you to receive an In-Kind Distribution of Securities
(reduced by customary transfer and registration charges) rather than the
typical cash distribution. You must notify the Trustee at least ten
business days prior to the Mandatory Termination Date if you elect this
In-Kind Distribution option. If you do not elect to participate in
either the Rollover Option or the In-Kind Distribution option, 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 your Trust is terminated. Regardless of the
distribution involved, the Trustee will deduct from a Trust 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 $27 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, 1999, the total partners' capital of
Nike Securities L.P. was $19,881,035 (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.
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.
Page 38
The Trustee has not participated in selecting the Securities; it only
provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable for taking any action or for
not taking any action in good faith according to the Indenture. We will
also not be accountable for errors in judgment. We will only be liable
for our own willful misfeasance, bad faith, gross negligence (ordinary
negligence in the Trustee's case) or reckless disregard of our
obligations and duties. The Trustee is not liable for any loss or
depreciation when the Securities are sold. If we fail to act under the
Indenture, the Trustee may do so, and the Trustee will not be liable for
any action it takes in good faith under the Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - Appoint a successor sponsor, paying them a reasonable rate not more
than that stated by the SEC;
- - Terminate the Indenture and liquidate the Trust; or
- - Continue to act as Trustee without terminating the Indenture.
The Evaluator.
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532.
The Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information,
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.
Page 39
FIRST TRUST (registered trademark)
The Dow(sm) Target 5 Portfolio, March 2000 Series
The Dow(sm) Target 10 Portfolio, March 2000 Series
Global Target 15 Portfolio, March 2000 Series
The S&P Target 10 Portfolio, March 2000 Series
The Nasdaq Target 15 Portfolio, March 2000 Series
The Dow(sm) DART 5 Portfolio, March 2000 Series
The Dow(sm) DART 10 Portfolio, March 2000 Series
FT 399
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
________________________
When Units of the Trusts are no longer available, this prospectus may be
used as a preliminary prospectus for a future series, in which case you
should note the following:
THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL, OR ACCEPT OFFERS TO BUY, SECURITIES OF A FUTURE SERIES
UNTIL THAT SERIES HAS BECOME EFFECTIVE WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO SECURITIES CAN BE SOLD IN ANY STATE WHERE A SALE WOULD BE
ILLEGAL.
________________________
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. 333-94483) and
- - Investment Company Act of 1940 (file no. 811-05903)
Information about the Trusts can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington
D.C. Information regarding the operation of the Commission's Public
Reference Room may be obtained by calling the Commission at 1-202-942-
8090.
Information about the Trusts is available on the EDGAR Database on the
Commission's Internet site at
http://www.sec.gov.
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0102
e-mail address: [email protected]
February 29, 2000
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 40
First Trust (registered trademark)
TARGET PORTFOLIO SERIES
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of unit investment trusts ("Trusts")
contained in Target Portfolio Series not found in the prospectus for the
Trusts. This Information Supplement is not a prospectus and does not
include all of the information that a prospective investor should
consider before investing in a Trust. This Information Supplement should
be read in conjunction with the prospectus for the Trust in which an
investor is considering investing.
This Information Supplement is dated February 29, 2000. Capitalized
terms have been defined in the prospectus.
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Dow Jones & Company, Inc. 1
Standard & Poor's 2
The Nasdaq Stock Market, Inc. 2
Risk Factors 3
Securities 3
Dividends 3
Foreign Issuers 3
United Kingdom 4
Hong Kong 5
Exchange Rate 6
Litigation 9
Tobacco Industry 9
Concentrations 9
Banks and Thrifts 9
Real Estate Companies 11
Technology Companies 12
Portfolios 13
Equity Securities Selected for The Dow(sm) Target 5 Portfolio, March 2000 Series 13
Equity Securities Selected for The Dow(sm) Target 10 Portfolio, March 2000 Series 14
Equity Securities Selected for Global Target 15 Portfolio, March 2000 Series 15
Equity Securities Selected for The S&P Target 10 Portfolio, March 2000 Series 16
Equity Securities Selected for The Nasdaq Target 15 Portfolio, March 2000 Series 16
Equity Securities Selected for The Dow(sm) DART 5 Portfolio, March 2000 Series 17
Equity Securities Selected for The Dow(sm) DART 10 Portfolio, March 2000 Series 18
</TABLE>
Dow Jones & Company, Inc.
The Trusts are not sponsored, endorsed, sold or promoted by Dow Jones &
Company, Inc. ("Dow Jones"). Dow Jones makes no representation or
warranty, express or implied, to the owners of the Trusts or any member
of the public regarding the advisability of investing in securities
generally or in the Trusts particularly. Dow Jones' only relationship to
the Sponsor is the licensing of certain trademarks, trade names and
service marks of Dow Jones and of the Dow Jones Industrial Average(sm),
which is determined, composed and calculated by Dow Jones without regard
to the Sponsor or the Trusts. Dow Jones has no obligation to take the
needs of the Sponsor or the owners of the Trusts into consideration in
Page 1
determining, composing or calculating the Dow Jones Industrial
Average(sm). Dow Jones is not responsible for and has not participated
in the determination of the timing of, prices at, or quantities of the
Trusts to be issued or in the determination or calculation of the
equation by which the Trusts are to be converted into cash. Dow Jones
has no obligation or liability in connection with the administration,
marketing or trading of the Trusts.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN AND DOW
JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, OWNERS OF THE TRUSTS, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL
AVERAGE(SM) OR ANY DATA INCLUDED THEREIN. DOW JONES MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT
TO THE DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
Standard & Poor's
The Trusts are not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes
no representation or warranty, express or implied, to the owners of the
Trusts or any member of the public regarding the advisability of
investing in securities generally or in the Trusts particularly or the
ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the licensee is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index, which is
determined, composed and calculated by S&P without regard to the
licensee or the Trusts. S&P has no obligation to take the needs of the
licensee or the owners of the Trusts into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for
and has not participated in the determination of the prices and amount
of the Trusts or the timing of the issuance or sale of the Trusts or in
the determination or calculation of the equation by which the Trusts are
to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the Trusts.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE
LICENSEE, OWNERS OF THE TRUSTS, OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES,
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY
FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
The Nasdaq Stock Market, Inc.
The Nasdaq Target 15 Portfolio Series is not sponsored, endorsed, sold
or promoted by The Nasdaq Stock Market, Inc. (including its affiliates)
(Nasdaq, with its affiliates, are referred to as the "Corporations").
The Corporations have not passed on the legality or suitability of, or
the accuracy or adequacy of descriptions and disclosures relating to The
Nasdaq Target 15 Portfolio Series. The Corporations make no
representation or warranty, express or implied, to the owners of Units
of The Nasdaq Target 15 Portfolio Series or any member of the public
regarding the advisability of investing in securities generally or in
The Nasdaq Target 15 Portfolio Series particularly, or the ability of
Page 2
the Nasdaq 100 Index(registered trademark) to track general stock market
performance. The Corporations' only relationship to the Sponsor
("Licensee") is in the licensing of the Nasdaq 100(registered
trademark), Nasdaq 100 Index(registered trademark) and Nasdaq(registered
trademark) trademarks or service marks, and certain trade names of the
Corporations and the use of the Nasdaq 100 Index(registered trademark)
which is determined, composed and calculated by Nasdaq without regard to
Licensee or The Nasdaq Target 15 Portfolio Series. Nasdaq has no
obligation to take the needs of the Licensee or the owners of Units of
The Nasdaq Target 15 Portfolio Series into consideration in determining,
composing or calculating the Nasdaq 100 Index(registered trademark). The
Corporations are not responsible for and have not participated in the
determination of the timing of, prices at or quantities of The Nasdaq
Target 15 Portfolio Series to be issued or in the determination or
calculation of the equation by which The Nasdaq Target 15 Portfolio
Series is to be converted into cash. The Corporations have no liability
in connection with the administration, marketing or trading of The
Nasdaq Target 15 Portfolio Series.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED
CALCULATION OF THE NASDAQ 100 INDEX(registered trademark) OR ANY DATA
INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE LICENSEE, OWNERS OF THE NASDAQ
TARGET 15 PORTFOLIO SERIES, OR ANY OTHER PERSON OR ENTITY FROM THE USE
OF THE NASDAQ 100 INDEX(registered trademark) OR ANY DATA INCLUDED
THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES AND
EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ 100
INDEX(registered trademark) OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE,
INDIRECT OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
Risk Factors
Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the
risk that the financial condition of the issuers of the Securities or
the general condition of the relevant stock market may worsen, and the
value of the Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors. From September
30, 1997 through October 30, 1997, amid record trading volume, the S&P
500 Index, DJIA, FT Index and Hang Seng Index declined 4.60%, 7.09%,
6.19% and 31.14%, respectively. In addition, against a backdrop of
continued uncertainty regarding the current global currency crisis and
falling commodity prices, during the period between July 31, 1998 and
September 30, 1998, the S&P 500, DJIA and FT Index declined by 8.97%,
11.32% and 17.80%, respectively, while the Hang Seng Index increased .20%.
Dividends. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Shareholders of common stocks of the type held
by the Trusts have a right to receive dividends only when and if, and in
the amounts, declared by the issuer's board of directors and have a
right to participate in amounts available for distribution by the issuer
only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy.
Cumulative preferred stock dividends must be paid before common stock
dividends, and any cumulative preferred stock dividend omitted is added
to future dividends payable to the holders of cumulative preferred
stock. Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Foreign Issuers. Since certain or all of the Securities included in the
International Trusts consist of securities of foreign issuers, an
Page 3
investment in such Trusts involves certain investment risks that are
different in some respects from an investment in a trust which invests
entirely in the securities of domestic issuers. These investment risks
include future political or governmental restrictions which might
adversely affect the payment or receipt of payment of dividends on the
relevant Securities, the possibility that the financial condition of the
issuers of the Securities may become impaired or that the general
condition of the relevant stock market may worsen (both of which would
contribute directly to a decrease in the value of the Securities and
thus in the value of the Units), the limited liquidity and relatively
small market capitalization of the relevant securities market,
expropriation or confiscatory taxation, economic uncertainties and
foreign currency devaluations and fluctuations. In addition, for foreign
issuers that are not subject to the reporting requirements of the
Securities Exchange Act of 1934, there may be less publicly available
information than is available from a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to
those applicable to domestic issuers. The securities of many foreign
issuers are less liquid and their prices more volatile than securities
of comparable domestic issuers. In addition, fixed brokerage commissions
and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers
in foreign countries than there is in the United States. However, due to
the nature of the issuers of the Securities selected for the
International Trusts, the Sponsor believes that adequate information
will be available to allow the Supervisor to provide portfolio
surveillance for such Trusts.
Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the United States dollar value of these securities
will vary with fluctuations in the U.S. dollar foreign exchange rates
for the various Securities. See "Exchange Rate" below.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the International Trusts are
subject to exchange control restrictions under existing law which would
materially interfere with payment to such Trusts of dividends due on, or
proceeds from the sale of, the Securities. However, there can be no
assurance that exchange control regulations might not be adopted in the
future which might adversely affect payment to such a Trust. The
adoption of exchange control regulations and other legal restrictions
could have an adverse impact on the marketability of international
securities in the International Trusts and on the ability of such Trusts
to satisfy their obligation to redeem Units tendered to the Trustee for
redemption. In addition, restrictions on the settlement of transactions
on either the purchase or sale side, or both, could cause delays or
increase the costs associated with the purchase and sale of the foreign
Securities and correspondingly could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to a Trust relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by a Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by a
Trust will generally be effected only in foreign securities markets.
Although the Sponsor does not believe that the International Trust will
encounter obstacles in disposing of the Securities, investors should
realize that the Securities may be traded in foreign countries where the
securities markets are not as developed or efficient and may not be as
liquid as those in the United States. The value of the Securities will
be adversely affected if trading markets for the Securities are limited
or absent.
United Kingdom. The emphasis of the United Kingdom's economy is in the
private services sector, which includes the wholesale and retail sector,
banking, finance, insurance and tourism. Services as a whole account for
a majority of the United Kingdom's gross national product and makes a
significant contribution to the country's balance of payments. The
portfolios of the International Trusts may contain common stocks of
British companies engaged in such industries as banking, chemicals,
building and construction, transportation, telecommunications and
insurance. Many of these industries may be subject to government
regulation, which may have a materially adverse effect on the
performance of their stock. In the first quarter of 1998, gross domestic
product (GDP) of the United Kingdom grew to a level 3.0% higher than in
Page 4
the first quarter of 1997, however the overall rate of GDP growth has
slowed since the third quarter of 1997. The slow down largely reflects a
deteriorating trade position and higher indirect taxes. The average
quarterly rate of GDP growth in the United Kingdom (as well as in Europe
generally) has been decelerating since 1994. The United Kingdom is a
member of the European Union (the "EU") which was created through the
formation of the Maastricht Treaty on European Union in late 1993. It is
expected that the Treaty will have the effect of eliminating most
remaining trade barriers between the 15 member nations and make Europe
one of the largest common markets in the world. However, the effective
implementation of the Treaty provisions and the rate at which trade
barriers are eliminated is uncertain at this time. Furthermore, the
recent rapid political and social change throughout Europe make the
extent and nature of future economic development in the United Kingdom
and Europe and the impact of such development upon the value of
Securities issued by United Kingdom companies impossible to predict.
A majority of the EU members converted their existing sovereign
currencies to a common currency (the "euro") on January 1, 1999. The
United Kingdom did not participate in this conversion on January 1, 1999
and the Sponsor is unable to predict if or when the United Kingdom will
convert to the euro. Moreover, it is not possible to accurately predict
the effect of the current political and economic situation upon long-
term inflation and balance of trade cycles and how these changes, as
well as the implementation of a common currency throughout a majority of
EU countries, would affect the currency exchange rate between the U.S.
dollar and the British pound sterling. In addition, United Kingdom
companies with significant markets or operations in other European
countries (whether or not such countries are participating) face
strategic challenges as these entities adapt to a single trans-national
currency. The euro conversion may have a material impact on revenues,
expenses or income from operations; increase competition due to the
increased price transparency of EU markets; affect issuers' currency
exchange rate risk and derivatives exposure; disrupt current contracts;
cause issuers to increase spending on information technology updates
required for the conversion; and result in potential adverse tax
consequences. The Sponsor is unable to predict what impact, if any, the
euro conversion will have on any of the Securities issued by United
Kingdom companies in the International Trusts.
Hong Kong. Hong Kong, established as a British colony in the 1840's,
reverted to Chinese sovereignty effective July 1, 1997. On such date,
Hong Kong became a Special Administrative Region ("SAR") of China. Hong
Kong's new constitution is the Basic Law (promulgated by China in 1990).
Prior to July 1, 1997, the Hong Kong government followed a laissez-faire
policy toward industry. There were no major import, export or foreign
exchange restrictions. Regulation of business was generally minimal with
certain exceptions, including regulated entry into certain sectors of
the economy and a fixed exchange rate regime by which the Hong Kong
dollar has been pegged to the U.S. dollar. Over the past two decades
through 1996, the gross domestic product (GDP) has tripled in real
terms, equivalent to an average annual growth rate of 6%. However, Hong
Kong's recent economic data has not been encouraging. The full impact of
the Asian financial crisis, as well as current international economic
instability, is likely to continue to have a negative impact on the Hong
Kong economy in the near future.
Although China has committed by treaty to preserve for 50 years the
economic and social freedoms enjoyed in Hong Kong prior to the
reversion, the continuation of the economic system in Hong Kong after
the reversion will be dependent on the Chinese government, and there can
be no assurances that the commitment made by China regarding Hong Kong
will be maintained. Prior to the reversion, legislation was enacted in
Hong Kong designed to extend democratic voting procedures for Hong
Kong's legislature. China has expressed disagreement with this
legislation, which it states is in contravention of the principles
evidenced in the Basic Law of the Hong Kong SAR. The National Peoples'
Congress of China has passed a resolution to the effect that the
Legislative Council and certain other councils and boards of the Hong
Kong Government were to be terminated on June 30, 1997. Such bodies have
subsequently been reconstituted in accordance with China's
interpretation of the Basic Law. Any increase in uncertainty as to the
future economic and political status of Hong Kong could have a
materially adverse effect on the value of the Global Target 15
Portfolio. The Sponsor is unable to predict the level of market
liquidity or volatility which may occur as a result of the reversion to
sovereignty, both of which may negatively impact such Trust and the
value of the Units.
China currently enjoys a most favored nation status ("MFN Status") with
the United States. MFN Status is subject to annual review by the
President of the United States and approval by Congress. As a result of
Hong Kong's reversion to Chinese control, U.S. lawmakers have suggested
that they may review China's MFN status on a more frequent basis.
Revocation of the MFN Status would have a severe effect on China's trade
Page 5
and thus could have a materially adverse effect on the value of the
Global Target 15 Portfolio. The performance of certain companies listed
on the Hong Kong Stock Exchange is linked to the economic climate of
China. The renewal of China's MFN Status in May of 1996 has helped to
reduce the uncertainty for Hong Kong in conducting Sino-U.S. trade, and
the signing of the agreement on copyright protection between the U.S.
and Chinese governments in June of 1996 averted a trade war that would
have affected Hong Kong's re-export trade. In 1997, China and the United
States reached a four-year bilateral agreement on textiles, again
avoiding a Sino-U.S. trade war. More recently, the currency crisis which
has affected a majority of Asian markets since mid-1997 has forced Hong
Kong leaders to address whether to devalue the Hong Kong dollar or
maintain its peg to the U.S. dollar. During the volatile markets of
1998, the Hong Kong Monetary Authority (the "HKMA") acquired the common
stock of certain Hong Kong issuers listed on the Hong Kong Stock
Exchange in an effort to stabilize the Hong Kong dollar and thwart
currency speculators. Government intervention may hurt Hong Kong's
reputation as a free market and increases concerns that authorities are
not willing to let Hong Kong's currency system function autonomously.
This may undermine confidence in the Hong Kong dollar's peg to the U.S.
dollar. Any downturn in economic growth or increase in the rate of
inflation in China or Hong Kong could have a materially adverse effect
on the value of the Global Target 15 Portfolio.
Securities prices on the Hong Kong Stock Exchange, and specifically the
Hang Seng Index, can be highly volatile and are sensitive to
developments in Hong Kong and China, as well as other world markets. For
example, the Hang Seng Index declined by approximately 31% in October,
1997 as a result of speculation that the Hong Kong dollar would become
the next victim of the Asian currency crisis, and in 1989, the Hang Seng
Index dropped 1,216 points (approximately 58%) in early June following
the events at Tiananmen Square. The Hang Seng Index gradually climbed
subsequent to the events at Tiananmen Square, but fell by 181 points on
October 13, 1989 (approximately 6.5%) following a substantial fall in
the U.S. stock markets. During 1994, the Hang Seng Index lost
approximately 31% of its value. From January through August of 1998,
during a period marked by international economic instability and a
global currency crisis, the Hang Seng Index declined by nearly 27%. The
Hang Seng Index is subject to change and delisting of any issues may
have an adverse impact on the performance of the Global Target 15
Portfolio, although delisting would not necessarily result in the
disposal of the stock of these companies, nor would it prevent such
Trust from purchasing additional Securities. In recent years, a number
of companies, comprising approximately 10% of the total capitalization
of the Hang Seng Index, have delisted. In addition, as a result of Hong
Kong's reversion to Chinese sovereignty, an increased number of Chinese
companies could become listed on the Hong Kong Stock Exchange, thereby
changing the composition of the stock market and, potentially, the
composition of the Hang Seng Index.
Exchange Rate. The International Trusts are comprised either totally or
substantially of Securities that are principally traded in foreign
currencies and as such, involve investment risks that are substantially
different from an investment in a fund which invests in securities that
are principally traded in United States dollars. The United States
dollar value of the portfolio (and hence of the Units) and of the
distributions from the portfolio will vary with fluctuations in the
United States dollar foreign exchange rates for the relevant currencies.
Most foreign currencies have fluctuated widely in value against the
United States dollar for many reasons, including supply and demand of
the respective currency, the rate of inflation in the respective
economies compared to the United States, the impact of interest rate
differentials between different currencies on the movement of foreign
currency rates, the balance of imports and exports goods and services,
the soundness of the world economy and the strength of the respective
economy as compared to the economies of the United States and other
countries.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty which established a system of
fixed exchange rates and the convertibility of the United States dollar
into gold through foreign central banks. Starting in 1971, growing
volatility in the foreign exchange markets caused the United States to
abandon gold convertibility and to effect a small devaluation of the
United States dollar. In 1973, the system of fixed exchange rates
between a number of the most important industrial countries of the
world, among them the United States and most Western European countries,
was completely abandoned. Subsequently, major industrialized countries
Page 6
have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have
continued to "peg" their currencies to the United States dollar although
there has been some interest in recent years in "pegging" currencies to
"baskets" of other currencies or to a Special Drawing Right administered
by the International Monetary Fund. Since 1983, the Hong Kong dollar has
been pegged to the U.S. dollar. In Europe, the euro has been developed.
Currencies are generally traded by leading international commercial
banks and institutional investors (including corporate treasurers, money
managers, pension funds and insurance companies). From time to time,
central banks in a number of countries also are major buyers and sellers
of foreign currencies, mostly for the purpose of preventing or reducing
substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well-particularly with respect to
transfers of capital). Investor psychology may also be an important
determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.
The following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and
end of month equivalent U.S. dollar rates of exchange for the United
Kingdom pound sterling and the Hong Kong dollar:
Foreign Exchange Rates
Range of Fluctuations in Foreign Currencies
United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar U.S. Dollar
_____ ____________ _________
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
1996 0.583-0.670 7.732-7.742
1997 0.584-0.633 7.708-7.751
1998 0.584-0.620 7.735-7.749
1999 0.597-0.646 7.746-7.775
Source: Bloomberg L.P.
Page 7
<TABLE>
<CAPTION>
End of Month Exchange Rates End of Month Exchange Rates
___________________________ ___________________________
United Kingdom United Kingdom
Pound Sterling/ Hong Kong/ Pound Sterling/ Hong Kong/
Monthly Period U.S. Dollar U.S. Dollar Monthly Period U.S. Dollar U.S. Dollar
___________ __________ ________ __________ __________ ___________
<S> <C> <C> <C> <C> <C>
1992: February .653 7.731
January .559 7.762 March .655 7.734
February .569 7.761 April .664 7.735
March .576 7.740 May .645 7.736
April .563 7.757 June .644 7.741
May .546 7.749 July .642 7.735
June .525 7.731 August .639 7.733
July .519 7.732 September .639 7.733
August .503 7.729 October .615 7.732
September .563 7.724 November .595 7.732
October .641 7.736 December .583 7.735
November .659 7.742 1997:
December .662 7.744 January .624 7.750
1993: February .614 7.744
January .673 7.734 March .611 7.749
February .701 7.734 April .616 7.746
March .660 7.731 May .610 7.748
April .635 7.730 June .600 7.747
May .640 7.724 July .609 7.742
June .671 7.743 August .622 7.750
July .674 7.761 September .619 7.738
August .670 7.755 October .598 7.731
September .668 7.734 November .592 7.730
October .676 7.733 December .607 7.749
November .673 7.725 1998:
December .677 7.723 January .613 7.735
1994: February .609 7.743
January .664 7.724 March .598 7.749
February .673 7.727 April .598 7.747
March .674 7.737 May .613 7.749
April .659 7.725 June .600 7.748
May .662 7.726 July .613 7.748
June .648 7.730 August .595 7.749
July .648 7.725 September .589 7.749
August .652 7.728 October .596 7.747
September .634 7.727 November .607 7.743
October .611 7.724 December .602 7.746
November .639 7.731 1999:
December .639 7.738 January .608 7.748
1995: February .624 7.748
January .633 7.732 March .621 7.750
February .631 7.730 April .621 7.750
March .617 7.733 May .624 7.755
April .620 7.742 June .634 7.758
May .630 7.735 July .617 7.762
June .627 7.736 August .623 7.765
July .626 7.738 September .607 7.768
August .645 7.741 October .608 7.768
September .631 7.732 November .626 7.767
October .633 7.727 December .618 7.774
November .652 7.731 2000:
December .645 7.733 January .619 7.780
1996: February 28 .627 7.782
January .661 7.728
</TABLE>
Source: Bloomberg L.P.
Page 8
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing,
depending on the activity at any particular time of the large
international commercial banks, various central banks, large multi-
national corporations, speculators and other buyers and sellers of
foreign currencies, and since actual foreign currency transactions may
not be instantly reported, the exchange rates estimated by the Evaluator
may not be indicative of the amount in United States dollars the
International Trusts would receive had the Trustee sold any particular
currency in the market. The foreign exchange transactions of the
International Trusts will be conducted by the Trustee with foreign
exchange dealers acting as principals on a spot (i.e., cash) buying
basis. Although foreign exchange dealers trade on a net basis, they do
realize a profit based upon the difference between the price at which
they are willing to buy a particular currency (bid price) and the price
at which they are willing to sell the currency (offer price).
Litigation
Tobacco Industry. Certain of the issuers of Securities in certain Trusts
may be involved in the manufacture, distribution and sale of tobacco
products. Pending litigation proceedings against such issuers in the
United States and abroad cover a wide range of matters including product
liability and consumer protection. Damages claimed in such litigation
alleging personal injury (both individual and class actions), and in
health cost recovery cases brought by governments, labor unions and
similar entities seeking reimbursement for health care expenditures,
aggregate many billions of dollars.
In November 1998, certain companies in the U.S. tobacco industry entered
into a negotiated settlement with several states which would result in
the resolution of significant litigation and regulatory issues affecting
the tobacco industry generally. The proposed settlement, while extremely
costly to the tobacco industry, would significantly reduce uncertainties
facing the industry and increase stability in business and capital
markets. Future litigation and/or legislation could adversely affect the
value, operating revenues and financial position of tobacco companies.
The Sponsor is unable to predict the outcome of litigation pending
against tobacco companies or how the current uncertainty concerning
regulatory and legislative measures will ultimately be resolved. These
and other possible developments may have a significant impact upon both
the price of such Securities and the value of Units of Trusts containing
such Securities.
Concentrations
Banks and Thrifts. Certain Trusts may be considered to be concentrated
in common stocks of financial institutions. See "Risk Factors" in the
prospectus which will indicate, if applicable, a Trust's concentration
in this industry. Banks, thrifts and their holding companies are
especially subject to the adverse effects of economic recession,
volatile interest rates, portfolio concentrations in geographic markets
and in commercial and residential real estate loans, and competition
from new entrants in their fields of business. Banks and thrifts are
highly dependent on net interest margin. Recently, bank profits have
come under pressure as net interest margins have contracted, but volume
gains have been strong in both commercial and consumer products. There
is no certainty that such conditions will continue. Bank and thrift
institutions had received significant consumer mortgage fee income as a
result of activity in mortgage and refinance markets. As initial home
purchasing and refinancing activity subsided, this income diminished.
Economic conditions in the real estate markets, which have been weak in
the past, can have a substantial effect upon banks and thrifts because
they generally have a portion of their assets invested in loans secured
by real estate. Banks, thrifts and their holding companies are subject
to extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
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.
Page 9
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 which has recently been
signed into law. Under the legislation, banks will be able to purchase
or establish subsidiary banks in any state, one year after the
legislation's enactment. Starting in mid-1997, banks were allowed to
turn existing banks into branches. Consolidation is likely to continue.
The Securities and Exchange Commission and the Financial Accounting
Standards Board require the expanded use of market value accounting by
banks and have imposed rules requiring market accounting for investment
securities held in trading accounts or available for sale. Adoption of
additional such rules may result in increased volatility in the reported
health of the industry, and mandated regulatory intervention to correct
such problems. In late 1993 the United States Treasury Department
proposed a restructuring of the banks regulatory agencies which, if
implemented, may adversely affect certain of the Securities in the
Trust's portfolio. Additional legislative and regulatory changes may be
forthcoming. For example, the bank regulatory authorities have proposed
substantial changes to the Community Reinvestment Act and fair lending
laws, rules and regulations, and there can be no certainty as to the
effect, if any, that such changes would have on the Securities in a
Trust's portfolio. In addition, from time to time the deposit insurance
system is reviewed by Congress and federal regulators, and proposed
reforms of that system could, among other things, further restrict the
ways in which deposited moneys can be used by banks or reduce the dollar
amount or number of deposits insured for any depositor. Such reforms
could reduce profitability as investment opportunities available to bank
institutions become more limited and as consumers look for savings
vehicles other than bank deposits. Banks and thrifts face significant
competition from other financial institutions such as mutual funds,
credit unions, mortgage banking companies and insurance companies, and
increased competition may result from legislative broadening of regional
and national interstate banking powers as has been recently enacted.
Among other benefits, the legislation allows banks and bank holding
companies to acquire across previously prohibited state lines and to
consolidate their various bank subsidiaries into one unit. The Sponsor
makes no prediction as to what, if any, manner of bank and thrift
regulatory actions might ultimately be adopted or what ultimate effect
such actions might have on a Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
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
Page 10
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.
Real Estate Companies. Certain Portfolios are considered to be
concentrated in common stocks of companies engaged in real estate asset
management, development, leasing, property sales and other related
activities. See "Risk Factors" in the prospectus which will indicate, if
applicable, a Trust's concentration in this industry. Investment in
securities issued by these real estate companies should be made with an
understanding of the many factors which may have an adverse impact on
the credit quality of the particular company or industry. Generally,
these include economic recession, the cyclical nature of real estate
markets, competitive overbuilding, unusually adverse weather conditions,
changing demographics, changes in governmental regulations (including
tax laws and environmental, building, zoning and sales regulations),
increases in real estate taxes or costs of material and labor, the
inability to secure performance guarantees or insurance as required, the
unavailability of investment capital and the inability to obtain
construction financing or mortgage loans at rates acceptable to builders
and purchasers of real estate. Additional risks include an inability to
reduce expenditures associated with a property (such as mortgage
payments and property taxes) when rental revenue declines, and possible
loss upon foreclosure of mortgaged properties if mortgage payments are
not paid when due.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
REITs are differentiated by the types of real estate properties held and
the actual geographic location of properties and fall into two major
categories: equity REITs emphasize direct property investment, holding
their invested assets primarily in the ownership of real estate or other
equity interests, while mortgage REITs concentrate on real estate
financing, holding their assets primarily in mortgages secured by real
estate. REITs obtain capital funds for investment in underlying real
estate assets by selling debt or equity securities in the public or
institutional capital markets or by bank borrowing. Thus, the returns on
common equities of the REITs in which the Trust invests will be
significantly affected by changes in costs of capital and, particularly
in the case of highly "leveraged" REITs (i.e., those with large amounts
of borrowings outstanding), by changes in the level of interest rates.
The objective of an equity REIT is to purchase income-producing real
estate properties in order to generate high levels of cash flow from
rental income and a gradual asset appreciation, and they typically
invest in properties such as office, retail, industrial, hotel and
apartment buildings and healthcare facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distributed at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail
to qualify for such tax status, the related shareholders (including the
Trust) could be adversely affected by the resulting tax consequences.
The underlying value of the Securities and a Trust's ability to make
distributions to Unit holders may be adversely affected by changes in
national economic conditions, changes in local market conditions due to
changes in general or local economic conditions and neighborhood
characteristics, increased competition from other properties,
obsolescence of property, changes in the availability, cost and terms of
mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
Page 11
impediments to raising rents, adverse changes in governmental rules and
fiscal policies, dependency on management skill, civil unrest, acts of
God, including earthquakes and other natural disasters (which may result
in uninsured losses), acts of war, adverse changes in zoning laws, and
other factors which are beyond the control of the issuers of the REITs
in a Trust.
The value of the REITs may at times be particularly sensitive to
devaluation in the event of rising interest rates. Equity REITs are less
likely to be affected by interest rate fluctuations than mortgage REITs
and the nature of the underlying assets of an equity REIT may be
considered more tangible than that of a mortgage REIT. Equity REITs are
more likely to be adversely affected by changes in the value of the
underlying property it owns than mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in a Trust may be
adversely affected by increases or decreases in property tax rates and
assessments or reassessments of the properties underlying the REITs by
taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary.
The issuer of REITs generally maintains comprehensive insurance on
presently owned and subsequently acquired real property assets,
including liability, fire and extended coverage. However, certain types
of losses may be uninsurable or not be economically insurable as to
which the underlying properties are at risk in their particular locales.
There can be no assurance that insurance coverage will be sufficient to
pay the full current market value or current replacement cost of any
lost investment. Various factors might make it impracticable to use
insurance proceeds to replace a facility after it has been damaged or
destroyed. Under such circumstances, the insurance proceeds received by
a REIT might not be adequate to restore its economic position with
respect to such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of
the REITs in a Trust may not be presently liable or potentially liable
for any such costs in connection with real estate assets they presently
own or subsequently acquire while such REITs are held in a Trust.
Recently, in the wake of Chinese economic development and reform,
certain Hong Kong real estate companies and other investors began
purchasing and developing real estate in southern China, including
Beijing, the Chinese capital. By 1992, however, southern China began to
experience a rise in real estate prices, increases in construction costs
and a tightening of credit markets. Any worsening of these conditions
could affect the profitability and financial condition of Hong Kong real
estate companies and could have a materially adverse effect on the value
of a Global Target 15 Portfolio.
Technology Companies. Certain Portfolios are considered to be
concentrated in common stocks of technology companies. See "Risk
Factors" in the prospectus which will indicate, if applicable, a Trust's
concentration in this industry.
Technology companies generally include companies involved in the
development, design, manufacture and sale of computers and peripherals,
software and services, data networking/communications equipment,
internet access/information providers, semiconductors and semiconductor
Page 12
equipment and other related products, systems and services. The market
for these products, especially those specifically related to the
Internet, is characterized by rapidly changing technology, rapid product
obsolescence, cyclical market patterns, evolving industry standards and
frequent new product introductions. The success of the issuers of the
Securities depends in substantial part on the timely and successful
introduction of new products. An unexpected change in one or more of the
technologies affecting an issuer's products or in the market for
products based on a particular technology could have a material adverse
affect on an issuer's operating results. Furthermore, there can be no
assurance that the issuers of the Securities will be able to respond in
a timely manner to compete in the rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements
of new products or development of new technologies and general
conditions of the industry have caused and are likely to cause the
market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to
the operating performance of such companies. This market volatility may
adversely affect the market price of the Securities and therefore the
ability of a Unit holder to redeem Units at a price equal to or greater
than the original price paid for such Units.
Some key components of certain products of technology issuers are
currently available only from single sources. There can be no assurance
that in the future suppliers will be able to meet the demand for
components in a timely and cost effective manner. Accordingly, an
issuer's operating results and customer relationships could be adversely
affected by either an increase in price for, or an interruption or
reduction in supply of, any key components. Additionally, many
technology issuers are characterized by a highly concentrated customer
base consisting of a limited number of large customers who may require
product vendors to comply with rigorous industry standards. Any failure
to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies of technology
companies are incorporated into other related products, such companies
are often highly dependent on the performance of the personal computer,
electronics and telecommunications industries. There can be no assurance
that these customers will place additional orders, or that an issuer of
Securities will obtain orders of similar magnitude as past orders from
other customers. Similarly, the success of certain technology companies
is tied to a relatively small concentration of products or technologies.
Accordingly, a decline in demand of such products, technologies or from
such customers could have a material adverse impact on issuers of the
Securities.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their
proprietary rights in their products and technologies. There can be no
assurance that the steps taken by the issuers of the Securities to
protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology. In addition, due to the increasing
public use of the Internet, it is possible that other laws and
regulations may be adopted to address issues such as privacy, pricing,
characteristics, and quality of Internet products and services. For
example, recent proposals would prohibit the distribution of obscene,
lascivious or indecent communications on the Internet. The adoption of
any such laws could have a material adverse impact on the Securities in
a Trust.
Like many areas of technology, the semiconductor business environment is
highly competitive, notoriously cyclical and subject to rapid and often
unanticipated change. Recent industry downturns have resulted, in part,
from weak pricing, persistent overcapacity, slowdown in Asian demand and
a shift in retail personal computer sales toward the low end, or "sub-
$1,000" segment. Industry growth is dependent upon several factors,
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.
Portfolios
Equity Securities Selected for The Dow(sm) Target 5 Portfolio
Caterpillar Inc., headquartered in Peoria, Illinois, makes earthmoving,
construction and materials handling machinery and equipment and diesel
engines; and provides various financial products and services.
Page 13
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
International Paper Company, headquartered in Purchase, New York,
manufactures printing and writing paper, pulp, tissue, paperboard,
packaging and wood products. The company also manufactures nonwoven
papers, specialty chemicals, specialty panels and laminated products.
The company sells its products primarily in the United States, Europe
and the Pacific Rim.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
SBC Communications Inc., headquartered in San Antonio, Texas, provides
landline and wireless telecommunications services and equipment,
directory advertising, publishing and cable television services.
Equity Securities Selected for The Dow(sm) Target 10 Portfolio
Caterpillar Inc., headquartered in Peoria, Illinois, makes earthmoving,
construction and materials handling machinery and equipment and diesel
engines; and provides various financial products and services.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
Eastman Kodak Company, headquartered in Rochester, New York, develops,
makes and sells consumer and commercial photographic imaging products.
The company's products include films, photographic papers and chemicals,
cameras, projectors, processing equipment, audiovisual equipment,
copiers, microfilm products, applications software, printers and other
equipment.
Exxon Mobil Corporation, headquartered in Irving, Texas, explores for,
produces, transports and sells crude oil and natural gas petroleum
products. The company also explores for and mines coal and other
minerals properties; makes and sells petrochemicals; and owns interests
in electrical power generation facilities.
General Motors Corporation, headquartered in Detroit, Michigan,
manufactures and sells cars and trucks worldwide under the trademarks
"Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn," "Cadillac" and
"GMC Trucks."
International Paper Company, headquartered in Purchase, New York,
manufactures printing and writing paper, pulp, tissue, paperboard,
packaging and wood products. The company also manufactures nonwoven
papers, specialty chemicals, specialty panels and laminated products.
The company sells its products primarily in the United States, Europe
and the Pacific Rim.
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
J.P. Morgan & Company, Inc., headquartered in New York, New York, is a
global investment banking firm that serves clients with complex needs
through an integrated range of advisory, financing, trading, investment
and related capabilities.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
SBC Communications Inc., headquartered in San Antonio, Texas, provides
landline and wireless telecommunications services and equipment,
directory advertising, publishing and cable television services.
Page 14
Equity Securities Selected for the Global Target 15 Portfolio
Dow Jones Industrial Average(sm) Companies
Caterpillar Inc., headquartered in Peoria, Illinois, makes earthmoving,
construction and materials handling machinery and equipment and diesel
engines; and provides various financial products and services.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
International Paper Company, headquartered in Purchase, New York,
manufactures printing and writing paper, pulp, tissue, paperboard,
packaging and wood products. The company also manufactures nonwoven
papers, specialty chemicals, specialty panels and laminated products.
The company sells its products primarily in the United States, Europe
and the Pacific Rim.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
SBC Communications Inc., headquartered in San Antonio, Texas, provides
landline and wireless telecommunications services and equipment,
directory advertising, publishing and cable television services.
Financial Times Industrial Ordinary Share Index Companies
Allied Domecq Plc is an international food, drink and hospitality group
which owns the "Baskin Robbins" ice cream, "Dunkin' Donuts" food and
"Firkin" pubs chains. The company also produces a wide range of alcohol
brands through Hiram Walker.
British Airways Plc operates international and domestic scheduled
passenger airline services, as well as a worldwide air cargo business.
The company is one of the largest airlines in the world.
Marks & Spencer Plc retails consumer goods and food under the name "St.
Michael." The company sells quality clothing through "Brooks Brothers"
stores in the United States and Japan, sells food through its "Kings
Super Markets" in the United States, and other merchandise through a
chain of retail stores in Canada, Europe and Hong Kong. The company is
also engaged in financial, unit trust, treasury and insurance businesses.
Royal & Sun Alliance Insurance Group Plc is the holding company for the
multi-national insurance companies Sun Alliance Group Plc and Royal
Insurance Holdings Plc. The companies provide major classes of general
and life insurance to customers in the United Kingdom, Australia,
Canada, Scandinavia, South Africa and the United States.
Tate & Lyle Plc is the holding company for an international group of
companies which manufacture, refine, process, distribute and trade
sweeteners, starches and their by-products. Products include white
sugar, molasses and low calorie sweeteners. The company also
manufactures and sells engineered sugar milling equipment and provides
reinsurance services.
Hang Seng Index Companies
Amoy Properties Ltd. is a property investment company. The company's
principal activities are property investment and investment holding and,
through its subsidiaries, property investment for rental income, car
park management and property management.
Great Eagle Holdings Ltd. is an investment holding company with
subsidiaries active in property development, investment and management;
hotel and restaurant operations; provision of management and maintenance
services; financing and insurance operations.
Hang Lung Development Company Ltd. is an investment holding company
which, through its subsidiaries, is involved in property development for
sale, property investment for rental income, and hotel ownership and
management. The company is also involved in car park and property
management operations. Through its associated companies, the company is
Page 15
involved in the operation of restaurants and dry cleaning businesses.
Henderson Investment Ltd. is an investment holding company. The
principal activities of its subsidiaries are property development and
investment, investment holding, retailing and the hotel business.
Hysan Development Co. Ltd. is an investment holding company with
subsidiaries in the field of property investment, property development
and capital market investment. The company's profits mainly come from
commercial rental income and luxury residential property located in Hong
Kong.
Equity Securities Selected for The S&P Target 10 Portfolio
Alcan Aluminum Ltd., headquartered in Montreal, Quebec, Canada, mines
and processes bauxite; produces alumina from bauxite; generates electric
power for use in smelting aluminum; recycles used and scrap aluminum;
distributes and sells aluminum and non-aluminum products; and produces
and sells industrial chemicals in connection with aluminum operations.
Alcoa Inc., headquartered in Pittsburgh, Pennsylvania, makes primary
aluminum and fabricated products for the transportation, construction,
packaging and other markets.
Baker Hughes Incorporated, headquartered in Houston, Texas, supplies
reservoir-centered products, services and systems to the worldwide oil
and gas industry. The company provides products and services for oil and
gas exploration, drilling, completion and production. The company also
manufactures and markets a variety of roller cutter bits and fixed
cutter diamond bits.
Circuit City Stores-Circuit City Group, headquartered in Richmond,
Virginia, is one of the nation's largest retailers of brand name
consumer electronics products, including video and audio equipment, home
office products and major appliances. The company operates retail
superstores, consumer electronics-only stores and mall-based "Circuit
City Express" stores throughout the United States.
Electronic Data Systems Corporation, headquartered in Plano, Texas,
offers a full range of information technology services to enterprises,
government entities and individuals worldwide. Services include
management consulting; systems development, integration and management;
and process management.
Enron Corp., headquartered in Houston, Texas, gathers, transports and
markets natural gas at wholesale; explores for and produces natural gas
and crude oil; produces, purchases, transports and markets natural gas
liquids, crude oil and refined petroleum products; and develops,
constructs and operates natural gas-fired power plants.
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.
Seagate Technology, Inc., headquartered in Scotts Valley, California,
designs, manufactures and markets products for storage, retrieval and
management of data on computer and data communications systems. The
company's products include disk drives and magnetic discs used in
computer systems and multimedia applications; and disc drive components,
tape drives and software.
Solectron Corporation, headquartered in Milpitas, California, provides a
complete range of advanced manufacturing services, including
sophisticated electronic assembly and turnkey manufacturing management
services, to original equipment manufacturers in the electronics industry.
Tandy Corporation, headquartered in Fort Worth, Texas, with
subsidiaries, sells consumer electronic products across the United
States through its chain of RadioShack stores. The company's products
include private label electronic parts and accessories, audio/video
equipment, digital satellite systems, personal computers, telephones,
scanners, electronic toys and batteries.
Equity Securities Selected for The Nasdaq Target 15 Portfolio
3Com Corporation, headquartered in Santa Clara, California, offers a
broad range of networking products which include routers, switches,
hubs, remote access concentrators, and network management software for
Ethernet, Token Ring, Fiber Distributed Data Interface, Asynchronous
Transfer Mode and other high-speed technologies.
Adobe Systems Incorporated, headquartered in San Jose, California,
develops, markets and supports computer software products and
Page 16
technologies that enable users to express and use information across all
print and electronic media.
Apple Computer, Inc., headquartered in Cupertino, California, designs,
makes and markets microprocessor-based personal computers and related
personal computing and communicating solutions for sale mainly to
education, creative, home, business and government customers.
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.
BroadVision, Inc., headquartered in Redwood City, California, 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.
Citrix Systems, Inc., headquartered in Fort Lauderdale, Florida,
supplies multi-user application server products that enable the
effective and efficient enterprise-wide deployment of applications that
are designed for Windows operating systems. The company's product lines
include "WinFrame" and "MetaFrame."
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.
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.
Network Appliance, Inc., headquartered in Sunnyvale, California,
designs, makes, markets and supports high performance network data
storage devices which provide fast, simple, reliable and cost-effective
file service for data-intensive network environments.
Oracle Corporation, headquartered in Redwood Shores, California,
designs, develops, markets and supports computer software products with
a wide variety of uses, including database management, application
development, business intelligence and business applications.
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.
QLogic Corporation, headquartered in Costa Mesa, California, develops
and markets host and peripheral input/output controller integrated
circuits and host adapter cards. The company also develops small
computer system interface target and disk controller chips.
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.
RF Micro Devices, Inc., headquartered in Greensboro, North Carolina,
designs, develops and markets proprietary radio frequency integrated
circuits for wireless communications applications such as cellular,
cordless telephony, wireless security and remote meter reading.
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.
Equity Securities Selected for The Dow(sm) DART 5 Portfolio
The Boeing Company, headquartered in Seattle, Washington, with
subsidiaries, produces and markets commercial jet transports and
provides related support services, principally to commercial customers;
and develops, produces, modifies and supports military aircraft and
helicopters and related systems, and electronic, space and missile
systems.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
Page 17
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
Eastman Kodak Company, headquartered in Rochester, New York, develops,
makes and sells consumer and commercial photographic imaging products.
The company's products include films, photographic papers and chemicals,
cameras, projectors, processing equipment, audiovisual equipment,
copiers, microfilm products, applications software, printers and other
equipment.
General Motors Corporation, headquartered in Detroit, Michigan,
manufactures and sells cars and trucks worldwide under the trademarks
"Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn," "Cadillac" and
"GMC Trucks."
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
Equity Securities Selected for The Dow(sm) DART 10 Portfolio
The Boeing Company, headquartered in Seattle, Washington, with
subsidiaries, produces and markets commercial jet transports and
provides related support services, principally to commercial customers;
and develops, produces, modifies and supports military aircraft and
helicopters and related systems, and electronic, space and missile
systems.
Caterpillar Inc., headquartered in Peoria, Illinois, makes earthmoving,
construction and materials handling machinery and equipment and diesel
engines; and provides various financial products and services.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
Eastman Kodak Company, headquartered in Rochester, New York, develops,
makes and sells consumer and commercial photographic imaging products.
The company's products include films, photographic papers and chemicals,
cameras, projectors, processing equipment, audiovisual equipment,
copiers, microfilm products, applications software, printers and other
equipment.
General Motors Corporation, headquartered in Detroit, Michigan,
manufactures and sells cars and trucks worldwide under the trademarks
"Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn," "Cadillac" and
"GMC Trucks."
International Paper Company, headquartered in Purchase, New York,
manufactures printing and writing paper, pulp, tissue, paperboard,
packaging and wood products. The company also manufactures nonwoven
papers, specialty chemicals, specialty panels and laminated products.
The company sells its products primarily in the United States, Europe
and the Pacific Rim.
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.
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
J.P. Morgan & Company, Inc., headquartered in New York, New York, is a
global investment banking firm that serves clients with complex needs
through an integrated range of advisory, financing, trading, investment
and related capabilities.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
We have obtained the foregoing company descriptions from sources we deem
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Page 18
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 399, 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;
The First Trust Combined Series 272; and FT 412 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 399, has duly caused this Amendment to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on February 29, 2000.
FT 399
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 ) February 29, 2000
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 February 29, 2000 in
Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-94483) and related Prospectus of FT 399.
ERNST & YOUNG LLP
Chicago, Illinois
February 29, 2000
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 FT 399 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 399
File No. 333-94483
The Prospectus and the Indenture filed with Amendment No. 2
of the Registration Statement on Form S-6 have been revised to
reflect information regarding the execution of the Indenture and
the deposit of Securities on February 29, 2000 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 appear:
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 12-18 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
February 29, 2000
FT 399
TRUST AGREEMENT
Dated: February 29, 2000
The Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank, as Trustee and First Trust
Advisors L.P., as Evaluator and Portfolio Supervisor, sets forth
certain provisions in full and incorporates other provisions by
reference to the document entitled "Standard Terms and Conditions
of Trust for The First Trust Special Situations Trust, Series 22
and certain subsequent Series, Effective November 20, 1991"
(herein called the "Standard Terms and Conditions of Trust"), and
such provisions as are incorporated by reference constitute a
single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE DOWsm TARGET 5 PORTFOLIO, MARCH 2000 SERIES ("TARGET 5
TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0025 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0065 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is February
29, 2000.
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 $.0000 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE DOWsm TARGET 10 PORTFOLIO, MARCH 2000 SERIES ("TARGET 10
TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0025 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0065 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is February
29, 2000.
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 $.0000 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR GLOBAL TARGET 15 PORTFOLIO, MARCH 2000 SERIES
("GLOBAL TARGET TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0025 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0065 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is February
29, 2000.
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 $.0010 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE S&P TARGET 10 PORTFOLIO, MARCH 2000 SERIES
("S&P TARGET 10 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0025 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0065 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is February
29, 2000.
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 $.0010 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE NASDAQ TARGET 15 PORTFOLIO, MARCH 2000 SERIES
("NASDAQ TARGET 15 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0025 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0065 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is February
29, 2000.
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 $.0010 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE DOWSM DIVIDEND AND REPURCHASE TARGET 5 PORTFOLIO, MARCH
2000 SERIES
("DART 5 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0025 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0065 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is February
29, 2000.
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 $.0010 per Unit.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR THE DOWSM DIVIDEND AND REPURCHASE TARGET 10 PORTFOLIO, MARCH
2000 SERIES
("DART 10 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit and the initial fractional
undivided interest in and ownership of the Trust represented by
each Unit thereof are set forth in the Prospectus in the section
"Summary of Essential Information."
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio on the Initial Date of Deposit is
as set forth in the Prospectus under "Schedule of Investments."
D. The Record Date shall be as set forth in the prospectus
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0025 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Evaluator provides services during less than the whole of
such year). Such fee may exceed the actual cost of providing
such evaluation services for the Trust, but at no time will the
total amount received for evaluation services rendered to unit
investment trusts of which Nike Securities L.P. is the sponsor in
any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee in the amount of $.0065 per Unit, calculated
based on the largest number of Units outstanding during the
calendar year except during the initial offering period as
determined in Section 4.01 of this Indenture, in which case the
fee is calculated based on the largest number of units
outstanding during the period for which the compensation is paid
(such annual fee to be pro rated for any calendar year in which
the Trustee provides services during less than the whole of such
year). However, in no event, except as may otherwise be provided
in the Standard Terms and Conditions of Trust, shall the Trustee
receive compensation in any one year from any Trust of less than
$2,000 for such annual compensation.
I. The Initial Date of Deposit for the Trust is February
29, 2000.
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 $.0010 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 399.
B. Notwithstanding anything to the contrary in the
Prospectus, parties to the trust agreement are hereby advised:
The Trusts are not sponsored, endorsed, sold or
promoted by Dow Jones & Company, Inc. ("Dow Jones"). Dow
Jones makes no representation or warranty, express or
implied, to the owners of the Trusts or any member of the
public regarding the advisability of investing in securities
generally or in the Trusts particularly. Dow Jones' only
relationship to the Sponsor is the licensing of certain
trademarks, trade names and service marks of Dow Jones and
of the Dow Jones Industrial AverageSM , which is determined,
composed and calculated by Dow Jones without regard to the
Sponsor or the Trusts. Dow Jones has no obligation to take
the needs of the Sponsor or the owners of the Trusts into
consideration in determining, composing or calculating to
Dow Jones Industrial AverageSM. Dow Jones is not
responsible for and has not participated in the
determination of the timing of, prices at, or quantities of
the Trusts to be issued or in the determination or
calculation of the equation by which the Trusts are to be
converted into cash. Dow Jones has no obligation or
liability in connection with the administration, marketing
or trading of the Trusts.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE DOW JONES INDUSTRIAL AVERAGESM OR ANY
DATA INCLUDED THEREIN AND DOW JONES SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. DOW
JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY THE SPONSOR, OWNERS OF THE TRUSTS, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES
INDUSTRIAL AVERAGESM OR ANY DATA INCLUDED THEREIN. DOW
JONES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE DOW JONES
INDUSTRIAL AVERAGESM OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES
HAVE ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT,
PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED
OF THE POSSIBILITY THEREOF.
C. The term "Principal Account" as set forth in the
Standard Terms and Conditions of Trust shall be replaced with the
term "Capital Account."
D. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or
any successor trustee appointed as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank.
E. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided."
F. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
G. Section 1.01(26) shall be added to read as follows:
"(26) The term "Rollover Unit holder" shall be defined
as set forth in Section 5.05, herein."
H. Section 1.01(27) shall be added to read as follows:
"(27) The "Rollover Notification Date" shall be
defined as set forth in the Prospectus under "Summary of
Essential Information."
I. Section 1.01(28) shall be added to read as follows:
"(28) The term "Rollover Distribution" shall be
defined as set forth in Section 5.05, herein."
J. Section 1.01(29) shall be added to read as follows:
"(29) The term "Distribution Agent" shall refer to the
Trustee acting in its capacity as distribution agent
pursuant to Section 5.05 herein."
K. Section 1.01(30) shall be added to read as follows:
"(30) The term "Special Redemption and Liquidation
Period" shall be as set forth in the Prospectus under
"Summary of Essential Information."
L. Paragraph (b) of Section 2.01 shall be restated in its
entirety as follows:
(b)(1)From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its
discretion, to assign, convey to and deposit with the
Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form, (ii) Contract Obligations relating
to such additional Securities, accompanied by cash and/or
Letter(s) of Credit as specified in paragraph (c) of this
Section 2.01, or (iii) cash (or a Letter of Credit in lieu
of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchased in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur within 20 days from the date of a
failure occurring within such initial 90-day period) shall
maintain exactly the Percentage Ratio existing immediately
prior to such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "Cash" means,
as to the Capital Account, cash or other property (other
than Securities) on hand in the Capital Account or
receivable and to be credited to the Capital Account as of
the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units
created by the deposit) and, as to the Income Account, cash
or other property (other than Securities) received by the
Trust as of the date of the deposit or receivable by the
Trust in respect of a record date for a payment on a
Security which has occurred or will occur before the Trust
will be the holder of record of a Security, reduced by the
amount of any cash or other property received or receivable
on any Security allocable (in accordance with the Trustee's
calculations of distributions from the Income Account
pursuant to Section 3.05) to a distribution made or to be
made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units
created by the deposit and the denominator of which is the
number of Units which are outstanding immediately prior to
the deposit. Cash represented by a foreign currency shall
be replicated in such currency or, if the Trustee has
entered into a contract for the conversion thereof, in U.S.
dollars in an amount replicating the dollars to be received
on such conversion."
M. The following shall be added immediately following the
first sentence of paragraph (c) of Section 2.01:
"The Trustee may allow the Depositor to substitute for
any Letter(s) of Credit deposited with the Trustee in
connection with the deposits described in Section 2.01(a)
and (b) cash in an amount sufficient to satisfy the
obligations to which the Letter(s) of Credit relates. Any
substituted Letter(s) of Credit shall be released by the
Trustee."
N. Section 2.01(c) of the Standard Terms and Conditions of
Trust is hereby amended by adding the following at the conclusion
thereof:
"If any Contract Obligation requires settlement in
a foreign currency, in connection with the deposit of such
Contract Obligation the Depositor will deposit with the
Trustee either an amount of such currency sufficient to
settle the contract or a foreign exchange contract in such
amount which settles concurrently with the settlement of the
Contract Obligation and cash or a Letter of Credit in U.S.
dollars sufficient to perform such foreign exchange
contact."
O. Section 2.03(a) of the Standard Terms and Conditions of
Trust shall be amended by adding the following sentence after the
first sentence of such section:
"The number of Units may be increased through a split
of the Units or decreased through a reverse split thereof,
as directed in writing by the Depositor, at any time when
the Depositor is the only beneficial holder of Units, which
revised number of Units shall be recorded by the Trustee on
its books. The Trustee shall be entitled to rely on the
Depositor's direction as certification that no person other
than the Depositor has a beneficial interest in the Units
and the Trustee shall have no liability to any person for
action taken pursuant to such direction."
P. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. Subject to reimbursement
as hereinafter provided, the cost of organizing the Trust
and the sale of the Trust Units shall be borne by the
Depositor, provided, however, that the liability on the part
of the Depositor under this section shall not include any
fees or other expenses incurred in connection with the
administration of the Trust subsequent to the deposit
referred to in Section 2.01. At the conclusion of the
primary offering period (as certified by the Depositor to
the Trustee), the Trustee shall withdraw from the Account or
Accounts specified in the Prospectus or, if no Account is
therein specified, from the Capital Account, and pay to the
Depositor the Depositor's reimbursable expenses of
organizing the Trust in an amount certified to the Trustee
by the Depositor. In no event shall the amount paid by the
Trustee to the Depositor for the 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 conclusion of the primary
offering period; nor shall the Depositor be entitled to or
request reimbursement for expenses of organizing the Trust
incurred after the conclusion of the primary offering
period. If the cash balance of the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, sell Securities identified by the
Depositor, or distribute to the Depositor Securities having
a value, as determined under Section 4.01 as of the date of
distribution, sufficient for such reimbursement. Securities
sold or distributed to the Depositor to reimburse the
Depositor pursuant to this Section shall be sold or
distributed by the Trustee, to extent practicable, in the
percentage ratio then existing. The reimbursement provided
for in this section shall be for the account of the Unit
holders of record at the conclusion of the primary offering
period. Any assets deposited with the Trustee in respect of
the expenses reimbursable under this Section 3.01 shall be
held and administered as assets of the Trust for all
purposes hereunder. The Depositor shall deliver to the
Trustee any cash identified in the Statement of Net Assets
of the Trust included in the Prospectus not later than the
expiration of the Delivery Period and the Depositors
obligation to make such delivery shall be secured by the
letter of credit deposited pursuant to Section 2.01. Any
cash which the Depositor has identified as to be used for
reimbursement of expenses pursuant to this Section 3.01
shall be held by the Trustee, without interest, and reserved
for such purpose and, accordingly, prior to the conclusion
of the primary offering period, shall not be subject to
distribution or, unless the Depositor otherwise directs,
used for payment of redemptions in excess of the per Unit
amount payable pursuant to the next sentence. If a Unit
holder redeems Units prior to the conclusion of the primary
offering period, the Trustee shall pay to the Unit holder,
in addition to the Redemption Value of the tendered Units,
unless otherwise directed by the Depositor, an amount equal
to the estimated per Unit cost of organizing the Trust set
forth in the Prospectus, or such lower revision thereof most
recently communicated to the Trustee by the Depositor
pursuant to Section 5.01, multiplied by the number of Units
tendered for redemption; to the extent the cash on hand in
the Trust is insufficient for such payment, the Trustee
shall have the power to sell Securities in accordance with
Section 5.02. As used herein, the Depositor's reimbursable
expenses of organizing the Trust shall include the cost of
the initial preparation and typesetting of the registration
statement, prospectuses (including preliminary
prospectuses), the indenture, and other documents relating
to the Trust, SEC and state blue sky registration fees, the
cost of the initial valuation of the portfolio and audit of
the Trust, the initial fees and expenses of the Trustee, and
legal and other out-of-pocket expenses related thereto, but
not including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses incurred
in the preparation and printing of brochures and other
advertising materials and any other selling expenses."
Q. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
R. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Capital
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Capital Account unless the amount available for
distribution shall equal $1.00 per 100 Units.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) the following
reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the third
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
S. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
T. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Capital Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I."
U. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05.I.(e) deduct from the Income Account or,
to the extent funds are not available in such Account, from
the Capital Account and pay to the Depositor the amount that
it is entitled to receive pursuant to Section 3.14."
V. Section 3.07 of the Standard Terms and Conditions of
Trust is amended to delete the word and at the end of Section
3.07(f) and replace Section 3.01(g) with the following:
"(g) that such sale is required due to Units tendered for
redemption;
(h) that the sale of Securities is necessary or advisable
in order to maintain the qualification of the Trust as a
"regulated investment company" in the case of a Trust which has
elected to qualify as such; and
(i) that there has been a public tender offer made for a
Security or a merger or acquisition is announced affecting a
Security, and that in the opinion of the Sponsor the sale or
tender of the Security is in the best interest of the Unit
holders."
W. 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."
X. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in the amount of $.0025 per Unit,
calculated based on the largest number of Units outstanding
during the calendar year except during the initial offering
period as determined in Section 4.01 of this Indenture, in
which case the fee is calculated based on the largest number
of Units outstanding during the period for which the
compensation is paid (such annual fee to be pro rated for
any calendar year in which the Portfolio Supervisor provides
services during less than the whole of such year). Such fee
may exceed the actual cost of providing such portfolio
supervision services for the Trust, but at no time will the
total amount received for portfolio supervision services
rendered to unit investment trusts of which Nike Securities
L.P. is the sponsor in any calendar year exceed the
aggregate cost to the Portfolio Supervisor of supplying such
services in such year."
Y. 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."
Z. 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."
AA. 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.
BB. The following Section 3.16 shall be added:
Section 3.16. Creation and Development Fee. If the prospectus related to the
Trust specifies a creation and development fee, the Trustee shall, at the
conclusion of the primary offering period (as certified by the Depositor to the
Trustee) withdraw from the Capital Account, an amount equal to the net asset
value on such date multiplied by such percentage rate for the creation and
development fee as set forth in the prospectus for the trust and credit such
amount to a special non-Trust account designated by the Depositor out of which
the creation and development fee will be distributed to the Depositor (the
"Creation and Development Account"). The reimbursement provided for in this
section shall be for the account of Unit holders of record at the conclusion
of the primary offering period and shall no effect on the net asset value of
Trust Units prior to such date. 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 Creation and Development Account, provided, however, that the
aggregate amount advanced by the Trustee at any time for payment of the creation
and development fee 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 creation and development fee (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 Creation and
Development Account. If the Trust is terminated pursuant to Section 6.01(g),
the Depositor agrees to reimburse Unitholders for any amounts of the Creation
and Development Fee collected by the Depositor to which it is not entitled. All
advances made by the Trustee pursuant to this Section shall be secured by a
lien on the Trust prior to the interest of Unit holders. Notwithstanding the
foregoing, the Depositor shall not receive any amount of Creation and
Development Fee which, when added to any other sales charge imposed, exceeds
the maximum amount per Unit stated in the Prospectus. The Depositor agrees to
reimburse the Trust and any Unit holder any amount of Creation and Development
Fee it receives which exceeds the amount which the Depositor may receive under
applicable laws, regulations and rules."
CC. Article III of the Standard Terms and Conditions of
Trust is hereby amended by adding the following new Section 3.17:
"Section 3.17. Foreign Currency Exchange. Unless the
Depositor shall otherwise direct, whenever funds are
received by the Trustee in foreign currency, upon the
receipt thereof or, if such funds are to be received in
respect of a sale of Securities, concurrently with the
contract of the sale for the Security (in the latter case
the foreign exchange contract to have a settlement date
coincident with the relevant contract of sale for the
Security), the Trustee shall enter into a foreign exchange
contract for the conversion of such funds to U.S. dollars
pursuant to the instruction of the Depositor. The Trustee
shall have no liability for any loss or depreciation
resulting from action taken pursuant to such instruction."
DD. Article IV, Section 4.01 of the Standard Terms and
Conditions of Trust is hereby amended in the following manner:
1. Section 4.01(b) is hereby amended by deleting that
portion of the first sentence appearing after the colon and
the entire second sentence and replacing them in their
entirety with the following:
"if the Securities are listed on a national
or foreign securities exchange or The Nasdaq Stock
Market, such Evaluation shall generally be based
on the closing sale price on the exchange or
system which is the principal market therefor,
which shall be deemed to be the New York Stock
Exchange if the Securities are listed thereon
(unless the Evaluator deems such price
inappropriate as a basis for evaluation), or if
there is no closing sale price on such exchange or
system, at the closing ask prices. If the
Securities are not so listed or, if so listed and
the principal market therefor is other than on an
exchange, the evaluation shall generally be based
on the current ask price on the over-the-counter
market (unless it is determined that these prices
are inappropriate as a basis for evaluation). If
current ask prices are unavailable, the evaluation
is generally determined (a) on the basis of
current ask prices for comparable securities, (b)
by appraising the value of the Securities on the
ask side of the market or (c) any combination of
the above. If such prices are in a currency other
than U.S. dollars, the Evaluation of such Security
shall be converted to U.S. dollars based on
current offering side exchange rates, unless the
Security is in the form of an American Depositary
Share or Receipt, in which case the Evaluations
shall be based upon the U.S. dollar prices in the
market for American Depositary Shares or Receipts
(unless the Evaluator deems such prices
inappropriate as a basis for valuation). As used
herein, the closing sale price is deemed to mean
the most recent closing sale price on the relevant
securities exchange immediately prior to the
Evaluation time."
2. Section 4.01(c) is hereby deleted and
replaced in its entirety with the following:
"(c) After the initial offering period and
both during and after the initial offering period,
for purposes of the Trust Fund Evaluations
required by Section 5.01 in determining Redemption
Value and Unit Value, Evaluation of the Securities
shall be made in the manner described in Section
4.01(b), on the basis of current bid prices for
Zero Coupon Obligations (if any),the bid side
value of the relevant currency exchange rate
expressed in U.S. dollars and, except in those
cases in which the Equity Securities are listed on
a national or foreign securities exchange or The
Nasdaq Stock Market and the closing sale prices
are utilized, on the basis of the current bid
prices of the Equity Securities. In addition, the
Evaluator shall reduce the Evaluation of each
Security by the amount of any liquidation costs
(other than brokerage costs incurred on any
national securities exchange) and any capital
gains or other taxes which would be incurred by
the Trust upon the sale of such Security, such
taxes being computed as if the Security were sold
on the date of the Evaluation."
EE. 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."
FF. Section 5.01 is hereby amended to add the following at
the conclusion of the first paragraph thereof:
"Amounts receivable by the Trust in a foreign currency
shall be reported to the Evaluator who shall convert the
same to U.S. dollars based on current exchange rates, in the
same manner as provided in Section 4.01(b) or 4.01(c), as
applicable, for the conversion of the valuation of foreign
Equity Securities, and the Evaluator shall report such
conversion with each Evaluation made pursuant to Section
4.01."
GG. 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
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."
HH. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Subject to the restrictions set forth in the prospectus
Unit holders of the Target 5 Trust, the Target 10 Trust, the
S&P Target 10 Trust, the Nasdaq Target 15 Trust, the DART 5
Trust or the DART 10 Trust may redeem 1,000 Units or more of
such Trust and request a distribution in kind of (i) such
Unit holder's pro rata portion of each of the Securities in
such Trust, in whole shares, and (ii) cash equal to such
Unit holder's pro rata portion of the Income and Capital
Accounts as follows: (x) a pro rata portion of the net
proceeds of sale of the Securities representing any
fractional shares included in such Unit holder's pro rata
share of the Securities and (y) such other cash as may
properly be included in such Unit holder's pro rata share of
the sum of the cash balances of the Income and Principal
Accounts in an amount equal to the Unit Value determined on
the basis of a Trust Fund Evaluation made in accordance with
Section 5.01 determined by the Trustee on the date of tender
less amounts determined in clauses (i) and (ii)(x) of this
Section. Subject to Section 5.05 with respect to Rollover
Unit holders, to the extent possible, distributions of
Securities pursuant to an in kind redemption of Units shall
be made by the Trustee through the distribution of each of
the Securities in book-entry form to the account of the Unit
holder's bank or broker-dealer at the Depository Trust
Company. Any distribution in kind will be reduced by
customary transfer and registration charges."
II. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of the Trusts,
(the "New Series"), the Trustee shall, at the Depositor's
sole cost and expense, include in the notice sent to Unit
holders specified in Section 8.02 a form of election whereby
Unit holders, whose redemption distribution would be in an
amount sufficient to purchase at least one Unit of the New
Series, may elect to have their Unit(s) redeemed in kind in
the manner provided in Section 5.02, the Securities included
in the redemption distribution sold, and the cash proceeds
applied by the Distribution Agent to purchase Units of a New
Series, all as hereinafter provided. The Trustee shall
honor properly completed election forms returned to the
Trustee, accompanied by any Certificate evidencing Units
tendered for redemption or a properly completed redemption
request with respect to uncertificated Units, by its close
of business on the Rollover Notification Date. The notice
and form of election to be sent to Unit holders in respect
of any redemption and purchase of Units of a New Series as
provided in this section shall be in such form and shall be
sent at such time or times as the Depositor shall direct the
Trustee in writing and the Trustee shall have no
responsibility therefor. The Distributions Agent acts
solely as disbursing agent in connection with purchases of
Units pursuant to this Section and nothing herein shall be
deemed to constitute the Distribution Agent a broker in such
transactions
All Units so tendered by a Unit holder (a "Rollover
Unit holder") shall be redeemed and cancelled during the
Special Redemption and Liquidation Period on such date or
dates specified by Depositor. Subject to payment by such
Rollover Unit holder of any tax or other governmental
charges which may be imposed thereon, such redemption is to
be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the
redemption date equal to the net asset value (determined on
the basis of the Trust Fund Evaluation as of the redemption
date in accordance with Section 4.01) multiplied by the
number of Units being redeemed (herein called the "Rollover
Distribution"). Any Securities that are made part of the
Rollover Distribution shall be valued for purposes of the
redemption distribution as of the redemption date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent during
the Special Redemption and Liquidation Period specified in
the Prospectus pursuant to the Depositor's direction, and
the Distribution Agent shall, unless directed otherwise by
the Depositor, employ the Depositor as broker in connection
with such sales. For such brokerage services, the Depositor
shall be entitled to compensation at its customary rates,
provided however, that its compensation shall not exceed the
amount authorized by applicable securities laws and
regulations. The Depositor shall direct that sales be made
in accordance with the guidelines set forth in the
Prospectus under the heading "Special Redemption,
Liquidation and Investment in a New Trust." Should the
Depositor fail to provide direction, the Distribution Agent
shall sell the Securities in the manner provided in the
prospectus. The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon completion of all sales of Securities included in
the Rollover Unit holder's Rollover Distribution, the
Distribution Agent shall, as agent for such Rollover Unit
holder, enter into a contract with the Depositor to purchase
from the Depositor Units of a New Series (if any), at the
Depositor's public offering price for such Units on such
day, and at such reduced sales charge as shall be described
in the prospectus for such Trust. Such contract shall
provide for purchase of the maximum number of Units of a New
Series whose purchase price is equal to or less than the
cash proceeds held by the Distribution Agent for the Unit
holder on such day (including therein the proceeds
anticipated to be received in respect of Securities traded
on such day net of all brokerage fees, governmental charges
and any other expenses incurred in connection with such
sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included
in the Rollover Unit holder's redemption distribution shall
not be consummated in accordance with its terms, the
Distribution Agent shall apply the cash proceeds held for
such Unit holder as of the settlement date for the purchase
of Units of a New Series to purchase the maximum number of
Units which such cash balance will permit, and the Depositor
agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be
extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such
purchase. If the Unit holder's Rollover Distribution will
produce insufficient cash proceeds to purchase all of the
Units of a New Series contracted for, the Depositor agrees
that the contract shall be rescinded with respect to the
Units as to which there was a cash shortfall without any
liability to the Rollover Unit holder or the Distribution
Agent. Any cash balance remaining after such purchase shall
be distributed within a reasonable time to the Rollover Unit
holder by check mailed to the address of such Unit holder on
the registration books of the Trustee. Units of a New Series
will be uncertificated unless and until the Rollover Unit
holder requests a certificate. Any cash held by the
Distribution Agent shall be held in a non-interest bearing
account which will be of benefit to the Distribution Agent
in accordance with normal banking procedures. Neither the
Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation
resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in
the event the Depositor does not make Units available for
purchase.
(b) Notwithstanding the foregoing, the Depositor may,
in its discretion at any time, decide not to offer any new
Trust Series in the future, and if so, this Section 5.05
concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent
shall, however, be entitled to receive indemnification and
reimbursement from the Trust for any and all expenses and
disbursements to the same extent as the Trustee is permitted
reimbursement hereunder."
JJ. Paragraph (e) of Section 6.01 of Article VI of the
Standard Terms and Conditions of Trust is amended to read as
follows:
"(e) (I) Subject to the provisions of subparagraphs
(II) and (III) of this paragraph, the Trustee may employ
agents, sub-custodians, attorneys, accountants and auditors
and shall not be answerable for the default or misconduct of
any such agents, sub-custodians, attorneys, accountants or
auditors if such agents, sub-custodians, attorneys,
accountants or auditors shall have been selected with
reasonable care. The Trustee shall be fully protected in
respect of any action under this Indenture taken or suffered
in good faith by the Trustee in accordance with the opinion
of counsel, which may be counsel to the Depositor acceptable
to the Trustee, provided, however, that this disclaimer of
liability shall not (i) excuse the Trustee from the
responsibilities specified in subparagraph II below or
(ii) limit the obligation of the Trustee to indemnify the
Trust under subparagraph III below. The fees and expenses
charged by such agents, sub-custodians, attorneys,
accountants or auditors shall constitute an expense of the
Trust reimbursable from the Income and Capital Accounts of
the affected Trust as set forth in section 6.04 hereof.
(II) The Trustee may place and maintain in the care of
an eligible foreign custodian (which is employed by the
Trustee as a sub-custodian as contemplated by subparagraph
(I) of this paragraph (e) and which may be an affiliate or
subsidiary of the Trustee or any other entity in which the
Trustee may have an ownership Income) the Trust's foreign
securities, cash and cash equivalents in amounts reasonably
necessary to effect the Trust's foreign securities
transactions, provided that the Trustee hereby agrees to
perform all the duties assigned by rule 17f-5 as now in
effect or as it may be amended in the future, to the boards
of management investment companies. The Trustee's duties
under the preceding sentence will not be delegated.
As used in this subparagraph (II),
(1) "foreign securities" include: securities
issued and sold primarily outside the United States by a
foreign government, a national of any foreign country or a
corporation or other organization incorporated or organized
under the laws of any foreign country and securities issued
or guaranteed by the government of the United States or by
any state or any political subdivision thereof or by any
agency thereof or by any entity organized under the laws of
the United States or of any state thereof which have been
issued and sold primarily outside the United States.
(2) "eligible foreign custodian" means
(a) The following securities depositories and
clearing agencies which operate transnational systems for
the central handling of securities or equivalent book
entries which, by appropriate exemptive order issued by the
Securities and Exchange Commission, have been qualified as
eligible foreign custodians for the Trust but only for so
long as such exemptive order continues in effect: Morgan
Guaranty Trust Company of New York, Brussels, Belgium, in
its capacity as operator of the Euroclear System
("Euroclear"), and Cedel Bank S.A. ("CEDEL").
(b) Any other entity that shall have been
qualified as an eligible foreign custodian for the foreign
securities of the Trust by the Securities and Exchange
Commission by exemptive order, rule or other appropriate
action, commencing on such date as it shall have been so
qualified but only for so long as such exemptive order, rule
or other appropriate action continues in effect.
(III) The Trustee will indemnify and hold the
Trust harmless from and against any loss occurring as a
result of an eligible foreign custodian's willful
misfeasance, reckless disregard, bad faith, or gross
negligence in performing custodial duties."
KK. 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)"
LL. Section 6.01(i) of the Standard Terms and Conditions of
Trust shall be deleted in its entirety and replaced with the
following:
"(i) No payment to a Depositor or to any principal
underwriter (as defined in the Investment Company Act of 1940)
for the Trust or to any affiliated person (as so defined) or
agent of a Depositor or such underwriter shall be allowed the
Trustee as an expense except (a) for payment of such reasonable
amounts as the Securities and Exchange Commission may prescribe
as compensation for performing bookkeeping and other
administrative services of a character normally performed by the
Trustee, and (b) such other amounts permitted under the
Investment Company Act of 1940."
MM. The first sentence of the second paragraph of Section
6.04 shall be amended to include the phrase "license fees, if
any," immediately after the reference to legal and auditing
expenses.
NN. 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:
"The Depositor may remove the Trustee at any time with or
without cause and appoint a successor Trustee by written
instrument or instruments delivered not less than sixty days
prior to the effective date of such removal and appointment to
the Trustee so removed and to the successor Trustee."
OO. Section 8.02 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The fourth sentence of the second paragraph shall
be deleted and replaced with the following:
"The Trustee will honor duly executed requests for in-
kind distributions received (accompanied by the electing
Unit holder's Certificate, if issued) by the close of
business ten business days prior to the Mandatory
Termination Date."
(ii) The first sentence of the fourth paragraph shall
be deleted and replaced with the following:
"Commencing no earlier than the business day following
that date on which Unit holders must submit to the Trustee
notice of their request to receive an in-kind distribution
of Securities at termination, the Trustee will liquidate the
Securities not segregated for in-kind distributions during
such period and in such daily amounts as the Depositor shall
direct."
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank and First Trust Advisors L.P. have each caused
this Trust Agreement to be executed and the respective corporate
seal to be hereto affixed and attested (if applicable) by
authorized officers; all as of the day, month and year first
above written.
NIKE SECURITIES L.P.,
Depositor
By Robert M. Porcellino
Senior Vice President
THE CHASE MANHATTAN BANK,
Trustee
By Rosalia Raviele
Vice President
[SEAL]
ATTEST:
Joan Currie
Assistant Treasurer
FIRST TRUST ADVISORS L.P.,
Evaluator
By Robert M. Porcellino
Senior Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Senior Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
FT 399
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
February 29, 2000
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: FT 399
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of FT 399 in connection with the February
29, 2000 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. 333-94483)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:erg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
February 29, 2000
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 399
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 399 (the "Fund"), in connection with the issuance of units
of fractional undivided interest in certain of the Trusts of said
Fund (the "Trust"), under a Trust Agreement, dated February 29,
2000 (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. 333-94483)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
February 29, 2000
The Chase Manhattan Bank, as Trustee of
FT 399
4 New York Plaza, 6th Floor
New York, New York 10004-3113
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 399
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 399 (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. 333-94483) 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
February 29, 2000
The Chase Manhattan Bank, as Trustee of
FT 399
4 New York Plaza, 6th Floor
New York, New York 10004-3113
Attention: Mr. Thomas Porazzo
Vice President
Re: FT 399
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
399 (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 cause the Units to be transferred on the
registration books of the Trust to, and registered in, such other
names, and in such denominations, as the Depositor may order, and
may deliver, unless the Indenture provides that the Units will be
uncertificated, Certificates evidencing such ownership.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, Illinois 60532
February 29, 2000
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: FT 399
Gentlemen:
We have examined the Registration Statement File No. 333-
94483 for the above captioned fund. We hereby consent to the use
in the Registration Statement of the references to First Trust
Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Robert M. Porcellino
Senior Vice President
LINKLATERS & PAINES (NEW YORK)
885 THIRD AVENUE, SUITE 2600
NEW YORK, NEW YORK 10022
FAX (212) 751-9335
TELEX 127812
29 February 2000
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Dear Sirs:
FT 399 GLOBAL TARGET 15 PORTFOLIO-MARCH 2000 SERIES
1. We have acted as special United Kingdom ("UK") taxation
advisers in connection with the issue of units ("Units") in
the Global Target 15 Portfolio, March 2000 Series (the
"Trust") on the basis of directions given to us by Chapman
and Cutler, counsel to yourselves.
2. This opinion is limited to UK taxation law as applied in
practice on the date hereof by the Inland Revenue and is
given on the basis that it will be governed by and construed
in accordance with English law as enacted.
3. For the purpose of this opinion, the only documentation
which we have examined is a draft prospectus for FT 393
dated 18 February 2000 comprising The Dow Target 5
Portfolio, March 2000 Series; The Dow Target 10 Portfolio,
March 2000 Series; The S&P Target 10 Portfolio, March 2000
Series; The Nasdaq Target 15 Portfolio, March 2000 Series,
the Dow Dividend and Repurchase Target 5 Portfolio, March
2000 Series, the Dow Dividend and Repurchase Target 10
Portfolio, March 2000 Series and the Trust (together the
"Funds") (the "Prospectus"). We have been advised by
Chapman and Cutler that there will be no material
differences between the Prospectus and the final prospectus
to be issued for the Funds to be dated 29 February 2000.
Terms defined in the Prospectus bear the same meaning
herein.
4. We have assumed for the purposes of this opinion that:
4.1. a holder of Units ("Unit holder") is, under the terms
of the Indenture governing the Trust, entitled to have
paid to him (subject to a deduction for annual
expenses, including total applicable custodial fees and
certain other costs associated with foreign trading and
annual Trustee's, Sponsor's, portfolio supervisory,
evaluation and administrative fees and expenses) his
pro rata share of all the income which arises to the
Trust from the investments in the Trust, and that,
under the governing law of the Indenture, this is a
right as against the assets of the Trust rather than a
right enforceable in damages only against the Trustee;
4.2. subject as provided in paragraph 9 below, for taxation
purposes the Trustee is not a UK resident and is a US
resident;
4.3. the general administration of the Trust will be carried
out only in the US;
4.4. no Units are registered in a register kept in the UK by
or on behalf of the Trustee;
4.5. the Trust is not treated as a corporation for US tax
purposes;
4.6. the structure, including the investment strategy of the
Trust, will be substantially the same as that set out
in the Prospectus; and
4.7. each Unit holder is neither resident nor ordinarily
resident in the UK (and has not been resident or
ordinarily resident in the UK), nor is any such Unit
holder carrying on a trade in the UK through a branch
or agent in the UK.
5. We understand that the portfolio of the Trust will consist
of the common stock of the five companies with the lowest
per share stock price of the ten companies in each of the
Dow Jones Industrial Average, the Financial Times Industrial
Ordinary Share Index and the Hang Seng Index respectively
having the highest dividend yield in the respective index as
at the close of business on the business day prior to the
date of the final prospectus to be issued for the Funds in
respect of the stocks comprised in the Dow Jones Industrial
Average and three business days prior to the date of the
final prospectus to be issued for the Funds in respect of
stock comprised in the Financial Times Industrial Ordinary
Share Index and the Hang Seng Index; and that the Trust will
hold such common stocks for a period of approximately
thirteen months, after which time the Trust will terminate
and the stocks will be sold. We address UK tax issues in
relation only to the common stocks of companies in the
Financial Times Industrial Ordinary Share Index comprised in
the portfolio of the Trust (the "UK Equities").
6. Where a dividend which carries a tax credit to which an
individual resident in the United Kingdom would be entitled
under United Kingdom law is paid by a UK resident company to
a qualifying US resident which (either alone or together
with one or more associated corporations) controls directly
or indirectly less than 10 percent of the voting stock of
that UK company, the qualifying US resident is entitled
under the terms of the double taxation treaty between the US
and the UK (the "Treaty"), on making a claim to the UK
Inland Revenue, to a payment of a tax credit less a
withholding tax of 15 percent of the aggregate amount of the
tax credit and the dividend.
Section 30 of the Finance (No. 2) Act 1997 provides that the
tax credit attached to a dividend paid by a UK company on or
after April 6, 1999 is equal to one-ninth of the dividend.
Therefore, on payment by a UK company of a dividend of 90
pounds on or after April 6, 1999, a tax credit of 10 pounds
will arise. The tax credit is less than 15 per cent of the
aggregate amount of the tax credit and divided (i.e. 15 per
cent of 100). A qualifying US resident which (either alone
or together with one or more associated corporations)
controls directly or indirectly less than 10 percent of the
voting stock of that UK company will therefore not be
entitled to any payment in respect of that tax credit under
the Treaty in respect of dividends paid on UK Equities.
This opinion does not consider whether a Unit holder will be
a qualifying US resident for the purposes of the Treaty
since, for the reasons explained above, even if a Unit
holder did satisfy the necessary criteria to be a qualifying
US resident, the Unit holder would not be entitled to
repayment under the Treaty of any part of the tax credit.
7. The Trust may be held to be trading in stock rather than
holding stock for investment purposes by virtue, inter alia,
of the length of the time for which the stock is held. If
the stock is purchased and sold through a UK resident agent,
then, if the Trust is held to be trading in such stock,
profits made on its subsequent disposal may, subject to 8
below, be liable to United Kingdom tax on income.
8. Under current law, the Trust's liability to tax on such
profits will be limited to the amount of tax (if any)
withheld from the Trust's income provided such profits
derive from transactions carried out on behalf of the Trust
by a UK agent where the following conditions are satisfied:
8.1. the transactions from which the profits are derived are
investment transactions;
8.2. the agent carries on a business of providing investment
management services;
8.3. the transactions are carried out by the agent on behalf
of the Trust in the ordinary course of that business;
8.4. the remuneration received by the agent is at a rate
which is not less than that which is customary for the
type of business concerned;
8.5. the agent acts for the Trust in an independent
capacity.
The agent will act in an independent capacity if the
relationship between the agent and the Trust, taking
account of its legal, financial and commercial
characteristics, is one which would exist between
independent persons dealing at arm's length. This will
be regarded as the case by the UK Inland Revenue if,
for example, the provision of services by the agent to
the Trust (and any connected person) does not form a
substantial part of the agent's business (namely where
it does not exceed 70 percent of the agent's business,
by reference to fees or some other measure if
appropriate).
In addition, this condition will be regarded as
satisfied by the UK Inland Revenue if interests in the
Trust, a collective fund, are freely marketed;
8.6. the agent (and persons connected with the agent) do not
have a beneficial interest in more than 20 percent of
the Trust's income derived from the investment
transactions (excluding reasonable management fees paid
to the agent); and
8.7. the agent acts in no other capacity in the UK for the
Trust.
Further, where stock is purchased and sold by the Trust
through a UK broker in the ordinary course of a
brokerage business carried on in the UK by that broker,
and the remuneration which the broker receives for the
transactions is at a rate which is no less than that
which is customary for that class of business and the
broker acts in no other capacity for the Trust in the
UK, profits arising from transactions carried out
through that broker will not be liable to UK tax.
Accordingly, unless a Unit holder, being neither
resident nor ordinarily resident in the UK, has a
presence in the UK (other than through an agent or a
broker acting in the manner described above) in
connection with which the Units are held, the Unit
holder will not be charged to UK tax on such profits.
9. If the Trustee has a presence in the UK, then it is
technically possible that income or gains of the Fund could
be assessed upon the Trustee, whether arising from
securities (which includes stock) or from dealings in those
securities. We understand that the Trustee has a branch in
the UK. However, we consider that any such risk should be
remote provided that:
9.1. the UK branch of the Trustee will not have any
involvement with establishing or managing the Fund or
its assets nor derive income or gains from the Fund or
its assets.
9.2. any income derived by the Trustee will be derived by it (see
6.1 above) as a resident of the US for the purposes of the
Treaty; and
The Trustee (in its capacity as recipient of income on
behalf of the Trust) will be a resident of the US for
Treaty purposes to the extent that the income derived
by the Trust is subject to US tax as the income of a US
resident, either in the hands of the Trust itself or in
the hands of its beneficiaries.
We have assumed that the Trust will not be subject to
US tax on its income and that such income will be
treated as income of the beneficiaries of the Trust for
US purposes. Accordingly, the Trust would be a US
resident for the purposes of the Treaty only to the
extent that the beneficiaries would be taxable in the
US on such income or treated as so taxable by agreement
between the relevant authorities. The provisions of
the Treaty have been extended to grant resident status
to tax exempt charitable trusts and pension funds. We
understand that this is confirmed on the US Treasury
side by its "Technical Explanation" of the Treaty
issued on March 9, 1977.
10. Where the Trustee makes capital gains on the disposal of the
UK Equities, a Unit holder will not be liable to UK capital
gains tax on those gains.
11. UK stamp duty will generally be payable at the rate of 0.5%
of the consideration (rounded to the nearest multiple of 5)
in respect of a transfer of the shares in UK incorporated
companies or in respect of transfers to be effected on a UK
share register. UK stamp duty reserve tax will generally be
payable on the entering into of an unconditional agreement
to transfer such shares, or on a conditional agreement to
transfer such shares becoming unconditional, at the rate of
0.5 percent of the consideration to be provided. The tax
will generally be paid by the purchaser of such shares.
No UK stamp duty or stamp duty reserve tax should be payable
on an agreement to transfer nor a transfer of Units,
provided that such transfer is neither executed in nor
brought into the UK.
12. In our opinion, the taxation paragraphs contained on page 28
of the Prospectus under the heading "United Kingdom
Taxation," as governed by the general words appearing
immediately under that heading, which relate to the Trust
and which are to be contained in the final prospectus to be
issued for the Funds, represent a fair summary of material
UK taxation consequences for a US resident Unit holder of
Units in the Trust.
13. This opinion is addressed to you on the understanding that
you (and only you) may rely upon it in connection with the
issue and sale of the Units (and for no other purpose).
This opinion may not be quoted or referred to in any public
document or filed with any governmental agency or other
person without our written consent. We understand that it
is intended to produce a copy of this opinion to the
Trustee. We consent to the provision of this opinion to the
Trustee and confirm that, insofar as this opinion relates to
the UK tax consequences for the Trust and US persons
holdings Units in the Trust, the Trustee may similarly rely
upon it in connection with the issue and sale of Units.
However you should note that this opinion does not consider
the UK tax consequences for the Trustee arising from its
duties in respect of the Trust under the Indenture.
We consent further to the reference which is made in the
prospectus to be issued for the Fund to our opinion as to
the UK tax consequences to US persons holding Units in the
Trust.
Yours faithfully,
Linklaters & Paines
