Registration No. 333-47504
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 474
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title of Securities Being Registered:
An indefinite number of Units pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as
amended
F. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on November 30, 2000 at 2:00 p.m. pursuant to Rule 487.
________________________________
The Dow(sm) Target 5 Portfolio, December 2000 Series
The Dow(sm) Target 10 Portfolio, December 2000 Series
Global Target 15 Portfolio, December 2000 Series
The S&P Target 10 Portfolio, December 2000 Series
The Nasdaq Target 15 Portfolio, December 2000 Series
Value Line(R) Target Portfolio, December 2000 Series
The Dow(sm) Dividend And Repurchase Target 5
Portfolio, December 2000 Series
The Dow(sm) Dividend And Repurchase Target 10
Portfolio, December 2000 Series
Total Target Portfolio, December 2000 Series
FT 474
FT 474 is a series of a unit investment trust, the FT Series. FT 474
consists of nine 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 (R)
1-800-621-9533
The date of this prospectus is November 30, 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 22
Portfolios 23
Risk Factors 26
Hypothetical Performance Information 28
Public Offering 31
Distribution of Units 33
The Sponsor's Profits 34
The Secondary Market 34
How We Purchase Units 34
Expenses and Charges 34
Tax Status 35
Retirement Plans 38
Rights of Unit Holders 38
Income and Capital Distributions 39
Redeeming Your Units 39
Investing in a New Trust 41
Removing Securities from a Trust 41
Amending or Terminating the Indenture 42
Information on the Sponsor, Trustee and Evaluator 43
Other Information 44
Page 2
Summary of Essential Information
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 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 Portfolio Target 10 Portfolio Target 15 Portfolio
December December December
2000 Series 2000 Series 2000 Series
____________ ____________ ___________
<S> <C> <C> <C>
Initial Number of Units (1) 15,004 15,000 15,080
Fractional Undivided Interest in the Trust per Unit (1) 1/15,004 1/15,000 1/15,080
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900
Maximum Transactional Sales Charge of 2.65% of the
Public Offering Price per Unit (2.677% of the net amount
invested, exclusive of the deferred sales charge) (3) $ .265 $ .265 $ .265
Less Deferred Sales Charge per Unit $ (.165) $ (.165) $ (.165)
Public Offering Price per Unit (4) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.735 $ 9.735 $ 9.735
Redemption Price per Unit (based on aggregate underlying value
of Securities less the deferred sales charge) (5) $ 9.735 $ 9.735 $ 9.735
Estimated Net Annual Distribution per Unit (6) $ .3463 $ .2920 $ .4321
Cash CUSIP Number 30265X 302 30265X 344 30265X 385
Reinvestment CUSIP Number 30265X 310 30265X 351 30265X 393
Fee Accounts Cash CUSIP Number 30265X 328 30265X 369 30265X 401
Fee Accounts Reinvestment CUSIP Number 30265X 336 30265X 377 30265X 419
Security Code 59986 59990 59972
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date December 5, 2000
Mandatory Termination Date (7) December 31, 2001
Rollover Notification Date December 1, 2001
Special Redemption and Liquidation Period December 15, 2001 to December 31, 2001
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 2001.
Income Distribution Date (6) Last day of June and December, commencing June 30, 2001.
______________
<FN>
See "Notes to Summary of Essential Information" on page 5.
</FN>
</TABLE>
Page 3
Summary of Essential Information
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
The S&P The Nasdaq Value Line(R)
Target 10 Portfolio Target 15 Portfolio Target Portfolio
December December December
2000 Series 2000 Series 2000 Series
__________ __________ ________________
<S> <C> <C> <C>
Initial Number of Units (1) 15,005 15,002 15,003
Fractional Undivided Interest in the Trust per Unit (1) 1/15,005 1/15,002 1/15,003
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900
Maximum Transactional Sales Charge of 2.65% of the
Public Offering Price per Unit (2.677% of the net amount
invested, exclusive of the deferred sales charge) (3) $ .265 $ .265 $ .265
Less Deferred Sales Charge per Unit $ (.165) $ (.165) $ (.165
Public Offering Price per Unit (4) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.735 $ 9.735 $ 9.735
Redemption Price per Unit (based on aggregate underlying value
of Securities less the deferred sales charge) (5) $ 9.735 $ 9.735 $ 9.735
Estimated Net Annual Distribution per Unit (6) $ N.A. $ N.A. $ N.A.
Cash CUSIP Number 30265X 427 30265X 468 30265X 500
Reinvestment CUSIP Number 30265X 435 30265X 476 30265X 518
Fee Accounts Cash CUSIP Number 30265X 443 30265X 484 30265X 526
Fee Accounts Reinvestment CUSIP Number 30265X 450 30265X 492 30265X 534
Security Code 59994 60004 60008
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date December 5, 2000
Mandatory Termination Date (7) December 31, 2001
Rollover Notification Date December 1, 2001
Special Redemption and Liquidation Period December 15, 2001 to December 31, 2001
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 2001.
Income Distribution Date (6) Last day of June and December, commencing June 30, 2001.
______________
<FN>
See "Notes to Summary of Essential Information" on page 5.
</FN>
</TABLE>
Page 4
Summary of Essential Information
FT 474
At the Opening of Business on the Initial Date of Deposit-November 30, 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) Total Target
DART 5 Portfolio DART 10 Portfolio Portfolio
December December December
2000 Series 2000 Series 2000 Series
__________ __________ __________
<S> <C> <C> <C>
Initial Number of Units (1) 15,004 14,993 15,001
Fractional Undivided Interest in the Trust per Unit (1) 1/15,004 1/14,993 1/15,001
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900
Maximum Transactional Sales Charge of 2.65% of the
Public Offering Price per Unit (2.677% of the net amount
invested, exclusive of the deferred sales charge) (3) $ .265 $ .265 $ .265
Less Deferred Sales Charge per Unit $ (.165) $ (.165) $ (.165)
Public Offering Price per Unit (4) $ 10.000 $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.735 $ 9.735 $ 9.735
Redemption Price per Unit (based on aggregate underlying value
of Securities less the deferred sales charge) (5) $ 9.735 $ 9.735 $ 9.735
Estimated Net Annual Distribution per Unit (6) $ .2352 $ .2546 $ N.A.
Cash CUSIP Number 30265X 542 30265X 583 30265X 625
Reinvestment CUSIP Number 30265X 559 30265X 591 30265X 633
Fee Accounts Cash CUSIP Number 30265X 567 30265X 609 30265X 641
Fee Accounts Reinvestment CUSIP Number 30265X 575 30265X 617 30265X 658
Security Code 60012 60016 60020
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date December 5, 2000
Mandatory Termination Date (7) December 31, 2001
Rollover Notification Date December 1, 2001
Special Redemption and Liquidation Period December 15, 2001 to December 31, 2001
Income Distribution Record Date Fifteenth day of June and December, commencing June 15, 2001.
Income Distribution Date (6) Last day of June and December, commencing June 30, 2001.
_____________
<FN>
NOTES TO SUMMARY OF ESSENTIAL INFORMATION
(1) As of the close of business on December 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 transactional sales charge consists of an initial sales
charge and a deferred sales charge, but does not include the creation
and development fee. 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, The Nasdaq Target 15 Portfolio, the Value Line(R) Target
Portfolio or the Total Target 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
DECEMBER 2000 SERIES DECEMBER 2000 SERIES DECEMBER 2000 SERIES
_____________________ _____________________ _____________________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
UNIT HOLDER SALES FEES
(as a percentage of public offering price)
Maximum sales charge
Initial sales charge 1.00%(a) $.100 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge 1.65%(b) $.165 1.65%(b) $.165 1.65%(b) $.165
Creation and development fee cap over the Life of
the Trust 0.30%(c) $.030 0.30%(c) $.030 0.30%(c) $.030
(the annual creation and development fee is .30% ______ ______ ______ ______ ______ ______
of average daily net assets for the Trust, and is
only charged while a Unit holder remains invested)
Maximum Sales Charges (including creation and 2.95% $.295 2.95% $.295 2.95% $.295
development fee cap over the life of the Trust)(c) ====== ====== ====== ====== ====== ======
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated organization costs .135%(d) $.0135 .135%(d) $.0135 .205%(d) $.0205
====== ====== ====== ====== ====== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES(e)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .050% $.0050 .050% $.0050 .060% $.0060
Trustee's fee and other operating expenses .094%(f) .0094 .094%(f) .0094 .171%(f) .0171
______ ______ ______ ______ ______ ______
Total .144% $.0144 .144% $.0144 .231% $.0231
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
THE S&P TARGET THE NASDAQ VALUE LINE (R)
10 PORTFOLIO TARGET 15 PORTFOLIO TARGET PORTFOLIO
DECEMBER 2000 SERIES DECEMBER 2000 SERIES DECEMBER 2000 SERIES
_____________________ _____________________ ______________________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
UNIT HOLDER SALES FEES
(as a percentage of public offering price)
Maximum sales charge
Initial sales charge 1.00%(a) $.100 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge 1.65%(b) $.165 1.65%(b) $.165 1.65%(b) $.165
Creation and development fee cap over the Life of
the Trust 0.30%(c) $.030 0.30%(c) $.030 0.30%(c) $.030
(the annual creation and development fee is .30% ______ ______ ______ ______ ______ ______
of average daily net assets for the Trust, and is
only charged while a Unit holder remains invested)
Maximum Sales Charges (including creation and 2.95% $.295 2.95% $.295 2.95% $.295
development fee cap over the life of the Trust)(c) ====== ====== ====== ====== ====== ======
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated organization costs .165%(d) $.0165 .155%(d) $.0155 .190%(d) $.0190
====== ====== ====== ====== ====== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES(e)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .060% $.0060 .060% $.0060 .060% $.0060
Trustee's fee and other operating expenses .128%(f) .0128 .117%(f) .0117 .180%(f) .0180
______ ______ ______ ______ ______ ______
Total .188% $.0188 .177% $.0177 .240% $.0240
====== ====== ====== ====== ====== ======
</TABLE>
Page 6
<TABLE>
<CAPTION>
THE DOW(sm) THE DOW(sm) TOTAL TARGET
DART 5 PORTFOLIO DART 10 PORTFOLIO PORTFOLIO
DECEMBER 2000 SERIES DECEMBER 2000 SERIES DECEMBER 2000 SERIES
_____________________ _____________________ ____________________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
UNIT HOLDER TRANSACTION EXPENSES
(as a percentage of public offering price)
Maximum sales charge
Initial sales charge 1.00%(a) $.100 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge 1.65%(b) $.165 1.65%(b) $.165 1.65%(b) $.165
Creation and development fee cap over the Life of
the Trust 0.30%(c) $.030 0.30%(c) $.030 0.30%(c) $.030
(the annual creation and development fee is .30% ______ ______ ______ ______ ______ ______
of average daily net assets for the Trust, and is
only charged while a Unit holder remains invested)
Maximum Sales Charges (including creation and 2.95% $.295 2.95% $.295 2.95% $.295
development fee cap over the life of the Trust)(c) ====== ====== ====== ====== ====== ======
ORGANIZATION COSTS
(as a percentage of public offering price)
Estimated organization costs .180%(d) $.0180 .180%(d) $.0180 .200%(d) $.0200
====== ====== ====== ====== ====== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES(e)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative
and evaluation fees .060% $.0060 .060% $.0060 .060% $.0060
Trustee's fee and other operating expenses .098%(f) .0098 .098%(f) .0098 .132%(f) .0132
______ ______ ______ ______ ______ ______
Total .158% $.0158 .158% $.0158 .192% $.0192
====== ====== ====== ====== ====== ======
</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, December 2000 Series $323 $783 $1,269 $2,606
The Dow(sm) Target 10 Portfolio, December 2000 Series 323 783 1,269 2,606
Global Target 15 Portfolio, December 2000 Series 339 830 1,347 2,763
The S&P Target 10 Portfolio, December 2000 Series 330 805 1,306 2,680
The Nasdaq Target 15 Portfolio, December 2000 Series 328 799 1,295 2,659
Value Line(R)Target Portfolio, December 2000 Series 338 828 1,344 2,757
The Dow(sm) DART 5 Portfolio, December 2000 Series 329 801 1,298 2,665
The Dow(sm) DART 10 Portfolio, December 2000 Series 329 801 1,298 2,665
Total Target Portfolio, December 2000 Series 334 817 1,325 2,719
The example assumes that the principal amount and distributions are
rolled annually into a New Trust, and you are subject to a reduced
transactional sales charge.
_____________
<FN>
(a) The combination of the initial and deferred sales charge comprises
what we refer to as the "transactional sales charge." The initial sales
charge is actually equal to the difference between the maximum
transactional sales charge of 2.65% and any remaining deferred sales
charge.
(b) The deferred sales charge is a fixed dollar amount equal to $.165
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 January 19, 2001.
(c) The creation and development fee compensates the Sponsor for creating
and developing the Trusts. For as long as you own Units, this fee will
be accrued daily based on each Trust's net asset value at the annual
rate of .30%. You will only be charged the creation and development fee
while you own Units. Each Trust pays the amount of any accrued creation
and development fee to the Sponsor monthly from such Trust's assets.
Because the creation and development fee is accrued daily on the basis
of each Trust's current net asset value, if the value of your Units
increases, the annual creation and development fee as a percentage of
your initial investment would be greater than .30%. However, in no event
will we collect over the life of the Trust more than 0.30% of your
initial investment.
(d) Estimated organization costs will be deducted from the assets of
each Trust at the end of the initial offering period.
(e) Each of the fees listed herein is assessed on a fixed dollar amount
per Unit basis which, as a percentage of average net assets, will vary
over time.
(f) 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 474
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 474, comprised of The Dow (sm) Target 5
Portfolio, December 2000 Series; The Dow (sm) Target 10 Portfolio,
December 2000 Series; Global Target 15 Portfolio, December 2000 Series;
The S&P Target 10 Portfolio, December 2000 Series; The Nasdaq Target 15
Portfolio, December 2000 Series; Value Line(R) Target Portfolio,
December 2000 Series; The Dow (sm) Dividend And Repurchase Target 5
Portfolio, December 2000 Series; The Dow (sm) Dividend And Repurchase
Target 10 Portfolio, December 2000 Series; and Total Target Portfolio,
December 2000 Series as of the opening of business on November 30, 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
November 30, 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 474,
comprised of The Dow (sm) Target 5 Portfolio, December 2000 Series; The
Dow (sm) Target 10 Portfolio, December 2000 Series; Global Target 15
Portfolio, December 2000 Series; The S&P Target 10 Portfolio, December
2000 Series; The Nasdaq Target 15 Portfolio, December 2000 Series; Value
Line(R) Target Portfolio, December 2000 Series; The Dow (sm) Dividend
And Repurchase Target 5 Portfolio, December 2000 Series; The Dow (sm)
Dividend And Repurchase Target 10 Portfolio, December 2000 Series; and
Total Target Portfolio, December 2000 Series, at the opening of business
on November 30, 2000 in conformity with accounting principles generally
accepted in the United States.
ERNST & YOUNG LLP
Chicago, Illinois
November 30, 2000
Page 8
Statements of Net Assets
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 2000
<TABLE>
<CAPTION>
The Dow(sm) The Dow(sm) Global
Target 5 Portfolio Target 10 Portfolio Target 15 Portfolio
December December December
2000 Series 2000 Series 2000 Series
_____________ ____________ ___________________
<S> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $148,535 $148,495 $149,288
Less liability for reimbursement to Sponsor
for organization costs (3) (203) (203) (309)
Less liability for deferred sales charge (4) (2,476) (2,475) (2,488)
_________ _________ ________
Net assets $145,856 $145,817 $146,491
========= ========= =========
Units outstanding 15,004 15,000 15,080
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,035 $149,995 $150,796
Less maximum transactional sales charge (5) (3,976) (3,975) (3,996)
Less estimated reimbursement to Sponsor
for organization costs (3) (203) (203) (309)
_________ _________ ________
Net assets $145,856 $145,817 $146,491
========= ========= =========
__________
<FN>
See "Notes to Statements of Net Assets" on page 11.
</FN>
</TABLE>
Page 9
Statements of Net Assets
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 2000
<TABLE>
<CAPTION>
The S&P The Nasdaq Value Line(R)
Target 10 Target 15 Target
Portfolio Portfolio Portfolio
December December December
2000 Series 2000 Series 2000 Series
____________ ______________ _____________
<S> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $148,546 $148,521 $148,529
Less liability for reimbursement to Sponsor
for organization costs (3) (248) (233) (285)
Less liability for deferred sales charge (4) (2,476) (2,475) (2,475)
_________ _________ ________
Net assets $145,822 $145,813 $145,769
========= ========= =========
Units outstanding 15,005 15,002 15,003
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,046 $150,022 $150,030
Less maximum transactional sales charge (5) (3,976) (3,976) (3,976)
Less estimated reimbursement to Sponsor
for organization costs (3) (248) (233) (285)
_________ _________ ________
Net assets $145,822 $145,813 $145,769
========= ========= =========
__________
<FN>
See "Notes to Statements of Net Assets" on page 11.
</FN>
</TABLE>
Page 10
Statements of Net Assets
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 2000
<TABLE>
<CAPTION>
The Dow(sm) The Dow(sm) Total Target
DART 5 Portfolio DART 10 Portfolio Portfolio
December December December
2000 Series 2000 Series 2000 Series
____________ ______________ ___________
<S> <C> <C> <C>
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $148,541 $148,434 $148,513
Less liability for reimbursement to Sponsor
for organization costs (3) (270) (270) (300)
Less liability for deferred sales charge (4) (2,476) (2,474) (2,475)
________ ________ ________
Net assets $145,795 $145,690 $145,738
======== ======== ========
Units outstanding 15,004 14,993 15,001
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,041 $149,933 $150,013
Less maximum transactional sales charge (5) (3,976) (3,973) (3,975)
Less estimated reimbursement to Sponsor
for organization costs (3) (270) (270) (300)
________ ________ ________
Net assets $145,795 $145,690 $145,738
======== ======== ========
______________
<FN>
NOTES TO STATEMENTS OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit issued by The Chase Manhattan Bank,
of which $1,800,000 will be allocated among each of the nine Trusts in
FT 474, 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, $.0190, $.0180, $.0180 and $.0200 per
Unit for the Target 5 Portfolio, Target 10 Portfolio, Global Target 15
Portfolio, The S&P Target 10 Portfolio, The Nasdaq Target 15 Portfolio,
Value Line(R) Target Portfolio, DART 5 Portfolio, DART 10 Portfolio and
Total Target Portfolio, respectively. A payment will be made at the end
of the initial offering period to an account maintained by the Trustee
from which the obligation of the investors to the Sponsor will be
satisfied. To the extent that actual organization costs of a Trust are
greater than the estimated amount, only the estimated organization costs
added to the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of such Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions from a Trust ($.165 per Unit), payable to us in ten equal
monthly installments beginning on January 19, 2001 and on the twentieth
day of each month thereafter (or if such date is not a business day, on
the preceding business day) through October 19, 2001. If you redeem
Units before October 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
transactional sales charge (comprised of an initial and a deferred sales
charge) computed at the rate of 2.65% of the Public Offering Price
(equivalent to 2.677% of the net amount invested, exclusive of the
deferred sales charge), assuming no reduction of the transactional sales
charge as set forth under "Public Offering."
</FN>
</TABLE>
Page 11
Schedule of Investments
The Dow(sm) Target 5 Portfolio, December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 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>
1,563 T AT&T Corp. 20% $19.000 $ 29,697 4.63%
740 CAT Caterpillar Inc. 20% 40.125 29,692 3.39%
715 DD E.I. du Pont de Nemours & Company 20% 41.563 29,718 3.37%
840 IP International Paper Company 20% 35.375 29,715 2.83%
773 MO Philip Morris Companies, Inc. 20% 38.438 29,713 5.52%
_______ _________
Total Investments 100% $148,535
======= =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 21.
</FN>
</TABLE>
Page 12
Schedule of Investments
The Dow(sm) Target 10 Portfolio, December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 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>
782 T AT&T Corp. 10% $ 19.000 $ 14,858 4.63%
370 CAT Caterpillar Inc. 10% 40.125 14,846 3.39%
357 DD E.I. du Pont de Nemours & Company 10% 41.563 14,838 3.37%
349 EK Eastman Kodak Company 10% 42.563 14,854 4.14%
167 XOM Exxon Mobil Corporation 10% 88.938 14,853 1.98%
294 GM General Motors Corporation 10% 50.500 14,847 3.96%
420 IP International Paper Company 10% 35.375 14,857 2.83%
148 MMM Minnesota Mining & Manufacturing Company 10% 100.125 14,819 2.32%
386 MO Philip Morris Companies, Inc. 10% 38.438 14,837 5.52%
197 PG Procter & Gamble Company 10% 75.563 14,886 1.85%
_______ ________
Total Investments 100% $148,495
======= ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 21.
</FN>
</TABLE>
Page 13
Schedule of Investments
Global Target 15 Portfolio, December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 2000
<TABLE>
<CAPTION>
Percentage Cost of
Number of Aggregate Market Securities Current
of Offering Value per to the Dividend
Shares Name of Issuer of Securities (1) Price Share Trust (2) Yield (3)
______ _______________________________________ ___________ ________ ___________ ________
<C> <S> <C> <C> <C> <C>
DJIA COMPANIES:
_______________
521 AT&T Corp. 6.63% $19.000 $ 9,899 4.63%
247 Caterpillar Inc. 6.64% 40.125 9,911 3.39%
238 E.I. du Pont de Nemours & Company 6.63% 41.563 9,892 3.37%
280 International Paper Company 6.64% 35.375 9,905 2.83%
258 Philip Morris Companies, Inc. 6.64% 38.438 9,917 5.52%
FT INDEX COMPANIES:
___________________
1,803 British Airways Plc 6.63% 5.492 9,901 5.15%
3,965 Invensys Plc 6.63% 2.497 9,900 4.87%
3,587 Marks & Spencer Plc 6.63% 2.760 9,900 5.15%
2,209 The Peninsular and Oriental Steam Navigation Company 6.63% 4.482 9,900 4.89%
2,887 Tate & Lyle Plc 6.63% 3.429 9,899 6.73%
HANG SENG INDEX COMPANIES:
_________________________
11,500 Amoy Properties Ltd. 6.76% 0.878 10,099 5.26%
7,000 Cheung Kong Infrastructure Holdings Ltd. 7.06% 1.506 10,545 4.17%
13,000 Hang Lung Development Company Ltd. 6.81% 0.782 10,166 8.61%
15,000 Henderson Investment Ltd. 6.51% 0.647 9,711 4.55%
8,000 Hysan Development Co. Ltd. 6.53% 1.218 9,743 4.32%
_____ ________
Total Investments 100% $149,288
===== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 21.
</FN>
</TABLE>
Page 14
Schedule of Investments
The S&P Target 10 Portfolio, December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 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>
148 CAH Cardinal Health, Inc. 10% $100.375 $ 14,856
170 DUK Duke Energy Corporation 10% 87.250 14,833
307 DYN Dynegy Inc. 10% 48.313 14,832
229 EPG El Paso Energy Corporation 10% 64.938 14,871
211 ENE Enron Corp. 10% 70.313 14,836
426 LMT Lockheed Martin Corporation 10% 34.900 14,867
372 REI Reliant Energy, Inc. 10% 39.938 14,857
294 SPC The St. Paul Companies, Inc. 10% 50.500 14,847
353 THC Tenet Healthcare Corporation 10% 42.063 14,848
126 UNH UnitedHealth Group Incorporated 10% 118.250 14,899
______ ________
Total Investments 100% $148,546
====== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 21.
</FN>
</TABLE>
Page 15
Schedule of Investments
The Nasdaq Target 15 Portfolio, December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 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) (4)
______ _______________________________________ ___________ ________ _____________ _________________
<C> <S> <C> <C> <C> <C>
141 ADBE Adobe Systems Incorporated 6.10% $64.313 $ 9,068 $ 15,457
42 APOL Apollo Group, Inc. (Class A) 1.00% 35.484 1,490 2,668
164 BBBY Bed Bath & Beyond Inc. 2.37% 21.500 3,526 6,085
102 BMET Biomet, Inc. 2.68% 39.000 3,978 6,953
189 CIEN CIENA Corporation 9.35% 73.500 13,892 20,877
94 CTAS Cintas Corporation 3.30% 52.078 4,895 8,783
123 CEFT Concord EFS, Inc. 3.65% 44.063 5,420 9,516
50 GENZ Genzyme Corporation (General Division) 3.01% 89.313 4,466 7,768
63 MLHR Herman Miller, Inc. 1.01% 23.750 1,496 1,824
1,637 ORCL Oracle Corporation 24.99% 22.672 37,114 126,905
208 PAYX Paychex, Inc. 8.31% 59.375 12,350 22,103
85 SANM Sanmina Corporation 5.04% 88.000 7,480 13,322
41 SIAL Sigma-Aldrich Corporation 1.00% 36.250 1,486 2,799
105 SBUX Starbucks Corporation 3.22% 45.484 4,776 8,509
465 SUNW Sun Microsystems, Inc. 24.97% 79.750 37,084 128,397
______ ________
Total Investments 100% $148,521
====== ========
______________
<FN>
See "Notes to Schedules of Investments" on page 21.
</FN>
</TABLE>
Page 16
Schedule of Investments
Value Line(R) Target Portfolio, December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 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>
37 BARZ BARRA, Inc. 1.50% $ 60.063 $ 2,222
313 CAE CN CAE, Inc. (5) 2.86% 13.598 4,256
83 CAKE The Cheesecake Factory Incorporated 2.45% 43.813 3,636
226 CRUS Cirrus Logic, Inc. 4.72% 31.000 7,006
37 DP Diagnostic Products Corporation 1.12% 45.125 1,670
81 EDMC Education Management Corporation 1.91% 35.047 2,839
39 IMPH IMPATH Inc. 1.06% 40.359 1,574
299 IDTI Integrated Device Technology, Inc. 7.47% 37.125 11,100
39 KEI Keithley Instruments, Inc. 1.01% 38.500 1,502
92 LH Laboratory Corporation of America Holdings 8.56% 138.250 12,719
141 MND Mitchell Energy & Development Corp. 4.63% 48.750 6,874
301 OMM OMI Corporation 1.00% 4.938 1,486
181 OO Oakley, Inc. 2.38% 19.500 3,529
137 OCA Orthodontic Centers of America, Inc. 2.76% 29.938 4,102
231 OXHP Oxford Health Plans, Inc. 5.89% 37.875 8,749
40 PKE Park Electrochemical Corp. 1.05% 38.938 1,558
68 PPDI Pharmaceutical Product Development, Inc. 1.70% 37.125 2,525
286 PIR Pier 1 Imports, Inc. 2.12% 11.000 3,146
134 PLT Plantronics, Inc. 3.43% 38.000 5,092
140 PCP Precision Castparts Corp. 3.33% 35.313 4,944
128 DGX Quest Diagnostics Incorporated 8.85% 102.750 13,152
178 TLB The Talbots, Inc. 5.82% 48.563 8,644
98 TOL Toll Brothers, Inc. 2.62% 39.688 3,889
72 UHS Universal Health Services, Inc. (Class B) 4.70% 96.875 6,975
362 WAT Waters Corporation 17.06% 70.000 25,340
_______ ________
Total Investments 100% $148,529
======= ========
___________
<FN>
See "Notes to Schedules of Investments" on page 21.
</FN>
</TABLE>
Page 17
Schedule of Investments
The Dow(sm) Dividend And Repurchase Target 5 Portfolio,
December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 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>
698 EK Eastman Kodak Company 20% $ 42.563 $ 29,709 4.14%
859 HWP Hewlett-Packard Company 20% 34.563 29,690 0.93%
297 MMM Minnesota Mining & Manufacturing Company 20% 100.125 29,737 2.32%
773 MO Philip Morris Companies, Inc. 20% 38.438 29,713 5.52%
428 UTX United Technologies Corporation 20% 69.375 29,692 1.30%
______ ________
Total Investments 100% $148,541
===== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 21.
</FN>
</TABLE>
Page 18
Schedule of Investments
The Dow(sm) Dividend And Repurchase Target 10 Portfolio,
December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 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>
782 T AT&T Corp. 10% $ 19.000 $ 14,858 4.63%
212 BA The Boeing Company 10% 69.938 14,827 0.80%
370 CAT Caterpillar Inc. 10% 40.125 14,846 3.39%
357 DD E.I. du Pont de Nemours & Company 10% 41.563 14,838 3.37%
349 EK Eastman Kodak Company 10% 42.563 14,854 4.14%
294 GM General Motors Corporation 10% 50.500 14,847 3.96%
430 HWP Hewlett-Packard Company 10% 34.563 14,862 0.93%
148 MMM Minnesota Mining & Manufacturing Company 10% 100.125 14,819 2.32%
386 MO Philip Morris Companies, Inc. 10% 38.438 14,837 5.52%
214 UTX United Technologies Corporation 10% 69.375 14,846 1.30%
_____ ________
Total Investments 100% $148,434
===== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 21.
</FN>
</TABLE>
Page 19
Schedule of Investments
Total Target Portfolio, December 2000 Series
FT 474
At the Opening of Business on the
Initial Date of Deposit-November 30, 2000
<TABLE>
<CAPTION>
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
<C> <S> <C> <C> <C>
Dow(sm) DART 5 Strategy Stocks (33.37%):
____________________________________
233 EK Eastman Kodak Company 6.68% $ 42.563 $ 9,917
286 HWP Hewlett-Packard Company 6.66% 34.563 9,885
99 MMM Minnesota Mining & Manufacturing Company 6.67% 100.125 9,912
258 MO Philip Morris Companies, Inc. 6.68% 38.438 9,917
143 UTX United Technologies Corporation 6.68% 69.375 9,921
S&P Target 10 Strategy Stocks (33.29%):
____________________________________
49 CAH Cardinal Health, Inc. 3.31% 100.375 4,918
57 DUK Duke Energy Corporation 3.35% 87.250 4,973
102 DYN Dynegy Inc. 3.32% 48.313 4,928
76 EPG El Paso Energy Corporation 3.32% 64.938 4,935
70 ENE Enron Corp. 3.31% 70.313 4,922
142 LMT Lockheed Martin Corporation 3.34% 34.900 4,956
124 REI Reliant Energy, Inc. 3.33% 39.938 4,952
98 SPC The St. Paul Companies, Inc. 3.33% 50.500 4,949
118 THC Tenet Healthcare Corporation 3.34% 42.063 4,963
42 UNH UnitedHealth Group Incorporated 3.34% 118.250 4,966
Nasdaq Target 15 Strategy Stocks (33.34%):
____________________________________
47 ADBE Adobe Systems Incorporated 2.04% 64.313 3,023
14 APOL Apollo Group, Inc. (Class A) 0.33% 35.484 497
55 BBBY Bed Bath & Beyond Inc. 0.80% 21.500 1,183
34 BMET Biomet, Inc. 0.89% 39.000 1,326
63 CIEN CIENA Corporation 3.12% 73.500 4,631
31 CTAS Cintas Corporation 1.09% 52.078 1,614
41 CEFT Concord EFS, Inc. 1.22% 44.063 1,807
17 GENZ Genzyme Corporation (General Division) 1.02% 89.313 1,518
21 MLHR Herman Miller, Inc. 0.34% 23.750 499
546 ORCL Oracle Corporation 8.34% 22.672 12,379
69 PAYX Paychex, Inc. 2.76% 59.375 4,097
28 SANM Sanmina Corporation 1.66% 88.000 2,464
14 SIAL Sigma-Aldrich Corporation 0.34% 36.250 508
35 SBUX Starbucks Corporation 1.07% 45.484 1,592
155 SUNW Sun Microsystems, Inc. 8.32% 79.750 12,361
_______ _________
Total Investments 100% $148,513
======= =========
______________
<FN>
See "Notes to Schedules of Investments" on page 21.
Page 20
NOTES TO SCHEDULES OF INVESTMENTS
(1) All Securities are represented by regular way contracts to purchase
such Securities which are backed by an irrevocable letter of credit
deposited with the Trustee. We entered into purchase contracts for the
Securities on November 30, 2000. Each Trust has a Mandatory Termination
Date of December 31, 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 November 29, 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, December 2000 Series $147,470 $1,065
The Dow(sm) Target 10 Portfolio, December 2000 Series 147,568 927
Global Target 15 Portfolio, December 2000 Series 149,632 (344)
The S&P Target 10 Portfolio, December 2000 Series 148,558 (12)
The Nasdaq Target 15 Portfolio, December 2000 Series 143,965 4,556
Value Line(R) Target Portfolio, December 2000 Series 145,747 2,782
The Dow(sm) DART 5 Portfolio, December 2000 Series 147,286 1,255
The Dow(sm) DART 10 Portfolio, December 2000 Series 147,052 1,382
Total Target Portfolio, December 2000 Series 146,581 1,932
(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) Market capitalization is based on the market value as of the close of
business on November 29, 2000.
(5) This Security represents the common stock of a Canadian company which
trades on the Toronto Stock Exchange.
</FN>
</TABLE>
Page 21
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
474, consists of nine 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
- Value Line(R) Target Portfolio
- The Dow(sm) DART 5 Portfolio
- The Dow(sm) DART 10 Portfolio
- Total Target Portfolio
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.
Trusts containing primarily 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.
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").
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 (as set forth in "Schedule of Investments"
for each Trust), 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 Trusts pay the associated brokerage fees. To reduce this
dilution, the Trusts will try to buy the Securities as close to the
Evaluation Time and as close to the evaluation price as possible. In
addition, because the Trusts pay the brokerage fees associated with the
creation of new Units and with the sale of Securities to meet redemption
and exchange requests, frequent redemption and exchange activity will
likely result in higher brokerage expenses.
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 transactional sales charge
resulting from the failed contract on the next Income Distribution Date.
Page 22
Any Replacement Security a Trust acquires will be identical to those
from the failed contract.
Portfolios
Objectives.
When you invest in a Trust you are purchasing a quality portfolio of
attractive common stocks in one convenient purchase. 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. 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 10 highest dividend-yielding stocks from this
group.
Step 3:From the 10 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 10 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 10 highest dividend-yielding stocks in each
respective index.
Step 3: We select the five stocks with the lowest per share stock price
of the 10 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 Stock 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 one-year stock price
appreciation are selected for The S&P Target 10 Portfolio.
During the initial offering period The S&P Target 10 Portfolio will not
Page 23
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.
Value Line(R) Target Portfolio Strategy.
The Value Line(R) Target Portfolio invests in 25 of the 100 stocks that
Value Line(R) gives a #1 ranking for Timeliness(TM) which have recently
exhibited certain positive financial attributes. Value Line(R) ranks
1,700 stocks which represent approximately 94% of the trading volume on
all U.S. stock exchanges. Of these 1,700 stocks, only 100 are given
their #1 ranking for Timeliness(TM), which measures Value Line's view of
their probable price performance during the next six to 12 months
relative to the others. Value Line(R) bases their rankings on a long-
term trend of earnings, prices, recent earnings, price momentum, and
earnings surprise. The Value Line Target Portfolio is determined as
follows:
Step 1:We start with the 100 stocks which Value Line(R) at the initial
date of deposit gives their #1 ranking for Timeliness(TM), remove the
stocks of companies considered to be securities related issuers and
apply the following screens as of two business days prior to the date of
this prospectus.
Step 2:We screen for consistent growth by ranking these remaining stocks
based on 12-month and 6-month price appreciation (best [1] to worst
[100]).
Step 3:We then screen for profitability by ranking the stocks by their
return on assets.
Step 4:Finally, we screen for value by ranking the stocks based on their
price to cash flow.
Step 5:We add up the numerical ranks achieved by each company in the
above steps and select the 25 stocks with the lowest sums for the Value
Line(R) Target Portfolio.
The stocks which comprise the Value Line(R) Target Portfolio are
weighted by market capitalization subject to the restriction that no
stock will comprise less than 1% or 25% or more of the portfolio on the
date of this prospectus. The Securities will be adjusted on a
proportionate basis to accommodate this constraint.
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."
Page 24
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 10 stocks with the highest combined dividend
yields and buyback ratios.
Step 3: From the 10 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 10 stocks with the highest combined dividend
yields and buyback ratios for The Dow(sm) DART 10 Portfolio.
Total Target Portfolio Strategy.
The objective of the Total Target Portfolio is to provide an above-
average total return through an investment in the common stocks of
companies which are selected by applying three of the strategies
described previously, the Dow(sm) DART 5 Strategy, the S&P Target 10
Strategy and the Nasdaq Target 15 Strategy. While each of these
strategies also seeks to provide an above-average total return, each
follows a different investment strategy. The Trust seeks to outperform
the combined return of the DJIA, the S&P 500 Index and the Nasdaq 100
Index(R). The Trust's objective is to offer enhanced performance over a
pure value strategy while reducing the potential risk of a pure growth
strategy. We believe that this may provide investors with a better
opportunity to succeed regardless of which investment style prevails
moving forward. With the Total Target Strategy investors have the
ability to capture the broader market, a convenient blend of old and new
economy stocks. The Securities which comprise each of the three
strategies which make up the Total Target Portfolio were chosen by
applying the same selection criteria applicable to the individual
strategies. The composition of the Total Target Portfolio on the date of
this prospectus is as follows:
- Approximately 1/3 common stocks which comprise the Dow(sm) DART 5
Strategy;
- Approximately 1/3 common stocks which comprise the S&P Target 10
Strategy; and
- Approximately 1/3 common stocks which comprise the Nasdaq Target 15
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.
"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, The Dow(sm) DART 10
Portfolio and the Total Target 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. Neither the
S&P Target 10 Portfolio nor the Total Target Portfolio is sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's
makes no representation regarding the advisability of investing in such
Trusts. Please see the Information Supplement which sets forth certain
additional disclaimers and limitations of liabilities on behalf of
Standard & Poor's.
The "Nasdaq 100(R)," "Nasdaq 100 Index(R)," and "Nasdaq(R)" 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.
Neither The Nasdaq Target 15 Portfolio nor the Total Target Portfolio
has been passed on by the Corporations as to its legality or
suitability. Neither The Nasdaq Target 15 Portfolio nor the Total Target
Portfolio is 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 or the Total Target Portfolio.
Page 25
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
Timeliness(TM) Ranking System" are registered trademarks of Value Line
Securities, Inc. or Value Line Publishing, Inc. that have been licensed
to Nike Securities L.P. The Value Line(R) Target Portfolio is not
sponsored, recommended, sold or promoted by Value Line Publishing, Inc.
Value Line, Inc. or Value Line Securities, Inc. ("Value Line"). Value
Line makes no representation regarding the advisability of investing in
the Trust.
Dow Jones, Standard & Poor's, The Nasdaq Stock Market, Inc. and Value
Line, 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. In addition, common stock prices may
be particularly sensitive to rising interest rates, as the cost of
capital rises and borrowing costs increase.
Certain of the Securities in certain of the Trusts are issued by
companies with market capitalizations of less than $1 billion. The share
prices of these small-cap companies are often more volatile than those
of larger companies as a result of several factors common to many such
issuers, including limited trading volumes, products or financial
resources, management inexperience and less publicly available
information.
Because the Trusts are not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of any Trust will be positive over any period of time,
especially the relatively short 13-month life of the Trusts, 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.
Two of the Securities in The Nasdaq Target 15 represent approximately
50% of the value of such Trust. If these stocks decline in value you
may lose a substantial portion of your investment.
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.
Energy Industry. Because more than 25% of The S&P Target 10 Portfolio is
invested in companies that explore for, produce, refine, distribute or
sell petroleum or gas products, or provide parts or services to
petroleum or gas companies, this Trust is considered to be concentrated
in the energy industry. A portfolio concentrated in a single industry
may present more risks than a portfolio broadly diversified over several
industries. General problems of the petroleum and gas products industry
include volatile fluctuations in price and supply of energy fuels,
Page 26
international politics, reduced demand as a result of increases in
energy efficiency and energy conservation, the success of exploration
projects, clean-up and litigation costs relating to oil spills and
environmental damage, and tax and other regulatory policies of various
governments. Oil production and refining companies are subject to
extensive federal, state and local environmental laws and regulations
regarding air emissions and the disposal of hazardous materials. In
addition, declines in U.S. and Russian crude oil production will likely
lead to a greater world dependence on oil from OPEC nations which may
result in more volatile oil prices.
Healthcare Industry. The S&P Target 10 Portfolio is also considered to be
concentrated in the healthcare industry. General risks of such companies
involve extensive competition, generic drug sales or the loss of patent
protection, product liability litigation and increased government
regulation. Research and development costs of bringing new drugs to
market are substantial, and there is no guarantee that the product will
ever come to market. Healthcare facility operators may be affected by
the demand for services, efforts by government or insurers to limit
rates, restriction of government financial assistance and competition
from other providers.
Technology Industry. The Nasdaq Target 15 Portfolio is considered to be
concentrated in technology stocks. Technology companies are generally
subject to the risks of rapidly changing technologies; short product
life cycles; fierce competition; aggressive pricing and reduced profit
margins; the loss of patent, copyright and trademark protections;
cyclical market patterns; evolving industry standards and frequent new
product introductions. Technology companies may be smaller and less
experienced companies, with limited product lines, markets or financial
resources and fewer experienced management or marketing personnel.
Technology company stocks, especially those which are Internet-related,
have experienced extreme price and volume fluctuations that are often
unrelated to their operating performance. Also, the stocks of many
Internet companies have exceptionally high price-to-earnings ratios with
little or no earnings histories.
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.
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
Page 27
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,
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 Trusts containing
securities of foreign issuers) 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 11 of the 15 EU members
of their national currencies to the euro could negatively impact the
market rate of exchange between such currencies (or the newly
created euro) and the U.S. dollar.
To determine the value of foreign Securities or their dividends, the
Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, these markets can be quite volatile, depending on the activity
of the large international commercial banks, various central banks,
large multi-national corporations, speculators and other buyers and
sellers of foreign currencies. Since actual foreign currency
transactions may not be instantly reported, the exchange rates estimated
by the Evaluator may not reflect the amount the Trusts would receive,
in U.S. dollars, had the Trustee sold any particular currency in
the market.
Hypothetical Performance Information
The following 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; a
combination of the FT Index, Hang Seng Index and the DJIA (the
"Cumulative International Index Returns") and a combination of the DJIA,
S&P 500 Index and Nasdaq 100 Index (the "Cumulative Domestic 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 commissions 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 their respective strategy or strategies.
- 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 or strategies 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
Page 28
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.
Financial Times Industrial Ordinary Share Index. The FT Index consists
of 30 common stocks chosen by the editors of The Financial Times as
being representative of British industry and commerce.
Hang Seng Index. The Hang Seng Index consists of 33 of the stocks
currently listed on the Stock Exchange of Hong Kong Ltd. and is intended
to represent four major market sectors: commerce and industry, finance,
property and utilities.
Page 29
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN(2)
(Strategy figures reflect the deduction of sales charges and expenses but not brokerage commissions or taxes.)
Hypothetical Strategy Total Returns(1)
___________________________________________________________________________________________________________
Global The S&P The Nasdaq Value Line(R) The Dow(sm) The Dow(sm) Total
Target 5 Target 10 Target 15 Target 10 Target 15 Target DART 5 DART 10 Target
Year Strategy Strategy Strategy Strategy Strategy Strategy Strategy Strategy Strategy
____ ________ _________ _________ _________ __________ _____________ ___________ ___________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1972 19.27% 20.09% 14.53% 20.03%
1973 17.59% 1.72% 8.43% -4.55%
1974 -7.60% -3.26% -0.12% -9.36%
1975 62.01% 53.40% 45.03% 54.99%
1976 38.37% 32.63% 27.53% 32.56%
1977 3.19% -4.18% 1.02% -4.24%
1978 -1.04% -2.22% 8.59% -4.24%
1979 7.50% 10.65% 15.17% 10.58%
1980 39.09% 25.41% 48.14% 49.86% 41.33% 22.27%
1981 0.91% 5.14% -2.38% -12.81% -8.27% -0.31%
1982 40.77% 24.64% -5.15% 35.56% 19.57% 24.91%
1983 33.83% 36.49% 13.05% 17.51% 34.39% 37.78%
1984 8.77% 3.91% 27.20% 13.86% 10.97% 3.85%
1985 35.77% 27.04% 51.18% 40.79% 31.99% 40.56% 36.66%
1986 28.38% 33.08% 35.36% 19.29% 19.23% 20.01% 46.76% 39.28% 27.48%
1987 8.34% 3.28% 14.94% 6.75% 11.67% 16.77% 3.67% 2.88% 7.31%
1988 19.04% 22.11% 21.63% 17.84% -2.89% -8.11% 15.92% 16.54% 10.23%
1989 8.20% 24.49% 13.42% 36.95% 34.71% 46.28% 37.50% 25.93% 36.33%
1990 -17.85% -10.00% 0.75% -7.91% -7.65% 3.41% 3.42% -1.05% -4.10%
1991 59.28% 31.66% 37.63% 22.10% 106.12% 84.57% 39.91% 41.16% 55.97%
1992 20.45% 5.37% 23.99% 22.12% -2.45% -2.48% 10.48% 6.14% 9.99%
1993 31.47% 24.60% 62.67% 39.47% 26.00% 25.26% 17.40% 18.65% 27.56%
1994 5.95% 1.92% -9.60% 5.77% 8.10% 13.86% -7.99% -2.14% 1.91%
1995 27.99% 34.29% 10.91% 22.71% 51.05% 52.64% 43.88% 35.50% 39.15%
1996 23.73% 25.86% 18.39% 24.05% 57.23% 54.85% 32.83% 32.32% 37.97%
1997 17.55% 19.24% -8.73% 58.63% 32.54% 34.45% 19.18% 23.11% 36.72%
1998 10.01% 8.24% 10.96% 51.07% 119.86% 91.49% 24.88% 17.47% 65.19%
1999 -9.46% 2.76% 6.39% 1.13% 97.46% 106.50% 17.33% 16.00% 38.56%
2000 -15.58% -9.22% -14.52% -12.01% 39.51% 28.61% -7.51% -3.01% 6.62%
(thru
9/29)
</TABLE>
<TABLE>
<CAPTION>
Index Total Returns
___________________________________________________________________________________
Cumulative Cumulative
International Domestic
Hang Seng S&P 500 Nasdaq Index Index
Year DJIA FT Index Index Index 100 Index Returns(3) Returns(4)
____ _____ ________ _________ _______ _________ _____________ __________
<S> <C> <C> <C> <C> <C> <C> <C>
1972 18.38% 18.89%
1973 -13.20% -14.57%
1974 -23.64% -26.33%
1975 44.46% 36.84%
1976 22.80% 23.64%
1977 -12.91% -7.25%
1978 2.66% 6.49%
1979 10.60% 18.22%
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% 17.40%
1987 5.66% 37.13% -6.84% 5.33% 10.49% 11.99% 7.16%
1988 16.03% 9.00% 21.04% 16.64% 13.54% 15.36% 15.41%
1989 32.09% 20.07% 10.59% 31.35% 26.17% 20.92% 29.87%
1990 -0.73% 11.03% 11.71% -3.30% -10.41% 7.34% -4.82%
1991 24.19% 8.77% 50.68% 30.40% 64.99% 27.88% 39.85%
1992 7.39% -3.13% 34.73% 7.62% 8.86% 12.99% 7.96%
1993 16.87% 19.22% 124.95% 9.95% 11.67% 53.68% 12.83%
1994 5.03% 1.97% -29.34% 1.34% 1.74% -7.45% 2.71%
1995 36.67% 16.21% 27.52% 37.22% 43.01% 26.80% 38.96%
1996 28.71% 18.35% 37.86% 22.82% 42.74% 28.31% 31.42%
1997 24.82% 14.78% -17.69% 33.21% 20.76% 7.30% 26.26%
1998 18.03% 12.32% -2.60% 28.57% 85.43% 9.25% 44.01%
1999 27.06% 15.14% 71.34% 20.94% 102.08% 37.85% 50.02%
2000 -6.28% -23.31% -6.27% -1.39% -3.68% -11.95% -3.78%
(thru
9/29)
____________
<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 12/31/79 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 Value Line(R) Target Strategy, The
Dow(sm) DART 5 Strategy, The Dow(sm) DART 10 Strategy and the Total
Target Strategy achieved an average annual total return of 17.47%,
15.37%, 16.95%, 21.75%, 34.00%, 34.25%, 19.04%, % and 26.35%,
respectively. In addition, over each stated period, each individual
strategy, except the Global Target 15 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 International Index"); the S&P 500 Index; the Nasdaq 100
Index; and the combination of the DJIA, the S&P 500 Index and the Nasdaq
100 Index (the "Cumulative Domestic Index") which were 13.91%, 18.25%,
13.96%, 27.06% and 21.70%, respectively.
(3) Cumulative International Index Returns represent the weighted
average of the annual returns of the stocks contained in the FT Index,
Hang Seng Index and DJIA. The Cumulative International Index Returns are
weighted in the same proportions as the index components appear in the
Global Target 15 Portfolio. For instance, the Cumulative International
Index is weighted as follows: DJIA, 33-1/3%; FT Index, 33-1/3%; Hang
Seng Index, 33-1/3%. Cumulative International Index Returns do not
represent an actual index.
(4)Cumulative Domestic Index Returns represent the weighted average of
the annual returns of the stocks contained in the DJIA, S&P 500 Index
and Nasdaq 100 Index. The Cumulative Domestic Index Returns are weighted
in the same proportions as the index components appear in the Total
Target Portfolio. For instance, the Cumulative Domestic Index is
weighted as follows: DJIA, 33-1/3%; S&P 500 Index, 33-1/3%; Nasdaq 100
Index, 33-1/3%. Cumulative Domestic Index Returns do not represent an
actual index.
</FN>
</TABLE>
Page 30
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 maximum transactional sales charge (which combines an initial
upfront sales charge and a deferred sales charge).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities, 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 "Notes to 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).
Transactional Sales Charge.
The transactional 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 equal to the difference between the maximum
transactional sales charge of 2.65% of the Public Offering Price and the
maximum remaining deferred sales charge (initially $.165 per Unit). This
initial sales charge is initially equal to approximately 1.00% of the
Public Offering Price of a Unit, but will vary from 1.00% depending on
the purchase price of your Units and as deferred sales charge payments
are made. When the Public Offering Price per Unit exceeds $10.00, the
initial sales charge will exceed 1.00% of the Public Offering Price.
Monthly Deferred Sales Charge. In addition, ten monthly deferred sales
charges of $.0165 per Unit will be deducted from a Trust's assets on
approximately the twentieth day of each month from January 19, 2001
through October 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 1.65% of the Public Offering Price.
Page 31
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for "Fee
Accounts" as described below) the maximum transactional sales charge is
reduced, as follows:
If you invest Your maximum
(in thousands)* transactional
sales charge
will be
_______________ ____________
$50 but less than $100 2.40%
$100 but less than $150 2.15%
$150 but less than $500 1.80%
$500 but less than $1,000 1.65%
$1,000 or more 0.90%
*Breakpoint transactional 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 transactional 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 transactional 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 transactional sales charge. Any reduced
transactional 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
transactional sales charge set forth above on all individual purchases
over $83,000.
You may use your Rollover proceeds from a previous series of a Trust to
purchase Units of a Trust at the Public Offering Price less 1.00% (for
Rollover purchases of $1,000,000 or more, the deferred sales charge will
be limited to 0.90% of the Public Offering Price), but you will not be
eligible to receive the reduced transactional 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 Trust during the initial offering
period at the Public Offering Price less 1.00%. Please note that any
deferred sales charge remaining on units you redeem to buy Units of
these Trusts will be deducted from those redemption proceeds.
Investors purchasing 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 or comparable services as part of an investment account where a
comprehensive "wrap fee" or similar charge is imposed ("Fee Accounts")
will not be assessed the transactional sales charge described in this
section on the purchase of Units. We reserve the right to limit or deny
purchases of Units not subject to the transactional sales charge by
investors whose frequent trading activity we determine to be detrimental
to the Trusts.
Employees, officers and directors (and immediate family members) of the
Sponsor, our related companies, dealers and their affiliates, and
vendors providing services to us may purchase Units at the Public
Offering Price less the applicable dealer concession. Immediate family
members include 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").
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 transactional sales charge you must pay is less than the
applicable maximum deferred sales charge, including Fee Accounts Units,
you will be credited the difference between your maximum transactional
sales charge and the maximum deferred sales charge at the time you buy
your Units. If you elect to have distributions reinvested into
additional Units of your Trust, in addition to the reinvestment Units
you receive you will also be credited additional Units with a dollar
value at the time of reinvestment sufficient to cover the amount of any
Page 32
remaining deferred sales charge to be collected on such reinvestment
Units. The dollar value of these additional credited Units (as with all
Units) will fluctuate over time, and may be less on the dates deferred
sales charges are collected than their value at the time they were issued.
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 non-U.S. listed Securities during the initial
offering period is computed on the basis of the offering side
value of the relevant currency exchange rate expressed in
U.S. dollars as of the Evaluation Time.
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 non-
U.S. listed 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, for Units subject to a transactional
sales charge which are purchased using redemption or termination
proceeds or on purchases by Rollover Unit holders, this amount will be
reduced to 1.3% of the sales price of these Units (0.5% for Rollover
purchases of $1,000,000 or more).
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 will not receive a concession on the
sale of Units which are not subject to the transactional sales charge,
but such Units will be included in determining whether the above volume
sales levels are met. 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
Page 33
the Trusts available to their customers on an agency basis. A portion of
the transactional sales charge paid by these customers is kept by or
given to the banks in the amounts shown above.
Award Programs.
From time to time we may sponsor programs which provide awards to a
dealer's registered representatives who have sold a minimum number of
Units during a specified time period. We may also pay fees to qualifying
dealers for services or activities which are meant to result in sales of
Units of the Trusts. In addition, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable transactional 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 indexes, corporate or U.S. Government bonds, bank CDs and money
market accounts or funds, (2) performance data from Morningstar
Publications, Inc. or (3) information from publications such as Money,
The New York Times, U.S. News and World Report, 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
transactional sales charge per Unit for each Trust less any reduction as
stated in "Public Offering." We will also receive the amount of any
accrued and collected creation and development fee. Also, any difference
between our cost to purchase the Securities and the price at which we
sell them to a Trust is considered a profit or loss (see Note 2 of
"Notes to Schedules of Investments"). During the initial offering
period, dealers and others may also realize profits or sustain losses as
a result of fluctuations in the Public Offering Price they receive when
they sell the Units.
In maintaining a market for the Units, any difference between the price
at which we purchase Units and the price at which we sell or redeem them
will be a profit or loss to us.
The Secondary Market
Although not obligated, we intend to maintain a market for the Units
after the initial offering period and continuously offer to purchase
Units at prices based on the Redemption Price per Unit.
We will pay all expenses to maintain a secondary market, except the
Evaluator fees 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 at that time is equal to or greater than the Redemption Price per
Unit, we may purchase the Units. You will receive your proceeds from the
sale no later than if they were redeemed by the Trustee. We may tender
Units that we hold to the Trustee for redemption as any other Units. If
we elect not to purchase Units, the Trustee may sell tendered Units in
the over-the-counter market, if any. However, the amount you will
receive is the same as you would have received on redemption of the Units.
Expenses and Charges
The estimated annual expenses of each Trust are listed under "Fee
Table." If actual expenses of a Trust exceed the estimate, that Trust
will bear the excess. The Trustee will pay operating expenses of the
Trusts from the Income Account of such Trust if funds are available, and
then from the Capital Account. The Income and Capital Accounts are
Page 34
noninterest-bearing to Unit holders, so the Trustee may earn interest on
these funds, thus benefiting from their use.
As Sponsor, we will be compensated for providing bookkeeping and other
administrative services to the Trusts, and will receive brokerage fees
when a Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. 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 services 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. The "creation and development fee" is accrued
(and becomes a liability of each Trust) on a daily basis. The dollar
amount of the creation and development fee accrued each day, which will
vary with fluctuations in a Trust's net asset value, is determined by
multiplying the net asset value of the Trust on that day by 1/365 of the
annual creation and development fee of .30%. The total amount of any
accrued but unpaid creation and development fee is paid to the Sponsor
on a monthly basis from the assets of your Trust. If you redeem your
Units, you will only be responsible for any accrued and unpaid creation
and development fee through the date of redemption. In connection with
the creation and development fee, in no event will the Sponsor collect
over the life of the Trusts more than .30% 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 those 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, The Nasdaq
Stock Market, Inc. and/or Value Line;
- 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
Page 35
section does not describe your state or foreign taxes. As with any
investment, you should consult your own tax professional about your
particular consequences.
Trust Status.
The Trusts will not be taxed as corporations for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Securities and other assets held by a Trust, and as
such you will be considered to have received a pro rata share of income
(i.e., dividends and capital gains, if any) from each Security when such
income is considered to be received by a Trust. This is true even if you
elect to have your distributions automatically reinvested into
additional Units. In addition, the income from the Trust which you must
take into account for federal income tax purposes is not reduced for
amounts used to pay Trust expenses (including the deferred sales charge,
if any).
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
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). For tax years beginning after December 31, 2000, the 20%
rate is reduced to 18% and the 10% rate is reduced to 8% for long-term
gains from most property held for more than five years. Because the
Trusts have a maturity of approximately 13 months, the reduction in the
capital gains rate for property held for more than five years could only
possibly apply to your interest in the securities if you are eligible
for and elect to receive an in-kind distribution at redemption or
termination. However, the reduction of the 20% rate to 18% applies only
if the holding period for the property begins after December 31, 2000.
Therefore, you will not be eligible for the 18% capital gain rate on
assets for which your holding period began before January 1, 2001.
However, if you are an individual, you may elect to treat certain assets
you hold on January 1, 2001 as having been sold for their fair market
value on the next business day after January 1, 2001 for purposes of
this holding period requirement. If you make this election for an asset,
the asset would be eligible for the 18% rate if it is held by you for
more than five years after this deemed sale. If you make this election,
you must recognize any gain from this deemed sale, but any loss is not
recognized. Net capital gain equals net long-term capital gain minus net
short-term capital loss for the taxable year. 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 (except for Fee Accounts) 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
Page 36
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% of the gross income of
the foreign corporation over the three-year period ending with the close
of the taxable year preceding payment was effectively connected to the
conduct of a trade or business within the United States.
Some distributions by a Trust may be subject to foreign withholding
taxes. Any dividends withheld will nevertheless be treated as income to
you. However, because you are deemed to have paid directly your share of
foreign taxes that have been paid or accrued by a Trust, you may be
entitled to a foreign tax credit or deduction for U.S. tax purposes with
respect to such taxes.
Under the existing income tax laws of the State and City of New York,
the Trusts will not be taxed as corporations, and the income of the
Trusts will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes.
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
Page 37
result in either U.K. stamp duty or stamp duty reserve tax being payable
by the purchaser. The Global Target 15 Portfolio paid this tax when it
acquired Securities. When the Global Target 15 Portfolio sells
Securities, it is anticipated that the tax will be paid by the purchaser.
Hong Kong Taxation.
The following summary describes certain important Hong Kong tax
consequences to certain U.S. Unit holders who hold Units in the Global
Target 15 Portfolio as capital assets. This summary assumes that you are
not carrying on a trade, profession or business in Hong Kong and that
you have no profits sourced in Hong Kong arising from the carrying on of
such trade, profession or business. This summary is intended to be a
general guide only and is subject to any changes in Hong Kong or U.S.
law occurring after the date of this prospectus and you should consult
your own tax advisor about your particular circumstances.
Taxation of Dividends. Dividends you receive from the Global Target 15
Portfolio relating to Hong Kong issuers are not taxable and therefore
will not be subject to the deduction of any withholding tax.
Profits Tax. Unless you are carrying on a trade, profession or business
in Hong Kong you will not be subject to profits tax imposed by Hong Kong
on any gain or profits made on the realization or other disposal of your
Units.
Estate Duty. Units of the Global Target 15 Portfolio do not give rise to
Hong Kong estate duty liability.
Retirement Plans
You may purchase Units of the Trusts for:
- Individual Retirement Accounts;
- Keogh Plans;
- Pension funds; and
- Other tax-deferred retirement plans.
Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. Before participating in a plan like this, you should review
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as Record Owner of Units 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. All Fee Accounts Units, however, will be held in
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;
- A list of 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
Page 38
- The date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
- A summary of transactions in your Trust for the year;
- 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
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. Each later distribution of income and/or capital on your
Units will be reinvested by the Trustee into additional Units of your
Trust. There is no transactional sales charge on Units acquired through
the Distribution Reinvestment Option, as discussed under "Public
Offering." 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
Page 39
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 it 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
(except for Fee Accounts), rather than receiving cash, you may elect to
receive an In-Kind Distribution in an amount equal to the Redemption
Price per Unit by making this request in writing to the Trustee at the
time of tender. However, no In-Kind Distribution requests submitted
during the nine business days prior to a Trust's Mandatory Termination
Date will be honored. Where possible, the Trustee will make an In-Kind
Distribution by distributing each of the Securities in book-entry form
to your bank or broker/dealer account at the Depository Trust Company.
The Trustee will subtract any customary transfer and registration
charges from your In-Kind Distribution. As a tendering Unit holder, you
will receive your pro rata number of whole shares of the Securities that
make up the portfolio, and cash from the Capital Account equal to the
fractional shares to which you are entitled.
The Trustee may sell Securities to make funds available for redemption.
If Securities are sold, the size and diversification of a Trust will be
reduced. These sales may result in lower prices than if the Securities
were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
- If the NYSE is closed (other than customary weekend and holiday
closings);
- If the SEC determines that trading on the NYSE is restricted or that
an emergency exists making sale or evaluation of the Securities not
reasonably practical; or
- For any other period permitted by SEC order.
The Trustee is not liable to any person for any loss or damage which may
result from such a suspension or postponement.
The Redemption Price.
The Redemption Price per Unit is determined by the Trustee by:
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."
Page 40
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 to the maximum remaining deferred sales charge on such units
(currently expected to be $.165 per unit), but not the initial sales
charge. Units purchased using proceeds from Fee Accounts Units will
generally not be subject to any transactional sales charge.
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
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 transactional 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
Page 41
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 as stated in the "Summary of Essential
Information." The Trusts may be terminated earlier:
- Upon the consent of 100% of the Unit holders of a Trust;
- If the value of the Securities owned by a Trust as shown by any
evaluation is less than the lower of $2,000,000 or 20% of the total
value of Securities deposited in such Trust during the initial offering
period ("Discretionary Liquidation Amount"); or
- In the event that Units of a Trust not yet sold aggregating more than
60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor.
Prior to termination, the Trustee will send written notice to all Unit
holders which will specify how you should tender your certificates, if
any, to the Trustee. If a Trust is terminated due to this last reason,
we will refund your entire transactional 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 and subject to
any additional restrictions imposed on Fee Accounts Units by "wrap fee"
plans) rather than the typical cash distribution. See "Tax Status" for
additional information. 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
Page 42
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.
Code of Ethics. The Sponsor and the Trusts have adopted a code of ethics
requiring the Sponsor's employees who have access to information on
Trust transactions to report personal securities transactions. The
purpose of the code is to avoid potential conflicts of interest and to
prevent fraud, deception or misconduct with respect to the Trusts.
The Trustee.
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th Floor, New York, New
York, 10004-2413. If you have questions regarding the Trusts, you may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
supervised by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System.
The Trustee has not participated in selecting the Securities; it only
provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable 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
Page 43
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532.
The Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information,
but will not be liable to the Trustee, Sponsor or Unit holders for
errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trusts.
Experts.
Ernst & Young LLP, independent auditors, have audited the Trusts'
statements of net assets, including the schedules of investments, at the
opening of business on the Initial Date of Deposit, as set forth in
their report. We've included the Trusts' statements of net assets,
including the schedules of investments, in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific details concerning the nature, structure and risks
of this product.
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Page 47
FIRST TRUST(R)
The Dow(sm) Target 5 Portfolio, December 2000 Series
The Dow(sm) Target 10 Portfolio, December 2000 Series
Global Target 15 Portfolio, December 2000 Series
The S&P Target 10 Portfolio, December 2000 Series
The Nasdaq Target 15 Portfolio, December 2000 Series
Value Line(R) Target Portfolio, December 2000 Series
The Dow(sm) DART 5 Portfolio, December 2000 Series
The Dow(sm) DART 10 Portfolio, December 2000 Series
Total Target Portfolio, December 2000 Series
FT 474
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. 333-47504) and
- Investment Company Act of 1940 (file no. 811-05903)
Information about the Trusts, including their Codes of Ethics, 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]
November 30, 2000
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 48
First Trust (R)
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 the 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 November 30, 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
Value Line Publishing, Inc. 3
Risk Factors
Securities 4
Dividends 4
Foreign Issuers 4
United Kingdom 5
Hong Kong 6
Exchange Rate 7
Litigation
Tobacco Industry 10
Concentrations
Energy Companies 10
Healthcare Companies 11
Real Estate Companies 12
Technology Companies 14
Portfolios
Equity Securities Selected for The Dow(sm) Target 5 Portfolio, December 2000 Series 15
Equity Securities Selected for The Dow(sm) Target 10 Portfolio, December 2000 Series 15
Equity Securities Selected for Global Target 15 Portfolio, December 2000 Series 16
Equity Securities Selected for The S&P Target 10 Portfolio, December 2000 Series 17
Equity Securities Selected for The Nasdaq Target 15 Portfolio, December 2000 Series 18
Equity Securities Selected for Value Line(R) Target Portfolio, December 2000 Series 19
Equity Securities Selected for The Dow(sm) DART 5 Portfolio, December 2000 Series 20
Equity Securities Selected for The Dow(sm) DART 10 Portfolio, December 2000 Series 21
Equity Securities Selected for Total Target Portfolio, December 2000 Series 22
</TABLE>
Dow Jones & Company, Inc.
The Trusts are not sponsored, endorsed, sold or promoted by Dow Jones &
Company, Inc. ("Dow Jones"). Dow Jones makes no representation or
warranty, express or implied, to the owners of the Trusts or any member
of the public regarding the advisability of investing in securities
generally or in the Trusts particularly. Dow Jones' only relationship to
the Sponsor is the licensing of certain trademarks, trade names and
service marks of Dow Jones and of the Dow Jones Industrial Average(sm),
which is determined, composed and calculated by Dow Jones without regard
Page 1
to the Sponsor or the Trusts. Dow Jones has no obligation to take the
needs of the Sponsor or the owners of the Trusts into consideration in
determining, composing or calculating the Dow Jones Industrial
Average(sm). Dow Jones is not responsible for and has not participated
in the determination of the timing of, prices at, or quantities of the
Trusts to be issued or in the determination or calculation of the
equation by which the Trusts are to be converted into cash. Dow Jones
has no obligation or liability in connection with the administration,
marketing or trading of the Trusts.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN AND DOW
JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, OWNERS OF THE TRUSTS, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL
AVERAGE(SM) OR ANY DATA INCLUDED THEREIN. DOW JONES MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT
TO THE DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
Standard & Poor's
The Trusts are not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes
no representation or warranty, express or implied, to the owners of the
Trusts or any member of the public regarding the advisability of
investing in securities generally or in the Trusts particularly or the
ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the licensee is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index, which is
determined, composed and calculated by S&P without regard to the
licensee or the Trusts. S&P has no obligation to take the needs of the
licensee or the owners of the Trusts into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for
and has not participated in the determination of the prices and amount
of the Trusts or the timing of the issuance or sale of the Trusts or in
the determination or calculation of the equation by which the Trusts are
to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the Trusts.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE
LICENSEE, OWNERS OF THE TRUSTS, OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES,
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY
FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
The Nasdaq Stock Market, Inc.
Neither The Nasdaq Target 15 Portfolio Series nor the Total Target
Portfolio Series is 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 or the Total Target 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 the
Page 2
Total Target Portfolio Series or any member of the public regarding the
advisability of investing in securities generally or in The Nasdaq
Target 15 Portfolio Series or the Total Target Portfolio Series
particularly, or the ability of the Nasdaq 100 Index(R) to track general
stock market performance. The Corporations' only relationship to the
Sponsor ("Licensee") is in the licensing of the Nasdaq 100(R), Nasdaq
100 Index(R) and Nasdaq(R) trademarks or service marks, and certain
trade names of the Corporations and the use of the Nasdaq 100 Index(R)
which is determined, composed and calculated by Nasdaq without regard to
Licensee, The Nasdaq Target 15 Portfolio Series or the Total Target
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
or the Total Target Portfolio Series into consideration in determining,
composing or calculating the Nasdaq 100 Index(R). 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 or the Total Target Portfolio Series to be issued or in the
determination or calculation of the equation by which The Nasdaq Target
15 Portfolio Series or the Total Target Portfolio Series are 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 or the Total Target Portfolio Series.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED
CALCULATION OF THE NASDAQ 100 INDEX(R) 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, OWNERS OF THE TOTAL TARGET PORTFOLIO SERIES OR ANY OTHER PERSON
OR ENTITY FROM THE USE OF THE NASDAQ 100 INDEX(R) 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(R) 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.
Value Line Publishing, Inc.
Value Line Publishing, Inc.'s ("VLPI") only relationship to Nike is
VLPI's licensing to Nike of certain VLPI trademarks and trade names and
the Value Line(R) Timeliness(TM) Ranking System (the "System"), which is
composed by VLPI without regard to Nike, this Product or any investor.
VLPI has no obligation to take the needs of Nike or any investor in the
Product into consideration in composing the System. The Product results
may differ from the hypothetical or published results of the Value
Line(R) Timeliness(TM) Ranking System. VLPI is not responsible for and
has not participated in the determination of the prices and composition
of the Product or the timing of the issuance for sale of the Product or
in the calculation of the equations by which the Product is to be
converted into cash.
VLPI MAKES NO WARRANTY CONCERNING THE SYSTEM, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTIES ARISING
FROM USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE, AND
VLPI MAKES NO WARRANTY AS TO THE POTENTIAL PROFITS OR ANY OTHER BENEFITS
THAT MAY BE ACHIEVED BY USING THE SYSTEM OR ANY INFORMATION OR MATERIALS
GENERATED THEREFROM. VLPI DOES NOT WARRANT THAT THE SYSTEM WILL MEET ANY
REQUIREMENTS OR THAT IT WILL BE ACCURATE OR ERROR-FREE. VLPI ALSO DOES
NOT GUARANTEE ANY USES, INFORMATION, DATA OR OTHER RESULTS GENERATED
FROM THE SYSTEM. VLPI HAS NO OBLIGATION OR LIABILITY (I) IN CONNECTION
WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE PRODUCT; OR (II)
FOR ANY LOSS, DAMAGE, COST OR EXPENSE SUFFERED OR INCURRED BY ANY
INVESTOR OR OTHER PERSON OR ENTITY IN CONNECTION WITH THIS PRODUCT, AND
IN NO EVENT SHALL VLPI BE LIABLE FOR ANY LOST PROFITS OR OTHER
CONSEQUENTIAL, SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT OR EXEMPLARY
Page 3
DAMAGES IN CONNECTION WITH THE PRODUCT.
Risk Factors
Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the
risk that the financial condition of the issuers of the Securities or
the general condition of the relevant stock market may worsen, and the
value of the Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors.
Dividends. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. 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
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
Page 4
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
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
Page 5
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.
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.
Page 6
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
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:
Page 7
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 8
<TABLE>
<CAPTION>
End of Month Exchange Rates End of Month Exchange Rates
for Foreign Currencies for Foreign Currencies (continued)
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>
1993: 1997:
January .673 7.734 January .624 7.750
February .701 7.734 February .614 7.744
March .660 7.731 March .611 7.749
April .635 7.730 April .616 7.746
May .640 7.724 May .610 7.748
June .671 7.743 June .600 7.747
July .674 7.761 July .609 7.742
August .670 7.755 August .622 7.750
September .668 7.734 September .619 7.738
October .676 7.733 October .598 7.731
November .673 7.725 November .592 7.730
December .677 7.723 December .607 7.749
1994: 1998:
January .664 7.724 January .613 7.735
February .673 7.727 February .609 7.743
March .674 7.737 March .598 7.749
April .659 7.725 April .598 7.747
May .662 7.726 May .613 7.749
June .648 7.730 June .600 7.748
July .648 7.725 July .613 7.748
August .652 7.728 August .595 7.749
September .634 7.727 September .589 7.749
October .611 7.724 October .596 7.747
November .639 7.731 November .607 7.743
December .639 7.738 December .602 7.746
1995: 1999:
January .633 7.732 January .608 7.748
February .631 7.730 February .624 7.748
March .617 7.733 March .621 7.750
April .620 7.742 April .621 7.750
May .630 7.735 May .624 7.755
June .627 7.736 June .634 7.758
July .626 7.738 July .617 7.762
August .645 7.741 August .623 7.765
September .631 7.732 September .607 7.768
October .633 7.727 October .608 7.768
November .652 7.731 November .626 7.767
December .645 7.733 December .618 7.774
1996: 2000:
January .661 7.728 January .619 7.780
February .653 7.731 February .633 7.783
March .655 7.734 March .628 7.787
April .664 7.735 April .645 7.789
May .645 7.736 May .666 7.792
June .644 7.741 June .661 7.796
July .642 7.735 July .667 7.799
August .639 7.733 August .691 7.799
September .639 7.733 September .678 7.796
October .615 7.732 October .698 7.797
November .595 7.732 November 29 .703 7.799
December .583 7.735
</TABLE>
Source: Bloomberg L.P.
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
Page 9
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
Energy Companies. The S&P Target 10 Portfolio is considered to be
concentrated in companies involved in the energy industry. The business
activities of these companies may include: production, generation,
transmission, marketing, control, or measurement of gas and oil; the
provision of component parts or services to companies engaged in the
above activities; energy research or experimentation; and environmental
activities related to the solution of energy problems, such as energy
conservation and pollution control.
The securities of companies in the energy field are subject to changes
in value and dividend yield which depend, to a large extent, on the
price and supply of energy fuels. Swift price and supply fluctuations
may be caused by events relating to international politics, energy
conservation, the success of exploration projects, and tax and other
regulatory policies of various governments. As a result of the
foregoing, the Securities in The S&P Target 10 Portfolio may be subject
to rapid price volatility. The Sponsor is unable to predict what impact
the foregoing factors will have on the Securities during the life of The
S&P Target 10 Portfolio.
According to the U.S. Department of Commerce, the factors which will
most likely shape the energy industry include the price and availability
of oil from the Middle East, changes in U.S. environmental policies and
the continued decline in U.S. production of crude oil. Possible effects
of these factors may be increased U.S. and world dependence on oil from
the Organization of Petroleum Exporting Countries ("OPEC") and highly
uncertain and potentially more volatile oil prices. Factors which the
Sponsor believes may increase the profitability of oil and petroleum
operations include increasing demand for oil and petroleum products as a
result of the continued increases in annual miles driven and the
improvement in refinery operating margins caused by increases in average
domestic refinery utilization rates. The existence of surplus crude oil
production capacity and the willingness to adjust production levels are
the two principal requirements for stable crude oil markets. Without
excess capacity, supply disruptions in some countries cannot be
compensated for by others. Surplus capacity in Saudi Arabia and a few
other countries and the utilization of that capacity prevented, during
the Persian Gulf crisis, and continues to prevent, severe market
disruption. Although unused capacity contributed to market stability in
Page 10
1990 and 1991, it ordinarily creates pressure to overproduce and
contributes to market uncertainty. The restoration of a large portion of
Kuwait and Iraq's production and export capacity could lead to such a
development in the absence of substantial growth in world oil demand.
Formerly, OPEC members attempted to exercise control over production
levels in each country through a system of mandatory production quotas.
Because of the 1990-1991 crisis in the Middle East, the mandatory system
has since been replaced with a voluntary system. Production under the
new system has had to be curtailed on at least one occasion as a result
of weak prices, even in the absence of supplies from Kuwait and Iraq.
The pressure to deviate from mandatory quotas, if they are reimposed, is
likely to be substantial and could lead to a weakening of prices. In the
longer term, additional capacity and production will be required to
accommodate the expected large increases in world oil demand and to
compensate for expected sharp drops in U.S. crude oil production and
exports from the Soviet Union. Only a few OPEC countries, particularly
Saudi Arabia, have the petroleum reserves that will allow the required
increase in production capacity to be attained. Given the large-scale
financing that is required, the prospect that such expansion will occur
soon enough to meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the industry
over the coming decade. Refiners are likely to be required to make heavy
capital investments and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as
the 1990 amendments to the Clean Air Act. If the cost of these changes
is substantial enough to cut deeply into profits, smaller refiners may
be forced out of the industry entirely. Moreover, lower consumer demand
due to increases in energy efficiency and conservation, gasoline
reformulations that call for less crude oil, warmer winters or a general
slowdown in economic growth in this country and abroad could negatively
affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will
increase or that any increases will not be marked by great volatility.
Some oil companies may incur large cleanup and litigation costs relating
to oil spills and other environmental damage. Oil production and
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the
disposal of hazardous materials. Increasingly stringent environmental
laws and regulations are expected to require companies with oil
production and refining operations to devote significant financial and
managerial resources to pollution control. General problems of the oil
and petroleum products industry include the ability of a few influential
producers to significantly affect production, the concomitant volatility
of crude oil prices, increasing public and governmental concern over air
emissions, waste product disposal, fuel quality and the environmental
effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry
or the environment could have a negative impact on the petroleum
products industry. While legislation has been enacted to deregulate
certain aspects of the oil industry, no assurances can be given that new
or additional regulations will not be adopted. Each of the problems
referred to could adversely affect the financial stability of the
issuers of any petroleum industry stocks in The S&P Target 10 Portfolio.
Healthcare Companies. The S&P Target 10 Portfolio is considered to be
concentrated in common stocks of companies involved in advanced medical
devices and instruments, drugs and biotech, healthcare/managed care,
hospital management/health services and medical supplies have potential
risks unique to their sector of the healthcare field. These companies
are subject to governmental regulation of their products and services, a
factor which could have a significant and possibly unfavorable effect on
the price and availability of such products or services. Furthermore,
such companies face the risk of increasing competition from new products
or services, generic drug sales, the termination of patent protection
for drug or medical supply products and the risk that technological
advances will render their products obsolete. The research and
development costs of bringing a drug to market are substantial, and
include lengthy governmental review processes with no guarantee that the
product will ever come to market. Many of these companies may have
losses and may not offer certain products for several years. Such
companies may also have persistent losses during a new product's
transition from development to production, and revenue patterns may be
erratic. In addition, healthcare facility operators may be affected by
events and conditions including among other things, demand for services,
the ability of the facility to provide the services required,
physicians' confidence in the facility, management capabilities,
Page 11
competition with other hospitals, efforts by insurers and governmental
agencies to limit rates, legislation establishing state rate-setting
agencies, expenses, government regulation, the cost and possible
unavailability of malpractice insurance and the termination or
restriction of governmental financial assistance, including that
associated with Medicare, Medicaid and other similar third party payor
programs.
As the population of the United States ages, the companies involved in
the healthcare field will continue to search for and develop new drugs,
medical products and medical services through advanced technologies and
diagnostics. On a worldwide basis, such companies are involved in the
development and distributions of drugs, vaccines, medical products and
medical services. These activities may make the healthcare and medical
services sector very attractive for investors seeking the potential for
growth in their investment portfolio. However, there are no assurances
that the Trust's objectives will be met.
Legislative proposals concerning healthcare are proposed in Congress
from time to time. These proposals span a wide range of topics,
including cost and price controls (which might include a freeze on the
prices of prescription drugs), national health insurance, incentives for
competition in the provision of healthcare services, tax incentives and
penalties related to healthcare insurance premiums and promotion of pre-
paid healthcare plans. The Sponsor is unable to predict the effect of
any of these proposals, if enacted, on the issuers of Securities in the
Trust.
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
Page 12
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
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
Page 13
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
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
Page 14
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
AT&T Corp., headquartered in New York, New York, provides voice, data
and video telecommunications services; regional, domestic, international
and local communication transmission services; cellular telephone and
other wireless services; and billing, directory and calling card services.
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.
Equity Securities Selected for The Dow(sm) Target 10 Portfolio
AT&T Corp., headquartered in New York, New York, provides voice, data
and video telecommunications services; regional, domestic, international
and local communication transmission services; cellular telephone and
other wireless services; and billing, directory and calling card services.
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
Page 15
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
Procter & Gamble Company, headquartered in Cincinnati, Ohio,
manufactures consumer products worldwide, including detergents, fabric
conditioners and hard surface cleaners; products for personal cleansing,
oral care, digestive health, hair and skin; paper tissue, disposable
diapers, and pharmaceuticals; and shortenings, oils, snacks, baking
mixes, peanut butter, coffee, drinks and citrus products.
Equity Securities Selected for the Global Target 15 Portfolio
Dow Jones Industrial Average(sm) Companies
AT&T Corp., headquartered in New York, New York, provides voice, data
and video telecommunications services; regional, domestic, international
and local communication transmission services; cellular telephone and
other wireless services; and billing, directory and calling card services.
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.
Financial Times Industrial Ordinary Share Index Companies
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.
Invensys Plc is a global electronics and engineering company operating
through four divisions: Intelligent Automation, Industrial Drive
Systems, Power Systems and Controls. The company's products include
motors, electronic drives, compressors, position sensors and controls,
power transmission products, and software and remote monitoring systems.
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.
The Peninsular and Oriental Steam Navigation Company is one of the
world's leading ship owners, with a fleet of cruise ships, ferries,
container ships, bulk carriers, coastal tankers and offshore service
vessels. The diversified, international company also has interests in
port ownership, management and stevedoring; property and construction;
and service industries.
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.
Page 16
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.
Cheung Kong Infrastructure Holdings Ltd. is a diversified infrastructure
company which develops, invests in and operates infrastructure projects
in Hong Kong, Australia, Canada, China, the Philippines and other
countries. The company manufactures concrete, asphalt and aggregates and
also operates power plants.
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
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
Cardinal Health, Inc., headquartered in Dublin, Ohio, distributes a
broad line of pharmaceuticals, surgical and hospital supplies,
therapeutic plasma and other specialty pharmaceutical products, health
and beauty care products and other items typically sold by hospitals,
retail drug stores and other healthcare providers. The company also
makes, leases and sells point-of-use pharmacy systems; provides pharmacy
management services; and franchises apothecary-style pharmacies.
Duke Energy Corporation, headquartered in Charlotte, North Carolina,
provides electric service to about two million customers in North
Carolina and South Carolina; operates interstate pipelines that deliver
natural gas to various regions of the country; and markets electricity,
natural gas and natural gas liquids.
Dynegy Inc., headquartered in Houston, Texas, through subsidiaries,
markets natural gas, natural gas liquids, crude oil and electric power;
and gathers, processes and transports natural gas through ownership and
operation of natural gas processing plants, storage facilities and
pipelines in North America and the United Kingdom.
El Paso Energy Corporation, headquartered in Houston, Texas, operates in
the areas of interstate and intrastate transportation; the gathering and
processing of natural gas; the marketing of natural gas, power and other
commodities; and the operation of energy infrastructure facilities
worldwide.
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.
Lockheed Martin Corporation, headquartered in Bethesda, Maryland,
engages in the research, design, development, manufacture and
integration of advanced technology products and services ranging from
aircraft, spacecraft and launch vehicles to missiles, electronics,
information systems and energy management.
Reliant Energy, Inc., headquartered in Houston, Texas, operates as a
diversified international energy services. The company's Retail Group
consists of three natural gas utilities and one electric utility, as
well as a retail marketing group, which provides unregulated retail
energy products and services. The company's Wholesale Group invests in
power generation projects and provides wholesale trading and marketing
services as well as natural gas supply, gathering, transportation and
storage.
The St. Paul Companies, Inc., headquartered in St. Paul, Minnesota, with
subsidiaries, provides a broad range of commercial and consumer related
insurance products and services, including property liability insurance
underwriting and reinsurance. The company also provides risk advisory
services and investment banking asset management services.
Page 17
Tenet Healthcare Corporation, headquartered in Santa Barbara,
California, owns or operates acute care hospitals and related healthcare
facilities in 22 states; and holds investments in other healthcare
companies.
UnitedHealth Group Incorporated, headquartered in Minnetonka, Minnesota,
is aligned into six businesses which work together to provide customers
with an integrated set of health and well-being products and services.
These businesses include: UnitedHealthcare, Uniprise, Ovations,
Specialized Care Services, Ingenix and The Center for Health Care Policy
and Evaluation.
Equity Securities Selected for The Nasdaq Target 15 Portfolio
Adobe Systems Incorporated, headquartered in San Jose, California,
develops, markets and supports computer software products and
technologies that enable users to express and use information across all
print and electronic media.
Apollo Group, Inc. (Class A), headquartered in Phoenix, Arizona, through
subsidiaries, offers higher education programs and services for working
adults at over 100 campuses and learning centers in the United States,
Puerto Rico and London, England. The company offers accredited degree
programs, certificate programs and customized training.
Bed Bath & Beyond Inc., headquartered in Union, New Jersey, sells
domestic merchandise (bed linens, bath accessories and kitchen textiles)
and home furnishings (cookware, dinnerware, glassware and basic
housewares) through retail stores.
Biomet, Inc., headquartered in Warsaw, Indiana, and its subsidiaries,
make and sell reconstructive and trauma devices, electrical bone growth
stimulators, orthopedic support devices, operating room supplies,
powered surgical instruments, general surgical instruments, arthroscopy
products and craniomaxillofacial products. The company's products are
used primarily by orthopedic medical specialists in both surgical and
non-surgical therapy.
CIENA Corporation, headquartered in Linthicum, Maryland, designs,
manufactures and sells dense wavelength division multiplexing systems
for long distance fiber optic telecommunications networks. The company
also provides a range of engineering, furnishing and installation
services. The company's systems alleviate capacity constraints in high
traffic, long distance fiber optic routes without requiring installation
of new fiber.
Cintas Corporation, headquartered in Cincinnati, Ohio, designs and
manufactures corporate identity uniforms which they rent or sell to
customers, along with non-uniform equipment. The company also offers
ancillary products which include the sale or rental of walk-off mats,
fender covers, towels, mops and linen products.
Concord EFS, Inc., headquartered in Memphis, Tennessee, provides
electronic transaction authorization, processing, settlement and funds
transfer services on a nationwide basis.
Genzyme Corporation (General Division), headquartered in Cambridge,
Massachusetts, develops and markets specialty therapeutic, surgical and
diagnostic products, pharmaceuticals and genetic diagnostic services.
The company also develops, makes and markets biological products for the
treatment of cartilage damage, severe burns, chronic skin ulcers and
neurodegenerative diseases.
Herman Miller, Inc., headquartered in Zeeland, Michigan, designs,
manufactures and sells furniture systems, products and related services
primarily for offices. The company's customers also include healthcare
facilities, including hospitals and clinical, industrial and educational
laboratories.
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.
Paychex, Inc., headquartered in Rochester, New York, provides payroll
processing, human resource and benefits outsourcing solutions for small-
to medium-sized businesses nationwide.
Sanmina Corporation, headquartered in San Jose, California, makes
complex printed circuit board assemblies, custom-designed backplane
assemblies and subassemblies, multilayer printed circuit boards and
custom cable and wire harness assemblies; and tests and assembles
electronic sub-systems and systems.
Sigma-Aldrich Corporation, headquartered in St. Louis, Missouri,
develops, makes and distributes a range of biochemicals, organic
chemicals, chromatography products and diagnostic reagents. The company
also makes metal products used in the installation and retrofitting of
electrical, mechanical and telecommunication applications.
Page 18
Starbucks Corporation, headquartered in Seattle, Washington, buys and
roasts whole bean coffees and sells its own brand of specialty coffee.
The company has retail operations in North America and the Pacific Rim.
The company also produces and sells the bottled "Frappucino" coffee
drink and a line of ice creams.
Sun Microsystems, Inc., headquartered in Palo Alto, California, supplies
network computing products, including desktop systems, storage
subsystems, network switches, servers, software, microprocessors and a
full range of services and support, using the UNIX operating system.
Equity Securities Selected for the Value Line(R) Target Portfolio
BARRA, Inc., headquartered in Berkeley, California, develops, markets
and supports application software and information services used to
analyze, manage and trade portfolios of equity, fixed income,
derivatives and other financial instruments. The company and its
subsidiaries are engaged in integrated business activities that combine
technology, data, software and services to help clients make investment
and trading decisions.
CAE, Inc., headquartered in Toronto, Ontario, Canada, operates
throughout Canada, the United States and Europe developing and producing
electronic simulation training systems for commercial airlines, the
military and space agencies, and providing contractor training services
for the military.
The Cheesecake Factory Incorporated, headquartered in Calabasas Hills,
California, operates upscale, full-service, casual dining restaurants
under the name "The Cheesecake Factory" in 11 states and Washington,
D.C. The company also operates a self-service, limited menu "express"
operation at DisneyQuest in Orlando, Florida and a bakery production
facility.
Cirrus Logic, Inc., headquartered in Austin, Texas, manufactures
integrated circuits for the personal computer, consumer and industrial
markets. The company offers products and technologies for multimedia,
wireless and wireline communications, magnetic hard disk and CD-ROM
storage, and data acquisition applications.
Diagnostic Products Corporation, headquartered in Los Angeles,
California, develops, makes and markets medical immunodiagnostic test
kits which utilize state-of-the-art technology derived from immunology
and molecular biology, and automated laboratory instruments which
perform the tests.
Education Management Corporation, headquartered in Pittsburgh,
Pennsylvania, provides proprietary postsecondary education in the United
States based on student enrollments and revenues, including associate's
and bachelor's degree programs and non-degree programs in the areas of
design, media arts, culinary arts, fashion and paralegal studies.
IMPATH Inc., headquartered in New York, New York, provides the expertise
to establish correct diagnosis, accurate prognosis, treatment
determination and patient follow-up, all of which are essential for
making medically optimal and cost-effective cancer management decisions.
The company is focused exclusively on the analysis of cancer, combining
advanced technologies and medical expertise to provide patient-specific
diagnostic, prognostic and treatment information to physicians involved
in the treatment of cancer.
Integrated Device Technology, Inc., headquartered in Santa Clara,
California, designs, develops, makes and sells a broad range of high
performance semiconductor products and modules for its key markets: data
communications and telecommunications equipment; personal computers; and
shared network devices.
Keithley Instruments, Inc., headquartered in Solon, Ohio, provides
electrical measurement solutions to wireless communications,
semiconductor and electronic component manufacturers, other high-growth
areas of the electronics industry and research laboratories.
Laboratory Corporation of America Holdings, headquartered in Burlington,
North Carolina, offers medical testing services through a national
network of laboratories. The company's broad range of testing services
are used by the medical profession for the diagnosis, monitoring and
treatment of disease and other clinical states.
Mitchell Energy & Development Corp., headquartered in The Woodlands,
Texas, produces natural gas and oil, and gathers and markets natural gas
liquids in Texas, Louisiana and Oklahoma.
OMI Corporation, headquartered in Stamford, Connecticut, operates as a
bulk shipping company which provides seaborne transportation services,
primarily of crude oil and petroleum products, in the international
shipping market. The company's client base includes major independent
and state-owned oil companies, oil traders and government entities.
Page 19
Oakley, Inc., headquartered in Foothill Ranch, California, designs,
makes and distributes high-performance eyewear and athletic equipment
used by a variety of athletes such as skiers, cyclists, runners,
surfers, golfers, tennis and baseball players, and motocross riders, as
well as for the nonsports market.
Orthodontic Centers of America, Inc., headquartered in Ponte Vedra
Beach, Florida, develops and manages orthodontic practices located in 41
states. The company's services include operations, financial, marketing
and administrative services provided to the orthodontic centers.
Oxford Health Plans, Inc., headquartered in Trumbull, Connecticut,
provides health benefit plans including point-of-service Freedom and
Liberty Plans, traditional health maintenance organizations, dental
plans and third party employer funded benefit plans in Connecticut,
Florida, Illinois, New Hampshire, New Jersey, New York and Pennsylvania.
Park Electrochemical Corp., headquartered in Lake Success, New York,
designs, makes and markets electronic circuitry products used in the
production of sophisticated multilayer printed circuit boards, plumbing
hardware products, and industrial adhesive tapes and films.
Pharmaceutical Product Development, Inc., headquartered in Wilmington,
North Carolina, provides a broad range of integrated product development
services on a global basis to complement the research and development
activities of companies in the pharmaceutical and biotechnology
industries. The company offers assessment and management of chemical and
environmental health risk and provides research, development and
consulting services in the life, environmental and discovery sciences.
Pier 1 Imports, Inc., headquartered in Fort Worth, Texas, operates and
franchises retail stores under the names "Pier 1 Imports" and "The
Pier," selling a variety of furniture, decorative home furnishings,
dining and kitchen goods, and accessories.
Plantronics, Inc., headquartered in Santa Cruz, California, designs,
makes and sells lightweight communication headsets which can be worn
over the head or on either ear; and makes and sells amplified telephone
handsets and specialty telephones for hearing impaired users, and noise-
canceling handsets for use in high-noise environments.
Precision Castparts Corp., headquartered in Portland, Oregon, makes
complex metal components and products, serving a wide variety of
aerospace and general industrial applications. The company manufactures
large, complex structural investment castings and airfoil castings used
in jet aircraft engines. In addition, the company has expanded into the
industrial gas turbine, fluid management, industrial metalworking tools
and machines and other metal products markets.
Quest Diagnostics Incorporated, headquartered in Teterboro, New Jersey,
provides diagnostic testing, information and services to physicians,
hospitals, managed care organizations, employers and government
agencies. The wide variety of tests performed on human tissue and fluids
help doctors and hospitals diagnose, treat and monitor disease. The
company also conducts research, specializes in esoteric testing using
genetic screening and other advanced technologies, performs clinical
studies testing, and manufactures and distributes diagnostic test kits
and instruments.
The Talbots, Inc., headquartered in Hingham, Massachusetts, sells
classic apparel, shoes and accessories for women, boys and girls through
its retail stores in the United States, Canada, and the United Kingdom,
and through 25 catalogs.
Toll Brothers, Inc., headquartered in Huntingdon Valley, Pennsylvania,
designs, builds, markets and finances single-family detached and
attached homes in middle and high income residential communities located
mainly on land the company has developed in suburban residential areas.
The company also provides financing to customers.
Universal Health Services, Inc. (Class B), headquartered in King of
Prussia, Pennsylvania, owns and operates acute care hospitals,
behavioral health centers and women's hospitals; and operates/manages
surgery and radiation oncology centers.
Waters Corporation, headquartered in Milford, Massachusetts, makes,
distributes and provides high performance liquid chromatography ("HPLC")
instruments, chromatography columns and other consumables, and related
service.
Equity Securities Selected for The Dow(sm) DART 5 Portfolio
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,
Page 20
copiers, microfilm products, applications software, printers and other
equipment.
Hewlett-Packard Company, headquartered in Palo Alto, California,
designs, makes and services equipment and systems for measurement,
computation and communications including computer systems, personal
computers, printers, calculators, electronic test equipment, medical
electronic equipment, electronic components and instrumentation for
chemical analysis.
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.
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.
United Technologies Corporation, headquartered in Hartford, Connecticut,
makes Pratt & Whitney aircraft jet engines and spare parts; Otis
elevators and escalators; Carrier heating, ventilating and air
conditioning equipment; automotive products and systems; Sikorsky
helicopters; and Hamilton Sundstrand aerospace systems.
Equity Securities Selected for The Dow(sm) DART 10 Portfolio
AT&T Corp., headquartered in New York, New York, provides voice, data
and video telecommunications services; regional, domestic, international
and local communication transmission services; cellular telephone and
other wireless services; and billing, directory and calling card services.
The Boeing Company, headquartered in Seattle, Washington, produces and
markets commercial jet transports and provides related support services,
principally to commercial customers. The company also 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."
Hewlett-Packard Company, headquartered in Palo Alto, California,
designs, makes and services equipment and systems for measurement,
computation and communications including computer systems, personal
computers, printers, calculators, electronic test equipment, medical
electronic equipment, electronic components and instrumentation for
chemical analysis.
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.
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.
United Technologies Corporation, headquartered in Hartford, Connecticut,
makes Pratt & Whitney aircraft jet engines and spare parts; Otis
elevators and escalators; Carrier heating, ventilating and air
conditioning equipment; automotive products and systems; Sikorsky
helicopters; and Hamilton Sundstrand aerospace systems.
Page 21
Equity Securities Selected for Total Target Portfolio
The Dow(sm) DART 5 Strategy Stocks.
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.
Hewlett-Packard Company, headquartered in Palo Alto, California,
designs, makes and services equipment and systems for measurement,
computation and communications including computer systems, personal
computers, printers, calculators, electronic test equipment, medical
electronic equipment, electronic components and instrumentation for
chemical analysis.
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.
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.
United Technologies Corporation, headquartered in Hartford, Connecticut,
makes Pratt & Whitney aircraft jet engines and spare parts; Otis
elevators and escalators; Carrier heating, ventilating and air
conditioning equipment; automotive products and systems; Sikorsky
helicopters; and Hamilton Sundstrand aerospace systems.
The S&P Target 10 Strategy Stocks.
Cardinal Health, Inc., headquartered in Dublin, Ohio, distributes a
broad line of pharmaceuticals, surgical and hospital supplies,
therapeutic plasma and other specialty pharmaceutical products, health
and beauty care products and other items typically sold by hospitals,
retail drug stores and other healthcare providers. The company also
makes, leases and sells point-of-use pharmacy systems; provides pharmacy
management services; and franchises apothecary-style pharmacies.
Duke Energy Corporation, headquartered in Charlotte, North Carolina,
provides electric service to about two million customers in North
Carolina and South Carolina; operates interstate pipelines that deliver
natural gas to various regions of the country; and markets electricity,
natural gas and natural gas liquids.
Dynegy Inc., headquartered in Houston, Texas, through subsidiaries,
markets natural gas, natural gas liquids, crude oil and electric power;
and gathers, processes and transports natural gas through ownership and
operation of natural gas processing plants, storage facilities and
pipelines in North America and the United Kingdom.
El Paso Energy Corporation, headquartered in Houston, Texas, operates in
the areas of interstate and intrastate transportation; the gathering and
processing of natural gas; the marketing of natural gas, power and other
commodities; and the operation of energy infrastructure facilities
worldwide.
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.
Lockheed Martin Corporation, headquartered in Bethesda, Maryland,
engages in the research, design, development, manufacture and
integration of advanced technology products and services ranging from
aircraft, spacecraft and launch vehicles to missiles, electronics,
information systems and energy management.
Reliant Energy, Inc., headquartered in Houston, Texas, operates as a
diversified international energy services. The company's Retail Group
consists of three natural gas utilities and one electric utility, as
well as a retail marketing group, which provides unregulated retail
energy products and services. The company's Wholesale Group invests in
power generation projects and provides wholesale trading and marketing
services as well as natural gas supply, gathering, transportation and
storage.
The St. Paul Companies, Inc., headquartered in St. Paul, Minnesota, with
Page 22
subsidiaries, provides a broad range of commercial and consumer related
insurance products and services, including property liability insurance
underwriting and reinsurance. The company also provides risk advisory
services and investment banking asset management services.
Tenet Healthcare Corporation, headquartered in Santa Barbara,
California, owns or operates acute care hospitals and related healthcare
facilities in 22 states; and holds investments in other healthcare
companies.
UnitedHealth Group Incorporated, headquartered in Minnetonka, Minnesota,
is aligned into six businesses which work together to provide customers
with an integrated set of health and well-being products and services.
These businesses include: UnitedHealthcare, Uniprise, Ovations,
Specialized Care Services, Ingenix and The Center for Health Care Policy
and Evaluation.
The Nasdaq Target 15 Strategy Stocks.
Adobe Systems Incorporated, headquartered in San Jose, California,
develops, markets and supports computer software products and
technologies that enable users to express and use information across all
print and electronic media.
Apollo Group, Inc. (Class A), headquartered in Phoenix, Arizona, through
subsidiaries, offers higher education programs and services for working
adults at over 100 campuses and learning centers in the United States,
Puerto Rico and London, England. The company offers accredited degree
programs, certificate programs and customized training.
Bed Bath & Beyond Inc., headquartered in Union, New Jersey, sells
domestic merchandise (bed linens, bath accessories and kitchen textiles)
and home furnishings (cookware, dinnerware, glassware and basic
housewares) through retail stores.
Biomet, Inc., headquartered in Warsaw, Indiana, and its subsidiaries,
make and sell reconstructive and trauma devices, electrical bone growth
stimulators, orthopedic support devices, operating room supplies,
powered surgical instruments, general surgical instruments, arthroscopy
products and craniomaxillofacial products. The company's products are
used primarily by orthopedic medical specialists in both surgical and
non-surgical therapy.
CIENA Corporation, headquartered in Linthicum, Maryland, designs,
manufactures and sells dense wavelength division multiplexing systems
for long distance fiber optic telecommunications networks. The company
also provides a range of engineering, furnishing and installation
services. The company's systems alleviate capacity constraints in high
traffic, long distance fiber optic routes without requiring installation
of new fiber.
Cintas Corporation, headquartered in Cincinnati, Ohio, designs and
manufactures corporate identity uniforms which they rent or sell to
customers, along with non-uniform equipment. The company also offers
ancillary products which include the sale or rental of walk-off mats,
fender covers, towels, mops and linen products.
Concord EFS, Inc., headquartered in Memphis, Tennessee, provides
electronic transaction authorization, processing, settlement and funds
transfer services on a nationwide basis.
Genzyme Corporation (General Division), headquartered in Cambridge,
Massachusetts, develops and markets specialty therapeutic, surgical and
diagnostic products, pharmaceuticals and genetic diagnostic services.
The company also develops, makes and markets biological products for the
treatment of cartilage damage, severe burns, chronic skin ulcers and
neurodegenerative diseases.
Herman Miller, Inc., headquartered in Zeeland, Michigan, designs,
manufactures and sells furniture systems, products and related services
primarily for offices. The company's customers also include healthcare
facilities, including hospitals and clinical, industrial and educational
laboratories.
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.
Paychex, Inc., headquartered in Rochester, New York, provides payroll
processing, human resource and benefits outsourcing solutions for small-
to medium-sized businesses nationwide.
Sanmina Corporation, headquartered in San Jose, California, makes
complex printed circuit board assemblies, custom-designed backplane
assemblies and subassemblies, multilayer printed circuit boards and
custom cable and wire harness assemblies; and tests and assembles
electronic sub-systems and systems.
Sigma-Aldrich Corporation, headquartered in St. Louis, Missouri,
develops, makes and distributes a range of biochemicals, organic
chemicals, chromatography products and diagnostic reagents. The company
also makes metal products used in the installation and retrofitting of
electrical, mechanical and telecommunication applications.
Starbucks Corporation, headquartered in Seattle, Washington, buys and
roasts whole bean coffees and sells its own brand of specialty coffee.
The company has retail operations in North America and the Pacific Rim.
The company also produces and sells the bottled "Frappucino" coffee
drink and a line of ice creams.
Sun Microsystems, Inc., headquartered in Palo Alto, California, supplies
network computing products, including desktop systems, storage
subsystems, network switches, servers, software, microprocessors and a
full range of services and support, using the UNIX operating system.
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 24
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 474, 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; FT 412; and FT 438 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 474, has duly caused this Amendment to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on November 30, 2000.
FT 474
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
David J. Allen Sole Director )
of Nike Securities )
Corporation, the ) November 30, 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 November 30, 2000 in
Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-47504) and related Prospectus of FT 474.
ERNST & YOUNG LLP
Chicago, Illinois
November 30, 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 474 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. 33-46955] 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).
2.2 Copy of Code of Ethics (incorporated by reference to
Amendment No. 1 to form S-6 [File No. 333-31176] filed
on behalf of FT 415).
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
