SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: FT 395
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title of Securities
Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION DATED DECEMBER 21, 1999
AS AMENDED DECEMBER 27, 1999
BANDWIDTH SELECT PORTFOLIO, SERIES 2
E-BUSINESS SELECT PORTFOLIO, SERIES 2
GLASS-STEAGALL FINANCIAL OPPORTUNITY SELECT PORTFOLIO SERIES
INTERNET SELECT PORTFOLIO, SERIES 2
NEW E-CONOMY SELECT PORTFOLIO SERIES
ONLINE MEDIA SELECT PORTFOLIO SERIES
PHARMACEUTICAL SELECT PORTFOLIO, SERIES 2
TECHNOLOGY SELECT PORTFOLIO, SERIES 2
BANDWIDTH PORTFOLIO, SERIES 2
E-BUSINESS PORTFOLIO, SERIES 2
ENERGY PORTFOLIO, SERIES 7
GLASS-STEAGALL FINANCIAL OPPORTUNITY PORTFOLIO SERIES
INTERNET PORTFOLIO, SERIES 9
NEW E-CONOMY PORTFOLIO SERIES
ONLINE MEDIA PORTFOLIO SERIES
PHARMACEUTICAL PORTFOLIO, SERIES 8
TECHNOLOGY PORTFOLIO, SERIES 11
FT 395
FT 395 is a series of a unit investment trust, the FT Series. Each of
the 17 portfolios listed above (each, a "Trust," and collectively, the
"Trusts") is a separate portfolio, or series, of FT 395 consisting of a
diversified portfolio of common stocks ("Securities") issued by
companies in the industry sector or investment focus for which each
Trust is named. The objective of each Trust is to provide above-average
capital appreciation. Each Select Portfolio Series has an expected
maturity of approximately 18 months. Each Portfolio Series has an
expected maturity of approximately five years.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
First Trust (registered trademark)
1-800-621-9533
The date of this prospectus is January __, 2000
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 8
Report of Independent Auditors 12
Statements of Net Assets 13
Schedules of Investments 18
The FT Series 36
Portfolios 37
Risk Factors 43
Public Offering 46
Distribution of Units 48
The Sponsor's Profits 49
The Secondary Market 50
How We Purchase Units 50
Expenses and Charges 50
Tax Status 51
Retirement Plans 52
Rights of Unit Holders 52
Income and Capital Distributions 53
Redeeming Your Units 54
Removing Securities from a Trust 55
Amending or Terminating the Indenture 55
Information on the Sponsor, Trustee and Evaluator 56
Other Information 57
Page 2
Summary of Essential Information
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
Glass-Steagall
Financial
Bandwidth e-Business Opportunity Internet
Select Select Select Select
Portfolio Portfolio Portfolio Portfolio
Series 2 Series 2 Series Series 2
____________ ____________ ____________ ___________
Initial Number of Units (1)
Fractional Undivided Interest
in the Trust per Unit (1) 1/ 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation
of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of
3.25% of the Public Offering Price per Unit
(3.283% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .325 $ .325 $ .325 $ .325
Less Deferred Sales Charge per Unit $ (.225) $ (.225) $ (.225) $ (.225)
Public Offering Price per Unit (4) $10.000 $10.000 $10.000 $10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.675 $ 9.675 $ 9.675 $ 9.675
Redemption Price per Unit
(based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.675 $ 9.675 $ 9.675 $ 9.675
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
Mandatory Termination Date (6) ______, 2001 ______, 2001 ______, 2001 ______, 2001
First Settlement Date ____________, 2000
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
_____________
<FN>
See "Notes to Summary of Essential Information" on page 7.
</FN>
Page 3
Summary of Essential Information
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
New Online Pharmaceutical
e-conomy Media Select Select Technology
Select Portfolio Portfolio Portfolio Select Portfolio
Series Series Series 2 Series 2
___________ ___________ ___________ ___________
Initial Number of Units (1)
Fractional Undivided Interest
in the Trust per Unit (1) 1/ 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation
of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of
3.25% of the Public Offering Price
per Unit (3.283% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .325 $ .325 $ .325 $ .325
Less Deferred Sales Charge per Unit $ (.225) $ (.225) $ (.225) $ (.225)
Public Offering Price per Unit (4) $10.000 $10.000 $10.000 $10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.675 $ 9.675 $ 9.675 $ 9.675
Redemption Price per Unit
(based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.675 $ 9.675 $ 9.675 $ 9.675
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
Mandatory Termination Date (6) ______, 2001 ______, 2001 ______, 2001 ______, 2001
First Settlement Date ____________, 2000
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
_____________
<FN>
See "Notes to Summary of Essential Information" on page 7.
</FN>
Page 4
Summary of Essential Information
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
Glass-Steagall
Bandwidth e-Business Energy Financial
Portfolio Portfolio Portfolio Opportunity
Series 2 Series 2 Series 7 Portfolio Series
___________ ___________ ___________ ___________
Initial Number of Units (1)
Fractional Undivided Interest
in the Trust per Unit (1) 1/ 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation
of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of
4.50% of the Public Offering Price
per Unit (4.545% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .450 $ .450 $ .450 $ .450
Less Deferred Sales Charge per Unit $ (.350) $ (.350) $ (.350) $ (.350)
Public Offering Price per Unit (4) $10.000 $10.000 $10.000 $10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.550 $ 9.550 $ 9.550 $ 9.550
Redemption Price per Unit
(based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.550 $ 9.550 $ 9.550 $ 9.550
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
Mandatory Termination Date (6) ______, 2005 ______, 2005 ______, 2005 ______, 2005
First Settlement Date ____________, 2000
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
_____________
<FN>
See "Notes to Summary of Essential Information" on page 7.
</FN>
Page 5
Summary of Essential Information
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
New Online
Internet e-conomy Media Pharmaceutical
Portfolio Portfolio Portfolio Portfolio
Series 9 Series Series Series 8
___________ ___________ ___________ ___________
Initial Number of Units (1)
Fractional Undivided Interest
in the Trust per Unit (1) 1/ 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation
of Securities per Unit (2) $ 9.900 $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of
4.50% of the Public Offering Price
per Unit (4.545% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .450 $ .450 $ .450 $ .450
Less Deferred Sales Charge per Unit $(.350) $(.350) $(.350) $(.350)
Public Offering Price per Unit (4) $10.000 $10.000 $10.000 $10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.550 $ 9.550 $ 9.550 $ 9.550
Redemption Price per Unit
(based on aggregate underlying value
of Securities less deferred sales charge) (5) $ 9.550 $ 9.550 $ 9.550 $ 9.550
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
Mandatory Termination Date (6) ______, 2005 ______, 2005 ______, 2005 ______, 2005
First Settlement Date ____________, 2000
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
_____________
<FN>
See "Notes to Summary of Essential Information" on page 7.
</FN>
Page 6
Summary of Essential Information
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
Technology
Portfolio
Series 11
___________
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities per Unit (2) $ 9.900
Maximum Sales Charge of
4.50% of the Public Offering Price per Unit (4.545% of the net amount invested,
exclusive of the deferred sales charge) (3) $ .450
Less Deferred Sales Charge per Unit $ (.350)
Public Offering Price per Unit (4) $10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.550
Redemption Price per Unit
(based on aggregate underlying value of Securities less deferred sales charge) (5) $ 9.550
Cash CUSIP Number
Reinvestment CUSIP Number
Security Code
Mandatory Termination Date (6) ______, 2005
First Settlement Date ____________, 2000
Income Distribution Record Date Fifteenth day of each June and December, commencing June 15, 2000.
Income Distribution Date (7) Last day of each June and December, commencing June 30, 2000.
______________
<FN>
NOTES TO SUMMARY OF ESSENTIAL INFORMATION
(1) As of the close of business on the Initial Date of Deposit, we may
adjust the number of Units of a Trust so that the Public Offering Price
per Unit will equal approximately $10.00. If we make such an adjustment,
the fractional undivided interest per Unit will vary from the amounts
indicated above.
(2) Each listed Security is valued at its last closing sale price. If a
Security is not listed, or if no closing sale price exists, it is valued
at its closing ask price. Evaluations for purposes of determining the
purchase, sale or redemption price of Units are made as of the close of
trading on the New York Stock Exchange ("NYSE") (generally 4:00 p.m.
Eastern time) on each day on which it is open (the "Evaluation Time").
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Tables" and "Public Offering."
(4) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. The price you pay for your
Units will be based on their valuation at the Evaluation Time on the
date you purchase your Units. On the Initial Date of Deposit the Public
Offering Price per Unit will not include any accumulated dividends on
the Securities. After this date a pro rata share of any accumulated
dividends on the Securities will be included.
(5) Until the earlier of six months after the Initial Date of Deposit or
the end of the initial offering period, the Sponsor's Initial Repurchase
Price per Unit and the Redemption Price per Unit will include the
estimated organization costs per Unit set forth under "Fee Tables."
After such date, the Sponsor's Repurchase Price and Redemption Price per
Unit will not include such estimated organization costs. See "Redeeming
Your Units."
(6) See "Amending or Terminating the Indenture."
(7) Distributions from the Capital Account will be made monthly on the
last day of the month to Unit holders of record on the fifteenth day of
such month if the amount available for distribution equals at least
$1.00 per 100 Units. In any case, we will distribute any funds in the
Capital Account in December of each year.
</FN>
Page 7
Fee Table
This Fee Table describes the fees and expenses that you may, directly or
indirectly, pay if you buy and hold Units of a Trust. See "Public
Offering" and "Expenses and Charges." Although each Select Portfolio
Series has a term of approximately 18 months, each Portfolio Series has
a term of approximately five years, and each is a unit investment trust
rather than a mutual fund, this information allows you to compare fees.
Bandwidth e-Business Glass-Steagall
Select Select Financial Opportunity
Portfolio Portfolio Select Portfolio
Series 2 Series 2 Series
______________ _______________ _____________________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 2.25%(b) .225 2.25%(b) .225 2.25%(b) .225
_____ ______ _____ ______ _____ _______
Maximum sales charge 3.25% $ .325 3.25% $ .325 3.25% $ .325
===== ====== ===== ====== ===== ======
Maximum sales charge imposed on reinvested dividends 2.25%(c) $ .225 2.25%(c) $ .225 2.25%(c) $ .225
===== ====== ===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .260%(d) $.0260 .260%(d) $.0260 .260%(d) $.0260
===== ====== ===== ====== ===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping,
administrative and evaluation fees .079% $.0080 .079% $.0080 .079% $.0080
Trustee's fee and other operating expenses .116%(e) .0117 .116%(e) .0117 .116%(e) .0117
_____ ______ _____ ______ _____ ______
Total .195% $.0197 .195% $.0197 .195% $.0197
===== ====== ===== ====== ===== ======
Internet Select New e-conomy Online Media
Portfolio Select Portfolio Select Portfolio
Series 2 Series Series
________________ _________________ ________________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 2.25%(b) .225 2.25%(b) .225 2.25%(b) .225
_____ ______ _____ ______ _____ _______
Maximum sales charge 3.25% $ .325 3.25% $ .325 3.25% $ .325
===== ====== ===== ====== ===== ======
Maximum sales charge imposed on reinvested dividends 2.25%(c) $ .225 2.25%(c) $ .225 2.25%(c) $ .225
===== ====== ===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .260%(d) $.0260 .260%(d) $.0260 .260%(d) $.0260
===== ====== ===== ====== ===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping,
administrative and evaluation fees .079% $.0080 .079% $.0080 .079% $.0080
Trustee's fee and other operating expenses .116%(e) .0117 .116%(e) .0117 .116%(e) .0117
_____ ______ _____ ______ _____ ______
Total .195% $.0197 .195% $.0197 .195% $.0197
===== ====== ===== ====== ===== ======
Pharmaceutical Technology
Select Portfolio Select Portfolio
Series 2 Series 2
________________ ________________
Amount Amount
per Unit per Unit
_________ ________
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 2.25%(b) .225 2.25%(b) .225
_____ ______ _____ ______
Maximum sales charge 3.25% $ .325 3.25% $ .325
===== ====== ===== ======
Maximum sales charge imposed on reinvested dividends 2.25%(c) $ .225 2.25%(c) $ .225
===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .260%(d) $.0260 .260%(d) $.0260
===== ====== ===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping,
administrative and evaluation fees .079% $.0080 .079% $.0080
Trustee's fee and other operating expenses .116%(e) .0117 .116%(e) .0117
_____ ______ _____ ______
Total .195% $.0197 .195% $.0197
===== ====== ===== ======
Page 8
Bandwidth e-Business Energy
Portfolio Portfolio Portfolio
Series 2 Series 2 Series 7
______________ _______________ ______________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 3.50%(b) .350 3.50%(b) .350 3.50%(b) .350
______ ______ _____ ______ _____ ______
Maximum sales charge 4.50% $ .450 4.50% $ .450 4.50% $ .450
===== ====== ===== ====== ===== ======
Maximum sales charge imposed on reinvested dividends 3.50%(c) $ .350 3.50%(c) $ .350 3.50%(c) $ .350
===== ====== ===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .225%(d) $.0225 .225%(d) $.0225 .225%(d) $.0225
===== ====== ===== ====== ===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and
evaluation fees .100% $.0098 .100% $.0098 .100% $.0098
Trustee's fee and other operating expenses .152%(e) .0149 .152%(e) .0149 .152%(e) .0149
______ ______ _____ ______ _____ ______
Total .252% $.0247 .252% $.0247 .252% $.0247
===== ====== ===== ====== ===== ======
Glass-Steagall
Financial Internet New e-conomy
Opportunity Portfolio Portfolio
Portfolio Series Series 9 Series
______________ _______________ ______________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 3.50%(b) .350 3.50%(b) .350 3.50%(b) .350
______ ______ _____ ______ _____ ______
Maximum sales charge 4.50% $ .450 4.50% $ .450 4.50% $ .450
===== ====== ===== ====== ===== ======
Maximum sales charge imposed on reinvested dividends 3.50%(c) $ .350 3.50%(c) $ .350 3.50%(c) $ .350
===== ====== ===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .225%(d) $.0225 .225%(d) $.0225 .225%(d) $.0225
===== ====== ===== ====== ===== ======
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and
evaluation fees .100% $.0098 .100% $.0098 .100% $.0098
Trustee's fee and other operating expenses .152%(e) .0149 .152%(e) .0149 .152%(e) .0149
______ ______ _____ ______ _____ ______
Total .252% $.0247 .252% $.0247 .252% $.0247
===== ====== ===== ====== ===== ======
Online Media Pharmaceutical Technology
Portfolio Portfolio Portfolio
Series Series 8 Series 11
________________ ________________ _________________
Amount Amount Amount
per Unit per Unit per Unit
_________ ________ ________
Unit Holder Transaction Expenses
(as a percentage of public offering price)
Initial sales charge imposed on purchase 1.00%(a) $ .100 1.00%(a) $ .100 1.00%(a) $ .100
Deferred sales charge 3.50%(b) .350 3.50%(b) .350 3.50%(b) .350
_____ ______ _____ ______ _____ ______
Maximum sales charge 4.50% $ .450 4.50% $ .450 4.50% $ .450
===== ====== ===== ====== ===== ======
Maximum sales charge imposed on reinvested dividends 3.50%(c) $ .350 3.50%(c) $ .350 3.50%(c) $ .350
===== ====== ===== ====== ===== ======
Organization Costs
(as a percentage of public offering price)
Estimated organization costs .225%(d) $.0225 .225%(d) $.0225 .225%(d) $.0225
===== ====== ===== ====== ===== ======
Estimated Annual Trust Operating
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and
evaluation fees .100% $.0098 .100% $.0098 .100% $.0098
Trustee's fee and other operating expenses .152%(e) .0149 .152%(e) .0149 .152%(e) .0149
_____ ______ _____ ______ _____ ______
Total .252% $.0247 .252% $.0247 .252% $.0247
===== ====== ===== ====== ===== ======
Page 9
Example
This example is intended to help you compare the cost of investing in a
Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in a Trust for the periods shown
and sell all your Units at the end of those periods. The example also
assumes a 5% return on your investment each year and that a Trust's
operating expenses stay the same. Although your actual costs may vary,
based on these assumptions your costs would be:
1 Year 18 Months (f) 3 Years 5 Years
______ _____________ _______ _______
Bandwidth Select Portfolio, Series 2 $371 $381 $ - $ -
e-Business Select Portfolio, Series 2 371 381 - -
Glass-Steagall Financial Opportunity Select Portfolio Series 371 381 - -
Internet Select Portfolio, Series 2 371 381 - -
New e-conomy Select Portfolio Series 371 381 - -
Online Media Select Portfolio Series 371 381 - -
Pharmaceutical Select Portfolio, Series 2 371 381 - -
Technology Select Portfolio, Series 2 371 381 - -
Bandwidth Portfolio, Series 2 498 N.A. 549 606
e-Business Portfolio, Series 2 498 N.A. 549 606
Energy Portfolio, Series 7 498 N.A. 549 606
Glass-Steagall Financial Opportunity Portfolio Series 498 N.A. 549 606
Internet Portfolio, Series 9 498 N.A. 549 606
New e-conomy Portfolio Series 498 N.A. 549 606
Online Media Portfolio Series 498 N.A. 549 606
Pharmaceutical Portfolio, Series 8 498 N.A. 549 606
Technology Portfolio, Series 11 498 N.A. 549 606
The example will not differ if you hold rather than sell your Units at
the end of each period. The example does not reflect sales charges on
reinvested dividends and other distributions. If these sales charges
were included, your costs would be higher.
_____________
<FN>
(a) The amount of the initial sales charge will vary depending on the
purchase price of your Units. The amount of the initial sales charge is
actually the difference between the maximum sales charge of 3.25% of the
Public Offering Price for each Select Portfolio Series (4.50% in the
case of each Portfolio Series) and the maximum remaining deferred sales
charge (initially $.225 per Unit for each Select Portfolio Series and
$.350 per Unit for each Portfolio Series). When the Public Offering
Price exceeds $10.00 per Unit, the initial sales charge will exceed
1.00% of the Public Offering Price per Unit.
(b) The deferred sales charge is a fixed dollar amount equal to $.225
per Unit for each Select Portfolio Series and $.350 per Unit for each
Portfolio Series, which will be deducted in five monthly installments of
$.045 per Unit for each Select Portfolio Series and $.07 per Unit for
each Portfolio Series on the 20th day of each month (or the preceding
business day if the 20th day is not a business day) from August 18, 2000
through December 20, 2000. If you buy Units at a price of less than
$10.00 per Unit, the dollar amount of the deferred sales charge will not
Page 10
change but the deferred sales charge on a percentage basis will be more
than 2.25% of the Public Offering Price for each Select Portfolio Series
or more than 3.50% of the Public Offering Price for each Portfolio
Series. If you purchase Units after the first deferred sales charge
payment has been deducted, your purchase price will include both the
initial sales charge and any remaining deferred sales charge payments.
If you sell or redeem your Units before you have paid the total deferred
sales charge on your Units, you will have to pay the remainder at that
time.
(c) Reinvested dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "Income and Capital
Distributions."
(d) You will bear all or a portion of the costs incurred in organizing
your respective Trust. These estimated organization costs are included
in the price you pay for your Units and will be deducted from the assets
of a Trust at the earlier of six months after the Initial Date of
Deposit or the end of the initial offering period.
(e) For the Portfolio Series, other operating expenses include the costs
incurred by each Portfolio Series for annually updating those Trusts'
registration statements. Other operating expenses do not, however,
include brokerage costs and other portfolio transaction fees for any of
the Trusts. In certain circumstances the Trusts may incur additional
expenses not set forth above. See "Expenses and Charges."
(f) For each Select Portfolio Series, the Example represents the
estimated costs incurred through each Trust's approximate 18-month life.
</FN>
Page 11
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 395
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 395, comprised of the Bandwidth Select
Portfolio, Series 2; e-Business Select Portfolio, Series 2; Glass-
Steagall Financial Opportunity Select Portfolio Series; Internet Select
Portfolio, Series 2; New e-conomy Select Portfolio Series; Online Media
Select Portfolio Series; Pharmaceutical Select Portfolio, Series 2;
Technology Select Portfolio, Series 2; Bandwidth Portfolio, Series 2; e-
Business Portfolio, Series 2; Energy Portfolio, Series 7; Glass-Steagall
Financial Opportunity Portfolio Series; Internet Portfolio, Series 9;
New e-conomy Portfolio Series; Online Media Portfolio Series;
Pharmaceutical Portfolio, Series 8; and Technology Portfolio, Series 11,
as of the opening of business on January __, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of net assets
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
statements of net assets. Our procedures included confirmation of the
letter of credit allocated among the Trusts on January __, 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 395,
comprised of the Bandwidth Select Portfolio, Series 2; e-Business Select
Portfolio, Series 2; Glass-Steagall Financial Opportunity Select
Portfolio Series; Internet Select Portfolio, Series 2; New e-conomy
Select Portfolio Series; Online Media Select Portfolio Series;
Pharmaceutical Select Portfolio, Series 2; Technology Select Portfolio,
Series 2; Bandwidth Portfolio, Series 2; e-Business Portfolio, Series 2;
Energy Portfolio, Series 7; Glass-Steagall Financial Opportunity
Portfolio Series; Internet Portfolio, Series 9; New e-conomy Portfolio
Series; Online Media Portfolio Series; Pharmaceutical Portfolio, Series
8; and Technology Portfolio, Series 11, at the opening of business on
January __, 2000 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
January __, 2000
Page 12
Statements of Net Assets
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Glass-Steagall
Financial
Bandwidth e-Business Opportunity Internet Select
Select Portfolio Select Portfolio Select Portfolio Portfolio
Series 2 Series 2 Series Series 2
____________ ____________ ____________ ____________
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $ $ $ $
Less liability for reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $ $
Less maximum sales charge (5) ( ) ( ) ( ) ( )
Less estimated reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
______________
<FN>
See "Notes to Statements of Net Assets" on page 17.
</FN>
Page 13
Statements of Net Assets (cont'd.)
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
New e-conomy Online Media Pharmaceutical Technology
Select Portfolio Select Portfolio Select Portfolio Select Portfolio
Series Series Series 2 Series 2
__________ _____________ ______________ ______________
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $ $ $ $
Less liability for reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $ $
Less maximum sales charge (5) ( ) ( ) ( ) ( )
Less estimated reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
______________
<FN>
See "Notes to Statements of Net Assets" on page 17.
</FN>
Page 14
Statements of Net Assets (cont'd.)
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Bandwidth e-Business Energy Glass-Steagall
Portfolio Portfolio Portfolio Financial Opportunity
Series 2 Series 2 Series 7 Portfolio Series
____________ __________ ___________ ___________
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $ $ $ $
Less liability for reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $ $
Less maximum sales charge (5) ( ) ( ) ( ) ( )
Less estimated reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
______________
<FN>
See "Notes to Statements of Net Assets" on page 17.
</FN>
Page 15
Statements of Net Assets (cont'd.)
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Internet New e-conomy Online Media Pharmaceutical
Portfolio Portfolio Portfolio Portfolio
Series 9 Series Series Series 8
____________ __________ __________ ______________
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $ $ $ $
Less liability for reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $ $
Less maximum sales charge (5) ( ) ( ) ( ) ( )
Less estimated reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
________ ________ ________ ________
Net assets $ $ $ $
======== ======== ======== ========
______________
<FN>
See "Notes to Statements of Net Assets" on page 17.
</FN>
Page 16
Statements of Net Assets (cont'd.)
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Technology
Portfolio
Series 11
______________
NET ASSETS
Investment in Securities represented by purchase contracts (1) (2) $
Less liability for reimbursement to Sponsor for organization costs (3) ( )
Less liability for deferred sales charge (4) ( )
________
Net assets $
========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $
Less maximum sales charge (5) ( )
Less estimated reimbursement to Sponsor for organization costs (3) ( )
________
Net assets $
========
_____________
<FN>
NOTES TO STATEMENTS OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit issued by The Chase Manhattan Bank,
of which $3,400,000 will be allocated among each of the 17 Trusts in FT
395, has been deposited with the Trustee as collateral, covering the
monies necessary for the purchase of the Securities according to their
purchase contracts.
(3) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trusts. These costs have been estimated at $.0260 per
Unit for each Select Portfolio Series and $.0225 per Unit for each
Portfolio Series. A payment will be made at the earlier of six months
after the Initial Date of Deposit or the end of the initial offering
period to an account maintained by the Trustee from which the obligation
of the investors to the Sponsor will be satisfied. To the extent that
actual organization costs of a Trust are greater than the estimated
amount, only the estimated organization costs added to the Public
Offering Price will be reimbursed to the Sponsor and deducted from the
assets of such Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions of $.225 per Unit in the case of each Select Portfolio
Series, or $.35 per Unit in the case of each Portfolio Series, payable
to us in five equal monthly installments beginning on August 18, 2000
and on the twentieth day of each month thereafter (or if such date is
not a business day, on the preceding business day) through December 20,
2000. If you redeem your Units before December 20, 2000 you will have to
pay the remaining amount of the deferred sales charge applicable to such
Units when you redeem them.
(5) The aggregate cost to investors includes a maximum sales charge
(comprised of an initial sales charge and a deferred sales charge)
computed at the rate of 3.25% of the Public Offering Price per Unit for
each Select Portfolio Series (equivalent to 3.283% of the net amount
invested, exclusive of the deferred sales charge) or 4.50% of the Public
Offering Price per Unit for each Portfolio Series (equivalent to 4.545%
of the net amount invested, exclusive of the deferred sales charge),
assuming no reduction of sales charge as set forth under "Public
Offering."
</FN>
Page 17
Schedule of Investments
Bandwidth Select Portfolio, Series 2
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_________ _____________________________________ _________ ______ _________
Communications Services
_______________________
T AT&T Corp. $ $
COVD Covad Communications Group, Inc.
GBLX Global Crossing Ltd. (4)
LVLT Level 3 Communications, Inc.
WCOM MCI WorldCom, Inc.
QWST Qwest Communications International Inc.
Communications Equipment
________________________
ADCT ADC Telecommunications, Inc.
CMTN Copper Mountain Networks, Inc.
LU Lucent Technologies Inc.
NT Nortel Networks Corporation
TLAB Tellabs, Inc.
Fiber Optics
_____________________
HLIT Harmonic Inc.
JDSU JDS Uniphase Corporation
Networking Products
_____________________
CSCO Cisco Systems, Inc.
JNPR Juniper Networks, Inc.
RBAK Redback Networks Inc.
Semiconductors
_____________________
AMCC Applied Micro Circuits Corporation
BRCM Broadcom Corporation (Class A)
CNXT Conexant Systems, Inc.
PMCS PMC-Sierra, Inc.
VTSS Vitesse Semiconductor Corporation
Wireless Communications
_______________________
ERICY L.M. Ericsson AB (ADR)
MOT Motorola, Inc.
NOK Nokia Oy (ADR)
QCOM QUALCOMM Incorporated
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 18
Schedule of Investments
e-Business Select Portfolio, Series 2
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
Number of Aggregate Market Cost of
of Ticker Symbol and Offering Value per Securities to
Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
______ _______________________________________ __________ ______ _________
Horizontal Portals
__________________
AOL America Online, Inc. $ $
ARBA Ariba, Inc.
CMRC Commerce One, Inc.
PPRO PurchasePro.com, Inc.
VERT VerticalNet, Inc.
YHOO Yahoo! Inc.
Infrastructure
_________________
BVSN BroadVision, Inc.
CHKP Check Point Software Technologies Ltd. (4)
ISLD Digital Island
EXDS Exodus Communications, Inc.
LVLT Level 3 Communications, Inc.
WCOM MCI WorldCom, Inc.
MSFT Microsoft Corporation
SEBL Siebel Systems, Inc.
VRSN VeriSign, Inc.
Procurement
_________________
CSCO Cisco Systems, Inc.
DELL Dell Computer Corporation
IBM International Business Machines Corporation
ITWO i2 Technologies, Inc.
ORCL Oracle Corporation
Venture Capital
_________________
CMGI CMGI Inc.
ICGE Internet Capital Group, Inc.
Vertical Portals
_________________
CMDX Chemdex Corporation
HLTH Healtheon/WebMD Corporation
PCOR pcOrder.com, Inc.
______ ________
Total Investments 100% $
====== ========
_________________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 19
Schedule of Investments
Glass-Steagall Financial Opportunity Select Portfolio Series
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
Banks & Thrifts
_________________
BAC Bank of America Corporation $ $
CMB The Chase Manhattan Corporation
FSR Firstar Corporation
FBF Fleet Boston Corporation
KEY KeyCorp
MEL Mellon Financial Corporation
NTRS Northern Trust Corporation
STT State Street Corporation
WFC Wells Fargo Company
Financial Services
__________________
AXP American Express Company
COF Capital One Financial Corporation
C Citigroup Inc.
HI Household International, Inc.
KRB MBNA Corporation
PVN Providian Financial Corporation
Insurance
_________
AFL AFLAC Incorporated
AIG American International Group, Inc.
MMC Marsh & McLennan Companies, Inc.
NFS Nationwide Financial Services, Inc. (Class A)
Investment Services
___________________
AMTD Ameritrade Holding Corporation (Class A)
DLJ Donaldson, Lufkin & Jenrette, Inc.
EGRP E*TRADE Group, Inc.
EV Eaton Vance Corp.
GS The Goldman Sachs Group, Inc.
NITE Knight/Trimark Group, Inc. (Class A)
LEH Lehman Brothers Holdings Inc.
MER Merrill Lynch & Co., Inc.
MWD Morgan Stanley Dean Witter & Co.
TROW T.Rowe Price Associates, Inc.
SCH The Charles Schwab Corporation
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 20
Schedule of Investments
Internet Select Portfolio, Series 2
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
Access/Information Providers
____________________________
T AT&T Corp. $ $
AOL America Online, Inc.
WCOM MCI WorldCom, Inc.
QWST Qwest Communications International Inc.
Communications Equipment
________________________
JDSU JDS Uniphase Corporation
LU Lucent Technologies Inc.
TLAB Tellabs, Inc.
Computers & Peripherals
_______________________
DELL Dell Computer Corporation
EMC EMC Corporation
GTW Gateway Inc.
HWP Hewlett-Packard Company
SUNW Sun Microsystems, Inc.
Internet Content
________________
CMGI CMGI Inc.
ICGE Internet Capital Group, Inc.
LCOS Lycos, Inc.
YHOO Yahoo! Inc.
Internet Software & Services
____________________________
BVSN BroadVision, Inc.
CHKP Check Point Software Technologies Ltd. (4)
EXDS Exodus Communications, Inc.
INTU Intuit Inc.
MSFT Microsoft Corporation
ORCL Oracle Corporation
RNWK RealNetworks, Inc.
Networking Products
_____________________
CSCO Cisco Systems, Inc.
JNPR Juniper Networks, Inc.
RDBK Redback Networks Inc.
Semiconductors
_____________________
CNXT Conexant Systems, Inc.
INTC Intel Corporation
PMCS PMC-Sierra, Inc.
VTSS Vitesse Semiconductor Corporation
______ _________
Total Investments 100% $
====== =========
______________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 21
Schedule of Investments
New e-conomy Select Portfolio Series
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
Bandwidth
_____________
T AT&T Corp. $ $
CSCO Cisco Systems, Inc.
LU Lucent Technologies Inc.
WCOM MCI WorldCom, Inc.
TLAB Tellabs, Inc.
e-Business
_____________
ARBA Ariba, Inc.
BVSN BroadVision, Inc.
CMRC Commerce One, Inc.
EXDS Exodus Communications, Inc.
ICGE Internet Capital Group, Inc.
e-Infrastructure
_____________
DELL Dell Computer Corporation
EMC EMC Corporation
HWP Hewlett-Packard Company
ORCL Oracle Corporation
SUNW Sun Microsystems, Inc.
Internet
_____________
AOL America Online, Inc.
CMGI CMGI Inc.
LCOS Lycos, Inc.
MSFT Microsoft Corporation
YHOO Yahoo! Inc.
Wireless
_____________
ERICY L.M. Ericsson AB (ADR)
MOT Motorola, Inc.
NOK Nokia Oy (ADR)
QCOM QUALCOMM Incorporated
VOD Vodafone AirTouch Plc (ADR)
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 22
Schedule of Investments
Online Media Select Portfolio Series
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
Advertising
___________
IPG The Interpublic Group of Companies, Inc. $ $
OMC Omnicom Group Inc.
TMPW TMP Worldwide Inc.
YNR Young & Rubicam Inc.
Internet
________
AOL America Online, Inc.
DCLK DoubleClick Inc.
LCOS Lycos, Inc.
RNWK RealNetworks, Inc.
YHOO Yahoo! Inc.
Media/Content
_____________
DIS The Walt Disney Company
GCI Gannett Co., Inc.
KRI Knight-Ridder, Inc.
NYT The New York Times Company (Class A)
TMC The Times Mirror Company (Class A)
TRB Tribune Company
Webcasting
__________
AFM AMFM Inc.
CBS CBS Corporation
CCU Clear Channel Communications, Inc.
EMMS Emmis Communications Corporation (Class A)
INF Infinity Broadcasting Corporation (Class A)
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 23
Schedule of Investments
Pharmaceutical Select Portfolio, Series 2
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_________ _______________________________________ __________ ______ ________
ABT Abbott Laboratories $ $
AMGN Amgen Inc.
BGEN Biogen, Inc.
BMY Bristol-Myers Squibb Company
CHIR Chiron Corporation
ELN Elan Corporation Plc (ADR)
GENZ Genzyme Corporation (General Division)
GLX Glaxo Wellcome Plc (ADR)
IDPH IDEC Pharmaceuticals Corporation
IMNX Immunex Corporation
JNJ Johnson & Johnson
LLY Eli Lilly and Company
MEDI MedImmune, Inc.
MRK Merck & Co., Inc.
NVTSY Novartis AG (ADR)
PFE Pfizer Inc.
ROHHY Roche Holdings AG (ADR)
SGP Schering-Plough Corporation
SBH SmithKline Beecham Plc (ADR)
WLA Warner-Lambert Company
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 24
Schedule of Investments
Technology Select Portfolio, Series 2
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_________ _______________________________________ __________ ______ ________
Computer & Peripherals
______________________
DELL Dell Computer Corporation $ $
EMC EMC Corporation
GTW Gateway Inc.
HWP Hewlett-Packard Company
SLR Solectron Corporation
SUNW Sun Microsystems, Inc.
Computer Software & Services
____________________________
BMCS BMC Software, Inc.
CHKP Check Point Software Technologies Ltd. (4)
CPWR Compuware Corporation
LGTO Legato Systems, Inc.
MSFT Microsoft Corporation
ORCL Oracle Corporation
Data Networking/Communications Equipment
__________________________________
ADCT ADC Telecommunications, Inc.
CSCO Cisco Systems, Inc.
LU Lucent Technologies Inc.
NOK Nokia Oy (ADR)
TLAB Tellabs, Inc.
Semiconductor Equipment
___________________
AMAT Applied Materials, Inc.
NVLS Novellus Systems, Inc.
Semiconductors
______________
ALTR Altera Corporation
INTC Intel Corporation
MXIM Maxim Integrated Products, Inc.
QLGC QLogic Corporation
TXN Texas Instruments Incorporated
VTSS Vitesse Semiconductor Corporation
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 25
Schedule of Investments
Bandwidth Portfolio, Series 2
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_________ _____________________________________ _________ ______ _________
Communications Services
_____________________
T AT&T Corp. $ $
COVD Covad Communications Group, Inc.
GBLX Global Crossing Ltd. (4)
LVLT Level 3 Communications, Inc.
WCOM MCI WorldCom, Inc.
QWST Qwest Communications International Inc.
Communications Equipment
_____________________
ADCT ADC Telecommunications, Inc.
CMTN Copper Mountain Networks, Inc.
LU Lucent Technologies Inc.
NT Nortel Networks Corporation
TLAB Tellabs, Inc.
Fiber Optics
_____________________
HLIT Harmonic Inc.
JDSU JDS Uniphase Corporation
Networking Products
_____________________
CSCO Cisco Systems, Inc.
JNPR Juniper Networks, Inc.
RBAK Redback Networks Inc.
Semiconductors
_____________________
AMCC Applied Micro Circuits Corporation
BRCM Broadcom Corporation (Class A)
CNXT Conexant Systems, Inc.
PMCS PMC-Sierra, Inc.
VTSS Vitesse Semiconductor Corporation
Wireless Communications
_____________________
ERICY L.M. Ericsson AB (ADR)
MOT Motorola, Inc.
NOK Nokia Oy (ADR)
QCOM QUALCOMM Incorporated
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 26
Schedule of Investments
e-Business Portfolio, Series 2
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
Number of Aggregate Market Cost of
of Ticker Symbol and Offering Value per Securities to
Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
______ _______________________________________ __________ ______ _________
Horizontal Portals
_________________
AOL America Online, Inc. $ $
ARBA Ariba, Inc.
CMRC Commerce One, Inc.
PPRO PurchasePro.com, Inc.
VERT VerticalNet, Inc.
YHOO Yahoo! Inc.
Infrastructure
_________________
BVSN BroadVision, Inc.
CHKP Check Point Software Technologies Ltd. (4)
ISLD Digital Island
EXDS Exodus Communications, Inc.
LVLT Level 3 Communications, Inc.
WCOM MCI WorldCom, Inc.
MSFT Microsoft Corporation
SEBL Siebel Systems, Inc.
VRSN VeriSign, Inc.
Procurement
_________________
CSCO Cisco Systems, Inc.
DELL Dell Computer Corporation
IBM International Business Machines Corporation
ITWO i2 Technologies, Inc.
ORCL Oracle Corporation
Venture Capital
_________________
CMGI CMGI Inc.
ICGE Internet Capital Group, Inc.
Vertical Portals
_________________
CMDX Chemdex Corporation
HLTH Healtheon/WebMD Corporation
PCOR pcOrder.com, Inc.
______ ________
Total Investments 100% $
====== ========
_________________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 27
Schedule of Investments
Energy Portfolio, Series 7
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Approximate
Percentage
Number of Aggregate Market Cost of
of Ticker Symbol and Offering Value per Securities to
Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
______ _______________________________________ __________ ______ _________
Natural Gas
___________
EPG El Paso Energy Corporation $ $
ENE Enron Corp.
Oil & Gas-Drilling
__________________
GLM Global Marine Inc.
NBR Nabors Industries, Inc.
NE Noble Drilling Corporation
SDC Santa Fe International Corporation
RIG Transocean Offshore Inc.
Oil & Gas-Exploration & Production
_____________________________
BRR Barrett Resources Corporation
BR Burlington Resources Inc.
EOG EOG Resources, Inc.
VRI Vastar Resources, Inc.
Oil-Field Services
_______________
BJS BJ Services Company
HAL Halliburton Company
SLB Schlumberger Limited
TDW Tidewater Inc.
WFT Weatherford International, Inc.
Oil-Integrated
_____________
BPA BP Amoco Plc (ADR)
CHV Chevron Corporation
E ENI SpA (ADR)
XOM Exxon Mobil Corporation
RD Royal Dutch Petroleum Company (4)
TX Texaco Inc.
TOT Total Fina SA (ADR)
MRO USX-Marathon Group
Oil-Refining & Marketing
_____________________
TOS Tosco Corporation
______ ________
Total Investments 100% $
====== ========
_________________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 28
Schedule of Investments
Glass-Steagall Financial Opportunity Portfolio Series
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
Banks & Thrifts
_________________
BAC Bank of America Corporation $ $
CMB The Chase Manhattan Corporation
FSR Firstar Corporation
FBF Fleet Boston Corporation
KEY KeyCorp
MEL Mellon Financial Corporation
NTRS Northern Trust Corporation
STT State Street Corporation
WFC Wells Fargo Company
Financial Services
_________________
AXP American Express Company
COF Capital One Financial Corporation
C Citigroup Inc.
HI Household International, Inc.
KRB MBNA Corporation
PVN Providian Financial Corporation
Insurance
_________________
AFL AFLAC Incorporated
AIG American International Group, Inc.
MMC Marsh & McLennan Companies, Inc.
NFS Nationwide Financial Services, Inc. (Class A)
Investment Services
_________________
AMTD Ameritrade Holding Corporation (Class A)
DLJ Donaldson, Lufkin & Jenrette, Inc.
EGRP E*TRADE Group, Inc.
EV Eaton Vance Corp.
GS The Goldman Sachs Group, Inc.
NITE Knight/Trimark Group, Inc. (Class A)
LEH Lehman Brothers Holdings Inc.
MER Merrill Lynch & Co., Inc.
MWD Morgan Stanley Dean Witter & Co.
TROW T.Rowe Price Associates, Inc.
SCH The Charles Schwab Corporation
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 29
Schedule of Investments
Internet Portfolio, Series 9
FT 395
At the Opening of Business on the Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
Access/Information Providers
_____________________
T AT&T Corp. $ $
AOL America Online, Inc.
WCOM MCI WorldCom, Inc.
QWST Qwest Communications International Inc.
Communications Equipment
_____________________
JDSU JDS Uniphase Corporation
LU Lucent Technologies Inc.
TLAB Tellabs, Inc.
Computers & Peripherals
_____________________
DELL Dell Computer Corporation
EMC EMC Corporation
GTW Gateway Inc.
HWP Hewlett-Packard Company
SUNW Sun Microsystems, Inc.
Internet Content
_____________________
CMGI CMGI Inc.
ICGE Internet Capital Group, Inc.
LCOS Lycos, Inc.
YHOO Yahoo! Inc.
Internet Software & Services
_____________________
BVSN BroadVision, Inc.
CHKP Check Point Software Technologies Ltd. (4)
EXDS Exodus Communications, Inc.
INTU Intuit Inc.
MSFT Microsoft Corporation
ORCL Oracle Corporation
RNWK RealNetworks, Inc.
Networking Products
_____________________
CSCO Cisco Systems, Inc.
JNPR Juniper Networks, Inc.
RDBK Redback Networks Inc.
Semiconductors
_____________________
CNXT Conexant Systems, Inc.
INTC Intel Corporation
PMCS PMC-Sierra, Inc.
VTSS Vitesse Semiconductor Corporation
______ _________
Total Investments 100% $
====== =========
______________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 30
Schedule of Investments
New e-conomy Portfolio Series
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_________ _______________________________________ __________ ______ ________
Bandwidth
_____________
T AT&T Corp. $ $
CSCO Cisco Systems, Inc.
LU Lucent Technologies Inc.
WCOM MCI WorldCom, Inc.
TLAB Tellabs, Inc.
e-Business
_____________
ARBA Ariba, Inc.
BVSN BroadVision, Inc.
CMRC Commerce One, Inc.
EXDS Exodus Communications, Inc.
ICGE Internet Capital Group, Inc.
e-Infrastructure
_____________
DELL Dell Computer Corporation
EMC EMC Corporation
HWP Hewlett-Packard Company
ORCL Oracle Corporation
SUNW Sun Microsystems, Inc.
Internet
_____________
AOL America Online, Inc.
CMGI CMGI Inc.
LCOS Lycos, Inc.
MSFT Microsoft Corporation
YHOO Yahoo! Inc.
Wireless
_____________
ERICY L.M. Ericsson AB (ADR)
MOT Motorola, Inc.
NOK Nokia Oy (ADR)
QCOM QUALCOMM Incorporated
VOD Vodafone AirTouch Plc (ADR)
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 31
Schedule of Investments
Online Media Portfolio Series
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
Advertising
___________
IPG The Interpublic Group of Companies, Inc. $ $
OMC Omnicom Group Inc.
TMPW TMP Worldwide Inc.
YNR Young & Rubicam Inc.
Internet
________
AOL America Online, Inc.
DCLK DoubleClick Inc.
LCOS Lycos, Inc.
RNWK RealNetworks, Inc.
YHOO Yahoo! Inc.
Media/Content
_____________
DIS The Walt Disney Company
GCI Gannett Co., Inc.
KRI Knight-Ridder, Inc.
NYT The New York Times Company (Class A)
TMC The Times Mirror Company (Class A)
TRB Tribune Company
Webcasting
__________
AFM AMFM Inc.
CBS CBS Corporation
CCU Clear Channel Communications, Inc.
EMMS Emmis Communications Corporation (Class A)
INF Infinity Broadcasting Corporation (Class A)
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 32
Schedule of Investments
Pharmaceutical Portfolio, Series 8
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
ABT Abbott Laboratories $ $
AMGN Amgen Inc.
BGEN Biogen, Inc.
BMY Bristol-Myers Squibb Company
CHIR Chiron Corporation
ELN Elan Corporation Plc (ADR)
GENZ Genzyme Corporation (General Division)
GLX Glaxo Wellcome Plc (ADR)
IDPH IDEC Pharmaceuticals Corporation
IMNX Immunex Corporation
JNJ Johnson & Johnson
LLY Eli Lilly and Company
MEDI MedImmune, Inc.
MRK Merck & Co., Inc.
NVTSY Novartis AG (ADR)
PFE Pfizer Inc.
ROHHY Roche Holdings AG (ADR)
SGP Schering-Plough Corporation
SBH SmithKline Beecham Plc (ADR)
WLA Warner-Lambert Company
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
See "Notes to Schedules of Investments" on page 34.
</FN>
Page 33
Schedule of Investments
Technology Portfolio, Series 11
FT 395
At the Opening of Business on the
Initial Date of Deposit-January __, 2000
Approximate
Percentage
of Aggregate Market Cost of
Number Ticker Symbol and Offering Value per Securities to
of Shares Name of Issuer of Securities (1) Price (3) Share the Trust (2)
_______ _______________________________________ __________ ______ ________
Computer & Peripherals
_____________________
DELL Dell Computer Corporation $ $
EMC EMC Corporation
GTW Gateway Inc.
HWP Hewlett-Packard Company
SLR Solectron Corporation
SUNW Sun Microsystems, Inc.
Computer Software & Services
____________________________
BMCS BMC Software, Inc.
CHKP Check Point Software Technologies Ltd. (4)
CPWR Compuware Corporation
LGTO Legato Systems, Inc.
MSFT Microsoft Corporation
ORCL Oracle Corporation
Data Networking/Communications Equipment
__________________________________
ADCT ADC Telecommunications, Inc.
CSCO Cisco Systems, Inc.
LU Lucent Technologies Inc.
NOK Nokia Oy (ADR)
TLAB Tellabs, Inc.
Semiconductor Equipment
___________________
AMAT Applied Materials, Inc.
NVLS Novellus Systems, Inc.
Semiconductors
____________
ALTR Altera Corporation
INTC Intel Corporation
MXIM Maxim Integrated Products, Inc.
QLGC QLogic Corporation
TXN Texas Instruments Incorporated
VTSS Vitesse Semiconductor Corporation
______ _________
Total Investments 100% $
====== =========
_____________
<FN>
NOTES TO SCHEDULES OF INVESTMENTS
(1) All Securities are represented by regular way contracts to purchase
such Securities which are backed by an irrevocable letter of credit
deposited with the Trustee. We entered into purchase contracts for the
Securities on January __, 2000. Each Select Portfolio Series has a
Mandatory Termination Date of ______, 2001. Each Portfolio Series has a
Mandatory Termination Date of ______, 2005.
Page 34
(2) The cost of the Securities to a Trust represents the aggregate
underlying value with respect to the Securities acquired (generally
determined by the closing sale prices of the listed Securities and the
ask prices of the over-the-counter traded Securities at the Evaluation
Time on the business day preceding the Initial Date of Deposit). The
valuation of the Securities has been determined by the Evaluator, an
affiliate of ours. The cost of the Securities to us and our profit or
loss (which is the difference between the cost of the Securities to us
and the cost of the Securities to a Trust) are set forth below:
Cost of
Securities Profit
to Sponsor (Loss)
_________ _______
Bandwidth Select Portfolio, Series 2 $ $
e-Business Select Portfolio, Series 2
Glass-Steagall Financial Opportunity Select Portfolio Series
Internet Select Portfolio, Series 2
New e-conomy Select Portfolio Series
Online Media Select Portfolio Series
Pharmaceutical Select Portfolio, Series 2
Technology Select Portfolio, Series 2
Bandwidth Portfolio, Series 2
e-Business Portfolio, Series 2
Energy Portfolio, Series 7
Glass-Steagall Financial Opportunity Portfolio Series
Internet Portfolio, Series 9
New e-conomy Portfolio Series
Online Media Portfolio Series
Pharmaceutical Portfolio, Series 8
Pharmaceutical Portfolio, Series 8
Technology Portfolio, Series 11
(3) The portfolio may contain additional Securities each of which will
not exceed approximately __% of the Aggregate Offering Price. Although
it is not the Sponsor's intention, certain of the Securities listed
above may not be included in the final portfolio. Also, the percentages
of the Aggregate Offering Price for the Securities are approximate
amounts and may vary in the final portfolio.
(4) This Security represents the common stock of a foreign company which
trades directly on a U.S. national securities exchange.
</FN>
Page 35
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created several similar
yet separate series of a unit investment trust which we have named the
FT Series. We designate each of these series of the FT Series with a
different series number. Each of the following is a separate portfolio,
or series, of FT 395:
- - Bandwidth Select Portfolio, Series 2
- - e-Business Select Portfolio, Series 2
- - Glass-Steagall Financial Opportunity Select Portfolio Series
- - Internet Select Portfolio, Series 2
- - New e-conomy Select Portfolio Series
- - Online Media Select Portfolio Series
- - Pharmaceutical Select Portfolio, Series 2
- - Technology Select Portfolio, Series 2
- - Bandwidth Portfolio, Series 2
- - e-Business Portfolio, Series 2
- - Energy Portfolio, Series 7
- - Glass-Steagall Financial Opportunity Portfolio Series
- - Internet Portfolio, Series 9
- - New e-conomy Portfolio Series
- - Online Media Portfolio Series
- - Pharmaceutical Portfolio, Series 8
- - Technology Portfolio, Series 11
YOU MAY GET MORE SPECIFIC DETAILS CONCERNING THE NATURE, STRUCTURE AND
RISKS OF THIS PRODUCT IN AN "INFORMATION SUPPLEMENT" BY CALLING THE
TRUSTEE AT 1-800-682-7520.
Mandatory Termination Date.
Each Trust will terminate on the Mandatory Termination Date set forth in
the "Summary of Essential Information" for each Trust. Each Trust was
created under the laws of the State of New York by a Trust Agreement
(the "Indenture") dated the Initial Date of Deposit. This agreement,
entered into among Nike Securities L.P., as Sponsor, The Chase Manhattan
Bank as Trustee and First Trust Advisors L.P. as Portfolio Supervisor
and Evaluator, governs the operation of the Trusts.
How We Created the Trusts.
On the Initial Date of Deposit, we deposited portfolios of common stocks
with the Trustee and in turn, the Trustee delivered documents to us
representing our ownership of the Trusts in the form of units ("Units").
With our deposit of Securities on the Initial Date of Deposit we
established a percentage relationship among the Securities in each
Trust's portfolio, as stated under "Schedule of Investments" for each
Trust. After the Initial Date of Deposit, we may deposit additional
Securities in the Trusts, or cash (including a letter of credit) with
instructions to buy more Securities to create new Units for sale. If we
create additional Units, we will attempt, to the extent practicable, to
maintain the percentage relationship established among the Securities on
the Initial Date of Deposit, and not the percentage relationship
existing on the day we are creating 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 the Trusts, on a market value basis, will also change
daily. The portion of Securities represented by each Unit will not
change as a result of the deposit of additional Securities or cash in a
Trust. If we deposit cash, you and new investors may experience a
dilution of your investment. This is because prices of Securities will
fluctuate between the time of the cash deposit and the purchase of the
Securities, and because the Trusts pay the associated brokerage fees. To
reduce this dilution, the Trusts will try to buy the Securities as close
to the Evaluation Time and as close to the evaluation price as possible.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may retain and pay us (or our affiliate) to act as agent for the
Trusts to buy Securities. If we or an affiliate of ours act as agent to
the Trusts, we will be subject to the restrictions under the Investment
Company Act of 1940, as amended.
We cannot guarantee that a Trust will keep its present size and
composition for any length of time. Securities may periodically be sold
under certain circumstances, and the proceeds from these sales will be
used to meet Trust obligations or distributed to Unit holders, but will
not be reinvested. However, Securities will not be sold to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if they no longer meet the criteria by
which they were selected. You will not be able to dispose of or vote any
of the Securities in the Trusts. As the holder of the Securities, the
Trustee will vote all of the Securities and will do so based on our
instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Page 36
Securities initially deposited in a Trust fails, unless we can purchase
substitute Securities ("Replacement Securities"), we will refund to you
that portion of the purchase price and sales charge resulting from the
failed contract on the next Income Distribution Date. Any Replacement
Security a Trust acquires will be identical to those from the failed
contract.
Portfolios
Objectives.
The objective of each Trust is to provide investors with the potential
for above-average capital appreciation through an investment in a
diversified portfolio of common stocks of companies in the industry
sector or investment focus for which the Trust is named. A diversified
portfolio helps to offset the risks normally associated with such an
investment, although it does not eliminate them entirely. The companies
selected for the Trusts have been researched and evaluated using
database screening techniques, fundamental analysis, and the judgment of
the Sponsor's research analysts. Each Select Portfolio Series has an
expected maturity of approximately 18 months whereas each Portfolio
Series has an expected maturity of approximately five years.
Bandwidth Select Portfolio, Series 2 and Bandwidth Portfolio, Series 2
each consist of a portfolio of common stocks of telecommunications
companies which are focusing on bandwidth technologies. The term
bandwidth refers to the amount of information that can be transmitted
from one user to another in a given amount of time. The speed at which
these signals travel is often as important to the end-user as the
information that is being transmitted. The growing demand for bandwidth
is being driven by the surge in the volume and complexity of data
communications on the Internet. For example, it would take more
bandwidth to download a video game off the Internet in one second than a
page of text.
Now that the Internet infrastructure is firmly in place, the demand for
bandwidth should continue to grow as more people access the Web
worldwide, and as telecommunications service providers begin to mass
market their newer and faster broadband systems.
The following factors support our positive outlook for the companies in
these portfolios:
- - Communications networks presently carry nearly 30 times more voice
traffic than data. In light of the growth in Internet usage, data
traffic is expected to surpass voice communications in the years ahead.
- - Wireless communications is now the fastest growing segment of the
communications equipment market. The demand for wireless products and
services should continue to grow as analog networks are upgraded to
digital systems. Digital signals will accommodate wireless data
communications and potentially increase demand for bandwidth.
- - The transition from copper wiring to fiber-optics is occurring at a
brisk pace. In 1998, it is estimated that over 20 million miles of fiber
cables were installed across the United States.
- - Internet access revenues are expected to shift from independent
Internet service providers to telecom and cable companies.
Deregulation. The U.S. Telecommunications Act of 1996 and the 1997
Telecommunications Agreement, passed by the World Trade Organization,
have opened markets domestically and internationally to encourage
competition and capital investment. New service providers, such as Level
3 Communications, are investing aggressively in network equipment.
Broadband Systems. The future of high-speed access to the Internet lies
in Digital Subscriber Lines (DSL) and cable modems. A new DSL technology
standard, known as the G.Lite, will allow for high-speed Internet access
concurrent with normal telephone service. The technology can be
installed directly by consumers into their PCs, so there will be no
added cost to the telecommunications carriers.
Communications Equipment. The demand for value-added services, like high-
speed Internet access, should continue to fuel demand for more bandwidth
and communications equipment. On a worldwide basis, demand for
communications equipment was estimated at approximately $250 billion in
1997. With the level of competition intensifying, telecommunications
companies have the potential to spend more on equipment in the future.
e-Business Select Portfolio, Series 2 and e-Business Portfolio, Series 2
each consist of a portfolio of common stocks of companies that are
either marketing their goods and services on the Internet or selling
their products and services to those companies transacting business on
the Web.
Page 37
Until recently, the media has focused its attention primarily on
companies that are engaging in business to consumer e-commerce. It is
now becoming apparent, however, that business-to-business e-commerce is
growing at a much faster rate than the more consumer driven market.
The following factors support our positive outlook for business-to-
business e-commerce:
- - The Internet economy, though still in its formative stages, generated
$300 billion in revenue in the U.S in 1998. To put this new economy into
perspective, the auto and telecommunications industries, far more
mature, generated $350 and $270 billion of revenue respectively, over
the same period.
- - It is estimated that as e-commerce evolves, business-to-business
revenues have the potential to outpace business to consumer revenues by
approximately tenfold. Business to consumer companies may dominate the
total number of e-commerce companies (approximately 64%, compared to
approximately 36% providing business-to-business services in 1998), but
the majority of total revenue is being generated by business to business
e-commerce (approximately 23% of total revenue for business to consumer
compared to approximately 77% of total revenue for business-to-business).
- - The revenues generated by e-commerce are only half the story. The
cost savings associated with transacting business on the Internet could
be substantial. It is estimated that corporations around the world have
the potential to experience an aggregate cost savings in excess of a
trillion dollars over the next several years.
A New Breed Of Middlemen. In the bricks-and-mortar business world they
are known as middlemen, but in the cyber-world they are called
intermediaries. They serve the same purpose, which is to act as market
makers and help facilitate transactions between businesses.
Intermediaries are essentially network hubs, comparable to airline hubs
that route travelers making connecting flights. They generate revenues
by charging transaction fees for bringing buyers and sellers together.
Intermediaries help make e-Business run faster-better-cheaper.
Technology Makes it Possible. We believe that technology-based
companies, especially those involved in creating the Internet
infrastructure and those that provide access to the Internet, are in an
ideal position to capitalize on the potential growth of business-to-
business e-commerce. More specifically, the emphasis will be on computer
hardware and software companies that design products to improve front
and back-office capabilities, ranging from raw materials procurement to
the delivery of finished goods. It is technology that will allow
companies to communicate effectively in real time with their customers
and suppliers.
No Boundaries. The motivation behind the business-to-business sales
model is to transact business faster-better-cheaper, but it accomplishes
much more. By conducting business online, companies are not only
removing geographical boundaries, both domestically and globally, but
are eliminating many of the boundaries that have long prevented many
smaller companies from engaging in business with their larger
counterparts. As the business-to-business marketplace expands, we
believe that the companies in the e-Business Select Portfolio Series and
e-Business Portfolio Series have the potential to participate in growth
opportunities.
Energy Portfolio, Series 7 consists of a portfolio of common stocks of
companies of energy companies which the Sponsor believes are positioned
to take advantage of the world's increasing demand for energy. The
demand for energy, in all of its forms, tends to be driven largely by
economic prosperity and is, therefore, cyclical in nature. The global
consumption of oil, for example, increased in 1996 and 1997 due to solid
economic growth throughout most of the world; yet consumption decreased
in 1998 as a result of the economic crisis developing in Russia and
Southeast Asia.
The United States consumes approximately 25% of the world's supply of
oil; however, it is anticipated that emerging countries, along with
Asia, may experience the highest rate of growth in demand in the not too
distant future. Emerging countries, which account for 43% of world
demand as of 1997, are expected to account for more than 50% of demand
by the year 2015.
The following factors support our positive outlook for the energy
industry:
- - The price of oil has moved higher in 1999 and, on a historical basis,
is back to its normal trading range of $17-$19 per barrel.
- - Oil prices have a significant influence on capital spending. Oil
companies need a sustained upward trend in oil prices to justify risking
large amounts of investment capital on rigs and exploration. For this
Page 38
reason, the oil industry tends to experience longer peaks and troughs
than most cyclical industries.
- - Utilization rates, which reflect the percentage of rigs that are
active, can act as a barometer for energy prices. In 1981, oil prices
were high and the utilization rate was at 98%. In 1986, however, oil
prices were low and the utilization rate was at 26%. In August of 1998,
the rate was at 77%. While not always accurate, this barometer suggests
that when oil prices are strong, the percentage of active rigs tends to
increase.
- - By the year 2020, it is projected that the world will consume three
times as much energy as it did 25 years ago. The majority of the added
consumption is expected to come from the developing countries of Asia.
Horizontal Drilling. This exploration technique is not new, but it has
been improved. New instrumentation can now be attached to a drill bit to
generate real time geological information, without impeding the drilling
process. It is estimated that horizontal drilling has the potential to
out-produce a vertical well by as much as sevenfold. This technique has
been especially cost-effective in offshore drilling.
3-D Seismic Imaging. This is a relatively new technology that is used to
detect underground oil and gas reserves. Seismic imaging utilizes the
vibration from sound waves to construct a three-dimensional, computer-
generated picture of a geological formation. This process has the
potential to greatly improve the odds of locating oil and gas.
Time is Money. The technologies that are presently being employed in the
field of oil and gas exploration are helping reduce the cost of
extracting oil and natural gas by saving detection time and allowing
companies to capture a higher percentage of tapped reserves. In the
1990s, oil and natural gas stocks have been mostly out of favor, but the
companies in the industry have been consolidating and cutting costs to
position themselves for the next upward cycle.
Glass-Steagall Financial Opportunity Select Portfolio Series and Glass-
Steagall Financial Opportunity Portfolio Series each consist of a
portfolio of common stocks of companies that provide a wide variety of
financial services.
The financial industry has undergone several significant changes during
its storied history. Perhaps none have been more noteworthy than the
recent overturn of the Glass-Steagall Act of 1933. Firms can now create
"financial supermarkets" that offer traditional banking, insurance
underwriting, securities underwriting, investment brokerage and merchant
banking. Combine this with a strong job market, and a robust economy and
stock market, and business is currently booming for companies in the
financial industry.
We believe that there are a few major trends that should continue
pushing the financial industry.
The first is an aging population. Nearly three out of ten people in the
U.S. are baby boomers. Scores of them have already started, or soon will
start, planning for their retirement just as they are entering their
peak earnings years.
Another driving factor behind the industry is technological innovation.
Improved technology has enabled financial companies to increase their
volume and reduce transaction costs in order to attract consumers.
E-commerce, once viewed as a threat, is now being embraced by many in
the industry. Because most purchases made over the Internet are charged,
companies that offer credit card services are realizing that e-commerce
represents a significant source of potential revenue. Others have begun
offering products and services over the Internet simply to satisfy
growing demand or as an effective cross-selling tool.
For much of the industry, however, the greatest impact may come from
merger and acquisition activity. U.S. M&A activity continues to remain
strong, led by telecommunications, radio and TV, and banking industries.
Now that the Glass-Steagall Act is no longer a barrier, companies
throughout the industry can compete more effectively and implement new
growth strategies just as other industries have done.
The following factors support our positive outlook for the financial
services industry:
- - Through the first six months of 1999, trading volume on the New York
Stock Exchange was up nearly 30% versus the same period in the previous
year.
- - Total underwriting revenues reached record levels in 1998. Although
underwriting revenue fell slightly through the first half of 1999, it is
still high compared to historical levels.
- - We believe that the recent proposal to eliminate the pooling method of
accounting in January of 2001 will add further pressure for
Page 39
consolidation within the industry.
- - Between the end of 1990 and the end of 1998, assets under management
have grown from just over $1 trillion to more than $5.5 trillion. Much
of this growth can be attributed to increased retirement savings and
gains in the stock market.
Internet Select Portfolio, Series 2 and Internet Portfolio, Series 9
each consist of a portfolio of common stocks of technology companies
which provide products or services for, or conduct business on the
Internet.
The number of individuals connecting to the World Wide Web is growing
daily. A recent report by The Computer Industry Almanac projects that
there could potentially be 490 million people around the world with
Internet access by the year 2002. Business, educational, and home
Internet users in the top 15 countries are expected to account for
nearly 82% of these worldwide Internet users. The report also suggests
that by 2000, there will be 25 countries where over 10% of the
population will be Internet users.
Although the potential scope of the Internet is impressive, its effects
may be even more dramatic. One of the Internet's most significant
effects is to cut the cost of interaction-the searching, coordinating
and monitoring that people and companies must do when they exchange
goods, services or ideas. It is estimated that the costs associated with
these activities could drop by as much as 80% or more if they are
handled electronically. Pervading all economies, these costs account for
more than a third of economic activity in the United States.
Though still considered to be in its infancy, the Internet has already
had an impact on business, consumers and nearly every aspect of today's
society. Whether this rate of change will continue and where it will
take us may be determined, in our opinion, in large part by the
companies in the Internet Portfolios.
New technologies continue to be accepted faster than ever. While it took
35 years before one-quarter of U.S. households owned a telephone, the
Internet took only 7 years to reach the same level of penetration.
Consider the following factors:
- - More than 110 million adults are online in the United States alone,
and the number of online users is expected to dramatically increase in
the future.
- - A new computer is added to the Internet approximately every four
seconds.
- - Business-to-business online revenues totaled $43 billion in 1998, up
from an estimated $9.5 billion in 1997.
- - Improved security measures are helping fuel consumer transactions
over the Web. Global e-commerce spending jumped from approximately $50
billion in 1998 to an estimated $110 billion in 1999.
- - Computers have become almost as popular as other home appliances. The
number of homes with a computer nearly doubled from 29% in 1995 to
approximately 54% in 1999.
- - There are 800 million pages on the Web while another 1.5 million pages
are being created every day.
New e-conomy Select Portfolio Series and New e-conomy Portfolio Series
each consist of a portfolio of common stocks of companies that bring
products and services to the new technology-driven economy.
The new economy is about change: change at a dizzying pace. Most of the
focus has been on those acting on the changes. They are hoping to take
advantage of new markets and technologies to run their businesses more
efficiently and to reach consumers and each other in ways never before
possible.
In the New e-conomy Portfolio, we are interested in the companies who
are the agents of change; those companies that are enacting change as
opposed to reacting to change. The portfolio focuses on companies
involved in business-to-business e-commerce, bandwidth technologies, the
Internet, the Internet's infrastructure and wireless technology. In our
opinion, it is these companies that are helping to redefine the new
economy.
Business. The Internet has established an entirely new method of
transacting business. It has few barriers to entry beyond that of a
personal computer, and is very cost-efficient. We believe that
corporations around the world could potentially experience significant
cost savings from e-commerce over the next several years. By conducting
business online, companies are not only removing domestic geographical
boundaries, but global boundaries as well.
The Consumer. One of the real advantages of the new economy is that the
consumer also benefits. It has been reported that technology has been
Page 40
credited with reducing the rate of inflation in the United States by
0.7% in each of the past two years. Unlike previous economic expansions,
the new economy has shown that it is possible to have sustained growth
without higher inflation. In the new economy, if inflation can be
restrained, there is a greater chance of boosting consumption across the
globe.
Convergence. It's the quintessential new economy idea: translate
everything from Seinfeld to your kid's homework into the digitized 1s
and 0s of computer language, then make it all available anywhere in the
world via the Internet. Big dollars are already being wagered on the
prospect of phone, TV and PC convergence. The idea that three of the
most powerful devices of the last century can be merged into a single
seamless information system is a vision which could have profound
ramifications on the corporate media landscape in the not-too-distant
future.
Consider the following factors:
- - The Internet economy, though still in its formative stages, generated
approximately $300 billion in revenue in the United States in 1998. To
put this new economy into perspective, the auto and telecommunications
industries, far more mature, generated approximately $350 and $270
billion of revenue respectively over the same period.
- - A new computer is added to the Internet approximately every four
seconds.
- - 1.5 million web pages are being created every day.
- - The World Wide Web doubles in size every eight months.
- - Approximately half of all U.S. households own a computer. Lower-income
households are buying personal computers at a faster rate than any other
segment, in part because of the introduction of models that retail below
$1,000.
- - Approximately 110 million U.S. households are connected to the
Internet. In addition, 28 million offices are connected, an increase of
approximately 76% over early 1998.
Online Media Select Portfolio Series and Online Media Portfolio Series
each consist of a portfolio of common stocks of online media and
advertising companies. The way businesses market their products has been
an ongoing evolution. Regardless of whether they have chosen newspapers,
magazines, radio, or television, the media has played an integral role
in distributing product information. In their early stages, each medium
was considered to be the new communication source of the time. However,
none grew or were accepted as fast as the newest form of media, the
Internet. It is estimated that there are currently more than 100 million
adults using the Internet in the United States. To put this number in
perspective, the most profitable medium, the television, boasts an
audience of roughly 195 million adults. With the unprecedented growth of
the Internet as a new medium, both media companies and advertisers have
been quick to explore it as a new source of revenue.
The Media. Some of the more traditional media companies view the Internet
as a way to complement their existing businesses while others are
aggressively pursuing new growth strategies. The larger, diversified media
companies may stand to benefit the most from using the Internet. One of the
keys to online success is building and keeping an audience. Because of their
accomplishments in traditional mediums, these companies already know what
it takes to provide the quality content that people are looking for. By
adding the Internet to their impressive list of media platforms, they are
able to entice new customers to advertise with them and allow existing
customers to broaden the scope of their advertising.
Advertisers. Perhaps no other group has adapted to new media channels as
rapidly as advertisers. Advertisers understand that as audiences migrate
from one medium to another, advertising budgets soon follow. Also, because
websites are typically geared toward a specific audience, advertisers are
able to market their clients' products and services more efficiently.
Consider the following factors:
- - Internet companies are also spending advertising dollars to market
themselves offline. It is estimated that Internet-related advertising in
traditional media will approach $2 billion in 1999.
- - The anticipated ad spending resulting from upcoming events such as the
2000 Summer Olympics, Presidential election campaign and the ongoing dot-com
wars should bode well for advertisers, diversified media companies and Web
portals.
- - Over half of the marketers recently surveyed by Forrester Research say
that they will increase their current media budgets to pay for online
advertising.
Page 41
- - With more people using the Internet for entertainment, the companies that
offer the best content are likely to be the ones that increase audience
traffic and generate more e-commerce and advertising revenues.
- - Compared to other media, the growth of the Internet has been unprecedented.
While it took radio 38 years and television 13 years to reach 50 million U.S.
users, it has only taken the Internet five years to reach the same level
Pharmaceutical Select Portfolio, Series 2 and Pharmaceutical Portfolio,
Series 8 each consist of a portfolio of common stocks of pharmaceutical
companies. The pharmaceutical industry generated over $300 billion in
sales worldwide in 1998, nearly $125 billion of which was made by U.S.
drugmakers. The industry is highly competitive and extremely capital
intensive. Drugmakers spend in excess of $21 billion annually on
researching and developing new products. The amount of capital invested
in research and development ("R&D") has nearly doubled every five years
since 1970.
There are approximately 78 million baby boomers living in the United
States, some of whom will begin turning 65 after 2010. Currently, it is
estimated that 70% of Americans over the age of 65 suffer from
cardiovascular disease. It is believed that as average life expectancies
increase, the number of people at risk for disease will increase.
The following factors support our positive outlook for the
pharmaceutical industry:
- - Numerous pharmaceutical scientists are currently researching over
1,000 new medicines. Pharmaceutical companies have generated more than
100 new treatments in the last two years.
- - Pharmaceutical companies have staffed up their sales forces to
increase market shares. The top 40 drugmakers currently employ
approximately 59,000 representatives in the United States, up from
34,000 in 1994.
- - Foreign demand for pharmaceuticals is growing, especially in emerging
countries. U.S. drug companies sold an estimated $43 billion abroad in
1998, approximately 54% of total U.S. sales.
- - Managed care providers, especially HMOs, encourage the use of
pharmaceuticals because they are regarded as a relatively inexpensive
form of treatment and are less invasive.
- - Research-based pharmaceutical companies continue to invest record-
setting amounts on research and development. Spending is expected to
increase by 14.1% in 1999 to a new record level of $24.03 billion.
The Food & Drug Administration. In 1997, the Food and Drug
Administration (FDA) relaxed its restrictions on pharmaceutical
companies advertising drugs directly to the public. The FDA, which now
has a faster review process in place, is creating a business environment
that could make it quicker and more economical for some drugmakers to
bring new products to market.
Ad Spending Is On The Rise. Direct-To-Consumer (DTC) advertising totaled
$1.3 billion in 1998. The amount spent on television ads featuring
prescription drugs was $664 million, more than double the amount in
1997. Drugmakers are promoting their products to the public through all
of the major media outlets including television, radio, magazines and
newspapers. Advertising allows companies to educate the public about
diseases and treatments as well as gather information that will help
them target consumers in the future.
Demand Driven By Need. Pharmaceutical companies have initiated a number
of cost-containment measures such as using the Internet to reduce
administrative costs and forging alliances with biotechnology companies
to share expertise and the costs associated with R&D. Ultimately, the
demand for prescription and over-the-counter drugs is driven more by
need than price. An aging population coupled with longer life
expectancies should help support, if not boost, demand for drugs in the
future.
Technology Select Portfolio, Series 2 and Technology Portfolio, Series
11 each consist of a portfolio of common stocks of technology companies
involved in the manufacturing, sales or servicing of computers and
peripherals, data networking/communications equipment and software. If
you are looking to invest in cutting-edge technology, you may not need
to look any further than the Internet. It is now estimated that over 200
million people are connected to the Web worldwide. The technology that
makes it all possible is developed by computer, software, networking and
communications companies. Now that the infrastructure is in place, the
focus of technology is shifting to e-commerce.
E-commerce can be divided into two main categories: business-to-consumer
and business-to-business. Business-to-business online revenues totaled
Page 42
$43 billion in 1998, while business-to-consumer revenues were estimated
to be in the area of $13 billion.
The following factors support our positive outlook for the technology
industry:
- - Half of all U.S. households own a computer. Lower-income households
are buying personal computers at a faster rate than any other segment,
in part because of the introduction of models that retail below $1,000.
- - Approximately 110 million U.S. adults are connected to the
Internet. In addition, 28 million offices are connected, an increase of
76% over early 1998.
- - Communications networks presently carry nearly 30 times more voice
traffic than data. In light of the growth in Internet usage, data
traffic is expected to surpass voice communications in the years ahead.
- - Semiconductor sales, tempered in recent years by economic weakness in
Asia, are expected to rebound and experience strong growth in 2000 and
2001.
- - The expanding use of e-commerce is expected to result in significant
cost savings in business-to-consumer transactions.
- - Using the Internet to improve forecasting and replenishment of
products, companies should be able to reduce inventory costs as
suppliers are linked by just-in-time inventory systems.
- - E-commerce should dramatically reduce the amount of time it takes to
process orders. In addition, customer service costs should be reduced
through the use of a Web customer service interface to decrease errors.
Software Solutions. E-commerce is creating demand and opportunity for
software products in many areas including supply-chain management (SCM)
and database software. These software systems can navigate massive
amounts of data to help streamline manufacturing and distribution,
monitor inventories and perform transaction management.
Data Networking. The value of information lies in its application.
Computer networks connect computers and peripheral equipment so that
information can be shared. As e-commerce evolves, the need for
businesses to network with suppliers and customers should create strong
demand for those companies that provide equipment and data networking
services.
Higher Productivity. Technology has played an integral part in the
economic prosperity enjoyed by the United States during the 1990s. It
has helped increase productivity and curb inflation. The Internet should
continue to fuel technological innovation for years to come as
businesses of all sizes go online to increase distributions and boost
efficiency. The Technology Select Portfolio Series and the Technology
Page 42
Portfolio Series invest in companies that have the potential to benefit
from the future growth in e-commerce.
Of course, as with any similar investments, there can be no guarantee
that the objective of the Trusts will be achieved. See "Risk Factors"
for a discussion of the risks of investing in the Trusts.
Risk Factors
Price Volatility. The Trusts invest in common stocks of U.S. and foreign
companies. The value of a Trust's Units will fluctuate with changes in
the value of these common stocks. Common stock prices fluctuate for
several reasons including changes in investors' perceptions of the
financial condition of an issuer or the general condition of the
relevant stock market, or when political or economic events affecting
the issuers occur.
Because the Trusts are not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of any Trust will be positive over any period of time,
especially the relatively short 18-month life of the Select Portfolio
Series, or that you won't lose money. Units of the Trusts are not
deposits of any bank and are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
Certain of the Securities in certain Trusts may be issued by companies
with market capitalizations of less than $1 billion. The share prices of
these small-cap companies are often more volatile than those of larger
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.
Bandwidth Industry. Because more than 25% of the Bandwidth Portfolios
are invested in telecommunications companies which are focusing on bandwidth
technologies, these Trusts are considered to be concentrated in the
Page 43
bandwidth industry. A portfolio concentrated in a single industry may
present more risks than a portfolio which is broadly diversified over
several industries. The market for high technology communications
products and services is characterized by rapidly changing technology,
rapid product obsolescence or loss of patent protection, cyclical market
patterns, evolving industry standards and frequent new product
introductions. Certain communications/bandwidth companies are subject to
substantial governmental regulation, which among other things, regulates
permitted rates of return and the kinds of services that a company may
offer. The communications industry has experienced substantial
deregulation in recent years. Deregulation may lead to fierce
competition for market share and can have a negative impact on certain
companies. Competitive pressures are intense and communications stocks
can experience rapid volatility.
e-Business Industry. The e-Business Portfolios and the New e-conomy
Portfolios are considered to be concentrated in companies
involved with business-to-business online selling, including companies
who are marketing goods and services or transacting business online.
General risks for these companies include the state of the worldwide
economy, intense global competition, and rapid obsolescence of the
utilized technologies and their related systems, products and services.
While business-to-business e-commerce is evolving rapidly, future demand
for individual products and services is impossible to predict.
E-commerce company stocks have experienced extreme price and volume
fluctuations that are often unrelated to their operating performance.
Many such companies have exceptionally high price-to-earnings ratios
with little or no earnings histories. In addition, numerous e-commerce
companies have only recently begun operations, and may have limited
product lines, markets or financial resources, limited trading histories
and fewer experienced management personnel. Finally, the lack of
barriers to entry suggests a future of intense competition for online
retailers. For additional information regarding the risks associated
with the e-Business Select Portfolio Series, New e-conomy Select
Portfolio Series, e-Business Portfolio Series and the New e-conomy
Portfolio Series, see "Risk Factors-Technology Industry."
Energy Industry. The Energy Portfolio Series is considered to be
concentrated in companies that explore for, produce, refine, distribute
or sell petroleum or gas products, or provide parts or services to
petroleum or gas companies. General problems of the petroleum and gas
products industry include volatile fluctuations in price and supply of
energy fuels, 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.
Financial Services Industry. The Glass-Steagall Financial Opportunity
Portfolios are considered to be concentrated in banks and thrifts,
insurance companies and investment firms. Banks, thrifts and their
holding companies are especially subject to the adverse effects of
economic recession; volatile interest rates; portfolio concentrations in
geographic markets and in commercial and residential real estate loans;
and competition from new entrants in their fields of business. Although
recently-enacted legislation repealed most of the barriers which
separated the banking, insurance and securities industries, these
industries are still extensively regulated at both the federal and
state level and may be adversely affected by increased regulations.
Banks and thrifts face increased competition from nontraditional lending
sources as regulatory changes, such as the recently enacted financial-
services overhaul legislation, permit new entrants to offer various
financial products. Technological advances such as the Internet allow
these nontraditional lending sources to cut overhead and permit the more
efficient use of customer data.
Brokerage firms, broker/dealers, investment banks, finance companies and
mutual fund companies are also financial services providers. These
companies compete with banks and thrifts to provide traditional
financial service products, in addition to their traditional services,
such as brokerage and investment advice. In addition, all financial
service companies face shrinking profit margins due to new competitors,
Page 44
the cost of new technology and the pressure to compete globally.
Companies involved in the insurance industry are engaged in
underwriting, selling, distributing or placing of property and casualty,
life or health insurance. Insurance company profits are affected by many
factors, including interest rate movements, the imposition of premium
rate caps, competition and pressure to compete globally. Property and
casualty insurance profits may also be affected by weather catastrophes
and other disasters. Life and health insurance profits may be affected
by mortality rates. Already extensively regulated, insurance companies'
profits may also be adversely affected by increased government
regulations or tax law changes.
Media Industry. The Online Media Portfolios are considered to be
concentrated in companies involved in the development, production, sale
and distribution of goods or services used to provide advertising,
programming and information for the Internet marketplace. Online media
companies are subject to risks which include cyclical revenues and
earnings, the availability of discretionary income of individuals,
changing consumer tastes and interests, fierce competition in the industry
and the potential for increased government regulation. Media company
revenues are dependent in large part on advertising spending. A weakening
general economy may lead to a reduction in discretionary spending on
advertising. For additional information regarding specific risks associated
with the Online Media Portfolios, see "Risk Factors-Technology."
Pharmaceutical Industry. The Pharmaceutical Portfolios are considered to be
concentrated in companies involved in drug development and production.
Pharmaceutical companies are subject to changing government regulation,
including price controls, national health insurance, managed care regulation
and tax incentives or penalties related to medical insurance premiums, which
could have a negative effect on the price and availability of their
products and services. In addition, such companies face increasing
competition from generic drug sales, the termination of their patent
protection for certain drugs and technological advances which render
their products or services obsolete. The research and development costs
required to bring a drug to market are substantial and may include a
lengthy review by the government, with no guarantee that the product
will ever go to market or show a profit. Many of these companies may not
offer certain drugs or products for several years, and as a result, may
have significant losses of revenue and earnings.
Technology Industry. The e-Business Portfolios, Internet Portfolios,
New e-conomy Portfolios, Online Media Portfolios and Technology Portfolios
are considered to be concentrated in Securities issued
by companies which are involved in the technology industry. Technology
companies are generally subject to the risks of rapidly changing
technologies; short product life cycles; fierce competition; aggressive
pricing and reduced profit margins; the loss of patent, copyright and
trademark protections; cyclical market patterns; evolving industry
standards and frequent new product introductions. Technology companies
may be smaller and less experienced companies, with limited product
lines, markets or financial resources and fewer experienced management
or marketing personnel. Technology company stocks, especially those
which are Internet-related, have experienced extreme price and volume
fluctuations that are often unrelated to their operating performance.
Also, the stocks of many Internet companies have exceptionally high
price-to-earnings ratios with little or no earnings histories. For
additional information regarding more specific risks associated with the
e-Business Portfolios and New e-conomy Portfolios, see "Risk Factors-
e-Business Industry." For additional information regarding more specific
risks associated with the Online Media Portfolios, see "Risk Factors-
Media Industry."
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.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain of the companies represented in the Trusts.
In addition, litigation regarding any of the issuers of the Securities,
such as that concerning Microsoft Corporation, or of the industries
represented by such issuers, may negatively impact the share prices of
these Securities. We cannot predict what impact any pending or proposed
legislation or pending or threatened litigation will have on the share
prices of the Securities.
Year 2000 Problem. Many computer systems were not designed to properly
process information and data involving dates of January 1, 2000 and
Page 45
thereafter. This is commonly known as the "Year 2000 Problem." We do not
expect that any of the computer system changes necessary to prepare for
January 1, 2000 will cause any major operational difficulties for the
Trusts. However, we are unable to predict what impact the Year 2000
Problem will have on any of the issuers of the Securities, but you
should note that foreign issuers may have greater complications than
other issuers.
Foreign Stocks. Certain of the Securities in the Trusts are issued by
foreign companies, which makes these Trusts subject to more risks than
if they invested solely in domestic common stocks. These Securities are
either directly listed on a U.S. securities exchange or are in the form
of American Depositary Receipts ("ADRs") which are listed on a U.S.
securities exchange. Risks of foreign common stocks include higher
brokerage costs; different accounting standards; expropriation,
nationalization or other adverse political or economic developments;
currency devaluations, blockages or transfer restrictions; restrictions
on foreign investments and exchange of securities; inadequate financial
information; and lack of liquidity of certain foreign markets.
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the per Unit price of
which is comprised of the following:
- - The aggregate underlying value of the Securities;
- - The amount of any cash in the Income and Capital Accounts;
- - Dividends receivable on Securities; and
- - The total sales charge (which combines an initial upfront sales
charge and a deferred sales charge).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities and changes in
the value of the Income and/or Capital Accounts.
Securities purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for a Trust's organization
costs (including costs of preparing the registration statement, the
Indenture and other closing documents, registering Units with the
Securities and Exchange Commission ("SEC") and states, the initial audit
of each Trust portfolio, legal fees and the initial fees and expenses of
the Trustee) will be purchased in the same proportionate relationship as
all the Securities contained in a Trust. Securities will be sold to
reimburse the Sponsor for a Trust's organization costs at the earlier of
six months after the Initial Date of Deposit or the end of the initial
offering period (a significantly shorter time period than the life of
the Trusts). During the period ending with the earlier of six months
after the Initial Date of Deposit or the end of the initial offering
period, there may be a decrease in the value of the Securities. To the
extent the proceeds from the sale of these Securities are insufficient
to repay the Sponsor for Trust organization costs, the Trustee will sell
additional Securities to allow a Trust to fully reimburse the Sponsor.
In that event, the net asset value per Unit of a Trust will be reduced
by the amount of additional Securities sold. Although the dollar amount
of the reimbursement due to the Sponsor will remain fixed and will never
exceed the per Unit amount set forth for a Trust in "Notes to Statements
of Net Assets," this will result in a greater effective cost per Unit to
Unit holders for the reimbursement to the Sponsor. To the extent actual
organization costs are less than the estimated amount, only the actual
organization costs will be deducted from the assets of a Trust. When
Securities are sold to reimburse the Sponsor for organization costs, the
Trustee will sell Securities, to the extent practicable, which will
maintain the same proportionate relationship among the Securities
contained in a Trust as existed prior to such sale.
Although you are not required to pay for your Units until three business
days following your order (the "date of settlement"), you may pay before
then. You will become the owner of Units ("Record Owner") on the date of
settlement if payment has been received. If you pay for your Units
before the date of settlement, we may use your payment during this time
and it may be considered a benefit to us, subject to the limitations of
the Securities Exchange Act of 1934.
Minimum Purchase.
The minimum amount you can purchase of a Trust is $1,000 worth of Units
($500 if you are purchasing Units for your Individual Retirement Account
Page 46
or any other qualified retirement plan).
Sales Charges.
The sales charge you will pay has both an initial and a deferred
component. The initial sales charge, which you will pay at the time of
purchase, is initially equal to approximately 1.00% of the Public
Offering Price of a Unit. This initial sales charge is actually equal to
the difference between the maximum sales charge for each Trust (3.25% of
the Public Offering Price for each Select Portfolio Series and 4.50% of
the Public Offering Price for each Portfolio Series) and the maximum
remaining deferred sales charge (initially $.225 per Unit for each
Select Portfolio Series and $.350 per Unit for each Portfolio Series).
The initial sales charge will vary from 1.00% with changes in the
aggregate underlying value of the Securities, changes in the Income and
Capital Accounts and as deferred sales charge payments are made. In
addition, five monthly deferred sales charge payments of $.045 per Unit
in the case of each Select Portfolio Series or $.07 per Unit in the case
of each Portfolio Series will be deducted on the 20th day of each month
from August 18, 2000 through December 20, 2000.
If you purchase Units after the last deferred sales charge payment has
been assessed, your sales charge will consist of a one-time initial
sales charge of 3.25% of the Public Offering Price per Unit (equivalent
to 3.359% of the net amount invested) for each Select Portfolio Series
and 4.50% of the Public Offering Price per Unit (equivalent to 4.712% of
the net amount invested) for each Portfolio Series. For each Portfolio
Series, the sales charge will be reduced by 1/2 of 1% on each subsequent
January 31, commencing January 31, 2001, to a minimum sales charge of
3.00%.
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for a "wrap
fee account" as described below), the maximum sales charge is reduced as
follows for each Select Portfolio Series:
Your maximum
If you invest sales charge
(in thousands):* will be:
_________________ ____________
$50 but less than $100 3.00%
$100 but less than $150 2.75%
$150 but less than $500 2.40%
$500 but less than $1,000 2.25%
$1,000 or more 1.50%
For each Portfolio Series:
Your maximum
If you invest sales charge
(in thousands):* will be:
_________________ ____________
$50 but less than $100 4.25%
$100 but less than $250 4.00%
$250 but less than $500 3.50%
$500 or more 2.50%
* Breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be
applied on whichever basis is more favorable to the investor. The
breakpoints will be adjusted to take into consideration purchase orders
stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
The reduced sales charge for quantity purchases will apply only to
purchases made by the same person on any one day from any one dealer. To
help you reach the above levels, you can combine the Units you purchase
of the Trusts in this prospectus with any other same day purchases of
other trusts for which we are Principal Underwriter and are currently in
the initial offering period. In addition, we will also consider Units
you purchase in the name of your spouse or child under 21 years of age
to be purchases by you. The reduced sales charges will also apply to a
trustee or other fiduciary purchasing Units for a single trust estate or
single fiduciary account. You must inform your dealer of any combined
purchases before the sale in order to be eligible for the reduced sales
charge. Any reduced sales charge is the responsibility of the party
making the sale.
If you own units of any other unit investment trusts sponsored by us you
may use your redemption or termination proceeds from these trusts to
purchase Units of the Trusts subject only to any remaining deferred
sales charge to be collected on Units of the Trusts. Please note that
Page 47
you will be charged the amount of any remaining deferred sales charge on
units you redeem when you redeem them.
The following persons may purchase Units at the Public Offering Price
less the applicable dealer concession:
- - Employees, officers and directors of the Sponsor, our related
companies, dealers and their affiliates, and vendors providing services
to us.
- - Immediate family members of the above (spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-
in-law, sons-in-law and daughters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons).
If you purchase Units through registered broker/dealers who charge
periodic fees for financial planning, investment advisory or asset
management services or provide these services as part of an investment
account where a comprehensive "wrap fee" charge is imposed, you may
purchase Units at the Public Offering Price, subject only to the
Sponsor's retention of the sales charge. See "Distribution of Units-
Dealer Concessions."
You will be charged the deferred sales charge per Unit regardless of any
discounts. However, if you are eligible to receive a discount such that
the maximum sales charge you must pay is less than the applicable
maximum deferred sales charge, you will be credited the difference
between your maximum sales charge and the maximum deferred sales charge
at the time you buy your Units.
The Value of the Securities.
The Evaluator will appraise the aggregate underlying value of the
Securities in a Trust as of the Evaluation Time on each business day and
will adjust the Public Offering Price of the Units according to this
valuation. This Public Offering Price will be effective for all orders
received before the Evaluation Time on each such day. If we or the
Trustee receive orders for purchases, sales or redemptions after that
time, or on a day which is not a business day, they will be held until
the next determination of price. The term "business day" as used in this
prospectus will exclude Saturdays, Sundays and certain national holidays
on which the NYSE is closed.
The aggregate underlying value of the Securities in a Trust will be
determined as follows: if the Securities are listed on a securities
exchange or The Nasdaq Stock Market, their value is generally based on
the closing sale prices on that exchange or system (unless it is
determined that these prices are not appropriate as a basis for
valuation). However, if there is no closing sale price on that exchange
or system, they are valued based on the closing ask prices. If the
Securities are not so listed, or, if so listed and the principal market
for them is other than on that exchange or system, their value will
generally be based on the current ask prices on the over-the-counter
market (unless it is determined that these prices are not appropriate as
a basis for valuation). If current ask prices are unavailable, the
valuation is generally determined:
a) On the basis of current ask prices for comparable securities;
b) By appraising the value of the Securities on the ask side of the
market; or
c) By any combination of the above.
After the initial offering period is over, the aggregate underlying
value of the Securities will be determined as set forth above, except
that bid prices are used instead of ask prices when necessary.
Distribution of Units
We intend to qualify Units of the Trusts for sale in a number of states.
All Units will be sold at the then current Public Offering Price.
Dealer Concessions.
For the Select Portfolio Series, dealers and other selling agents can
purchase Units at prices which reflect a concession or agency commission
of 2.75% of the Public Offering Price per Unit. However, for Units sold
subject only to any remaining deferred sales charge, the amount will be
reduced to $0.175 per Unit for Units sold subject to the maximum
deferred sales charge or 78% of the then current maximum remaining
deferred sales charge on Units sold subject to less than the maximum
deferred sales charge.
Dealers and other selling agents who sell Units of the Select Portfolio
Series during the initial offering period in the dollar amounts shown
below will be entitled to the following additional sales concessions as
a percentage of the Public Offering Price:
Page 48
Total Sales
per Trust Additional
(in millions): Concession:
_____________ __________
$15 but less than $25 .015%
$25 but less than $40 .025%
$40 but less than $50 .050%
$50 but less than $75 .125%
$75 but less than $100 .150%
$100 or more .200%
For the Portfolio Series, dealers and other selling agents can purchase
Units at prices which reflect a concession or agency commission of 3.2%
of the Public Offering Price per Unit (or 65% of the maximum sales
charge after January 31, 2001). However, dealers and other selling
agents will receive a concession on the sale of Units subject only to
any remaining deferred sales charge equal to $.22 per Unit on Units sold
subject to the maximum deferred sales charge or 63% of the then current
maximum remaining deferred sales charge on Units sold subject to less
than the maximum deferred sales charge. Dealers and other selling agents
will receive an additional volume concession or agency commission on the
sale of Portfolio Series Units equal to .30% of the Public Offering
Price if they purchase at least $100,000 worth of Units of the Portfolio
Series on the Initial Date of Deposit or $250,000 on any day thereafter
or if they were eligible to receive a similar concession in connection
with sales of similarly structured trusts sponsored by us which are
currently in the initial offering period.
Dealers and other selling agents who sell Units of the Portfolio Series
during the initial offering period in the dollar amounts shown below
will be entitled to the following additional sales concessions as a
percentage of the Public Offering Price:
Total Sales
per Trust Additional
(in millions): Concession:
_________________ ___________
$1 but less than $2 .10%
$2 but less than $3 .15%
$3 but less than $10 .20%
$10 or more .30%
For all Trusts, dealers and other selling agents who, during any
consecutive 12-month period, sell at least $2 billion worth of primary
market units of unit investment trusts sponsored by us will receive a
concession of $30,000 in the month following the achievement of this
level. We reserve the right to change the amount of concessions or
agency commissions from time to time. Certain commercial banks may be
making Units of the Trusts available to their customers on an agency
basis. A portion of the sales charge paid by these customers is kept by
or given to the banks in the amounts shown above.
Award Programs.
From time to time we may sponsor programs which provide awards to a
dealer's registered representatives who have sold a minimum number of
Units during a specified time period. We may also pay fees to qualifying
dealers for services or activities which are meant to result in sales of
Units of the Trusts. In addition, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable sales charge on Units sold by such persons during such
programs. We make these payments out of our own assets and not out of
Trust assets. These programs will not change the price you pay for your
Units.
Investment Comparisons.
From time to time we may compare the estimated returns of the Trusts
(which may show performance net of the expenses and charges the Trusts
would have incurred) and returns over specified periods of other similar
trusts we sponsor in our advertising and sales materials, with (1)
returns on other taxable investments such as the common stocks
comprising various market indexes, corporate or U.S. Government bonds,
bank CDs and money market accounts or funds, (2) performance data from
Morningstar Publications, Inc. or (3) information from publications such
as Money, The New York Times, U.S. News and World Report, BusinessWeek,
Forbes or Fortune. The investment characteristics of each Trust differ
from other comparative investments. You should not assume that these
performance comparisons will be representative of a Trust's future
performance.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum sales
charge per Unit of a Trust less any reduced sales charge as stated in
Page 49
"Public Offering." Also, any difference between our cost to purchase the
Securities and the price at which we sell them to a Trust is considered
a profit or loss (see Note 2 of "Notes to Schedules of Investments").
During the initial offering period, dealers and others may also realize
profits or sustain losses as a result of fluctuations in the Public
Offering Price they receive when they sell the Units.
In maintaining a market for the Units, any difference between the price
at which we purchase Units and the price at which we sell or redeem them
will be a profit or loss to us.
The Secondary Market
Although not obligated, we intend to maintain a market for the Units
after the initial offering period and continuously offer to purchase
Units at prices based on the Redemption Price per Unit.
We will pay all expenses to maintain a secondary market, except the
Evaluator fees, Trustee costs to transfer and record the ownership of
Units and in the case of the Portfolio Series, costs incurred in
annually updating the Portfolio Series' registration statements. We may
discontinue purchases of Units at any time. IF YOU WISH TO DISPOSE OF
YOUR UNITS, YOU SHOULD ASK US FOR THE CURRENT MARKET PRICES BEFORE
MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. If you sell or redeem
your Units before you have paid the total deferred sales charge on your
Units, you will have to pay the remainder at that time.
How We Purchase Units
The Trustee will notify us of any tender of Units for redemption. If our
bid at that time is equal to or greater than the Redemption Price per
Unit, we may purchase the Units. You will receive your proceeds from the
sale no later than if they were redeemed by the Trustee. We may tender
Units that we hold to the Trustee for redemption as any other Units. If
we elect not to purchase Units, the Trustee may sell tendered Units in
the over-the-counter market, if any. However, the amount you will
receive is the same as you would have received on redemption of the Units.
Expenses and Charges
The estimated annual expenses of each Trust are listed under "Fee
Table." If actual expenses of a Trust exceed the estimate, that Trust
will bear the excess. The Trustee will pay operating expenses of a Trust
from the Income Account of such Trust if funds are available, and then
from the Capital Account. The Income and Capital Accounts are
noninterest-bearing to Unit holders, so the Trustee may earn interest on
these funds, thus benefiting from their use.
As Sponsor, we will be compensated for providing bookkeeping and other
administrative services to the Trusts, and will receive brokerage fees
when a Trust uses us (or an affiliate of ours) as agent in buying or
selling Securities. For the Portfolio Series, legal and regulatory
filing fees and expenses associated with updating those Trusts'
registration statements yearly are also now chargeable to such Trusts.
Historically, we paid these fees and expenses. There are no such fees
and expenses that will be charged to the Select Portfolio Series. First
Trust Advisors L.P., an affiliate of ours, acts as both Portfolio
Supervisor and Evaluator to the Trusts and will receive the fees set
forth under "Fee Table" for providing portfolio supervisory and
evaluation services to the Trusts. In providing portfolio supervisory
services, the Portfolio Supervisor may purchase research services from a
number of sources, which may include underwriters or dealers of the
Trusts.
The fees payable to us, First Trust Advisors L.P. and the Trustee are
based on the largest aggregate number of Units of a Trust outstanding at
any time during the calendar year, except during the initial offering
period, in which case these fees are calculated based on the largest
number of Units outstanding during the period for which compensation is
paid. These fees may be adjusted for inflation without Unit holders'
approval, but in no case will the annual fees paid to us or our
affiliates for providing a given service to all unit investment trusts
for which we provide such services be more than the actual cost of
providing such services in such year.
In addition to a Trust's operating expenses and those fees described
above, each Trust may also incur the following charges:
Page 50
- - All legal and annual auditing expenses of the Trustee according to its
responsibilities under the Indenture;
- - The expenses and costs incurred by the Trustee to protect a Trust and
your rights and interests;
- - Fees for any extraordinary services the Trustee performed under the
Indenture;
- - Payment for any loss, liability or expense the Trustee incurred
without negligence, bad faith or willful misconduct on its part, in
connection with its acceptance or administration of a Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of a
Trust; and/or
- - All taxes and other government charges imposed upon the Securities or
any part of a Trust.
The above expenses and the Trustee's annual fee are secured by a lien on
the Trusts. Since the Securities are all common stocks and dividend
income is unpredictable, we cannot guarantee that dividends will be
sufficient to meet any or all expenses of the Trusts. If there is not
enough cash in the Income or Capital Account, the Trustee has the power
to sell Securities in a Trust to make cash available to pay these
charges which may result in capital gains or losses to you. See "Tax
Status."
The Portfolio Series will be audited annually. So long as we are making
a secondary market for Units, we will bear the cost of these annual
audits to the extent the costs exceed $0.0050 per Unit. Otherwise, the
Portfolio Series will pay for the audit. You can request a copy of the
audited financial statements from the Trustee.
Tax Status
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trusts. This section is current as
of the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a non-U.S. person, a
broker/dealer, or other investor with special circumstances. In
addition, this section does not describe your state or foreign taxes. As
with any investment, you should consult your own tax professional about
your particular consequences.
Trust Status.
The Trusts will not be taxed as corporations for federal income tax
purposes. As a Unit owner, you will be treated as the owner of a pro
rata portion of the Securities and other assets held by your Trust, and
as such you will be considered to have received a pro rata share of
income (i.e., dividends and capital gains, if any) from each Security
when such income is considered to be received by your Trust. This is
true even if you elect to have your distributions automatically
reinvested into additional Units. In addition, the income from a Trust
which you must take into account for federal income tax purposes is not
reduced by amounts used to pay a deferred sales charge.
Your Tax Basis and Income or Loss upon Disposition.
If your Trust disposes of Securities, you will generally recognize gain
or loss. If you dispose of your Units or redeem your Units for cash, you
will also generally recognize gain or loss. To determine the amount of
this gain or loss, you must subtract your tax basis in the related
Securities from your share of the total 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). 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.
Page 51
In-Kind Distributions.
Under certain circumstances, you may request a distribution of
Securities (an "In-Kind Distribution") when you redeem your Units or at
a Trust's termination. If you request an In-Kind Distribution you will
be responsible for any expenses related to this distribution. By
electing to receive an In-Kind Distribution, you will receive an
undivided interest in whole shares of stock plus, possibly, cash.
You will not recognize gain or loss if you only receive Securities in
exchange for your pro rata portion of the Securities held by a Trust.
However, if you also receive cash in exchange for a fractional share of
a Security held by a Trust, you will generally recognize gain or loss
based on the difference between the amount of cash you receive and your
tax basis in such fractional share of the Security.
Limitations on the Deductibility of Trust Expenses.
Generally, for federal income tax purposes, you must take into account
your full pro rata share of a Trust's income, even if some of that
income is used to pay Trust expenses. You may deduct your pro rata share
of each expense paid by a Trust to the same extent as if you directly
paid the expense. You may, however, be required to treat some or all of
the expenses of the Trusts as miscellaneous itemized deductions.
Individuals may only deduct certain miscellaneous itemized deductions to
the extent they exceed 2% of adjusted gross income.
Foreign, State and Local Taxes.
Some distributions by a Trust may be subject to foreign withholding
taxes. Any dividends withheld will nevertheless be treated as income to
you. However, because you are deemed to have paid directly your share of
foreign taxes that have been paid or accrued by a Trust, you may be
entitled to a foreign tax credit or deduction for U.S. tax purposes with
respect to such taxes.
Under the existing income tax laws of the State and City of New York,
the Trusts will not be taxed as corporations, and the income of the
Trusts will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes.
Retirement Plans
You may purchase Units of the Trusts for:
- - Individual Retirement Accounts;
- - Keogh Plans;
- - Pension funds; and
- - Other tax-deferred retirement plans.
Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. Before participating in a plan like this, you should review
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as Record Owner of Units persons registered as
such on its books. It is your responsibility to notify the Trustee when
you become Record Owner, but normally your broker/dealer provides this
notice. You may elect to hold your Units in either certificated or
uncertificated form.
Certificated Units. When you purchase your Units you can request that
they be evidenced by certificates, which will be delivered shortly after
your order. Certificates will be issued in fully registered form,
transferable only on the books of the Trustee in denominations of one
Unit or any multiple thereof. You can transfer or redeem your
certificated Units by endorsing and surrendering the certificate to the
Trustee, along with a written instrument of transfer. You must sign your
name exactly as it appears on the face of the certificate with your
signature guaranteed by an eligible institution. In certain cases the
Trustee may require additional documentation before they will transfer
or redeem your Units.
You may be required to pay a nominal fee to the Trustee for each
certificate reissued or transferred, and to pay any government charge
that may be imposed for each transfer or exchange. If a certificate gets
lost, stolen or destroyed, you may be required to furnish indemnity to
the Trustee to receive replacement certificates. You must surrender
mutilated certificates to the Trustee for replacement.
Uncertificated Units. You may also choose to hold your Units in
uncertificated form. If you choose this option, the Trustee will
establish an account for you and credit your account with the number of
Page 52
Units you purchase. Within two business days of the issuance or transfer
of Units held in uncertificated form, the Trustee will send you:
- - A written initial transaction statement containing a description of
the Trust;
- - The number of Units issued or transferred;
- - Your name, address and Taxpayer Identification Number ("TIN");
- - A notation of any liens or restrictions of the issuer and any adverse
claims; and
- - The date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
- - A summary of transactions in your Trust for the year;
- - Any Securities sold during the year and the Securities held at the
end of that year by your Trust;
- - The Redemption Price per Unit, computed on the 31st day of December
of such year (or the last business day before); and
- - Amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
federal and state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. The Trustee will credit dividends received on a
Trust's Securities to the Income Account of such Trust. All other
receipts, such as return of capital, are credited to the Capital Account
of such Trust.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." No income distribution will be paid if accrued expenses of
a Trust exceed amounts in the Income Account on the Income Distribution
Dates. Distribution amounts will vary with changes in a Trust's fees and
expenses, in dividends received and with the sale of Securities. The
Trustee will distribute amounts in the Capital Account, net of amounts
designated to meet redemptions, pay the deferred sales charge or pay
expenses on the last day of each month to Unit holders of record on the
fifteenth day of each month provided the amount equals at least $1.00
per 100 Units. If the Trustee does not have your TIN, it is required to
withhold a certain percentage of your distribution and deliver such
amount to the Internal Revenue Service ("IRS"). You may recover this
amount by giving your TIN to the Trustee, or when you file a tax return.
However, you should check your statements to make sure the Trustee has
your TIN to avoid this "back-up withholding."
We anticipate that there will be enough money in the Capital Account of
a Trust to pay the deferred sales charge. If not, the Trustee may sell
Securities to meet the shortfall.
Within a reasonable time after a Trust is terminated, you will receive
the pro rata share of the money from the sale of the Securities.
However, if you are eligible, you may elect to receive an In-Kind
Distribution as described under "Amending or Terminating the Indenture."
You will receive a pro rata share of any other assets remaining in your
Trust after deducting any unpaid expenses.
The Trustee may establish reserves (the "Reserve Account") within a
Trust to cover anticipated state and local taxes or any governmental
charges to be paid out of such Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of your Trust by notifying the Trustee at least 10 days before any
Record Date. Each later distribution of income and/or capital on your
Units will be reinvested by the Trustee into additional Units of your
Trust. You will have to pay the remaining deferred sales charge on any
Units acquired pursuant to this distribution reinvestment option. This
Page 53
option may not be available in all states. PLEASE NOTE THAT EVEN IF YOU
REINVEST DISTRIBUTIONS, THEY ARE STILL CONSIDERED DISTRIBUTIONS FOR
INCOME TAX PURPOSES.
Redeeming Your Units
You may redeem all or a portion of your Units at any time by sending the
certificates representing the Units you want to redeem to the Trustee at
its unit investment trust office. If your Units are uncertificated, you
need only deliver a request for redemption to the Trustee. In either
case, the certificates or the redemption request must be properly
endorsed with proper instruments of transfer and signature guarantees as
explained in "Rights of Unit Holders-Unit Ownership" (or by providing
satisfactory indemnity if the certificates were lost, stolen, or
destroyed). No redemption fee will be charged, but you are responsible
for any governmental charges that apply. Three business days after the
day you tender your Units (the "Date of Tender") you will receive cash
in an amount for each Unit equal to the Redemption Price per Unit
calculated at the Evaluation Time on the Date of Tender.
The Date of Tender is considered to be the date on which the Trustee
receives your certificates or redemption request (if such day is a day
the NYSE is open for trading). However, if your certificates or
redemption request are received after 4:00 p.m. Eastern time (or after
any earlier closing time on a day on which the NYSE is scheduled in
advance to close at such earlier time), the Date of Tender is the next
day the NYSE is open for trading.
Any amounts paid on redemption representing income will be withdrawn
from the Income Account if funds are available for that purpose, or from
the Capital Account. All other amounts paid on redemption will be taken
from the Capital Account. The IRS will require the Trustee to withhold a
portion of your redemption proceeds if it does not have your TIN, as
generally discussed under "Income and Capital Distributions."
If you tender 1,000 Units or more for redemption, rather than receiving
cash, you may elect to receive an In-Kind Distribution in an amount
equal to the Redemption Price per Unit by making this request in writing
to the Trustee at the time of tender. However, no In-Kind Distribution
requests submitted during the nine business days prior to a Trust's
Mandatory Termination Date will be honored. Where possible, the Trustee
will make an In-Kind Distribution by distributing each of the Securities
in book-entry form to your bank or broker/dealer account at the
Depository Trust Company. The Trustee will subtract any customary
transfer and registration charges from your In-Kind Distribution. As a
tendering Unit holder, you will receive your pro rata number of whole
shares of the Securities that make up the portfolio, and cash from the
Capital Account equal to the fractional shares to which you are entitled.
The Trustee may sell Securities to make funds available for redemption.
If Securities are sold, the size and diversification of a Trust will be
reduced. These sales may result in lower prices than if the Securities
were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
- - If the NYSE is closed (other than customary weekend and holiday
closings);
- - If the SEC determines that trading on the NYSE is restricted or that
an emergency exists making sale or evaluation of the Securities not
reasonably practical; or
- - For any other period permitted by SEC order.
The Trustee is not liable to any person for any loss or damage which may
result from such a suspension or postponement.
The Redemption Price.
The Redemption Price per Unit is determined by the Trustee by:
adding
1. cash in the Income and Capital Accounts of a Trust not designated to
purchase Securities;
2. the aggregate value of the Securities held in a Trust; and
3. dividends receivable on the Securities trading ex-dividend as of the
date of computation; and
deducting
1. any applicable taxes or governmental charges that need to be paid out
of a Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of a Trust, if any;
4. cash held for distribution to Unit holders of record of a Trust as of
the business day before the evaluation being made; and
5. other liabilities incurred by a Trust; and
dividing
1. the result by the number of outstanding Units of a Trust.
Page 54
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, until the
earlier of six months after the Initial Date of Deposit or the end of
the initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
Removing Securities from a Trust
The portfolios of the Trusts are not managed. However, we may, but are
not required to, direct the Trustee to dispose of a Security in certain
limited circumstances, including situations in which:
- - The issuer of the Security defaults in the payment of a declared
dividend;
- - Any action or proceeding prevents the payment of dividends;
- - There is any legal question or impediment affecting the Security;
- - The issuer of the Security has breached a covenant which would affect
the payment of dividends, the issuer's credit standing, or otherwise
damage the sound investment character of the Security;
- - The issuer has defaulted on the payment of any other of its
outstanding obligations; or
- - The price of the Security has declined to such an extent, or such
other credit factors exist, that in our opinion keeping the Security
would be harmful to a Trust.
Except in the limited instance in which a Trust acquires Replacement
Securities, as described in "The FT Series," a Trust may not acquire any
securities or other property other than the Securities. The Trustee, on
behalf of the Trusts, will reject any offer for new or exchanged
securities or property in exchange for a Security, such as those
acquired in a merger or other transaction. If such exchanged securities
or property are nevertheless acquired by a Trust, at our instruction,
they will either be sold or held in such Trust. In making the
determination as to whether to sell or hold the exchanged securities or
property we may get advice from the Portfolio Supervisor. Any proceeds
received from the sale of Securities, exchanged securities or property
will be credited to the Capital Account for distribution to Unit holders
or to meet redemption requests. The Trustee may retain and pay us or an
affiliate of ours to act as agent for a Trust to facilitate selling
Securities, exchanged securities or property from the Trusts. If we or
our affiliate act in this capacity, we will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may sell Securities designated by us or, absent our
direction, at its own discretion, in order to meet redemption requests
or pay expenses. In designating Securities to be sold, we will try to
maintain the proportionate relationship among the Securities. If this is
not possible, the composition and diversification of a Trust may be
changed. To get the best price for a Trust we may specify minimum
amounts (generally 100 shares) in which blocks of Securities are to be
sold. We may consider sales of units of unit investment trusts which we
sponsor when we make recommendations to the Trustee as to which
broker/dealers they select to execute a Trust's portfolio transactions,
or when acting as agent for a Trust in acquiring or selling Securities
on behalf of the Trusts.
Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - To cure ambiguities;
- - To correct or supplement any defective or inconsistent provision;
- - To make any amendment required by any governmental agency; or
- - To make other changes determined not to be materially adverse to your
best interests (as determined by us and the Trustee).
Termination. As provided by the Indenture, the Trusts will terminate on
the Mandatory Termination Date as stated in the "Summary of Essential
Information" for each Trust. The Trusts may be terminated earlier:
- - Upon the consent of 100% of the Unit holders of a Trust;
- - If the value of the Securities owned by a Trust as shown by any
evaluation is less than the lower of $2,000,000 or 20% of the total
value of Securities deposited in such Trust during the initial offering
period ("Discretionary Liquidation Amount"); or
- - In the event that Units of a Trust not yet sold aggregating more than
60% of the Units of such Trust are tendered for redemption by
Page 55
underwriters, including the Sponsor.
Prior to termination, the Trustee will send written notice to all Unit
holders which will specify how you should tender your certificates, if
any, to the Trustee. If a Trust is terminated due to this last reason,
we will refund your entire sales charge; however, termination of a Trust
before the Mandatory Termination Date for any other stated reason will
result in all remaining unpaid deferred sales charges on your Units
being deducted from your termination proceeds. For various reasons, a
Trust may be reduced below the Discretionary Liquidation Amount and
could therefore be terminated before the Mandatory Termination Date.
Unless terminated earlier, the Trustee will begin to sell Securities in
connection with the termination of a Trust during the period beginning
nine business days prior to, and no later than, the Mandatory
Termination Date. We will determine the manner and timing of the sale of
Securities. Because the Trustee must sell the Securities within a
relatively short period of time, the sale of Securities as part of the
termination process may result in a lower sales price than might
otherwise be realized if such sale were not required at this time.
If you own at least 1,000 Units of a Trust the Trustee will send you a
form at least 30 days prior to the Mandatory Termination Date which will
enable you to receive an In-Kind Distribution (reduced by customary
transfer and registration charges) rather than the typical cash
distribution. 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 the In-Kind Distribution option, you will
receive a cash distribution from the sale of the remaining Securities,
along with your interest in the Income and Capital Accounts, within a
reasonable time after such Trust is terminated. Regardless of the
distribution involved, the Trustee will deduct from the Trusts any
accrued costs, expenses, advances or indemnities provided for by the
Indenture, including estimated compensation of the Trustee and costs of
liquidation and any amounts required as a reserve to pay any taxes or
other governmental charges.
Information on the Sponsor, Trustee and Evaluator
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
wholesale distribution of unit investment trusts under the "First Trust"
brand name and other securities. An Illinois limited partnership formed
in 1991, we act as Sponsor for successive series of:
- - The First Trust Combined Series
- - FT Series (formerly known as The First Trust Special Situations Trust)
- - The First Trust Insured Corporate Trust
- - The First Trust of Insured Municipal Bonds
- - The First Trust GNMA
First Trust introduced the first insured unit investment trust in 1974.
To date we have deposited more than $25 billion in First Trust unit
investment trusts. Our employees include a team of professionals with
many years of experience in the unit investment trust industry.
We are a member of the National Association of Securities Dealers, Inc.
and Securities Investor Protection Corporation. Our principal offices
are at 1001 Warrenville Road, Lisle, Illinois 60532; telephone number
(630) 241-4141. As of December 31, 1998, the total partners' capital of
Nike Securities L.P. was $18,506,548 (audited).
This information refers only to us and not to the Trusts or to any
series of the Trusts or to any other dealer. We are including this
information only to inform you of our financial responsibility and our
ability to carry out our contractual obligations. We will provide more
detailed financial information on request.
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
Page 56
Federal Reserve System.
The Trustee has not participated in selecting the Securities for the
Trusts; it only provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable for taking any action or for
not taking any action in good faith according to the Indenture. We will
also not be accountable for errors in judgment. We will only be liable
for our own willful misfeasance, bad faith, gross negligence (ordinary
negligence in the Trustee's case) or reckless disregard of our
obligations and duties. The Trustee is not liable for any loss or
depreciation when the Securities are sold. If we fail to act under the
Indenture, the Trustee may do so, and the Trustee will not be liable for
any action it takes in good faith under the Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - Appoint a successor sponsor, paying them a reasonable rate not more
than that stated by the SEC;
- - Terminate the Indenture and liquidate the Trusts; or
- - Continue to act as Trustee without terminating the Indenture.
The Evaluator.
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532.
The Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information,
but will not be liable to the Trustee, Sponsor or Unit holders for
errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trusts.
Experts.
Ernst & Young LLP, independent auditors, have audited the Trusts'
statements of net assets, including the schedules of investments, at the
opening of business on the Initial Date of Deposit, as set forth in
their report. We've included the Trusts' statements of net assets,
including the schedules of investments, in the prospectus and elsewhere
in the registration statement in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific details concerning the nature, structure and risks
of this product.
Page 57
This page is intentionally left blank.
Page 58
This page is intentionally left blank.
Page 59
FIRST TRUST (registered trademark)
BANDWIDTH SELECT PORTFOLIO, SERIES 2
E-BUSINESS SELECT PORTFOLIO, SERIES 2
GLASS-STEAGALL FINANCIAL OPPORTUNITY SELECT PORTFOLIO SERIES
INTERNET SELECT PORTFOLIO, SERIES 2
NEW E-CONOMY SELECT PORTFOLIO SERIES
ONLINE MEDIA SELECT PORTFOLIO SERIES
PHARMACEUTICAL SELECT PORTFOLIO, SERIES 2
TECHNOLOGY SELECT PORTFOLIO, SERIES 2
BANDWIDTH PORTFOLIO, SERIES 2
E-BUSINESS PORTFOLIO, SERIES 2
ENERGY PORTFOLIO, SERIES 7
GLASS-STEAGALL FINANCIAL OPPORTUNITY PORTFOLIO SERIES
INTERNET PORTFOLIO, SERIES 9
NEW E-CONOMY PORTFOLIO SERIES
ONLINE MEDIA PORTFOLIO SERIES
PHARMACEUTICAL PORTFOLIO, SERIES 8
TECHNOLOGY PORTFOLIO, SERIES 11
FT 395
Sponsor:
NIKE SECURITIES L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
24-Hour Pricing Line:
1-800-446-0132
This prospectus contains information relating to the above-mentioned
unit investment trusts, but does not contain all of the information
about this investment company as filed with the Securities and Exchange
Commission in Washington, D.C. under the:
- - Securities Act of 1933 (file no. 333-93265) and
- - Investment Company Act of 1940 (file no. 811-05903)
Information about the Trusts can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington
D.C. Information regarding the operation of the Commission's Public
Reference Room may be obtained by calling the Commission at 1-202-942-
8090.
Information about the Trusts is available on the EDGAR Database on the
Commission's Internet site at
http://www.sec.gov.
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W., Washington, D.C. 20549-0102
e-mail address: publicinfo@sec.gov
January __, 2000
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 60
First Trust (registered trademark)
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of unit investment trusts ("Trusts")
contained in FT 395 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 January __, 2000. Capitalized terms
have been defined in the prospectus.
Table of Contents
Risk Factors
Securities 1
Dividends 1
Foreign Issuers 1
Litigation
Microsoft Corporation 2
Concentrations
Communications 2
Electronic Commerce 3
Energy 3
Financial Services 4
Pharmaceutical 7
Technology 7
Portfolios
Bandwidth 8
e-Business 9
Energy 10
Glass-Steagall Financial Opportunity 10
Internet 11
New e-conomy 11
Pharmaceutical 12
Technology 13
Risk Factors
Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the
risk that the financial condition of the issuers of the Securities or
the general condition of the relevant stock market may worsen, and the
value of the Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors.
Dividends. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Common stocks do not represent an obligation of
the issuer and, therefore, do not offer any assurance of income or
provide the same degree of protection of capital as do debt securities.
The issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the issuer
to declare or pay dividends on its common stock or the rights of holders
of common stock with respect to assets of the issuer upon liquidation or
bankruptcy.
Foreign Issuers. Since certain of the Securities included in the Trusts
consist of securities of foreign issuers, an investment in the Trusts
Page 1
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 Trusts, the
Sponsor believes that adequate information will be available to allow
the Supervisor to provide portfolio surveillance for the Trusts.
Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the U.S. dollar value of these securities will vary
with fluctuations in the U.S. dollar foreign exchange rates for the
various Securities.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trusts are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trusts of dividends due on, or proceeds
from the sale of, the Securities. However, there can be no assurance
that exchange control regulations might not be adopted in the future
which might adversely affect payment to the Trusts. The adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the
Trusts and on the ability of the Trusts to satisfy its obligation to
redeem Units tendered to the Trustee for redemption. In addition,
restrictions on the settlement of transactions on either the purchase or
sale side, or both, could cause delays or increase the costs associated
with the purchase and sale of the foreign Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to the Trusts relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by a Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by
the Trusts will generally be effected only in foreign securities
markets. Although the Sponsor does not believe that the Trusts will
encounter obstacles in disposing of the Securities, investors should
realize that the Securities may be traded in foreign countries where the
securities markets are not as developed or efficient and may not be as
liquid as those in the United States. The value of the Securities will
be adversely affected if trading markets for the Securities are limited
or absent.
Litigation
Microsoft Corporation. Microsoft Corporation is currently engaged in
litigation with Sun Microsystems, Inc., the U.S. Department of Justice,
several state Attorneys General and Caldera, Inc. The complaints against
Microsoft include copyright infringement, unfair competition and anti-
trust violations. The claims seek injunctive relief and monetary
damages. As of November 5, 1999, Microsoft's management asserted that
resolving these matters will not have a material adverse impact on its
financial position or its results of operation.
Concentrations
Communications. An investment in Units of the Bandwidth Portfolios
should be made with an understanding of the problems and risks such an
investment may entail. The market for high-technology communications
products and services is characterized by rapidly changing technology,
rapid product obsolescence, cyclical market patterns, evolving industry
standards and frequent new product introductions. The success of the
issuers of the Securities depends in substantial part on the timely and
successful introduction of new products and services. An unexpected
change in one or more of the technologies affecting an issuer's products
or in the market for products based on a particular technology could
have a material adverse affect on an issuer's operating results.
Furthermore, there can be no assurance that the issuers of the
Securities will be able to respond in a timely manner to compete in the
rapidly developing marketplace.
Page 2
The communications industry is subject to governmental regulation.
However, as market forces develop, the government will continue to
deregulate the communications industry, promoting vigorous economic
competition and resulting in the rapid development of new communications
technologies. The products and services of communications companies may
be subject to rapid obsolescence. These factors could affect the value
of the Trust's Units. For example, while telephone companies in the
United States are subject to both state and federal regulations
affecting permitted rates of returns and the kinds of services that may
be offered, the prohibition against phone companies delivering video
services has been lifted. This creates competition between phone
companies and cable operators and encourages phone companies to
modernize their communications infrastructure. Certain types of
companies represented in the Trust's portfolio are engaged in fierce
competition for a share of the market of their products. As a result,
competitive pressures are intense and the stocks are subject to rapid
price volatility.
Many communications companies rely on a combination of patents,
copyrights, trademarks and trade secret laws to establish and protect
their proprietary rights in their products and technologies. There can
be no assurance that the steps taken by the issuers of the Securities to
protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology.
Electronic Commerce. An investment in Units of the e-Business Portfolios
and the New e-conomy Portfolios should be made with an understanding of
the characteristics of the problems and risks such an investment may
entail. These portfolios consist of common stocks of retailers that
market their goods and services on the Internet and technology companies
that create the tools to make it possible. The profitability of
companies engaged in the retail industry will be affected by various
factors including the general state of the economy and consumer spending
trends. Recently, there have been major changes in the retail
environment due to the declaration of bankruptcy by some of the major
corporations involved in the retail industry, particularly the
department store segment. The continued viability of the retail industry
will depend on the industry's ability to adapt and to compete in
changing economic and social conditions, to attract and retain capable
management, and to finance expansion. Weakness in the banking or real
estate industry, a recessionary economic climate with the consequent
slowdown in employment growth, less favorable trends in unemployment or
a marked deceleration in real disposable personal income growth could
result in significant pressure on both consumer wealth and consumer
confidence, adversely affecting consumer spending habits. In addition,
competitiveness of the retail industry will require large capital
outlays for investment in the installation of automated checkout
equipment to control inventory, to track the sale of individual items
and to gauge the success of sales campaigns. Increasing employee and
retiree benefit costs may also have an adverse effect on the industry.
In many sectors of the retail industry, competition may be fierce due to
market saturation, converging consumer tastes and other factors. Because
of these factors and the recent increase in trade opportunities with
other countries, American retailers are now entering global markets
which entail added risks such as sudden weakening of foreign economies,
difficulty in adapting to local conditions and constraints and added
research costs.
Retailers who sell their products over the Internet have the potential
to access more consumers, but will require the capital to acquire and
maintain sophisticated technology. E-commerce company stocks have
experienced extreme price and volume fluctuations that are often
unrelated to their operating performance. Many such companies have
exceptionally high price-to-earnings ratios with little or no earnings
histories. In addition, numerous e-commerce companies have only recently
begun operations, and may have limited product lines, markets or
financial resources, as well as fewer experienced management personnel.
Finally, the lack of barriers to entry suggests a future of intense
competition for online retailers.
See "Technology" below, for additional information concerning the risks
of companies engaged in the technology industry.
Energy. An investment in the Energy Portfolio Series should be made with
an understanding of the problems and risks such an investment may entail.
The Energy Portfolio Series invests in Securities of companies involved
in the energy industry. The business activities of companies held in the
Energy Portfolio Series 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. Companies participating in new
activities resulting from technological advances or research discoveries
in the energy field were also considered for the Pharmaceutical Select
Portfolio Series.
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
Page 3
foregoing, the Securities in the Pharmaceutical Select Portfolio Series
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 Pharmaceutical Select Portfolio Series.
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
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 Energy Portfolio Series.
Financial Services. An investment in Units of the Glass-Steagall
Financial Opportunity Portfolios should be made with an understanding of
the problems and risks inherent in the bank and financial services
sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in
their fields of business. Banks and thrifts are highly dependent on net
interest margin. Recently, bank profits have come under pressure as net
interest margins have contracted, but volume gains have been strong in
both commercial and consumer products. There is no certainty that such
conditions will continue. Bank and thrift institutions had received
significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic
Page 4
conditions in the real estate markets, which have been weak in the past,
can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by
real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Securities in the Trust's portfolio cannot be predicted
with certainty. The recently enacted Gramm-Leach-Bliley Act repealed most
of the barriers set up by the 1933 Glass-Steagall Act which separated the
banking, insurance and securities industries. Now banks, insurance companies
and securities firms can merge to form one-stop financial conglomerates
marketing a wide range of financial service products to investors.
This legislation will likely result in increased merger activity and
heightened competition among existing and new participants in the field.
Efforts to expand the ability of federal thrifts to branch on an interstate
basis have been initially successful through promulgation of regulations, and
legislation to liberalize interstate banking has recently been signed
into law. Under the legislation, banks will be able to purchase or
establish subsidiary banks in any state, one year after the
legislation's enactment. Since mid-1997, banks have been allowed to turn
existing banks into branches. Consolidation is likely to continue. The
Securities and Exchange Commission and the Financial Accounting
Standards Board require the expanded use of market value accounting by
banks and have imposed rules requiring market accounting for investment
securities held in trading accounts or available for sale. Adoption of
additional such rules may result in increased volatility in the reported
health of the industry, and mandated regulatory intervention to correct
such problems. Additional legislative and regulatory changes may be
forthcoming. For example, the bank regulatory authorities have proposed
substantial changes to the Community Reinvestment Act and fair lending
laws, rules and regulations, and there can be no certainty as to the
effect, if any, that such changes would have on the Securities in the
Trust's portfolio. In addition, from time to time the deposit insurance
system is reviewed by Congress and federal regulators, and proposed
reforms of that system could, among other things, further restrict the
ways in which deposited moneys can be used by banks or reduce the dollar
amount or number of deposits insured for any depositor. Such reforms
could reduce profitability as investment opportunities available to bank
institutions become more limited and as consumers look for savings
vehicles other than bank deposits. Banks and thrifts face significant
competition from other financial institutions such as mutual funds,
credit unions, mortgage banking companies and insurance companies, and
increased competition may result from legislative broadening of regional
and national interstate banking powers as has been recently enacted.
Among other benefits, the legislation allows banks and bank holding
companies to acquire across previously prohibited state lines and to
consolidate their various bank subsidiaries into one unit. The Sponsor
makes no prediction as to what, if any, manner of bank and thrift
regulatory actions might ultimately be adopted or what ultimate effect
such actions might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
Page 5
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Securities or whether such approvals, if necessary, will be
obtained.
Some of the nation's largest banks, already working to upgrade their own
computer systems to meet the Year 2000 deadline, are concerned that some
borrowers may fail to upgrade their computers in time, creating problem
loans and increasing overall loan losses. Banks considered most
vulnerable by analysts include those lending primarily to small
businesses, which aren't as likely as large businesses to have a plan
for upgrading their computers. Also at risk are banks with significant
exposure overseas, where many foreign businesses are not moving as
quickly to resolve this problem. Analysts warn that it will be difficult
for banks to determine their potential loan losses related to Year 2000
credit risk.
Companies involved in the insurance industry are engaged in
underwriting, reinsuring, selling, distributing or placing of property
and casualty, life or health insurance. Other growth areas within the
insurance industry include brokerage, reciprocals, claims processors and
multiline insurance companies. Insurance company profits are affected by
interest rate levels, general economic conditions, and price and
marketing competition. Property and casualty insurance profits may also
be affected by weather catastrophes and other disasters. Life and health
insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation,
including the imposition of maximum rate levels, which may not be
adequate for some lines of business. Proposed or potential tax law
changes may also adversely affect insurance companies' policy sales, tax
obligations, and profitability. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including
those applicable to regulated insurance companies, such as: (i) the
inherent uncertainty in the process of establishing property-liability
loss reserves, particularly reserves for the cost of environmental,
asbestos and mass tort claims, and the fact that ultimate losses could
materially exceed established loss reserves which could have a material
adverse effect on results of operations and financial condition; (ii)
the fact that insurance companies have experienced, and can be expected
in the future to experience, catastrophe losses which could have a
material adverse impact on their financial condition, results of
operations and cash flow; (iii) the inherent uncertainty in the process
of establishing property-liability loss reserves due to changes in loss
payment patterns caused by new claims settlement practices; (iv) the
need for insurance companies and their subsidiaries to maintain
appropriate levels of statutory capital and surplus, particularly in
light of continuing scrutiny by rating organizations and state insurance
regulatory authorities, and in order to maintain acceptable financial
strength or claims-paying ability rating; (v) the extensive regulation
and supervision to which insurance companies' subsidiaries are subject,
various regulatory initiatives that may affect insurance companies, and
regulatory and other legal actions; (vi) the adverse impact that
increases in interest rates could have on the value of an insurance
company's investment portfolio and on the attractiveness of certain of
its products; (vii) the need to adjust the effective duration of the
assets and liabilities of life insurance operations in order to meet the
anticipated cash flow requirements of its policyholder obligations; and
(vii) the uncertainty involved in estimating the availability of
reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have
considered or enacted laws that alter and, in many cases, increase state
authority to regulate insurance companies and insurance holding company
systems. Further, the National Association of Insurance Commissioners
("NAIC") and state insurance regulators are re-examining existing laws
and regulations, specifically focusing on insurance companies,
interpretations of existing laws and the development of new laws. In
addition, Congress and certain federal agencies have investigated the
condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is
unable to predict whether any state or federal legislation will be
enacted to change the nature or scope of regulation of the insurance
industry, or what effect, if any, such legislation would have on the
industry.
Page 6
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the
amount of investments in certain investment categories. Failure to
comply with these laws and regulations would cause non-conforming
investments to be treated as non-admitted assets for purposes of
measuring statutory surplus and, in some instances, would require
divestiture.
Environmental pollution clean-up is the subject of both federal and
state regulation. By some estimates, there are thousands of potential
waste sites subject to clean up. The insurance industry is involved in
extensive litigation regarding coverage issues. The Comprehensive
Environmental Response Compensation and Liability Act of 1980
("Superfund") and comparable state statutes ("mini-Superfund") govern
the clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund and the mini-Superfunds ("Environmental Clean-up
Laws or "ECLs") establish a mechanism to pay for clean-up of waste sites
if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
The extent of clean-up necessary and the assignment of liability has not
been fully established. The insurance industry is disputing many such
claims. Key coverage issues include whether Superfund response costs are
considered damages under the policies, when and how coverage is
triggered, applicability of pollution exclusions, the potential for
joint and several liability and definition of an occurrence. Similar
coverage issues exist for clean up and waste sites not covered under
Superfund. To date, courts have been inconsistent in their rulings on
these issues. An insurer's exposure to liability with regard to its
insureds which have been, or may be, named as PRPs is uncertain.
Superfund reform proposals have been introduced in Congress, but none
have been enacted. There can be no assurance that any Superfund reform
legislation will be enacted or that any such legislation will provide
for a fair, effective and cost-efficient system for settlement of
Superfund related claims.
While current federal income tax law permits the tax-deferred
accumulation of earnings on the premiums paid by an annuity owner and
holders of certain savings-oriented life insurance products, no
assurance can be given that future tax law will continue to allow such
tax deferrals. If such deferrals were not allowed, consumer demand for
the affected products would be substantially reduced. In addition,
proposals to lower the federal income tax rates through a form of flat
tax or otherwise could have, if enacted, a negative impact on the demand
for such products.
Companies engaged in investment banking/brokerage and investment
management include brokerage firms, broker/dealers, investment banks,
finance companies and mutual fund companies. Earnings and share prices
of companies in this industry are quite volatile, and often exceed the
volatility levels of the market as a whole. Recently, ongoing
consolidation in the industry and the strong stock market has benefited
stocks which investors believe will benefit from greater investor and
issuer activity. Major determinants of future earnings of these
companies are the direction of the stock market, investor confidence,
equity transaction volume, the level and direction of long-term and
short-term interest rates, and the outlook for emerging markets.
Negative trends in any of these earnings determinants could have a
serious adverse effect on the financial stability, as well as the stock
prices, of these companies. Furthermore, there can be no assurance that
the issuers of the Securities included in the e-Tail Portfolio will be
able to respond in a timely manner to compete in the rapidly developing
marketplace. In addition to the foregoing, profit margins of these
companies continue to shrink due to the commoditization of traditional
businesses, new competitors, capital expenditures on new technology and
the pressures to compete globally.
Pharmaceutical. An investment in Units of the Pharmaceutical Portfolios
should be made with an understanding of the problems and risks such an
investment may entail.
Companies involved in advanced medical devices and instruments, drugs
and biotech have potential risks unique to their sector of the
healthcare field. These companies are subject to governmental regulation
of their products and services, a factor which could have a significant
and possibly unfavorable effect on the price and availability of such
products or services. Furthermore, such companies face the risk of
increasing competition from new products or services, generic drug
sales, the termination of patent protection for drug or medical supply
products and the risk that technological advances will render their
products obsolete. The research and development costs of bringing a drug
to market are substantial, and include lengthy governmental review
processes with no guarantee that the product will ever come to market.
Many of these companies may have losses and may not offer certain
products for several years. Such companies may also have persistent
losses during a new product's transition from development to production,
and revenue patterns may be erratic.
As the population of the United States ages, the companies involved in
the healthcare field will continue to search for and develop new drugs,
medical products and medical services through advanced technologies and
diagnostics. On a worldwide basis, such companies are involved in the
development and distributions of drugs, vaccines, medical products and
medical services. These activities may make the
biotechnology/pharmaceuticals sector very attractive for investors
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,
Page 7
including cost and price controls (which might include a freeze on the
prices of prescription drugs). The Sponsor is unable to predict the
effect of any of these proposals, if enacted, on the issuers of
Securities in the Trust.
Technology. An investment in Units of the e-Business Portfolios, the
Internet Portfolios, the New e-conomy Portfolios and the Technology
Portfolios should be made with an understanding of the characteristics
of the problems and risks such an investment may entail. Technology
companies generally include companies involved in the development,
design, manufacture and sale of computers and peripherals, software and
services, data networking/communications equipment, internet
access/information providers, semiconductors and semiconductor equipment
and other related products, systems and services. The market for these
products, especially those specifically related to the Internet, is
characterized by rapidly changing technology, rapid product
obsolescence, cyclical market patterns, evolving industry standards and
frequent new product introductions. The success of the issuers of the
Securities depends in substantial part on the timely and successful
introduction of new products. An unexpected change in one or more of the
technologies affecting an issuer's products or in the market for
products based on a particular technology could have a material adverse
affect on an issuer's operating results. Furthermore, there can be no
assurance that the issuers of the Securities will be able to respond in
a timely manner to compete in the rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements
of new products or development of new technologies and general
conditions of the industry have caused and are likely to cause the
market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to
the operating performance of such companies. This market volatility may
adversely affect the market price of the Securities and therefore the
ability of a Unit holder to redeem Units at a price equal to or greater
than the original price paid for such Units.
Some key components of certain products of technology issuers are
currently available only from single sources. There can be no assurance
that in the future suppliers will be able to meet the demand for
components in a timely and cost effective manner. Accordingly, an
issuer's operating results and customer relationships could be adversely
affected by either an increase in price for, or an interruption or
reduction in supply of, any key components. Additionally, many
technology issuers are characterized by a highly concentrated customer
base consisting of a limited number of large customers who may require
product vendors to comply with rigorous industry standards. Any failure
to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies of technology
companies are incorporated into other related products, such companies
are often highly dependent on the performance of the personal computer,
electronics and telecommunications industries. There can be no assurance
that these customers will place additional orders, or that an issuer of
Securities will obtain orders of similar magnitude as past orders from
other customers. Similarly, the success of certain technology companies
is tied to a relatively small concentration of products or technologies.
Accordingly, a decline in demand of such products, technologies or from
such customers could have a material adverse impact on issuers of the
Securities.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their
proprietary rights in their products and technologies. There can be no
assurance that the steps taken by the issuers of the Securities to
protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology. In addition, due to the increasing
public use of the Internet, it is possible that other laws and
regulations may be adopted to address issues such as privacy, pricing,
characteristics, and quality of Internet products and services. For
example, recent proposals would prohibit the distribution of obscene,
lascivious or indecent communications on the Internet. The adoption of
any such laws could have a material adverse impact on the Securities in
the Trust.
Like many areas of technology, the semiconductor business environment is
highly competitive, notoriously cyclical and subject to rapid and often
unanticipated change. Recent industry downturns have resulted, in part,
from weak pricing, persistent overcapacity, slowdown in Asian demand and
a shift in retail personal computer sales toward the low end, or "sub-
$1,000" segment. Industry growth is dependent upon several factors,
including: the rate of global economic expansion; demand for products
such as personal computers and networking and communications equipment;
excess productive capacity and the resultant effect on pricing; and the
rate of growth in the market for low-priced personal computers.
Portfolios
Equity Securities Selected for Bandwidth Select Portfolio Series and
Bandwidth Portfolio Series
Both the Bandwidth Select Portfolio, Series 2 and the Bandwidth
Portfolio, Series 2 contain common stocks of the following companies:
Page 8
Communications Services
_______________________
AT&T Corp., headquartered in
Covad Communications Group, Inc., headquartered in
Global Crossing Ltd., headquartered in
Level 3 Communications, Inc., headquartered in
MCI WorldCom, Inc., headquartered in
Qwest Communications International Inc., headquartered in
Communications Equipment
_______________________
ADC Telecommunications, Inc., headquartered in
Copper Mountain Networks, Inc., headquartered in
Lucent Technologies Inc., headquartered in
Nortel Networks Corporation, headquartered in
Tellabs, Inc., headquartered in
Fiber Optics
_____________
Harmonic Inc., headquartered in
JDS Uniphase Corporation, headquartered in
Networking Products
___________________
Cisco Systems, Inc., headquartered in
Juniper Networks, Inc., headquartered in
Redback Networks Inc., headquartered in
Semiconductors
_______________
Applied Micro Circuits Corporation, headquartered in
Broadcom Corporation (Class A), headquartered in
Conexant Systems, Inc., headquartered in
PMC-Sierra, Inc., headquartered in
Vitesse Semiconductor Corporation, headquartered in
Wireless Communications
_______________________
L.M. Ericsson AB (ADR), headquartered in
Motorola, Inc., headquartered in
Nokia Oy (ADR), headquartered in
QUALCOMM Incorporated, headquartered in
Equity Securities Selected for e-Business Select Portfolio Series and e-
Business Portfolio Series
Both the e-Business Select Portfolio, Series 2 and the e-Business
Portfolio, Series 2 contain common stocks of the following companies:
Horizontal Portals
_______________
America Online, Inc., headquartered in
Ariba, Inc., headquartered in
Commerce One, Inc., headquartered in
PurchasePro.com, Inc., headquartered in
VerticalNet, Inc., headquartered in
Yahoo! Inc., headquartered in
Infrastructure
______________
BroadVision, Inc., headquartered in
Check Point Software Technologies Ltd., headquartered in
Digital Island, headquartered in
Exodus Communications, Inc., headquartered in
Level 3 Communications, Inc., headquartered in
Page 9
MCI WorldCom, Inc., headquartered in
Microsoft Corporation, headquartered in
Siebel Systems, Inc., headquartered in
VeriSign, Inc., headquartered in
Procurement
__________
Cisco Systems, Inc., headquartered in
Dell Computer Corporation, headquartered in
International Business Machines Corporation, headquartered in
i2 Technologies, Inc., headquartered in
Oracle Corporation, headquartered in
Venture Capital
_______________
CMGI Inc., headquartered in
Internet Capital Group, Inc., headquartered in
Vertical Portals
_______________
Chemdex Corporation, headquartered in
Healtheon/WebMD Corporation, headquartered in
pcOrder.com, Inc., headquartered in
Equity Securities Selected for Energy Portfolio, Series 7
Natural Gas
___________
El Paso Energy Corporation, headquartered in
Enron Corp., headquartered in
Oil & Gas-Drilling
________________
Global Marine Inc., headquartered in
Nabors Industries, Inc., headquartered in
Noble Drilling Corporation, headquartered in
Santa Fe International Corporation, headquartered in
Transocean Offshore Inc., headquartered in
Oil & Gas-Exploration & Production
___________________________________
Barrett Resources Corporation, headquartered in
Burlington Resources Inc., headquartered in
EOG Resources, Inc., headquartered in
Vastar Resources, Inc., headquartered in
Oil-Field Services
__________________
BJ Services Company, headquartered in
Halliburton Company, headquartered in
Schlumberger Limited, headquartered in
Tidewater Inc., headquartered in
Weatherford International, Inc., headquartered in
Oil-Integrated
______________
BP Amoco Plc (ADR), headquartered in
Chevron Corporation, headquartered in
ENI SpA (ADR), headquartered in
Exxon Mobil Corporation, headquartered in
Royal Dutch Petroleum Company, headquartered in
Texaco Inc., headquartered in
Total Fina SA (ADR), headquartered in
USX-Marathon Group, headquartered in
Page 10
Oil-Refining & Marketing
________________________
Tosco Corporation, headquartered in
Equity Securities Selected for Glass-Steagall Financial Opportunity
Select Portfolio Series and Glass-Steagall Financial Opportunity
Portfolio Series
Both the Glass-Steagall Financial Opportunity Select Portfolio Series
and the Glass-Steagall Financial Opportunity Portfolio Series contain
common stocks of the following companies:
Banks & Thrifts
_______________
Bank of America Corporation, headquartered in
The Chase Manhattan Corporation, headquartered in
Firstar Corporation, headquartered in
Fleet Boston Corporation, headquartered in
KeyCorp, headquartered in
Mellon Financial Corporation, headquartered in
Northern Trust Corporation, headquartered in
State Street Corporation, headquartered in
Wells Fargo Company, headquartered in
Financial Services
_______________
American Express Company, headquartered in
Capital One Financial Corporation, headquartered in
Citigroup Inc., headquartered in
Household International, Inc., headquartered in
MBNA Corporation, headquartered in
Providian Financial Corporation, headquartered in
Insurance
_________
AFLAC Incorporated, headquartered in
American International Group, Inc., headquartered in
Marsh & McLennan Companies, Inc., headquartered in
Nationwide Financial Services, Inc. (Class A), headquartered in
Investment Services
___________________
Ameritrade Holding Corporation (Class A), headquartered in
Donaldson, Lufkin & Jenrette, Inc., headquartered in
E*TRADE Group, Inc., headquartered in
Eaton Vance Corp., headquartered in
The Goldman Sachs Group, Inc., headquartered in
Knight/Trimark Group, Inc. (Class A), headquartered in
Lehman Brothers Holdings Inc., headquartered in
Merrill Lynch & Co., Inc., headquartered in
Morgan Stanley Dean Witter & Co., headquartered in
T.Rowe Price Associates, Inc., headquartered in
The Charles Schwab Corporation, headquartered in
Equity Securities Selected for Internet Select Portfolio Series and
Internet Portfolio Series
Both the Internet Select Portfolio, Series 2 and the Internet Portfolio,
Series 9 contain common stocks of the following companies:
Access/Information Providers
____________________________
AT&T Corp., headquartered in
America Online, Inc., headquartered in
MCI WorldCom, Inc., headquartered in
Page 11
Qwest Communications International Inc., headquartered in
Communications Equipment
________________________
JDS Uniphase Corporation, headquartered in
Lucent Technologies Inc., headquartered in
Tellabs, Inc., headquartered in
Computers & Peripherals
_______________________
Dell Computer Corporation, headquartered in
EMC Corporation, headquartered in
Gateway Inc., headquartered in
Hewlett-Packard Company, headquartered in
Sun Microsystems, Inc., headquartered in
Internet Content
________________
CMGI Inc., headquartered in
Internet Capital Group, Inc., headquartered in
Lycos, Inc., headquartered in
Yahoo! Inc., headquartered in
Internet Software & Services
_____________________________
BroadVision, Inc., headquartered in
Check Point Software Technologies Ltd., headquartered in
Exodus Communications, Inc., headquartered in
Intuit Inc., headquartered in
Microsoft Corporation, headquartered in
Oracle Corporation, headquartered in
RealNetworks, Inc., headquartered in
Networking Products
________________
Cisco Systems, Inc., headquartered in
Juniper Networks, Inc., headquartered in
Redback Networks Inc., headquartered in
Semiconductors
______________
Conexant Systems, Inc., headquartered in
Intel Corporation, headquartered in
PMC-Sierra, Inc., headquartered in
Vitesse Semiconductor Corporation, headquartered in
Equity Securities Selected for New e-conomy Select Portfolio Series and
New e-conomy Portfolio Series
Both the New e-conomy Select Portfolio Series and the New e-conomy
Portfolio Series contain common stocks of the following companies:
Bandwidth
_________
AT&T Corp., headquartered in
Cisco Systems, Inc., headquartered in
Lucent Technologies Inc., headquartered in
MCI WorldCom, Inc., headquartered in
Tellabs, Inc., headquartered in
e-Business
__________
Ariba, Inc., headquartered in
BroadVision, Inc., headquartered in
Commerce One, Inc., headquartered in
Page 12
Exodus Communications, Inc., headquartered in
Internet Capital Group, Inc., headquartered in
e-Infrastructure
________________
Dell Computer Corporation, headquartered in
EMC Corporation, headquartered in
Hewlett-Packard Company, headquartered in
Oracle Corporation, headquartered in
Sun Microsystems, Inc., headquartered in
Internet
________
America Online, Inc., headquartered in
CMGI Inc., headquartered in
Lycos, Inc., headquartered in
Microsoft Corporation, headquartered in
Yahoo! Inc., headquartered in
Wireless
________
L.M. Ericsson AB (ADR), headquartered in
Motorola, Inc., headquartered in
Nokia Oy (ADR), headquartered in
QUALCOMM Incorporated, headquartered in
Vodafone AirTouch Plc (ADR), headquartered in
Equity Securities Selected for Online Media Select Portfolio Series and
Online Media Portfolio Series
Both the Online Media Select Portfolio Series and the Online Media
Portfolio Series contain common stocks of the following companies:
Advertising
___________
The Interpublic Group of Companies, Inc., headquartered in
Omnicom Group Inc., headquartered in
TMP Worldwide Inc., headquartered in
Young & Rubicam Inc., headquartered in
Advertising
___________
America Online, Inc., headquartered in
DoubleClick Inc., headquartered in
Lycos, Inc., headquartered in
RealNetworks, Inc., headquartered in
Yahoo! Inc., headquartered in
Media/Content
_____________
The Walt Disney Company, headquartered in
Gannett Co., Inc., headquartered in
Knight-Ridder, Inc., headquartered in
The New York Times Company (Class A), headquartered in
The Times Mirror Company (Class A), headquartered in
Tribune Company, headquartered in
Webcasting
__________
AMFM Inc., headquartered in
CBS Corporation, headquartered in
Clear Channel Communications, Inc., headquartered in
Emmis Communications Corporation (Class A), headquartered in
Page 13
Infinity Broadcasting Corporation (Class A), headquartered in
Equity Securities Selected for Pharmaceutical Select Portfolio Series
and Pharmaceutical Portfolio Series
Both the Pharmaceutical Select Portfolio, Series 2 and the
Pharmaceutical Portfolio, Series 8 contain common stocks of the
following companies:
Abbott Laboratories, headquartered in
Amgen Inc., headquartered in
Biogen, Inc., headquartered in
Bristol-Myers Squibb Company, headquartered in
Chiron Corporation, headquartered in
Elan Corporation Plc (ADR), headquartered in
Genzyme Corporation (General Division), headquartered in
Glaxo Wellcome Plc (ADR), headquartered in
IDEC Pharmaceuticals Corporation, headquartered in
Immunex Corporation, headquartered in
Johnson & Johnson, headquartered in
Eli Lilly and Company, headquartered in
MedImmune, Inc., headquartered in
Merck & Co., Inc., headquartered in
Novartis AG (ADR), headquartered in
Pfizer Inc., headquartered in
Roche Holdings AG (ADR), headquartered in
Schering-Plough Corporation, headquartered in
SmithKline Beecham Plc (ADR), headquartered in
Warner-Lambert Company, headquartered in
Equity Securities Selected for Technology Select Portfolio Series and
Technology Portfolio Series
Both the Technology Select Portfolio, Series 2 and the Technology
Portfolio, Series 11 contain common stocks of the following companies:
Computers & Peripherals
____________________
Dell Computer Corporation, headquartered in
EMC Corporation, headquartered in
Gateway Inc., headquartered in
Hewlett-Packard Company, headquartered in
Solectron Corporation, headquartered in
Sun Microsystems, Inc., headquartered in
Computer Software & Services
____________________________
BMC Software, Inc., headquartered in
Check Point Software Technologies Ltd., headquartered in
Compuware Corporation, headquartered in
Legato Systems, Inc., headquartered in
Microsoft Corporation, headquartered in
Oracle Corporation, headquartered in
Data Networking/Communications Equipment
________________________________________
ADC Telecommunications, Inc., headquartered in
Cisco Systems, Inc., headquartered in
Lucent Technologies Inc., headquartered in
Nokia Oy (ADR), headquartered in
Page 14
Tellabs, Inc., headquartered in
Semiconductor Equipment
_______________________
Applied Materials, Inc., headquartered in
Novellus Systems, Inc., headquartered in
Semiconductors
______________
Altera Corporation, headquartered in
Intel Corporation, headquartered in
Maxim Integrated Products, Inc., headquartered in
QLogic Corporation, headquartered in
Texas Instruments Incorporated, headquartered in
Vitesse Semiconductor Corporation, headquartered in
We have obtained the foregoing descriptions from sources we deem
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Page 15
MEMORANDUM
Re: FT 395
The only difference of consequence (except as described
below) between FT 382, which is the current fund, and FT 395, the
filing of which this memorandum accompanies, is the change in the
series number. The list of securities comprising the Fund, the
evaluation, record and distribution dates and other changes
pertaining specifically to the new series, such as size and
number of Units in the Fund and the statement of condition of the
new Fund, will be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the FT
382 Prospectus relate to the series number and size and the date
and various items of information which will be derived from and
apply specifically to the securities deposited in the Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 395 has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on December 27, 1999.
FT 395
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
David J. Allen Sole Director of
Nike Securities December 27, 1999
Corporation, the
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., the Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to form S-6 of The First Trust Combined
Series 258 (File No. 33-63483) and the same is hereby
incorporated by this reference.
S-2
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF ERNST & YOUNG LLP
The consent of Ernst & Young LLP to the use of its name and
to the reference to such firm in the Prospectus included in this
Registration Statement will be filed by amendment.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-3
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-43693] filed on behalf of The First Trust
Special Situations Trust, Series 22).
1.1.1* Form of Trust Agreement for FT 395 among Nike Securities
L.P., as Depositor, The Chase Manhattan Bank, as Trustee
and First Trust Advisors L.P., as Evaluator and Portfolio
Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5