Registration No. 333-09183
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
The First Trust Special Situations Trust, Series 157
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
E. Title and Amount 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. Proposed Maximum Aggregate Offering Price to the Public of
the Securities Being Registered: Indefinite
G. Amount of Filing Fee: $0.00
H. Approximate date of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on November 14, 1996 at 2:00 p.m. pursuant to Rule
487.
________________________________
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 157
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
Form N-8B-2 Item Number Form S-6 Heading in Prospectus
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The First Trust
Special Situations
Trust
6. Execution and termination of Other Information
trust agreement
7. Changes of name *
8. Fiscal year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Public Offering
securities
(b) Cumulative or distributive The First Trust
securities Special Situations
Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The First Trust
Special Situations
Trust
11. Types of securities comprising The First Trust
units Special
Situations Trust
Schedule of
Investments
12. Certain information regarding
periodic payment certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The First
Trust Special
Situations Trust
(b) Certain information regarding
periodic payment certificates *
(c) Certain percentages Summary of Essential
Information; The
First Trust Special
Situations Trust;
Public Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The First Trust
affiliated persons Special
Situations Trust
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
15. Receipt and handling of payments
from purchasers *
16. Acquisition and disposition of
underlying securities The First Trust
Special Situations
Trust; Rights of Unit
Holders;
17. Withdrawal or redemption The First Trust
Special Situations
Trust; Public
Offering; Rights of
Unit Holders
18. (a) Receipt, custody and Rights of Unit Holders
disposition of income
(b) Reinvestment of distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and reports Rights of Unit Holders
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to Sponsor, Trustee
and Evaluator
21. Loans to security holders *
22. Limitations on liability The First Trust
Special Situations
Trust;
Information as to
Sponsor, Trustee
and Evaluator
23. Bonding arrangements Contents of
Registration
Statement
24. Other material provisions *
of trust agreement
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to
officials and affiliated *
persons of depositor
29. Voting securities of depositor *
30. Persons controlling depositor *
31. Payment by depositor for certain
services rendered to trust *
32. Payment by depositor for certain
other services rendered to trust *
33. Remuneration of employees of
depositor for certain services
rendered to trust *
34. Remuneration of other persons
for certain services rendered *
to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's Public Offering
securities by states
36. Suspension of sales of trust's
securities *
37. Revocation of authority to *
distribute
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal *
underwriters
42. Ownership of trust's securities
by certain persons *
43. Certain brokerage commissions
received by principal *
underwriters
44. (a) Method of valuation Summary of Essential
Information; The
First Trust Special
Situations Trust,
Public Offering
(b) Schedule as to offering *
price
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption rights *
46. (a) Redemption valuation Rights of Unit Holders
(b) Schedule as to redemption *
price
47. Maintenance of position in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to Sponsor, Trustee
and Evaluator
49. Fees and expenses of trustee The First Trust
Special Situations
Trust
50. Trustee's lien The First Trust
Special Situations
Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OF
SECURITIES
51. Insurance of holders of
trust's securities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust
agreement with respect to Special
selection or elimination of Situations Trust;
underlying securities Rights of Unit Holders
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The First Trust
or elimination of underlying Special
securities Situations Trust;
Rights of Unit Holders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The First Trust
Special Situations
Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during *
last ten years
55.
56.
57. Certain information regarding
period payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Form S-6) Auditors; Statement of
Net Assets
* Inapplicable, answer negative or not required.
Dorsey, Wright Sector Trusts, Precious Metals Series 1
The Trust. The First Trust (registered trademark) Special Situations
Trust, Series 157 (the "Trust") is a unit investment trust consisting of
a portfolio of common stocks issued by companies involved in the
exploration for and mining and processing of precious metals which were
selected by Dorsey, Wright & Associates using the Relative Strength
formula and Point and Figure method of technical analysis. This
analysis, as performed by Dorsey, Wright & Associates, is used to select
sectors of the economy and individual securities within such sectors
which show strong potential for capital appreciation. Dorsey, Wright &
Associates and Nike Securities L.P. have teamed up to use their
respective areas of expertise to create unit investment trusts which
incorporate the analysis of Dorsey, Wright & Associates.
The objective of the Trust is to provide for potential capital
appreciation by investing the Trust's portfolio in common stocks (the
"Common Stocks") issued by companies involved in the exploration for and
mining and processing of precious metals and in shares of a closed-end
mutual fund which itself invests in common stocks of precious metals
companies (the "Closed-End Fund"), which were selected by Dorsey, Wright
& Associates using the Relative Strength formula and Point and Figure
method of technical analysis. Collectively, the Common Stocks and Closed-
End Fund are referred to herein as the "Equity Securities." The Trust
has a mandatory termination date ("Mandatory Termination Date" or "Trust
Ending Date") as set forth under "Summary of Essential Information."
There is, of course, no guarantee that the objective of the Trust will
be achieved. Each Unit of the Trust represents an undivided fractional
interest in all the Equity Securities deposited in the Trust.
THE TRUST MAY BE CONSIDERED SPECULATIVE AND THEREFORE MAY BE APPROPRIATE
ONLY FOR THOSE INVESTORS WHO ARE ABLE AND WILLING TO ASSUME THE
INCREASED RISKS OF HIGHER PRICE VOLATILITY ASSOCIATED WITH AN INVESTMENT
IN COMMON STOCK OF COMPANIES ENGAGED IN THE EXPLORATION FOR AND/OR
MINING AND PROCESSING OF PRECIOUS METALS. THE TRUST SHOULD BE
CONSIDERED AS A VEHICLE FOR INVESTING ONLY A PORTION OF AN INVESTOR'S
ASSETS AND NOT AS A COMPLETE EQUITY INVESTMENT PROGRAM. SEE "RISK
FACTORS."
The Equity Securities deposited in the Trust's portfolio have no fixed
maturity date and the value of these underlying Equity Securities will
fluctuate with changes in the values of stocks in general. See "Schedule
of Investments."
The Sponsor may, from time to time during a period of up to
approximately 360 days after the Initial Date of Deposit, deposit
additional Equity Securities in the Trust or cash (including a letter of
credit) with instructions to purchase additional Equity Securities in
the Trust. Such deposits of additional Equity Securities or cash will,
therefore, be done in such a manner that the original proportionate
relationship amongst the individual issues of the Equity Securities
shall be maintained. Any deposit by the Sponsor of additional Equity
Securities, or the purchase of additional Equity Securities pursuant to
a cash deposit, will duplicate, as nearly as is practicable, the
original proportionate relationship established on the Initial Date of
Deposit, and not the actual proportionate relationship on the subsequent
date of deposit, since the two may differ. Any such difference may be
due to the sale, redemption or liquidation of any Equity Securities
deposited in the Trust on the Initial, or any subsequent, Date of
Deposit. See "What is the First Trust Special Situations Trust?" and
"How May Equity Securities be Removed from the Trust?"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Nike Securities L.P.
Sponsor of First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is November 14, 1996
Page 1
Public Offering Price. The Public Offering Price per Unit of the Trust
during the initial offering period is equal to the aggregate underlying
value of the Equity Securities in the Trust (generally determined by the
closing sale prices of listed Equity Securities and the ask prices of
over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of the Trust,
plus a deferred sales charge initially equal to $0.34 per Unit. This deferred
sales charge will be assessed on a monthly basis over a ten-month
period. Commencing on January 31, 1997, and on the last business day of
each month thereafter, through October 31, 1997, a deferred sales charge
of $.034 will be assessed per Unit per month. Units purchased subsequent
to the initial deferred sales charge payment but still during the
initial offering period will be charged the amount of the previously
collected deferred sales charge at the time of purchase and will be
subject to the remaining deferred sales charge payments not yet
collected. The deferred sales charge will be paid from funds in the
Income and/or Capital Accounts, if sufficient, or from the periodic sale
of Equity Securities. The total maximum sales charge assessed to Unit
holders on a per Unit basis will be $0.34 (which on the Initial Date of
Deposit is equivalent to 3.4% of the Public Offering Price), subject to
a reduction beginning December 1, 1997. The total maximum sales charge
which may be assessed to Unit holders on a per Unit basis is 3.9% of the
Public Offering Price (equivalent to a maximum of 4.058% of the net
amount invested, exclusive of the deferred sales charge). A pro rata
share of accumulated dividends, if any, in the Income Account is
included in the Public Offering Price. Upon completion of the deferred
sales charge period, the secondary market Public Offering Price per Unit
will not include deferred payments, but will instead include only a one-
time initial sales charge of 3.4% of the Public Offering Price
(equivalent to 3.520% of the net amount invested). The minimum amount
which an investor may purchase in the Trust is $1,000 ($250 for an
Individual Retirement Account or other retirement plans). The sales
charge is reduced on a graduated scale for sales involving at least
$50,000. See "How is the Public Offering Price Determined?"
UNITS OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE INVESTMENT RISK
INCLUDING LOSS OF PRINCIPAL.
Dividend and Capital Distributions. Distributions of dividends and
capital, if any, received by the Trust, net of expenses of the Trust,
will be paid on the Distribution Date to Unit holders of record on the
Record Date as set forth in the "Summary of Essential Information."
Distributions of funds in the Capital Account, if any, will be made at
least annually in December of each year. Any distribution of income
and/or capital will be net of the expenses of the Trust. See "What is
the Federal Tax Status of Unit Holders?" Additionally, upon termination
of the Trust, the Trustee will distribute, upon surrender of Units for
redemption, to each Unit holder his pro rata share of the Trust's
assets, less expenses, in the manner set forth under "Rights of Unit
Holders-How are Income and Capital Distributed?"
Secondary Market for Units. After the initial offering period, while
under no obligation to do so, the Sponsor intends to maintain a market
for Units of the Trust and offer to repurchase such Units at prices
which are based on the aggregate underlying value of Equity Securities
in the Trust (generally determined by the closing sale prices of listed
Equity Securities and the bid prices of over-the-counter traded Equity
Securities) plus or minus cash, if any, in the Capital and Income
Accounts of the Trust. If a secondary market is maintained during the
initial offering period, the prices at which Units will be repurchased
will also be based upon the aggregate underlying value of the Equity
Securities in the Trust (generally determined by the closing sale prices
of listed Equity Securities and the ask prices of over-the-counter
traded Equity Securities) plus or minus cash, if any, in the Capital and
Income Accounts of the Trust. If a secondary market is not maintained, a
Unit holder may redeem Units through redemption at prices based upon the
aggregate underlying value of the Equity Securities in the Trust
(generally determined by the closing sale prices of listed Equity
Securities and the bid prices of over-the-counter traded Equity
Securities) plus or minus a pro rata share of cash, if any, in the
Capital and Income Accounts of the Trust. A Unit holder tendering 2,500
Units or more for redemption may request a distribution of shares of
Equity Securities (reduced by customary transfer and registration
charges) in lieu of payment in cash. Units sold or tendered for
redemption prior to such time as the entire deferred sales charge has
been collected will be assessed the amount of the remaining deferred
sales charge at the time of sale or redemption. See "How May Units be
Redeemed?"
Termination. Commencing on the Mandatory Termination Date, Equity
Securities will begin to be sold in connection with the termination of
the Trust. The Sponsor will determine the manner, timing and execution
of the sale of the Equity Securities. Written notice of any termination
Page 2
of the Trust specifying the time or times at which Unit holders may
surrender their certificates for cancellation shall be given by the
Trustee to each Unit holder at his address appearing on the registration
books of the Trust maintained by the Trustee. At least 60 days prior to
the Mandatory Termination Date of the Trust, the Trustee will provide
written notice thereof to all Unit holders and will include with such
notice a form to enable Unit holders to elect a distribution of shares
of Equity Securities (reduced by customary transfer and registration
charges) if such Unit holder owns at least 2,500 Units of the Trust,
rather than to receive payment in cash for such Unit holder's pro rata
share of the amounts realized upon the disposition by the Trustee of
Equity Securities. To be effective, the election form, together with
surrendered certificates and other documentation required by the
Trustee, must be returned to the Trustee at least five business days
prior to the Mandatory Termination Date of the Trust. Unit holders not
electing a distribution of shares of Equity Securities will receive a
cash distribution within a reasonable time after the Trust is
terminated. See "Rights of Unit Holders-How are Income and Capital
Distributed?"
Risk Factors. An investment in the Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers of the Equity Securities or the general condition of the
stock market, changes in interest rates and economic recession. Because the
Trust consists of common stocks of companies engaged in the exploration
for and mining and processing of precious metals, investors should be
aware of risks specific to this sector of the economy. Mining operations
and exploration activities are subject to extensive federal, state and
local laws and regulations. In addition, prices of precious metals can
fluctuate widely and are affected by numerous industry factors.
Volatility in the market price of the Equity Securities in the Trust
also changes the value of the Units of the Trust. Unit holders tendering
Units for redemption during periods of market volatility may receive
redemption proceeds which are more or less than they paid for the Units.
The Trust's portfolio is not managed and Equity Securities will not be
sold by the Trust regardless of market fluctuations, although certain
Equity Securities may be sold under certain limited circumstances. See
"What are Equity Securities?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-November 14, 1996
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
General Information
<S> <C>
Initial Number of Units (1) 15,049
Fractional Undivided Interest in the Trust per Unit (1) 1/15,049
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $150,486
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 10.000
Maximum Sales Charge 3.4% of the Public Offering Price per Unit
(3.4% of the net amount invested, exclusive of the deferred sales charge) (3) $ .340
Less Deferred Sales Charge per Unit $ (.340)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.660
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.660
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP Number 33718T 191
First Settlement Date November 19, 1996
Mandatory Termination Date December 1, 1998
Discretionary Liquidation Amount The Trust may be terminated if the value thereof is less than the lower of
$2,000,000 or 20% of the total value of Equity Securities deposited in the
Trust during the primary offering period.
Trustee's Annual Fee $.0096 per Unit outstanding.
Evaluator's Annual Fee $.0030 per Unit outstanding, payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are made as
of the close of trading (generally 4:00 p.m. Eastern time) on the New York
Stock Exchange on each day on which it is open.
Supervisory Fee (5) Maximum of $.0035 per Unit outstanding annually payable to an affiliate of the
Sponsor.
Estimated Annual Amortization of
Organizational and Offering Costs (6) $.0090 per Unit.
Income Distribution Record Date Fifteenth day of each June and December commencing December 15, 1996.
Income Distribution Date (7) Last day of each June and December commencing December 31, 1996.
</TABLE>
[FN]
______________
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of the Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each Equity Security listed on a national securities exchange or the
NASDAQ National Market System is valued at the last closing sale price,
or if no such price exists or if the Equity Security is not so listed,
at the closing ask price thereof.
(3) The maximum sales charge consists solely of a deferred sales charge.
The total deferred sales charge amount will equal $0.34 per Unit, which
will be assessed over a ten-month period. Thus, Unit holders will pay a
deferred sales charge of $.034 per Unit per month commencing January 31,
1997 and on the last business day of each month thereafter through
October 31, 1997. Subsequent to the Initial Date of Deposit, the amount
of the sales charge as a percentage of the Public Offering Price will
vary with changes in the aggregate underlying value of the Equity
Securities in the Trust. During the initial offering period, Units
purchased subsequent to the initial deferred sales charge payment will
be charged the amount of the previously collected deferred sales charge
at the time of purchase and will be subject to the remaining deferred
sales charge payments not yet collected. These deferred sales charge
payments will be paid from funds in the Income and/or Capital Accounts,
if sufficient, or from the periodic sale of Equity Securities. See "Fee
Table" and "Public Offering" for additional information. Commencing on
November 3, 1997, the secondary market sales charge will not include a
deferred sales charge, but will instead include only a one-time initial
sales charge of 3.4% of the Public Offering Price which will decrease on
December 1, 1997 to a minimum sales charge of 2.9% as described under
"Public Offering." On the Initial Date of Deposit there will be no
accumulated dividends in the Income Account. Anyone ordering Units after
such date will pay a pro rata share of any accumulated dividends in such
Income Account. The Public Offering Price as shown reflects the value of
the Equity Securities at the opening of business on the Initial Date of
Deposit and establishes the original proportionate relationship amongst
the individual securities. No sales to investors will be executed at
this price. Additional Equity Securities will be deposited during the
day of the Initial Date of Deposit which will be valued as of 4:00 p.m.
Eastern time and sold to investors at a Public Offering Price per Unit
based on this valuation.
(4) See "How May Units be Redeemed?"
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0028 per
Unit.
(6) The Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of the Trust portfolio, legal fees and the
initial fees and expenses of the Trustee but not including the expenses
incurred in the printing of preliminary and final prospectuses, and
expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational and offering expenses will be charged
off over a period not to exceed the life of the Trust (approximately two
years). See "What are the Expenses and Charges?" and "Statement of Net
Assets." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
(7) Distributions from the Capital Account will be made monthly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
Page 4
FEE TABLE
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although the Trust
has a term of approximately two years and is a unit investment trust
rather than a mutual fund, this information is presented to permit a
comparison of fees.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 0.0%(a) $ 0.00
Deferred sales charge
(as a percentage of public offering price) 3.4%(b) 0.34
_______ _______
3.4% $ 0.34
======= =======
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee .097% $.0096
Portfolio supervision, bookkeeping, administrative, amortization
of organizational and offering costs and evaluation fees .185% .0183
Other operating expenses .054% .0054
_______ _______
Total .336% $.0333
======= =======
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years
______ _______ _______
<S> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming the Dorsey, Wright Sector Trusts, Precious Metals Series 1
has an estimated operating expense ratio of .336% and a 5% annual
return on the investment throughout the periods $ 37 $ 44 $ 52
</TABLE>
The example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. For purposes
of the example, the deferred sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the
dividend; the cumulative expenses would be higher if sales charges on
reinvested dividends were reflected in the year of reinvestment. The
example should not be considered a representation of past or future
expenses or annual rate of return; the actual expenses and annual rate
of return may be more or less than those assumed for purposes of the
example. In addition, while the Trust only has a term of approximately
two years, investors may be able to reinvest their proceeds into a
subsequently offered trust, subject to additional sales charges. In this
scenario the actual expenses incurred by an investor would exceed those
set forth above.
[FN]
______________
(a) There is no initial sales charge assessed on Trust Units.
(b) The actual fee is $.034 per month per Unit, irrespective of purchase
or redemption price deducted monthly commencing January 31, 1997 through
October 31, 1997. If a Unit holder sells or redeems Units before all of
these deductions have been made, the balance of the deferred sales
charge payments remaining will be deducted from the sales or redemption
proceeds. If the Unit price is less than $10.00 per Unit, the deferred
sales charge will exceed 3.4%. Units purchased subsequent to the initial
deferred sales charge payment will be subject to the previously
collected deferred sales charge payments at the time of purchase and any
remaining deferred sales charge payments not yet collected.
Page 5
Dorsey, Wright Sector Trusts, Precious Metals Series 1
The First Trust Special Situations Trust, Series 157
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 157 is one of a series
of investment companies created by the Sponsor under the name of The
First Trust Special Situations Trust, all of which are generally
similar, but each of which is separate and is designated by a different
series number (the "Trust"). This Series consists of an underlying
separate unit investment trust designated as: Dorsey, Wright Sector
Trusts, Precious Metals Series 1. The Trust was created under the laws
of the State of New York pursuant to a Trust Agreement (the
"Indenture"), dated the Initial Date of Deposit, with Nike Securities
L.P. as Sponsor, The Chase Manhattan Bank as Trustee, and First Trust
Advisors L.P. as Portfolio Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of the Equity Securities
together with an irrevocable letter or letters of credit of a financial
institution in an amount at least equal to the purchase price of such
Equity Securities. In exchange for the deposit of Equity Securities or
contracts to purchase Equity Securities in the Trust, the Trustee
delivered to the Sponsor documents evidencing the entire ownership of
the Trust.
The objective of the Trust is to provide for above-average potential
capital appreciation through an investment in Equity Securities issued
by companies involved in the exploration for and mining and processing
of precious metals which were selected by Dorsey, Wright & Associates
using the Relative Strength Formula and the Point and Figure method of
technical analysis. Point and Figure Charting is a method of technical
analysis which adheres to the relationship between supply and demand in
the marketplace. It is an objective, logical approach to charting trends
in the marketplace, thereby giving you answers to the questions "When
should I buy?" and "When should I sell?"
Point and Figure Charting has been used since the early part of this
century, and can be an important component to successful investing
because it looks for stocks with long-term relative strength. Long-term
relative strength means a stock should outperform the market on a
relative basis.
Point and Figure Charting allows analysts to track the upward and
downward trends of individual stocks over a period of time. Pre-
determined symbols (Xs and Os) are plugged into a chart, the results of
which indicate when it is a good time to buy or sell a particular stock.
In this manner, Point and Figure Charting does not require subjective
interpretation of rising or falling prices. Using the Point and Figure
Charting method, Dorsey, Wright & Associates has professionally selected
a particular sector, precious metals, which it believes show strong
potential for giving investors above-average capital appreciation
potential.
The Point and Figure of technical analysis benefits from the following
attributes:
1. It uses a long-term view;
2. It ignores the static time factor, confusing volume indications and
irrelevant, minor fluctuations; and
3. It enables you to recognize and interpret patterns and trends in
the market.
The criteria utilized to select the Dorsey, Wright Sector Trusts,
Precious Metals Series 1 involves multiple levels of filters. The first
filter that is applied looks at the overall market to determine if it
can support higher prices. This is accomplished by analyzing the NYSE
Bullish Percent and other indicators like the Percent of Stocks Above
Their 10-Week Moving Average and the OTC Bullish Percent. The second
filter screens the Relative Strength of the 41 sectors that Dorsey,
Wright & Associates follows. A qualifying sector must be viewed as
bullish and with the potential for appreciating. If a sector has passed
the second filter then the third and fourth filters are applied to the
underlying stocks in the identified sector. The third filter reviews the
stocks in the specific sector by using Fundamental Analysis. Dorsey,
Wright & Associates and Nike Securities Research Department looked at
company earnings, dividend reliability, and various ratios in
conjunction with reviewing outside research recommendations for each
individual stock. Finally, Dorsey, Wright & Associates analyzes the
remaining stock list to determine if their technical indicators are
Page 6
positive. This filter includes reviewing the company's Relative
Strength, Momentum, Trading Bands and Dorsey, Wright's proprietary Point
and Figure Analysis. The resulting group of stocks comprise the
portfolio of the Dorsey, Wright Sector Trusts, Precious Metals Series 1.
Dorsey, Wright & Associates will be compensated by the Sponsor for
providing its investment advice. Investors should note that the term of
the Trust is approximately two years and that Equity Securities will
only be sold in limited circumstances, even if the above methodology has
changed with respect to an individual Equity Security or the market as a
whole, or Dorsey, Wright & Associates determines that the precious
metals sector or individual Equity Securities contained in the Trust are
no longer suitable for investment. See "What are Equity Securities?-Risk
Factors." There is no guarantee that the objectives of the Trust will be
achieved.
With the deposit of the Equity Securities on the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
amounts of Equity Securities in the Trust's portfolio. From time to time
following the Initial Date of Deposit, the Sponsor, pursuant to the
Indenture, may deposit additional Equity Securities in the Trust, or
cash (including a letter of credit) with instructions to purchase
additional Equity Securities in the Trust, and Units may be continuously
offered for sale to the public by means of this Prospectus, resulting in
a potential increase in the outstanding number of Units of the Trust.
Any deposit by the Sponsor of additional Equity Securities, or the
purchase of additional Equity Securities pursuant to a cash deposit,
will duplicate, as nearly as is practicable, the original proportionate
relationship and not the actual proportionate relationship on the
subsequent date of deposit, since the two may differ. Any such
difference may be due to the sale, redemption or liquidation of any of
the Equity Securities deposited in the Trust on the Initial, or any
subsequent, Date of Deposit. See "How May Equity Securities be Removed
from the Trust?" The original percentage relationship of each Equity
Security to the Trust is set forth herein under "Schedule of
Investments." Since the prices of the underlying Equity Securities will
fluctuate daily, the ratio, on a market value basis, will also change
daily. The portion of Equity Securities represented by each Unit will
not change as a result of the deposit of additional Equity Securities in
the Trust. If the Sponsor deposits cash, however, existing and new
investors may experience a dilution of their investment and a reduction
in their anticipated income because of fluctuations in the prices of the
Equity Securities between the time of the cash deposit and the purchase
of the Equity Securities and because the Trust will pay the associated
brokerage fees. To minimize this effect, the Trust will try to purchase
the Equity Securities as close to the evaluation time or as close to the
evaluation price as possible. The Trustee may from time to time retain
and pay compensation to the Sponsor (or an affiliate of the Sponsor) to
act as agent for the Trust with respect to acquiring Equity Securities
for the Trust. In acting in such capacity, the Sponsor or its affiliate
will be held subject to the restrictions under the Investment Company
Act of 1940, as amended.
On the Initial Date of Deposit, each Unit of the Trust represented the
undivided fractional interest in the Equity Securities deposited in the
Trust set forth under "Summary of Essential Information." To the extent
that Units of the Trust are redeemed, the aggregate value of the Equity
Securities in the Trust will be reduced and the undivided fractional
interest represented by each outstanding Unit of the Trust will
increase. However, if additional Units are issued by the Trust in
connection with the deposit of additional Equity Securities or cash by
the Sponsor, the aggregate value of the Equity Securities in the Trust
will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit of the Trust will
be decreased proportionately. See "How May Units be Redeemed?" The Trust
has a Mandatory Termination Date as set forth herein under "Summary of
Essential Information."
What are the Expenses and Charges?
With the exception of bookkeeping and other administrative services
provided to the Trust for which the Sponsor will be reimbursed in
amounts set forth under "Summary of Essential Information," the Sponsor
will not receive any fees in connection with its activities relating to
the Trust. Such bookkeeping and administrative charges may be increased
without approval of the Unit holders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States
Department of Labor. The fees payable to the Sponsor for such services
may exceed the actual costs of providing such services for this Trust,
Page 7
but at no time will the total amount received for such services rendered
to all unit investment trusts of which Nike Securities L.P. is the
Sponsor in any calendar year exceed the aggregate cost to the Sponsor of
supplying such services in such year. First Trust Advisors L.P., an
affiliate of the Sponsor, will receive an annual supervisory fee, which
is not to exceed the amount set forth under "Summary of Essential
Information," for providing portfolio supervisory services for the
Trust. Such fee is based on the number of Units outstanding in the Trust
on January 1 of each year except for the year or years in which an
initial offering period occurs in which case the fee for a month is
based on the number of Units outstanding at the end of such month. The
fee may exceed the actual costs of providing such supervisory services
for this Trust, but at no time will the total amount received for
portfolio supervisory services rendered to all unit investment trusts of
which Nike Securities L.P. is the Sponsor in any calendar year exceed
the aggregate cost to First Trust Advisors L.P. of supplying such
services in such year. In providing such supervisory services, the
portfolio Supervisor may purchase research services from a variety of
sources which may include underwriters or dealers of the Trust.
Subsequent to the initial offering period, the Evaluator, an affiliate
of the Sponsor, will receive a fee as indicated in the "Summary of
Essential Information." The fee may exceed the actual costs of providing
such evaluation services for the Trust, but at no time will the total
amount received for evaluation services rendered in any calendar year to
all unit investment trusts of which Nike Securities L.P. is the Sponsor
exceed the aggregate cost to First Trust Advisors L.P. of supplying such
services in such year. The Trustee pays certain expenses of the Trust
for which it is reimbursed by the Trust. The Trustee will receive for
its ordinary recurring services to the Trust an annual fee as set forth
in the "Summary of Essential Information." Such fee will be based upon
the largest aggregate number of Units of the Trust outstanding at any
time during the year. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Indenture, reference is
made to the material set forth under "Rights of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income Account
of the Trust to the extent funds are available and then from the Capital
Account of the Trust. Since the Trustee has the use of the funds being
held in the Capital and Income Accounts for payment of expenses and
redemptions and since such Accounts are noninterest-bearing to Unit
holders, the Trustee benefits thereby. Part of the Trustee's
compensation for its services to the Trust is expected to result from
the use of these funds. Both fees may be increased without approval of
the Unit holders by amounts not exceeding proportionate increases under
the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor.
Expenses incurred in establishing the Trust, including costs of
preparing the registration statement, the trust indenture and other
closing documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of the Trust portfolio and the
initial fees and expenses of the Trustee and any other out-of-pocket
expenses, will be paid by the Trust and charged off over a period not to
exceed the life of the Trust (approximately two years). The following
additional charges are or may be incurred by the Trust: all legal and
annual auditing expenses of the Trustee incurred by or in connection
with its responsibilities under the Indenture; the expenses and costs of
any action undertaken by the Trustee to protect the Trust and the rights
and interests of the Unit holders; fees of the Trustee for any
extraordinary services performed under the Indenture; indemnification of
the Trustee for any loss, liability or expense incurred by it without
negligence, bad faith or willful misconduct on its part, arising out of
or in connection with its acceptance or administration of the Trust;
indemnification of the Sponsor for any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct in
acting as Depositor of the Trust; all taxes and other government charges
imposed upon the Securities or any part of the Trust (no such taxes or
charges are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses and the Trustee's annual fee, when
paid or owing to the Trustee, are secured by a lien on the Trust. In
addition, the Trustee is empowered to sell Equity Securities in the
Trust in order to make funds available to pay all these amounts if funds
are not otherwise available in the Income and Capital Accounts of the
Trust. Since the Equity Securities are all common stocks and the income
stream produced by dividend payments is unpredictable, the Sponsor
cannot provide any assurance that dividends will be sufficient to meet
any or all expenses of the Trust. As described above, if dividends are
insufficient to cover expenses, it is likely that Equity Securities will
have to be sold to meet Trust expenses. These sales may result in
capital gains or losses to Unit holders. See "What is the Federal Tax
Status of Unit Holders?"
The Indenture requires the Trust to be audited on an annual basis at the
expense of the Trust by independent auditors selected by the Sponsor. So
long as the Sponsor is making a secondary market for the Units, the
Sponsor is required to bear the cost of such annual audits to the extent
Page 8
such cost exceeds $0.0050 per Unit. Unit holders of the Trust covered by
an audit may obtain a copy of the audited financial statements upon
request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal income
tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as
"capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended
(the "Code"). Unit holders should consult their tax advisers in
determining the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units in the Trust.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of each of the assets of the Trust under the
Code; and the income of the Trust will be treated as income of the Unit
holders thereof under the Code. Each Unit holder will be considered to
have received his pro rata share of the income derived from each Equity
Security when such income is considered to be received by the Trust,
regardless of whether such income is used to pay a portion of the deferred
sales charge.
2. Each Unit holder will have a taxable event when the Trust disposes
of an Equity Security (whether by sale, exchange, liquidation,
redemption, or otherwise) or upon the sale or redemption of Units by
such Unit holder. The price a Unit holder pays for his Units is
allocated among his pro rata portion of each Equity Security held by the
Trust (in proportion to the fair market values thereof on the date the
Unit holder purchases his Units) in order to determine his initial tax
basis for his pro rata portion of each Equity Security held by the
Trust. For Federal income tax purposes, a Unit holder's pro rata portion
of dividends (other than designated capital gain dividends paid by a
Closed-End Fund as discussed below), as defined by Section 316 of the Code,
paid by a corporation with respect to an Equity Security held by the Trust,
is taxable as ordinary income to the extent of such corporation's current and
accumulated "earnings and profits." A Unit holder's pro rata portion of
dividends paid on such Equity Security which exceed such current and
accumulated earnings and profits will first reduce a Unit holder's tax
basis in such Equity Security, and to the extent that such dividends
exceed a Unit holder's tax basis in such Equity Security shall generally
be treated as capital gain. In general, any such capital gain will be
short-term unless a Unit holder has held his Units for more than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held by the
Trust will generally be considered a capital gain except in the case of
a dealer and, in general, will be long-term if the Unit holder has held
his Units for more than one year (the date on which the Units are
acquired (i.e., the trade date) is excluded for purposes of determining
whether the Units have been held for more than one year). A Unit
holder's portion of loss, if any, upon the sale or redemption of Units
or the disposition of Equity Securities held by the Trust will generally
be considered a capital loss (except in the case of a dealer) and, in
general, will be long-term if the Unit holder has held his Units for
more than one year. Unit holders should consult their tax advisers
regarding the recognition of such capital gains and losses for Federal
income tax purposes.
Distributions declared by a Closed-End Fund in
October, November, or December that are held by the Trust and paid
during the following January will be treated as having been received by
Unit holders on December 31 in the year such distributions were
declared. Distributions of the Closed-End Fund's net capital gain which
the Closed-End Fund properly designates as capital gain dividends will
be taxable to a Unit holder as long-term capital gains regardless of how
long a person has been a Unit holder of the Trust. If a Unit holder
holds his Units for six months or less or if the Trust holds the shares of
the Closed-End Fund for six months or less, any loss incurred by a Unit holder
related to the disposition of the shares of the Closed-End Fund will be
treated as a long-term capital loss to the extent of any long-term capital
gains distributions received (or deemed to have been received) with respect
to such shares of the Closed-End Fund. For taxpayers other than corporations,
net capital gains are subject to a maximum marginal tax rate of 28%.
However, it should be noted that legislative proposals are introduced
from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed.
Page 9
Dividends Received Deduction. A Unit holder will be considered to have
received all of the dividends paid on his pro rata portion of each
Equity Security when such dividends are considered to be received by the
Trust.
Distributions on the Closed-End Fund which are taxable as ordinary
income to the Unit holders will constitute dividends for federal income
tax purposes. To the extent dividends received by the Closed-End Fund
are attributable to foreign corporations, a corporation that owns Units
will not be entitled to the dividends received deduction with respect to
the pro rata portion of such dividends, since the dividends received
deduction is generally available only with respect to dividends paid by
domestic corporations. However, to the extent dividends received on the
Closed-End Fund are attributable to United States corporations (other than
real estate investment trusts) and are designated by the Closed-End Fund as
being eligible for the dividends received deductions, distributions
received by corporate Unit holders with respect to shares of the Closed-
End Fund attributable to such dividends may qualify for the 70% dividends
received deductions, subject to limitations otherwise applicable to the
availability of the deduction.
A corporation that owns Units will generally be entitled to a 70%
dividends received deduction with respect to such Unit holder's pro rata
portion of dividends received by the Trust (to the extent such dividends
are taxable as ordinary income, as discussed above) in the same manner
as if such corporation directly owned the Equity Securities paying such
dividends (other than corporate Unit holders, such as "S" corporations,
which are not eligible for the deduction because of their special
characteristics and other than for purposes of special taxes such as the
accumulated earnings tax and the personal holding corporation tax).
However, a corporation owning Units should be aware that Sections 246
and 246A of the Code impose additional limitations on the eligibility of
dividends for the 70% dividends received deduction. These limitations
include a requirement that stock (and therefore Units) must generally be
held at least 46 days (as determined under Section 246(c) of the Code).
Final regulations have been recently issued which address special rules
that must be considered in determining whether the 46-day holding
requirement is met. Moreover, the allowable percentage of the deduction
will be reduced from 70% if a corporate Unit holder owns certain stock
(or Units) the financing of which is directly attributable to indebtedness
incurred by such corporation. To the extent dividends received by a
Trust are attributable to foreign corporations, a corporation that owns
Units will not be entitled to the dividends received deduction with respect
to its pro rata portion of such dividends, since the dividends received
deduction is generally available only with respect to dividends paid by
domestic corporations.
It should be noted that various legislative proposals that would affect
the dividends received deduction have been introduced. Unit holders
should consult with their tax advisers with respect to the limitations
on and possible modifications to the dividends received deduction.
Deferred Sales Charges. Generally, the tax basis of a Unit holder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trust is deferred. It is possible that for federal income
tax purposes a portion of the deferred sales charge may be treated as
interest which would be deductible by a Unit holder subject to limitations
on the deduction of investment interest. In such a case, the non-interest
portion of the deferred sales charge would be added to the Unit holder's
tax basis in his Units. The deferred sales charge could cause the Unit
holder's Units to be considered to be debt-financed under Section 246A of
the Code which would result in a small reduction of the dividends-received
deduction. In any case, the income (or proceeds from redemption) a Unit
holder must take into account for federal income tax purposes is not reduced
by amounts deducted to pay the deferred sales charge. Unit holders should
consult their own tax advisers as to the income tax consequences of the
deferred sales charge.
Limitations on Deductibility of Trust Expenses by Unit Holders. Each
Unit holder's pro rata share of each expense paid by the Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by such Unit holder. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by
the Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
Page 10
by the Trust or if the Unit holder disposes of a Unit. For taxpayers
other than corporations, net capital gains are subject to a maximum
stated marginal tax rate of 28%. However, it should be noted that
legislative proposals are introduced from time to time that affect tax
rates and could affect relative differences at which ordinary income and
capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "Tax Act") raised tax rates
on ordinary income while capital gains remain subject to a 28% maximum
stated rate for taxpayers other than corporations. Because some or all
capital gains are taxed at a comparatively lower rate under the Tax Act,
the Tax Act includes a provision that recharacterizes capital gains as
ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after
April 30, 1993. Unit holders and prospective investors should consult
with their tax advisers regarding the potential effect of this provision
on their investment in Units.
If the Unit holder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all assets of the Trust
involved including his pro rata portion of all the Equity Securities
represented by the Unit.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units or Termination of the Trust. As discussed in "Rights of Unit
Holders-How are Income and Capital Distributed?", under certain
circumstances a Unit holder who owns at least 2,500 Units may request an
In-Kind Distribution upon the redemption of Units or the termination of
the Trust. The Unit holder requesting an In-Kind Distribution will be
liable for expenses related thereto (the "Distribution Expenses") and
the amount of such In-Kind Distribution will be reduced by the amount of
the Distribution Expenses. See "Rights of Unit Holders-How are Income
and Capital Distributed?" As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unit holder is
considered as owning a pro rata portion of each of the Trust assets for
Federal income tax purposes. The receipt of an In-Kind Distribution will
result in a Unit holder receiving an undivided interest in an Equity
Security plus, possibly, cash.
The potential tax consequences that may occur under an In-Kind
Distribution will depend on whether or not a Unit holder receives cash
in addition to Equity Securities. A Unit holder will not recognize gain
or loss if a Unit holder only receives Equity Securities in exchange for
his or her pro rata portion in the Equity Securities held by the Trust.
However, if a Unit holder also receives cash in exchange for a
fractional share of an Equity Security held by the Trust, such Unit
holder will generally recognize gain or loss based upon the difference
between the amount of cash received by the Unit holder and his tax basis
in such fractional share of an Equity Security held by the Trust.
Because the Trust will own many Equity Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by the Trust.
The amount of taxable gain (or loss) recognized upon such exchange will
generally equal the sum of the gain (or loss) recognized under the rules
described above by such Unit holder with respect to each Equity Security
owned by the Trust. Unit holders who request an In-Kind Distribution are
advised to consult their tax advisers in this regard.
Computation of the Unit holder's Tax Basis. Initially, a Unit holder's
tax basis in his Units will generally equal the price paid by such Unit
holder for his Units. The cost of the Units is allocated among his pro
rata portion of each of the Equity Securities held in the Trust in
accordance with the proportion of the fair market values of such Equity
Securities as of the valuation date nearest the date the Units are
purchased in order to determine such Unit holder's tax basis for his pro
rata portion of each Equity Security.
A Unit holder's tax basis in his Units and his pro rata portion of an
Equity Security held by the Trust will be reduced to the extent
dividends (other than designated capital gain dividends on a Closed-
End Fund) paid with respect to such Equity Security are received by the
Trust which are not taxable as ordinary income as described above.
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified by the Internal Revenue Service that
payments to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification are
not provided when requested, distributions by the Trust to such Unit
holder (including amounts received upon the redemption of Units) will be
subject to back-up withholding. Distributions by the Trust will
Page 11
generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign
corporations or other non-United States persons. Such persons should
consult their tax advisers.
If more than 50% of the value of the total assets of the Closed-End Fund
consists of stock or securities in a foreign corporation, the Closed-End
Fund may elect to pass through to its shareholders the foreign income and
similar taxes paid by the Closed-End Fund in order to enable such share-
holders to take a credit (or deduction) for foreign income taxes paid by
the Closed-End Fund. If such an election is made, Unit holders of the
Trust, because they are deemed to own a pro rata portion of the underlying
securities of the Closed-End Fund held by the Trust, as described above,
must include in their gross income, for Federal income tax purposes, both
their portion of dividends received by the Trust from the Closed-End Fund,
and also their portion of the amount which the Closed-End Fund deems to be
the Trust's portion of foreign income taxes paid with respect to, or
withheld from, dividends, interest or other income of the Closed-End Fund
from its foreign investments. Unit holders may then subtract from their
Federal income tax the amount of such taxes withheld, or else treat such
foreign taxes as deductions from gross income; however, as in the case of
investors receiving income directly from foreign sources, the above
described tax credit or deduction is subject to limitations. Unit holders
should consult their tax advisers regarding this election and its
consequences.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S. Unit
holders and derived from dividends of foreign corporation will not be subject
to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporation for a three-year period ending with the close
of its taxable year preceding payment was not effectively connected to the
conduct of a trade or business within the United States. In addition, such
earnings may be exempt from U.S. withholding pursuant to a specific treaty
between the United States and a foreign country. Non-U.S. Unit holders
should consult their own advisers regarding the imposition of U.S. withholding
on distributions from the Trust.
It should be noted that payments to the Trusts of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unit holders should consult their advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trusts. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unit holders. Because under
the grantor trust rules, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect to such
taxes, investors should consult their tax advisers with respect to foreign
withholding taxes and foreign tax credits.
Unit holders will be notified annually of the amounts of dividend income
and long-term capital gains distributions includable in the Unit
holder's gross income and amounts of Trust expenses which may be claimed
as itemized deductions.
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Why are Investments in the Trust Suitable for
Retirement Plans?"
The foregoing discussion relates only to United States Federal income
taxation of Unit holders; Unit holders may be subject to state and local
taxation in other jurisdictions. Unit holders should consult their tax
advisers regarding potential state or local taxation with respect to the
Units, and foreign investors should consult their tax advisers with
respect to United States tax consequences of ownership of Units.
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trust for New York tax matters, under the existing income tax laws of
the State of New York, the Trust is not an association taxable as a
corporation and the income of the Trust will be treated as the income of
the Unit holders thereof.
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to capital
gains and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible
for special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are Equity Securities?
The Trust consists of different issues of Equity Securities which are
listed on a national securities exchange or the NASDAQ National Market
System or traded in the over-the-counter market. See "What are the
Equity Securities Selected for Dorsey, Wright Sector Trusts, Precious
Metals Series 1?" for a general description of the companies.
Risk Factors. An investment in Units of the Trust should be made with an
understanding of the problems and risks inherent in the precious metals
industry in general.
The Trust includes securities which are issued by companies engaged in
the exploration for and development of gold and other precious metals
properties and mining and processing of gold ore and such other precious
metals. Mining operations and exploration activities are subject to
extensive federal, state and local laws and regulations governing
exploration, development, production, exports, taxes, labor standards,
occupational health, waste disposal, protection and remediation of the
environment, reclamation, mine safety, toxic substances and other
matters. Compliance with such laws and regulations may increase the
costs of planning, designing, drilling, developing, constructing,
operating and closing the mines and other facilities of certain
companies. It is possible that the costs and delays associated with
compliance with such laws and regulations could become such that certain
companies would not proceed with the development or operation of a mine
and could have a significant adverse effect on certain of the issuers of
Equity Securities. Mining and exploration companies must also seek
governmental permits for expansion and advanced exploration activities.
Obtaining the necessary government permits is a complex and time-
consuming process involving numerous federal, state and local agencies.
The failure to obtain certain permits could have a material adverse
effect on an issuer's business, operations and prospects. Furthermore,
the laws and regulations of foreign countries may differ significantly
from U.S. laws governing mining operations in the United States.
In addition, the profitability of precious metals companies is
significantly affected by changes in the market prices of precious
metals. Prices of precious metals can fluctuate widely and are affected
Page 12
by numerous industry factors, such as demand for precious metals,
forward selling by producers, central bank sales and purchases of gold,
and production and cost levels in major metals-producing regions. Gold,
in particular, has been subject to substantial price fluctuations over
short periods of time and may be affected by unpredictable international
monetary and other governmental policies, such as currency devaluations
or revaluations; economic and social conditions within a country; trade
imbalances; or trade or currency restrictions between countries. Since
much of the world's known gold reserves are located in South Africa,
political and social conditions there may influence the price of gold
and the share values of precious metals mining companies located
elsewhere. Investors should understand the special considerations and
risks related to such an investment emphasis, and, accordingly, the
potential effect on the value of the Trust.
Although many companies have hedging programs in place to reduce the
risk associated with precious metals price volatility, there is no
assurance that an issuer's hedging strategies will be successful.
Furthermore, exploration for all minerals, as well as gold and other
precious metals, is highly speculative in nature, involves many risks
and frequently is unsuccessful. There can be no assurance that any
company's exploration efforts will result in the discovery of
mineralization or that any mineralization discovered will result in an
increase of any company's reserves. In the event that new reserves are
not developed, an issuer may not be able to sustain its current level of
production which could adversely affect such Equity Securities in the
Trust's portfolio.
Because a substantial portion of the operations of companies involved in
exploring, mining, processing, or dealing in precious metal are
frequently located outside of the United States, and certain of the
Equity Securities in the Trust are issued by foreign corporations, an
investment in the Trust involves some investment risks that are
different in some respects from an investment in a trust that invests
entirely in securities of domestic issuers. Those investment risks
include future political and governmental restrictions which might
adversely affect the payment or receipt of payment of dividends on the
relevant Equity Securities, currency exchange rate fluctuations,
exchange control policies, and the limited liquidity and small market
capitalization of such foreign countries' securities markets. 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. However, due to the
nature of the issuers of the Equity Securities included in the Trust,
the Sponsor believes that adequate information will be available to
allow the Portfolio Supervisor to provide portfolio surveillance.
An investment in Units of the Trust should be made with an understanding
of the problems and risks such an investment may entail. The Trust
consists of such of the Equity Securities listed under "Schedule of
Investments" as may continue to be held from time to time in the Trust
and any additional Equity Securities acquired and held by the Trust
pursuant to the provisions of the Trust Agreement together with cash
held in the Income and Capital Accounts. Neither the Sponsor nor the
Trustee shall be liable in any way for any failure in any of the Equity
Securities. However, should any contract for the purchase of any of the
Equity Securities initially deposited hereunder fail, the Sponsor will,
unless substantially all of the moneys held in the Trust to cover such
purchase are reinvested in substitute Equity Securities in accordance
with the Trust Agreement, refund the cash and sales charge attributable
to such failed contract to all Unit holders on the next distribution date.
Because certain of the Equity Securities from time to time may be sold
under certain circumstances described herein, and because the proceeds
from such events will be distributed to Unit holders and will not be
reinvested, no assurance can be given that the Trust will retain for any
length of time its present size and composition. Although the Portfolio
is not managed, the Sponsor may instruct the Trustee to sell Equity
Securities under certain limited circumstances. Pursuant to the
Indenture and with limited exceptions, the Trustee may sell any
securities or other property acquired in exchange for Equity Securities
such as those acquired in connection with a merger or other transaction.
If such new or exchanged securities or property are offered, the Trustee
shall reject the offer. However, in the event such securities or
property are nonetheless acquired by the Trust, they may be accepted for
deposit in the Trust and either sold by the Trustee or held in the Trust
pursuant to the direction of the Sponsor (who may rely on the advice of
the Portfolio Supervisor). See "How May Equity Securities be Removed
from the Trust?" Equity Securities, however, will not be sold by the
Trust to take advantage of market fluctuations or changes in anticipated
Page 13
rates of appreciation or depreciation. In fact, no Equity Security will
be sold prior to termination of the Trust (except to satisfy redemption
requests or to pay expenses and in certain other limited circumstances)
even if Dorsey, Wright & Associates believes that such Equity Security
no longer has the potential for capital appreciation, or issues a "sell"
recommendation with respect to such Equity Security or Sector. Moreover,
no Equity Security will be sold, and the Sponsor may even continue
selling Units of the Trust, even if Dorsey, Wright & Associates'
methodology results in advice to liquidate common stock investments
generally.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be
in the over-the-counter market. As a result, the existence of a liquid
trading market for the Equity Securities may depend on whether dealers
will make a market in the Equity Securities. There can be no assurance
that a market will be made for any of the Equity Securities, that any
market for the Equity Securities will be maintained or of the liquidity
of the Equity Securities in any markets made. In addition, the Trust may
be restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions and the value of the Trust
will be adversely affected if trading markets for the Equity Securities
are limited or absent.
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 Equity Securities or the
general condition of the common stock market may worsen and the value of
the Equity Securities and therefore the value of the Units may decline.
The past market and earnings performance of the Equity Securities in the
Trust is not predictive of their future performance. 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. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Shareholders of common stocks of the type held
by the Trust have a right to receive dividends only when and if, and in
the amounts, declared by the issuer's board of directors and have a
right to participate in amounts available for distribution by the issuer
only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy. The
value of common stocks is subject to market fluctuations for as long as
the common stocks remain outstanding, and thus the value of the Equity
Securities in the Portfolio may be expected to fluctuate over the life
of the Trust to values higher or lower than those prevailing on the
Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Cumulative
preferred stock dividends must be paid before common stock dividends and
any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in the Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee will
have the right to vote all of the voting stocks in the Trust and will
vote such stocks in accordance with the instructions of the Sponsor.
The Sponsor may consider sales of Units of unit investment trusts of
which it sponsors in making recommendations to the Trustee as to the
selection of broker/dealers to execute the Trust's portfolio
Page 14
transactions. Such broker/dealers have acquired or may acquire the
Equity Securities for the Sponsor and thereby benefit from transaction
fees. The selected broker/dealer in its general securities business may
act as agent or principal in connection with the purchase and sale of
equity securities, including the Equity Securities in the Trust, and may
act as a market maker in certain of the Equity Securities. The selected
broker/dealer also from time to time may issue reports on and make
recommendations relating to equity securities, which may include the
Equity Securities.
Investors should also note that because Dorsey, Wright & Associates uses
the list of Equity Securities which comprises the portfolio in its
independent capacity as an investment advisor to individuals, mutual
funds, employee benefit plans and other institutions and persons and
distributes this information to various individuals and entities,
Dorsey, Wright & Associates may recommend or effect from time to time
the purchase or sale of one or more of the Equity Securities. This may
have an effect on the prices of the Equity Securities which is adverse
to the interest of the purchasers of Units of the Trust. Additionally,
this may have an impact on the price paid by the Trust for the Equity
Securities as well as the price received upon redemption of the Units or
upon the termination of the Trust.
What are the Equity Securities Selected for Dorsey, Wright Sector
Trusts, Precious Metals Series 1?
ASA, Ltd., headquartered in Jersey City, New Jersey, is a closed-end
mutual fund which seeks income and capital appreciation by investing
primarily in the securities of South African gold mining companies and
other South African mineral mining companies. At all times, the fund
must invest at least 50% of its total assets in common shares of gold
mining companies in South Africa. The remainder shall be invested in
other companies of South Africa or in cash, although 20% of fund assets
may be invested in mining-related industries outside of South Africa.
Agnico-Eagle Mines, Ltd., headquartered in Toronto, Ontario,
is an established Canadian gold producer with operations located
principally in northwestern Quebec and exploration and development
activities in Quebec and Ontario.
Alta Gold Company, headquartered in Henderson, Nevada, is a United
States based mining company engaged in the exploration, development and
production of precious and base metals. The company's mining properties
are located in the western United States.
Amax Gold, Inc., headquartered in Englewood, Colorado, produces gold in
the United States and Chile, explores for gold primarily in North,
Central and South America and Russia, and currently is 51% owned by
Cyprus Amax Minerals Company.
Barrick Gold Corporation, headquartered in Toronto, Ontario, has 11
producing mines, of which the major mines are located on the Carlin
Trend in Nevada, the El Indio Belt in Chile, and the Abitibi Belt in
northern Quebec. Through its extensive program of worldwide exploration
and development, the company now has properties at every stage of the
mining cycle, from initial assessment to exploration, feasibility,
development and production.
Battle Mountain Gold Company, headquartered in Houston, Texas, and its
subsidiaries mine and process gold, silver and copper ore in the United
States, Bolivia, Chile and Australia. The company also explores and
evaluates precious metals properties in Latin America, the South
Pacific, Australia and the United States.
Bema Gold Corporation, headquartered in Vancouver, British Columbia,
acquires, explores and develops precious metal properties in the western
United States and in Latin America. The company's four principal
properties are the Refugio property in Chile, the Champagne Mine-Lava
Creek property in Idaho, the Elk City Gold Belt properties in Idaho and
the Yarnell property in Arizona.
Cambior, Inc., headquartered in Val d'Or, Quebec, is a major diversified
gold producer with operations, development projects and exploration
activities in North and South America. Cambior, Inc. shares ("CBJ") are
listed on the Toronto, Montreal and American (AMEX) stock exchanges.
Coeur d'Alene Mines Corporation, headquartered in Coeur d'Alene, Idaho,
explores for and produces gold and silver in Nevada, Idaho, Alaska and
Chile. Flexust Manufacturing plants are operated by the company in
California, Indiana and Massachusetts. The company's primary operation
is the Rochester Silver-Gold Mine in Northwest Nevada. The company also
operates the Kensington gold mine project near Juneau, Alaska.
Page 15
Echo Bay Mines, Ltd., headquartered in Englewood, Colorado, is a major
gold producer with mines in Canada and the United States. The company
has expanded its search for new gold reserves and production worldwide.
Getchell Gold Corporation (formerly FirstMiss Gold Inc.), headquartered
in Englewood, Colorado, is a Nevada based gold mining and exploration
company with operations in north central Nevada.
Glamis Gold, Ltd., headquartered in Vancouver, British Columbia,
explores for and produces precious metals. The company owns properties
in Imperial, Kern and Calaveras counties, California, from which it
extracts gold through open pit and heap leach methods.
Gold Reserve Corporation, headquartered in Spokane, Washington,
acquires, explores for and develops mining properties. The company owns
shares in several mining companies and is developing a diamond and gold
property in Venezuela.
Golden Star Resources, Ltd., headquartered in Denver, Colorado, is a
gold and diamond exploration company which holds a 30% equity interest
in the Omai gold mine in Guyana, one of the largest gold mines in South
America. The company also holds significant gold and diamond exploration
interests in South America and Africa.
Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, is one of
the United States' best-known silver producers. The company also
produces gold and is a major supplier of ball clay, kaolin and other
industrial minerals. The company's operations are principally in the
United States and Mexico.
Homestake Mining Company, headquartered in San Francisco, California, is
an international gold mining company with substantial gold mining
operations and exploration in the United States, Canada and Australia.
Kinross Gold Corporation, headquartered in Toronto, Ontario, acquires,
develops and operates precious and base metal properties. The company,
which emphasizes gold and copper mining, has operations in British
Columbia, the western United States and Zimbabwe.
Newmont Gold Company, headquartered in Denver, Colorado, is an
approximately 90% owned subsidiary of Newmont Mining Corporation. The
company is involved in the exploration, mining and processing of gold
ore. The company's properties are located along the Carlin Trend in
Nevada.
Newmont Mining Corporation, headquartered in Denver, Colorado, through
its subsidiaries, explores for gold in the United States and the Pacific
Rim. Newmont Mining Corporation has refining arrangements with domestic
and foreign refiners which further refine gold bullion produced at the
company's refinery and return the toll gold to the company's account for
sale to third parties.
Pegasus Gold, Inc., headquartered in Spokane, Washington, is an
international gold mining company. Pegasus Gold, Inc. currently produces
about 500,000 ounces of gold annually from its properties in the United
States and Australia. The company carries out exploration
internationally through offices located in Mendoza, Argentina; Perth,
Australia; Rio de Janeiro, Brazil; Santiago, Chile; and Georgetown,
Guyana.
Placer Dome, Inc., headquartered in Vancouver, British Columbia,
explores for and produces gold, silver, copper and molybdenum. The
company has interests in 16 mines, 13 of them gold mines, in Australia,
Canada, Chile, Papua New Guinea, the Philippines and the United States.
Royal Gold, Inc., headquartered in Denver, Colorado, is a publicly held
corporation engaged in the gold and other precious minerals business
through the acquisition, exploration, development and sale of gold
properties and the acquisition of royalty interests. The company holds a
20% net profits royalty interest at the South Pipeline Project, Nevada,
and has a development property in California, in addition to exploration
projects in Nevada, Utah and Europe.
Royal Oak Mines, Inc., headquartered in Kirkland, Washington, explores
for and produces gold. The company holds interests in mines located in
Ontario, the Northwest Territories and Newfoundland and also holds
interests in Mountain Minerals Co. Ltd., Geddes Resources Limited, Asia
Minerals Corporation and other explorations throughout Canada and in
Nevada.
Santa Fe Pacific Gold Corporation, headquartered in Albuquerque, New
Mexico, is one of the largest gold mining companies in North America,
with mines in Nevada and California and exploration offices and projects
throughout the world.
TVX Gold, Inc., headquartered in Toronto, Ontario, is a Canadian-based
growth oriented international mining company with existing production of
precious metals from interests in seven producing mines located in North
Page 16
and South America. The company also has major offices in Rio de Janeiro,
Brazil and Santiago, Chile.
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before making
a decision to invest in the Trust.
The value of the Equity Securities will fluctuate over the life of the
Trust and may be more or less than the price at which they were
deposited in the Trust. The Equity Securities may appreciate or
depreciate in value (or pay dividends) depending on the full range of
economic and market influences affecting these securities, including the
impact of the Sponsor's purchase and sale of the Equity Securities
(especially during the primary offering period of Units of the Trust and
at the Trust Termination) and other factors.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Security. In the event of a notice
that any Equity Security will not be delivered ("Failed Contract
Obligations") to the Trust, the Sponsor is authorized under the
Indenture to direct the Trustee to acquire other Equity Securities
("Replacement Securities"). Any Replacement Security will be identical
to those which were the subject of the failed contract. The Replacement
Securities must be purchased within 20 days after delivery of the notice
of a failed contract and the purchase price may not exceed the amount of
funds reserved for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
the Trust and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in the Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of the Trust.
The Indenture also authorizes the Sponsor to increase the size of the
Trust and the number of Units thereof by the deposit of additional
Equity Securities, or cash (including a letter of credit) with
instructions to purchase additional Equity Securities, in the Trust and
the issuance of a corresponding number of additional Units. If the
Sponsor deposits cash, however, existing and new investors may
experience a dilution of their investment and a reduction in their
anticipated income because of fluctuations in the prices of the Equity
Securities between the time of the cash deposit and the purchase of the
Equity Securities and because the Trust will pay the associated
brokerage fees.
The Trust consists of the Equity Securities listed under "Schedule of
Investments" (or contracts to purchase such Securities) as may continue
to be held from time to time in the Trust and any additional Equity
Securities acquired and held by the Trust pursuant to the provisions of
the Indenture (including provisions with respect to deposits into the
Trust of Equity Securities in connection with the issuance of additional
Units).
Once all of the Equity Securities in the Trust are acquired, the Trustee
will have no power to vary the investments of the Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, and may dispose of
Equity Securities only under limited circumstances. See "How May Equity
Securities be Removed from the Trust?"
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit in respect of any Equity Security
which might reasonably be expected to have a material adverse effect on
the Trust. At any time after the Initial Date of Deposit, litigation may
be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on the Trust.
PUBLIC OFFERING
How is the Public Offering Price Determined?
The Public Offering Price per Unit of the Trust during the initial
offering period is equal to the aggregate underlying value of the Equity
Securities in the Trust (generally determined by the closing sale prices
of listed Equity Securities and the ask prices of over-the-counter
traded Equity Securities) plus or minus a pro rata share of cash, if
Page 17
any, in the Capital and Income Accounts of the Trust, plus a deferred
sales charge equal to $0.34 per Unit. The deferred sales charge will be
assessed monthly ($0.034 per Unit per month) over a ten-month period
commencing on January 31, 1997, and on the last business day of each
month thereafter, through October 31, 1997. Units purchased subsequent
to the initial deferred sales charge payment but still during the
initial offering period will be charged the amount of the previously
collected deferred sales charge at the time of purchase and will be
subject to the remaining deferred sales charge payments not yet
collected. The deferred sales charge will be paid from funds in the
Income and/or Capital Accounts, if sufficient, or from the periodic sale
of Equity Securities. At the Initial Date of Deposit, the total maximum
sales charge assessed to Unit holders on a per Unit basis will be 3.4%
of the Public Offering Price (equivalent to 3.4% of the net amount
invested, exclusive of the deferred sales charge). A pro rata share of
accumulated dividends, if any, in the Income Account is included in the
Public Offering Price. The total maximum sales charge which may be
assessed to Unit holders on a per Unit basis is 3.9% of the Public
Offering Price. Upon completion of the deferred sales charge period, the
secondary market Public Offering Price per Unit will not include
deferred sales charge payments, but will instead include only a one-time
initial sales charge of 3.4% of the Public Offering Price (equivalent to
3.520% of the net amount invested), which will be reduced on December 1,
1997 to a minimum sales charge of 2.9%. The minimum amount which an
investor may purchase in the Trust is $1,000 ($250 for an Individual
Retirement Account or other retirement plans). See "How is the Public
Offering Price Determined?"
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying value of the Equity Securities in the
Trust (generally determined by the closing sale prices of listed Equity
Securities and the ask prices of over-the-counter traded Equity
Securities), plus or minus cash, if any, in the Income and Capital
Accounts of the Trust divided by the number of Units of the Trust
outstanding, reduced by the deferred sales charge not yet paid. For
secondary market sales after the completion of the deferred sales charge
period, the Public Offering Price is also based on the aggregate
underlying value of the Equity Securities in the Trust (generally
determined by the closing sale prices of listed Equity Securities and
the bid prices of over-the-counter traded Equity Securities), plus or
minus cash, if any, in the Income and Capital Accounts of the Trust,
plus a one-time initial sales charge of 3.4% of the Public Offering
Price (equivalent to 3.520% of the net amount invested) divided by the
number of outstanding Units of the Trust.
The applicable sales charge for both primary and secondary market sales
is reduced by a discount as indicated below for volume purchases (except
for sales made pursuant to a "wrap fee account" or similar arrangements
as set forth below):
Dollar Amount of Transaction Discount
at Public Offering Price per Unit
_____________________________ ________
$ 50,000 but less than $ 150,000 $0.025
$ 150,000 but less than $ 500,000 $0.050
$ 500,000 but less than $1,000,000 $0.075
$1,000,000 or more $0.120
Any such reduced sales charge shall be the responsibility of the selling
broker/dealer, bank or other selling agent. The reduced sales charge
structure will apply on all purchases of Units in the Trust by the same
person on any one day from any one broker/dealer, bank or other selling
agent. Investors of previously issued series of the Dorsey Wright Sector
Trusts may utilize their redemption or termination proceeds from such
Trusts to purchase Units of the Trust subject to a sales charge of $.290
per Unit, deferred as set forth above. Investors may also utilize their
redemption or terminationproceeds from this Trust to purchase subsequently
issued series of theTrust at a reduced sales charge. Additionally, Units
purchased in thename of the spouse of a purchaser or in the name of a child
of suchpurchaser under 21 years of age will be deemed, for the purposes of
calculating the applicable sales charge, to be additional purchases by
the purchaser. The reduced sales charges will also be applicable to a
trustee or other fiduciary purchasing securities for a single trust
estate or single fiduciary account. The purchaser must inform the
broker/dealer, bank or other selling agent of any such combined purchase
prior to the sale in order to obtain the indicated discount. In
addition, with respect to the employees, officers and directors
Page 18
(including their immediate family members, defined as 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) of the Sponsor and
broker/dealers, banks or other selling agents and their subsidiaries,
Units may be purchased at the Public Offering Price less the concession
the Sponsor typically allows to dealers and other selling agents.
Investors who purchase Units through registered broker-dealers who
charge periodic fees for financial planning, investment advisory or
asset management services, or provide such services in connection with
the establishment of an investment account for which a comprehensive
"wrap fee" charge is imposed may purchase Units in the primary or secondary
market, at the Public Offering Price less the concession the Sponsor
typically would allow such broker-dealer. See "Public Offering-How are
Units Distributed?"
Had the Units of the Trust been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information." The Public
Offering Price of Units on the date of the prospectus or during the
initial offering period may vary from the amount stated under "Summary
of Essential Information" in accordance with fluctuations in the prices
of the underlying Equity Securities. During the initial offering period,
the aggregate value of the Units of the Trust shall be determined on the
basis of the aggregate underlying value of the Equity Securities therein
plus or minus cash, if any, in the Income and Capital Accounts of the
Trust. The aggregate underlying value of the Equity Securities during
the initial offering period will be determined in the following manner:
if the Equity Securities are listed on a national securities exchange or
the NASDAQ National Market System, this evaluation is generally based on
the closing sale prices on that exchange or that system (unless it is
determined that these prices are inappropriate as a basis for valuation)
or, if there is no closing sale price on that exchange or system, at the
closing ask prices. If the Equity Securities are not so listed or, if so
listed and the principal market therefor is other than on the exchange,
the evaluation shall generally be based on the current ask prices on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the
value of the Equity Securities on the ask side of the market or (c) by
any combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein (generally determined by the
closing sale prices of listed Equity Securities and the bid prices of
over-the-counter traded Equity Securities), plus or minus cash, if any,
in the Income and Capital Accounts of the Trust plus the applicable
sales charge. The aggregate underlying value of the Equity Securities
for secondary market sales is calculated in the same manner as described
above for sales made during the initial offering period with the
exception that bid prices are used instead of ask prices.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of the Units on the date of
settlement provided payment has been received. Cash, if any, made
available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934. Delivery of Certificates representing
Units so ordered will be made three business days following such order
or shortly thereafter. See "Rights of Unit Holders-How May Units be
Redeemed?" for information regarding the ability to redeem Units ordered
for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the Initial
Date of Deposit and (ii) for additional Units issued after such date as
additional Equity Securities or cash are deposited by the Sponsor, Units
will be distributed to the public at the then current Public Offering
Price. The initial offering period may be up to approximately 360 days.
During such period, the Sponsor may deposit additional Equity Securities
or cash in the Trust and create additional Units. Units reacquired by
the Sponsor during the initial offering period (at prices based upon the
aggregate underlying value of the Equity Securities in the Trust plus or
minus a pro rata share of cash, if any in the Income and Capital
Page 19
Accounts of the Trust) may be resold at the then current Public Offering
Price. Upon the termination of the initial offering period, unsold Units
created or reacquired during the initial offering period will be sold or
resold at the then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in the
secondary market (see "Will There be a Secondary Market?") may be
offered by this prospectus at the secondary market public offering price
determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trust for
sale in a number of states. Sales initially will be made to dealers and
other selling agents at prices which represent a concession or agency
commission of $0.21 per Unit, and, for secondary market sales, 2.1% of
the Public Offering Price (or 65% of the then current maximum sales
charge after December 1, 1997). The Sponsor reserves the right to change
the amount of the concession or agency commission from time to time.
Certain commercial banks may be making Units of the Trust available to
their customers on an agency basis. A portion of the sales charge paid
by these customers is retained by or remitted to the banks in the
amounts indicated above. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units; however, the Glass-Steagall
Act does permit certain agency transactions and the banking regulators
have not indicated that these particular agency transactions are not
permitted under such Act. In Texas and in certain other states, any
banks making Units available must be registered as broker/dealers under
state law.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or other selling agents of the Trust may receive
nominal awards from the Sponsor for each of their registered
representatives who have sold a minimum number of UIT Units during a
specified time period. In addition, at various times the Sponsor may
implement other programs under which the sales force of a broker/dealer,
bank or other selling agent may be eligible to win other nominal awards
for certain sales efforts, or under which the Sponsor will reallow to
any such dealer that sponsors sales contests or recognition programs
conforming to criteria established by the Sponsor, or participates in
sales programs sponsored by the Sponsor, an amount not exceeding the
total applicable sales charges on the sales generated by such person at
the public offering price during such programs. Also, the Sponsor, in
its discretion, may from time to time pursuant to objective criteria
established by the Sponsor, pay fees to qualifying dealers for certain
services or activities which are primarily intended to result in sales
of Units of the Trust. Such payments are made by the Sponsor out of its
own assets, and not out of the assets of the Trust. These programs will
not change the price Unit holders pay for their Units or the amount that
the Trust will receive from the Units sold.
The Sponsor may, from time to time in its advertising and sales
materials, compare the then current estimated returns on the Trust and
returns over specified periods on other similar Trusts sponsored by Nike
Securities L.P. with returns on other taxable investments such as
corporate or U.S. Government bonds, bank CDs and money market accounts
or money market funds, each of which has investment characteristics that
may differ from those of the Trust. U.S. Government bonds, for example,
are backed by the full faith and credit of the U.S. Government, and bank
CDs and money market accounts are insured by an agency of the federal
government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the
condition of the short-term debt market. The investment characteristics
of the Trust are described more fully elsewhere in this Prospectus.
Trust performance may be compared to performance on a total return basis
with the Dow Jones Industrial Average, the S&P 500 Composite Stock Price
Index, or performance data from Lipper Analytical Services, Inc. and
Morningstar Publications, Inc. or from publications such as Money, The
New York Times, U.S. News and World Report, Business Week, Forbes or
Fortune. As with other performance data, performance comparisons should
not be considered representative of the Trust's relative performance for
any future period.
What are the Sponsor's Profits?
The Sponsor of the Trust will receive a gross sales commission equal to
$0.34 per Unit, less any reduced sales charge for quantity purchases as
described under "Public Offering-How is the Public Offering Price
Determined?" See "Public Offering-How are Units Distributed?" for
information regarding the receipt of additional concessions available to
dealers and other selling agents. In addition, the Sponsor may be
Page 20
considered to have realized a profit or to have sustained a loss, as the
case may be, in the amount of any difference between the cost of the
Equity Securities to the Trust (which is based on the Evaluator's
determination of the aggregate offering price of the underlying Equity
Securities of such Trust on the Initial Date of Deposit as well as
subsequent deposits) and the cost of such Equity Securities to the
Sponsor. See Note (2) of "Schedule of Investments." During the initial
offering period, the dealers and other selling agents also may realize
profits or sustain losses as a result of fluctuations after the Initial
Date of Deposit in the Public Offering Price received by the dealers and
other selling agents upon the sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are
resold (which price includes a sales charge of 3.4% subject to reduction
beginning December 1, 1997) or redeemed. The secondary market public
offering price of Units may be greater or less than the cost of such
Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do so, the
Sponsor intends to maintain a market for the Units and continuously
offer to purchase Units at prices, subject to change at any time, based
upon the aggregate underlying value of the Equity Securities in the
Trust plus or minus cash, if any, in the Income and Capital Accounts of
the Trust. All expenses incurred in maintaining a secondary market,
other than the fees of the Evaluator and the costs of the Trustee in
transferring and recording the ownership of Units, will be borne by the
Sponsor. If the supply of Units exceeds demand, or for some other
business reason, the Sponsor may discontinue purchases of Units at such
prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS UNITS, HE SHOULD
INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO MAKING A
TENDER FOR REDEMPTION TO THE TRUSTEE. Units subject to a deferred sales
charge which are sold or tendered for redemption prior to such time as
the entire deferred sales charge on such Units has been collected will
be assessed the amount of the remaining deferred sales charge at the
time of sale or redemption.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his name appears on the face of the
certificate with the signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guaranty program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of the Trust; the number of Units issued or transferred; the
name, address and taxpayer identification number, if any, of the new
registered owner; a notation of any liens and restrictions of the issuer
and any adverse claims to which such Units are or may be subject or a
statement that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units are
transferable through the same procedures applicable to Units evidenced
by certificates (described above), except that no certificate need be
presented to the Trustee and no certificate will be issued upon the
transfer unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Page 21
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the securities in the Trust on or about the Income Distribution Dates
to Unit holders of record on the preceding Income Record Date. See
"Summary of Essential Information." Persons who purchase Units will
commence receiving distributions only after such person becomes a record
owner. Notification to the Trustee of the transfer of Units is the
responsibility of the purchaser, but in the normal course of business
such notice is provided by the selling broker/dealer. The pro rata share
of cash in the Capital Account of the Trust will be computed as of the
fifteenth day of each month. Proceeds received on the sale of any Equity
Securities in the Trust, to the extent not used to meet redemptions of
Units or pay expenses, will, however, be distributed on the last day of
each month to Unit holders of record on the fifteenth day of such month
if the amount available for distribution equals at least $1.00 per 100
Units. The Trustee is not required to pay interest on funds held in the
Capital Account of the Trust (but may itself earn interest thereon and
therefore benefit from the use of such funds). Notwithstanding,
distributions of funds in the Capital Account, if any, will be made on
the last day of each December to Unit holders of record as of December
15. See "What is the Federal Tax Status of Unit Holders?"
It is anticipated that the deferred sales charge will be collected from
the Capital Account and that amounts in the Capital Account will be
sufficient to cover the cost of the deferred sales charge. However, to
the extent that amounts in the Capital Account are insufficient to
satisfy the then current deferred sales charge obligation, Equity
Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made
to an account designated by the Sponsor for purposes of satisfying Unit
holders' deferred sales charge obligations.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
the Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder only when filing a tax return. Under
normal circumstances the Trustee obtains the Unit holder's tax
identification number from the selling broker. However, a Unit holder
should examine his or her statements from the Trustee to make sure that
the Trustee has been provided a certified tax identification number in
order to avoid this possible "back-up withholding." In the event the
Trustee has not been previously provided such number, one should be
provided as soon as possible.
Within a reasonable time after the Trust is terminated, each Unit holder
will, upon surrender of his Units for redemption, receive: (i) the pro
rata share of the amounts realized upon the disposition of Equity
Securities, unless he elects an In-Kind Distribution as described below
and (ii) a pro rata share of any other assets of the Trust, less
expenses of the Trust. Not less than 60 days prior to the Mandatory
Termination Date of the Trust, the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of whole shares of Equity
Securities (an "In-Kind Distribution"), if such Unit holder owns at
least 2,500 Units of the Trust, rather than to receive payment in cash
for such Unit holder's pro rata share of the amounts realized upon the
disposition by the Trustee of Equity Securities. An In-Kind Distribution
will be reduced by customary transfer and registration charges. To be
effective, the election form, together with surrendered certificates and
other documentation required by the Trustee, must be returned to the
Trustee at least five business days prior to the Mandatory Termination
Date of the Trust. A Unit holder may, of course, at any time after the
Equity Securities are distributed, sell all or a portion of the shares.
The Trustee will credit to the Income Account of the Trust any dividends
received on the Equity Securities therein. All other receipts (e.g.,
return of capital, etc.) are credited to the Capital Account of the Trust.
Page 22
The Trustee may establish reserves (the "Reserve Account") within the
Trust for state and local taxes, if any, and any governmental charges
payable out of the Trust.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of the Trust the following information in reasonable detail: (1) a
summary of transactions in the Trust for such year; (2) any Equity
Securities sold during the year and the Equity Securities held at the
end of such year by the Trust; (3) the redemption price per Unit based
upon a computation thereof on the 31st day of December of such year (or
the last business day prior thereto); and (4) amounts of income and
capital distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender to the
Trustee at its corporate trust office in the City of New York of the
certificates representing the Units to be redeemed, or in the case of
uncertificated Units, delivery of a request for redemption, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as explained above (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates), and
payment of applicable governmental charges, if any. No redemption fee
will be charged. On the third business day following such tender, the
Unit holder will be entitled to receive in cash an amount for each Unit
equal to the Redemption Price per Unit next computed after receipt by
the Trustee of such tender of Units. The "date of tender" is deemed to
be the date on which Units are received by the Trustee (if such day is a
day on which the New York Stock Exchange is open for trading), except
for Units received after 4:00 p.m. Eastern time (or as of any earlier
closing time on a day on which the New York Stock Exchange is scheduled
in advance to close at such earlier time), the date of tender is the
next day on which the New York Stock Exchange is open for trading and
such Units will be deemed to have been tendered to the Trustee on such
day for redemption at the redemption price computed on that day. Units
so redeemed shall be cancelled. Units tendered for redemption prior to
such time as the entire deferred sales charge on such Units has been
collected will be assessed the amount of the remaining deferred sales
charge at the time of redemption.
Any Unit holder tendering 2,500 Units or more for redemption may request
by written notice submitted at the time of tender from the Trustee in
lieu of a cash redemption a distribution of shares of Equity Securities
in an amount and value of Equity Securities per Unit equal to the
Redemption Price Per Unit as determined as of the evaluation next
following tender. To the extent possible, in-kind distributions ("In-
Kind Distributions") shall be made by the Trustee through the
distribution of each of the Equity Securities in book-entry form to the
account of the Unit holder's bank or broker/dealer at the Depository
Trust Company. An In-Kind Distribution will be reduced by customary
transfer and registration charges. The tendering Unit holder will
receive his pro rata number of whole shares of each of the Equity
Securities comprising the portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Unit holder is
entitled. The Trustee may adjust the number of shares of any issue of
Equity Securities included in a Unit holder's In-Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made
on the basis of the value of Equity Securities on the date of tender. If
funds in the Capital Account are insufficient to cover the required cash
distribution to the tendering Unit holder, the Trustee may sell Equity
Securities in the manner described above.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"How are Income and Capital Distributed?" In the event the Trustee has
not been previously provided such number, one must be provided at the
time redemption is requested.
Page 23
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of the Trust.
The Trustee is empowered to sell Equity Securities of the Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of the Trust will be
reduced. Such sales may be required at a time when Equity Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the aggregate
underlying value of the Equity Securities in the Trust plus or minus
cash, if any, in the Income and Capital Accounts of the Trust. The
Redemption Price per Unit is the pro rata share of each Unit determined
by the Trustee by adding: (1) the cash on hand in the Trust other than
cash deposited in the Trust to purchase Equity Securities not applied to
the purchase of such Equity Securities; (2) the aggregate value of the
Equity Securities held in the Trust, as determined by the Evaluator on
the basis of the aggregate underlying value of the Equity Securities in
the Trust next computed; and (3) dividends receivable on the Equity
Securities trading ex-dividend as of the date of computation; and
deducting therefrom: (1) amounts representing any applicable taxes or
governmental charges payable out of the Trust; (2) any amounts owing to
the Trustee for its advances; (3) an amount representing estimated
accrued expenses of the Trust, including but not limited to fees and
expenses of the Trustee (including legal and auditing fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of the Trust as of the business day prior to
the evaluation being made; and (5) other liabilities incurred by the
Trust; and finally dividing the results of such computation by the
number of Units of the Trust outstanding as of the date thereof. The
redemption price per Unit will be assessed the amount, if any, of the
remaining deferred sales charge at the time of redemption.
The aggregate value of the Equity Securities used to calculate the
Redemption Price per Unit will be determined in the following manner: if
the Equity Securities are listed on a national securities exchange or
the NASDAQ National Market System, this evaluation is generally based on
the closing sale prices on that exchange or that system (unless it is
determined that these prices are inappropriate as a basis for valuation)
or, if there is no closing sale price on that exchange or system, at the
closing bid prices. If the Equity Securities are not so listed or, if so
listed and the principal market therefor is other than on the exchange,
the evaluation shall generally be based on the current bid prices on the
over-the-counter market (unless these prices are inappropriate as a
basis for evaluation). If current bid prices are unavailable, the
evaluation is generally determined (a) on the basis of current bid
prices for comparable securities, (b) by appraising the value of the
Equity Securities on the bid side of the market or (c) by any
combination of the above.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Securities and Exchange Commission determines that trading on the New
York Stock Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances, the
Sponsor may apply to the Securities and Exchange Commission for an order
permitting a full or partial suspension of the right of Unit holders to
redeem their Units. The Trustee is not liable to any person in any way
for any loss or damage which may result from any such suspension or
postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 p.m. Eastern time on the same
business day and by making payment therefor to the Unit holder not later
than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
Page 24
prospectus describing such Units. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
How May Equity Securities be Removed from the Trust?
The Portfolio of the Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of an Equity Security in
the event that an issuer defaults in the payment of a dividend that has
been declared, that any action or proceeding has been instituted
restraining the payment of dividends or there exists any legal question
or impediment affecting such Equity Security, that the issuer of the
Equity Security has breached a covenant which would affect the payments
of dividends, the credit standing of the issuer or otherwise impair the
sound investment character of the Equity Security, that the issuer has
defaulted on the payment on any other of its outstanding obligations,
that the price of the Equity Security has declined to such an extent or
other such credit factors exist so that in the opinion of the Sponsor,
the retention of such Equity Securities would be detrimental to the
Trust. Except as stated under "Portfolio-What are Some Additional
Considerations for Investors?" for Failed Obligations, the acquisition
by the Trust of any securities or other property other than the Equity
Securities is prohibited. Pursuant to the Indenture and with limited
exceptions, the Trustee may sell any securities or other property
acquired in exchange for Equity Securities such as those acquired in
connection with a merger or other transaction. If such new or exchanged
securities or property are offered, the Trustee shall reject the offer.
However, in the event such securities or property are nonetheless
acquired by the Trust, they may be accepted for deposit in the Trust and
either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Portfolio
Supervisor). Proceeds from the sale of Equity Securities (or any
securities or other property received by the Trust in exchange for
Equity Securities) by the Trustee are credited to the Capital Account of
the Trust for distribution to Unit holders or to meet redemptions. The
Trustee may from time to time retain and pay compensation to the Sponsor
(or an affiliate of the Sponsor) to act as agent for the Trust with
respect to selling Equity Securities from the Trust. In acting in such
capacity the Sponsor or its affiliate will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may also sell Equity Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose of
redeeming Units of the Trust tendered for redemption and the payment of
expenses.
The Sponsor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares
of individual issues of Equity Securities. To the extent this is not
practicable, the composition and diversity of the Equity Securities may
be altered. In order to obtain the best price for the Trust, it may be
necessary for the Sponsor to specify minimum amounts (generally 100
shares) in which blocks of Equity Securities are to be sold.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is Dorsey, Wright & Associates?
Dorsey, Wright & Associates is an independent, privately-owned
registered investment advisory firm headquartered in Richmond, Virginia.
Thomas J. Dorsey and Watson H. Wright, the firm's two principals,
together have 35 years experience in the equity markets, both having
specialized in Point and Figure technical analysis throughout most of
their careers.
The discipline of Point and Figure Charting has been around since the
turn of the century. Dorsey, Wright & Associates has perfected the
technique, establishing itself as one of the country's leading stock
analysis firms.
Furthermore, Dorsey, Wright & Associates has developed the same charting
method to track the relative strength of sectors and stocks compared to
a broad index. Dorsey, Wright & Associates currently charts close to
7,000 optionable stocks and 41 sectors.
Thomas Dorsey has published a book entitled "Point and Figure Charting."
Page 25
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, The First Trust Special Situations Trust, The First Trust
Insured Corporate Trust, The First Trust of Insured Municipal Bonds and
The First Trust GNMA. First Trust introduced the first insured unit
investment trust in 1974 and to date more than $9 billion in First Trust
unit investment trusts have been deposited. The Sponsor's employees
include a team of professionals with many years of experience in the
unit investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (630) 241-4141. As of
December 31, 1995, the total partners' capital of Nike Securities L.P.
was $9,033,760 (audited). (This paragraph relates only to the Sponsor
and not to the Trust or to any series thereof or to any other
Underwriter. The information is included herein only for the purpose of
informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
Who is 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. Unit holders who have questions regarding the Trust may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Equity Securities. In the event of the failure of
the Sponsor to act under the Indenture, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under
the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
Page 26
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is 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
Evaluator may resign or may be removed by the Sponsor or the Trustee, in
which event the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." The Trust may be liquidated at any time by consent of 100%
of the Unit holders of the Trust or by the Trustee when the value of the
Equity Securities owned by the Trust as shown by any evaluation, is less
than the lower of $2,000,000 or 20% of the total value of Equity
Securities deposited in such Trust during the primary offering period,
or in the event that Units of the Trust not yet sold aggregating more
than 60% of the Units of the Trust are tendered for redemption by a
broker/dealer, including the Sponsor. If the Trust is liquidated because
of the redemption of unsold Units of the Trust by a broker/dealer, the
Sponsor will refund to each purchaser of Units of the Trust the entire
sales charge and the transaction fees paid by such purchaser. In the
event of termination, written notice thereof will be sent by the Trustee
to all Unit holders of the Trust. Within a reasonable period after
termination, the Trustee will follow the procedures set forth under "How
are Income and Capital Distributed?"
Commencing on the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of the Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of the Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
holder at his address appearing on the registration books of the Trust
maintained by the Trustee. At least 60 days prior to the Mandatory
Termination Date of the Trust the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges), if
such Unit holder owns at least 2,500 Units of the Trust, rather than to
receive payment in cash for such Unit holder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity
Securities. To be effective, the election form, together with
surrendered certificates and other documentation required by the
Trustee, must be returned to the Trustee at least five business days
Page 27
prior to the Mandatory Termination Date of the Trust. Unit holders not
electing a distribution of shares of Equity Securities will receive a
cash distribution from the sale of the remaining Equity Securities
within a reasonable time after the Trust is terminated. Regardless of
the distribution involved, the Trustee will deduct from the funds of the
Trust any accrued costs, expenses, advances or indemnities provided by
the Trust Agreement, including estimated compensation of the Trustee and
costs of liquidation and any amounts required as a reserve to provide
for payment of any applicable taxes or other governmental charges. Any
sale of Equity Securities in the Trust upon termination may result in a
lower amount than might otherwise be realized if such sale were not
required at such time. The Trustee will then distribute to each Unit
holder his pro rata share of the balance of the Income and Capital
Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Experts
The statement of net assets, including the schedule of investments, of
the Trust at the opening of business on the Initial Date of Deposit
appearing in this Prospectus and Registration Statement has been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement,
and is included in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
Page 28
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 157
We have audited the accompanying statement of net assets, including the
schedule of investments, of The First Trust Special Situations Trust,
Series 157, comprised of Dorsey, Wright Sector Trusts, Precious Metals
Series 1, at the opening of business on November 14, 1996. This
statement of net assets is the responsibility of the Trust's Sponsor.
Our responsibility is to express an opinion on this statement of net
assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the statement
of net assets. Our procedures included confirmation of the letter of
credit held by the Trustee and deposited in the Trust on November 14,
1996. An audit also includes assessing the accounting principles used
and significant estimates made by the Sponsor, as well as evaluating the
overall presentation of the statement of net assets. We believe that our
audit of the statement of net assets provides a reasonable basis for our
opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of The First
Trust Special Situations Trust, Series 157, comprised of Dorsey, Wright
Sector Trusts, Precious Metals Series 1, at the opening of business on
November 14, 1996 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
November 14, 1996
Page 29
Statement of Net Assets
Dorsey, Wright Sector Trusts, Precious Metals Series 1
The First Trust Special Situations Trust, Series 157
At the Opening of Business on the Initial Date of Deposit
November 14, 1996
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $150,486
Organizational and offering costs (3) 45,000
________
195,486
Less accrued organizational and offering costs (3) (45,000)
Less liability for deferred sales charge (4) (5,117)
_________
Net assets $145,369
=========
Units outstanding 15,049
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,486
Less sales charge (5) (5,117)
_________
Net assets $145,369
=========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $200,000 issued by Bankers
Trust Company has been deposited with the Trustee as collateral, which
is sufficient to cover the monies necessary for the purchase of the
Equity Securities pursuant to contracts for the purchase of such Equity
Securities.
(3) The Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed the life of the Trust (approximately two years). The
estimated organizational and offering costs are based on 2,500,000 Units
of the Trust expected to be issued. To the extent the number of Units
issued is larger or smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from the Trust ($.34
per Unit), payable to the Sponsor in ten equal monthly installments
beginning on January 31, 1997, and on the last business day of each
month thereafter through October 31, 1997. If Units are redeemed prior
to October 31, 1997, the remaining amount of the deferred sales charge
applicable to such Units will be payable at the time of redemption.
(5) The aggregate cost to investors includes a deferred sales charge
computed at the rate of 3.4% of the Public Offering Price (equivalent to
3.4% of the net amount invested, exclusive of the deferred sales
charge), assuming no reduction of sales charge for quantity purchases.
Page 30
Schedule of Investments
Dorsey, Wright Sector Trusts, Precious Metals Series 1
The First Trust Special Situations Trust, Series 157
At the Opening of Business on the Initial Date of Deposit
November 14, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Number of Aggregate Value Equity
of Ticker Symbol and Offering per Securities
Shares Name of Issuer of Equity Securities (1) Price Share to Trust (2)
_______ _______________________________________ ____________ _______ ____________
<S> <C> <C> <C> <C>
74 ASA ASA, Ltd. (3) 1.99% $40.500 $ 2,997
200 AEM Agnico-Eagle Mines, Ltd. (4) 2.03% 15.250 3,050
691 ALTA Alta Gold Company 2.04% 4.438 3,067
490 AU Amax Gold, Inc. 1.95% 6.000 2,940
531 ABX Barrick Gold Corporation (4) 10.01% 28.375 15,067
896 BMG Battle Mountain Gold Company 4.91% 8.250 7,392
516 BGO Bema Gold Corporation (4) 2.02% 5.875 3,032
190 CBJ Cambior, Inc. (4) 2.01% 15.875 3,016
186 CDE Coeur d'Alene Mines Corporation 1.96% 15.875 2,953
952 ECO Echo Bay Mines, Ltd. 5.02% 7.938 7,557
67 GGO Getchell Gold Corporation 2.00% 44.875 3,007
387 GLG Glamis Gold, Ltd. (4) 1.99% 7.750 2,999
240 GLDR Gold Reserve Corporation 2.05% 12.875 3,090
159 GSR Golden Star Resources, Ltd. 1.98% 18.750 2,981
1,176 HL Hecla Mining Company 4.89% 6.250 7,350
923 HM Homestake Mining Company 10.12% 16.500 15,230
369 KGC Kinross Gold Corporation (4) 1.99% 8.125 2,998
59 NGC Newmont Gold Company 1.99% 50.750 2,994
287 NEM Newmont Mining Corporation 9.94% 52.125 14,960
667 PGU Pegasus Gold, Inc. 5.04% 11.375 7,587
561 PDG Placer Dome, Inc. (4) 9.97% 26.750 15,007
235 RGLD Royal Gold, Inc. 2.05% 13.125 3,084
762 RYO Royal Oak Mines, Inc. 2.00% 3.938 3,001
583 GLD Santa Fe Pacific Gold Corporation 4.99% 12.875 7,506
938 TVX TVX Gold, Inc. (4) 5.06% 8.125 7,621
______ ________
Total Investments 100% $150,486
====== ========
</TABLE>
[FN]
______________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on November 13, 1996. The Trust has a mandatory termination date of
December 1, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$150,486. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $150,766 and $280, respectively.
(3) This Equity Security is a closed-end mutual fund which invests
primarily in the securities of South African gold mining companies and
other South African mineral mining companies. Investors should note
that because closed-end mutual funds charge fees similar to those
charged by the Trust, an investor may be subject to duplicative fees on
that portion of his or her investment represented by the closed-end
mutual fund shares.
(4) This Equity Security is a U.S. dollar denominated stock issued by a
Canadian company that trades directly on a United States national
securities exchange.
Page 31
CONTENTS:
Summary of Essential Information 4
Dorsey, Wright Sector Trusts, Precious Metals Series 1
The First Trust Special Situations Trust, Series 157:
What is The First Trust Special Situations Trust? 6
What are the Expenses and Charges? 7
What is the Federal Tax Status of Unit Holders? 9
Why are Investments in the Trust Suitable for
Retirement Plans? 12
Portfolio:
What are Equity Securities? 13
Risk Factors 13
What are the Equity Securities Selected for
Dorsey, Wright Sector Trusts, Precious
Metals Series 1? 15
What are Some Additional Considerations
for Investors? 17
Public Offering:
How is the Public Offering Price Determined? 18
How are Units Distributed? 20
What are the Sponsor's Profits? 21
Will There be a Secondary Market? 21
Rights of Unit Holders:
How is Evidence of Ownership
Issued and Transferred? 22
How are Income and Capital Distributed? 22
What Reports will Unit Holders Receive? 23
How May Units be Redeemed? 23
How May Units be Purchased by the Sponsor? 25
How May Equity Securities be Removed from the Trust? 25
Information as to Sponsor, Trustee and Evaluator:
Who is Dorsey, Wright & Associates? 26
Who is the Sponsor? 26
Who is the Trustee? 26
Limitations on Liabilities of Sponsor and Trustee 27
Who is the Evaluator? 27
Other Information:
How May the Indenture be Amended or Terminated? 28
Legal Opinions 28
Experts 28
Report of Independent Auditors 29
Statement of Net Assets 30
Notes to Statement of Net Assets 30
Schedule of Investments 31
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE TRUST
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
Dorsey, Wright Sector Trusts, Precious Metals Series 1
Nike Securities L.P.
Sponsor of First Trust (registered trademark)
1-800-621-9533
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
November 14, 1996
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 32
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
B. This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
The Registrant, The First Trust Special Situations Trust,
Series 157, hereby identifies The First Trust Special Situations
Trust, Series 4 Great Lakes Growth and Treasury Trust, Series 1,
The First Trust Special Situations Trust, Series 18 Wisconsin
Growth and Treasury Securities Trust, Series 1, The First Trust
Special Situations Trust, Series 119 and The First Trust Combined
Series 248, for purposes of the representations required by Rule
487 and represents the following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
157, has duly caused this Amendment to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Lisle and State of Illinois on
November 14, 1996.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 157
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
Robert D. Van Kampen Sole Director )
of Nike Securities )
Corporation, the ) November 14, 1996
General Partner of )
Nike Securities L.P.)
)
)
)Robert M. Porcellino
) Attorney-in-Fact**
)
)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney was
filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Combined Series 258 (File No. 33-63483) and
the same is hereby incorporated herein by this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated November 14, 1996,
in Amendment No. 2 to the Registration Statement (Form S-6) (File
No. 333-09183) and related Prospectus of The First Trust Special
Situations Trust, Series 157.
ERNST & YOUNG LLP
Chicago, Illinois
November 14, 1996
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and First Trust
Advisors L.P. as Portfolio Supervisor (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
43693] filed on behalf of The First Trust Special
Situations Trust, Series 22).
1.1.1 Form of Trust Agreement for Series 157 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).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
3.1 Opinion of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to Federal income tax status of
securities being registered.
3.3 Opinion of counsel as to New York income tax status of
securities being registered.
3.4 Opinion of counsel as to advancement of funds by
Trustee.
4.1 Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
63483] filed on behalf of The First Trust Combined
Series 258).
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 157
TRUST AGREEMENT
Dated: November 14, 1996
The Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank, as Trustee and First Trust
Advisors L.P., as Evaluator and Portfolio Supervisor, sets forth
certain provisions in full and incorporates other provisions by
reference to the document entitled "Standard Terms and Conditions
of Trust for The First Trust Special Situations Trust, Series 22
and certain subsequent Series, Effective November 20, 1991"
(herein called the "Standard Terms and Conditions of Trust"), and
such provisions as are incorporated by reference constitute a
single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 15,049 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/15,049.
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
1.99% ASA, Ltd., 2.03% Agnico-Eagle Mines,
Ltd., 2.04% Alta Gold Company, 1.95% Amax
Gold, Inc., 10.01% Barrick Gold Corporation,
4.91% Battle Mountain Gold Company, 2.02%
Bema Gold Corporation, 2.01% Cambior,
Inc., 1.96% Coeur d'Alene Mines Corporation,
5.02% Echo Bay Mines, Ltd., 2.00% Getchell
Gold Corporation, 1.99% Glamis Gold, Ltd.,
2.05% Gold Reserve Corporation, 1.98% Golden
Star Resources, Ltd., 4.89% Hecla Mining
Company, 10.12% Homestake Mining Company,
1.99% Kinross Gold Corporation, 1.99% Newmont
Gold Company, 9.94% Newmont Mining
Corporation, 5.04% Pegasus Gold, Inc., 9.97%
Placer Dome, Inc., 2.05% Royal Gold, Inc.,
1.99% Royal Oak Mines, Inc., 4.99% Santa Fe
Pacific Gold Corporation, 5.06% TVX Gold,
Inc.
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0030 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. Such fee
may exceed the actual cost of providing such evaluation services
for the Trust, but at no time will the total amount received for
evaluation services rendered to unit investment trusts of which
Nike Securities L.P. is the Sponsor in any calendar year exceed
the aggregate cost to the Evaluator of supplying such services in
such year.
H. The Trustee's Compensation Rate pursuant to
Section 6.04 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0096 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. However, in
no event, except as may otherwise be provided in the Standard
Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is November
14, 1996.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART III
A. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or
any successor trustee appointed as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank.
B. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal Account."
C. Paragraph (b) of Section 2.01 shall be restated in its
entirety as follows and, in connection therewith, the third
paragraph of Section 3.02 shall be deleted:
(b)(1)From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its
discretion, to assign, convey to and deposit with the
Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form, (ii) Contract Obligations relating
to such additional Securities, accompanied by cash and/or
Letter(s) of Credit as specified in paragraph (c) of this
Section 2.01, or (iii) cash (or a Letter of Credit in lieu
of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchase in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur with 20 days from the date of a failure
occurring within such initial 90-day period) shall maintain
exactly the Percentage Ratio existing immediately prior to
such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "Cash" means,
as to the Capital Account, cash or other property (other
than Securities) on hand in the Capital Account or
receivable and to be credited to the Capital Account as of
the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units
created by the deposit) and, as to the Income Account, cash
or other property (other than Securities) received by the
Trust as of the date of the deposit or receivable by the
Trust in respect of a record date for a payment on a
Security which has occurred or will occur before the Trust
will be the holder of record of a Security, reduced by the
amount of any cash or other property received or receivable
on any Security allocable (in accordance with the Trustee's
calculations of distributions from the Income Account
pursuant to Section 3.05) to a distribution made or to be
made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units
created by the deposit and the denominator of which is the
number of Units which are outstanding immediately prior to
the deposit.
D. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
E. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Principal Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I."
F. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Principal
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Principal Account unless the amount available for
distribution shall equal $1.00 per 100 Units.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) the following
reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the fifth
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
G. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
H. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
Principal Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by
reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11.
Whenever new securities or property is received and
retained by a Trust pursuant to this Section 3.11, the
Trustee shall, within five days thereafter, mail to all Unit
holders of such Trust notices of such acquisition unless
legal counsel for such Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
I. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05.I.(e) deduct from the Interest Account
or, to the extent funds are not available in such Account,
from the Principal Account and pay to the Depositor the
amount that it is entitled to receive pursuant to Section
3.14.
J. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.14.:
"Section 3.14. Bookkeeping and Administrative Expenses.
As compensation for providing bookkeeping and other
administrative services of a character described in Section
26(a)(2)(C) of the Investment Company Act of 1940 to the
extent such services are in addition to, and do not
duplicate, the services to be provided hereunder by the
Trustee or the Portfolio Supervisor, the Depositor shall
receive against a statement or statements therefor submitted
to the Trustee monthly or annually an aggregate annual fee
in an amount as set forth in the Prospectus times the number
of Units outstanding as of January 1 of such year except for
a year or years in which an initial offering period as
determined by Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the number of
Units outstanding at the end of such month (such annual fee
to be pro rated for any calendar year in which the Depositor
provides service during less than the whole of such year),
but in no event shall such compensation when combined with
all compensation received from other unit investment trusts
for which the Depositor hereunder is acting as Depositor for
providing such bookkeeping and administrative services in
any calendar year exceed the aggregate cost to the Depositor
providing services to such unit investment trusts. Such
compensation may, from time to time, be adjusted provided
that the total adjustment upward does not, at the time of
such adjustment, exceed the percentage of the total
increase, after the date hereof, in consumer prices for
services as measured by the United States Department of
Labor Consumer Price Index entitled "All Services Less Rent
of Shelter" or similar index, if such index should no longer
be published. The consent or concurrence of any Unit holder
hereunder shall not be required for any such adjustment or
increase. Such compensation shall be paid by the Trustee,
upon receipt of invoice therefor from the Depositor, upon
which, as to the cost incurred by the Depositor of providing
services hereunder the Trustee may rely, and shall be
charged against the Interest and Principal Accounts on or
before the Distribution Date following the Monthly Record
Date on which such period terminates. The Trustee shall
have no liability to any Certificateholder or other person
for any payment made in good faith pursuant to this Section.
If the cash balance in the Interest and Principal
Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 3.14, the Trustee shall
have the power to sell (i) Securities from the current list
of Securities designated to be sold pursuant to Section 5.02
hereof, or (ii) if no such Securities have been so
designated, such Securities as the Trustee may see fit to
sell in its own discretion, and to apply the proceeds of any
such sale in payment of the amounts payable pursuant to this
Section 3.14.
Any moneys payable to the Depositor pursuant to this
Section 3.14 shall be secured by a prior lien on the Trust
Fund except that no such lien shall be prior to any lien in
favor of the Trustee under the provisions of Section 6.04
herein.
K. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Unit holders may redeem 2,500 Units or more of a Trust
and request a distribution in kind of (i) such Unit holder's
pro rata portion of each of the Securities in such Trust, in
whole shares, and (ii) cash equal to such Unit holder's
pro rata portion of the Income and Principal Accounts as
follows: (x) a pro rata portion of the net proceeds of sale
of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Principal Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section.
Subject to Section 5.05 with respect to Rollover Unit
holders, to the extent possible, distributions of Securities
pursuant to an in kind redemption of Units shall be made by
the Trustee through the distribution of each of the
Securities in book-entry form to the account of the Unit
holder's bank or broker-dealer at the Depository Trust
Company. Any distribution in kind will be reduced by
customary transfer and registration charges."
L. Paragraph (g) of Section 6.01 of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
after the first word thereof:
"(i) the value of any Trust as shown by an evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less
than the lower of $2,000,000 or 20% of the total principal
amount of Securities deposited in such Trust, or (ii)"
M. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
N. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided."
O. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed
such amount set forth in the Prospectus under "Summary of
Essential Information" per Unit outstanding as of January 1
of such year except for a Trust during the year or years in
which an initial offering period as determined in Section
4.01 of this Indenture occurs, in which case the fee for a
month is based on the number of Units outstanding at the end
of such month (such annual fee to be pro rated for any
calendar year in which the Portfolio Supervisor provides
services during less than the whole of such year), but in no
event shall such compensation when combined with all
compensation received from other series of the Trust for
providing such supervisory services in any calendar year
exceed the aggregate cost to the Portfolio Supervisor for
the cost of providing such services."
P. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. The expenses incurred in
establishing a Trust, including the cost of the preparation
and typesetting of the registration statement, prospectuses
(including preliminary prospectuses), the indenture and
other documents relating to the Trust, printing of
Certificates, Securities and Exchange Commission and state
blue sky registration fees, the costs of the initial
valuation of the portfolio and audit of the Trust, the
initial fees and expenses of the Trustee, and legal and
other out-of-pocket expenses related thereto, but not
including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses incurred
in the preparation and printing of brochures and other
advertising materials and any other selling expenses, to the
extent not borne by the Depositor, shall be borne by the
Trust. To the extent the funds in the Income and Principal
Accounts of the Trust shall be insufficient to pay the
expenses borne by the Trust specified in this Section 3.01,
the Trustee shall advance out of its own funds and cause to
be deposited and credited to the Income Account such amount
as may be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each Record
Date from funds on hand in the Income Account or, to the
extent funds are not available in such Account, from the
Principal Account, in the amount deemed to have accrued as
of such Record Date as provided in the following sentence
(less prior payments on account of such advances, if any),
and the provisions of Section 6.04 with respect to the
reimbursement of disbursements for Trust expenses,
including, without limitation, the lien in favor of the
Trustee therefor and the authority to sell Securities as
needed to fund such reimbursement, shall apply to the
payment of expenses and the amounts advanced pursuant to
this Section. For the purposes of the preceding sentence
and the addition provided in clause (4) of the first
sentence of Section 5.01, the expenses borne by the Trust
pursuant to this Section shall be deemed to have been paid
on the date of the Trust Agreement and to accrue at a daily
rate over the time period specified for their amortization
provided in the Prospectus; provided, however, that nothing
herein shall be deemed to prevent, and the Trustee shall be
entitled to, full reimbursement for any advances made
pursuant to this Section no later than the termination of
the Trust. For purposes of calculating the accrual of
organizational expenses under this Section 3.01, the Trustee
shall rely on the written estimates of such expenses
provided by the Depositor pursuant to Section 5.01."
Q. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The second sentence of the first paragraph of
Section 5.01 shall be amended by adding the following at the
conclusion thereof: ", plus (4) amounts representing
organizational expenses paid from the Trust less amounts
representing accrued organizational expenses of the Trust,
plus (5) all other assets of the Trust"
(ii) The following shall be added at the end of the
first paragraph of Section 5.01:
Until the Depositor has informed the Trustee that
there will be no further deposits of Additional
Securities pursuant to section 2.01(b), the Depositor
shall provide the Trustee with written estimates of (i)
the total organizational expenses to be borne by the
Trust pursuant to Section 3.01 and (ii) the total
number of Units to be issued in connection with the
initial deposit and all anticipated deposits of
additional Securities. For purposes of calculating the
Trust Fund Evaluation and Unit Value, the Trustee shall
treat all such anticipated expenses as having been paid
and all liabilities therefor as having been incurred,
and all Units as having been issued, in each case on
the date of the Trust Agreement, and, in connection
with each such calculation, shall take into account a
pro rata portion of such expense and liability based on
the actual number of Units issued as of the date of
such calculation. In the event the Trustee is informed
by the Depositor of a revision in its estimate of total
expenses or total Units and upon the conclusion of the
deposit of additional Securities, the Trustee shall
base calculations made thereafter on such revised
estimates or actual expenses, respectively, but such
adjustment shall not affect calculations made prior
thereto and no adjustment shall be made in respect
thereof.
R. Section 2.03(a) of the Standard Terms and Conditions of
Trust shall be amended by adding the following sentence after the
first sentence of such section:
"The number of Units may be increased through a split
of the Units or decreased through a reverse split thereof,
as directed in writing by the Depositor, at any time when
the Depositor is the only beneficial holder of Units, which
revised number of Units shall be recorded by the Trustee on
its books. The Trustee shall be entitled to rely on the
Depositor's direction as certification that no person other
than the Depositor has a beneficial interest in the Units
and the Trustee shall have no liability to any person for
action taken pursuant to such direction."
S. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.15:
"Section 3.15. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus, withdraw from the Capital
Account, an amount per Unit specified in such Prospectus and
credit such amount to a special non-Trust account designated
by the Depositor out of which the deferred sales charge will
be distributed to the Depositor (the "Deferred Sales Charge
Account"). If the balance in the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Capital Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. If a Unit
holder redeems Units prior to full payment of the deferred
sales charge, the Trustee shall, if so provided in the
related Prospectus, on the Redemption Date, withhold from
the Redemption Price payable to such Unit holder an amount
equal to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If pursuant to Section 5.02 hereof, the Depositor shall
purchase a Unit tendered for redemption prior to the payment
in full of the deferred sales charge due on the tendered
Unit, the Depositor shall pay to the Unit holder the amount
specified under Section 5.02 less the unpaid portion of the
deferred sales charge. All advances made by the Trustee
pursuant to this Section shall be secured by a lien on the
Trust prior to the interest of the Unit holders."
T. The following shall be added immediately following the
first sentence of paragraph (c) of Section 2.01:
"The Trustee may allow the Depositor to substitute any
Letter(s) of Credit deposited with the Trustee in connection
with the deposits described in Section 2.01(a) and (b) with
cash in an amount sufficient to satisfy the obligations to
which the Letter(s) of Credit relates. Any substituted
Letter(s) of credit shall be released by the Trustee."
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank and First Trust Advisors L.P. have each caused
this Trust Agreement to be executed and the respective corporate
seal to be hereto affixed and attested (if applicable) by
authorized officers; all as of the day, month and year first
above written.
NIKE SECURITIES L.P.,
Depositor
By Robert M. Porcellino
Vice President
THE CHASE MANHATTAN BANK,
Trustee
By Thomas Porrazzo
Vice President
[SEAL]
ATTEST:
Rosalia A. Raviele
Second Vice President
FIRST TRUST ADVISORS L.P.,
Evaluator
By Robert M. Porcellino
Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
The First Trust Special Situations Trust, Series 157
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 14, 1996
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 157
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 157 in connection with the preparation, execution
and delivery of a Trust Agreement dated November 14, 1996 among
Nike Securities L.P., as Depositor, The Chase Manhattan Bank, as
Trustee and First Trust Advisors L.P., as Evaluator and Portfolio
Supervisor, pursuant to which the Depositor has delivered to and
deposited the Securities listed in Schedule A to the Trust
Agreement with the Trustee and pursuant to which the Trustee has
issued to or on the order of the Depositor a certificate or
certificates representing units of fractional undivided interest
in and ownership of the Fund created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-09183)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:erg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
November 14, 1996
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
he Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Re: The First Trust Special Situations Trust, Series 157
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 157. (the
"Fund"), in connection with the issuance of units of fractional
undivided interests in the Trust of said Fund (the "Trust"),
under a Trust Agreement, dated October 23, 1996 (the
"Indenture"), among Nike Securities L.P., as Depositor, The Chase
Manhattan Bank, as Trustee and First Trust Advisors L.P., as
Evaluator and Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trust will be administered, and
investments by the Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The Trust holds Equity Securities as such term is defined in the
Prospectus.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. The Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit holder
will be treated as the owner of a pro rata portion of each of the
assets of the Trust under the Internal Revenue Code of 1986 (the
"Code"); under subpart E, subchapter J of Chapter 1 of the Code,
income of the Trust will be treated as income of the Unit
holders; and an item of Trust income will have the same character
in the hands of a Unit holder as it would have in the hands of
the Trustee. Each Unit holder will be considered to have
received his pro rata share of income derived from each Trust
asset when such income is considered to be received by the Trust.
A Unit holder's pro rata portion or distributions of cash or
property with respect to Equity Securities ("dividends" as
defined by Section 316 of the Code) except for designated capital
gain dividends paid by Closed-End Fund, are taxable as ordinary
income to the extent of the corporations current and accumulated
"earnings and profits." A Unit holder's pro rata portion of
dividends which exceed such current and accumulated earnings and
profits will first reduce the Unit Holder's tax basis in such
Equity Securities, and to the extent that such dividends exceed a
Unit holder's tax basis in such Equity Securities, shall be
treated as gain from the sale or exchange of property.
The price a Unit holder pays for his Units is allocated
among his pro rata portion of each Equity Security held by the
Trust (in proportion to the fair market values thereof on the
valuation date nearest the date the Unit holder purchased his
Units), in order to determine his initial tax basis for his pro
rata portion of each Equity Security held by the Trust.
II. The price a Unit holder pays for his Units, generally
including sales charges, is allocated among his pro rata portion
of each Equity Security held by a Trust (in proportion to the
fair market values thereof on the valuation date closest to the
date the Unit holder purchases his Units), in order to determine
his tax basis for his pro rata portion of each Equity Security
held by a Trust.
III. Gain or loss will be recognized to a Unit holder upon
redemption or sale of his Units, except to the extent an in kind
distribution of Equity Securities is received by such Unit holder
from the Trust as discussed below. Such gain or loss is measured
by comparing the proceeds of such redemption or sale with the
adjusted basis of his Units. Before adjustment, such basis would
normally be cost if the Unit holder had acquired his units by
purchase. Such basis will be reduced, but not below zero, by the
Unit holder's pro rata portion of dividends, except for
designated capital gain dividends, with respect to Equity
Securities which are not taxable as ordinary income.
IV. If the Trustee disposes of an Equity Security (whether
by sale, exchange, liquidation, redemption, or otherwise) gain or
loss will be recognized to the Unit holder and the amount thereof
will be measured by comparing the Unit holder's aliquot share of
the total proceeds from the transaction with his basis for his
fractional interest in the Equity Security disposed of. Initial
basis is ascertained by apportioning the tax basis for his Units
(as of the date on which his Units were acquired) among each of
the Equity Securities of such Trust (as of the date on which his
Units were acquired) ratably according to their values as of the
valuation date nearest the date on which he purchased such Units.
A Unit holder's basis in his Units and of his fractional interest
in each Equity Security must be reduced, but not below zero, by
the Unit holder's pro rata portion of dividends, except for
designated capital gain dividends paid by the Closed-End Fund,
with respect to Equity Securities which are not taxable as
ordinary income.
V. With respect to a Unit holder's pro rata portion of
Equity Securities held by the Trust:
(a) Each Unit holder will be considered to
receive his pro rata portion of each distribution
made on the Equity Securities, when such
distribution is received by Trust. A distribution
declared by the Closed-End Fund in October,
November or December that is held by the Trust and
paid during the following January will be treated
as having been received by Unit holders on
December 31 in that year such distribution was
declared. To the extent that any distribution on
the Equity Securities constitutes ordinary income,
each Unit holder will be deemed to have received
ordinary income when the distribution is deemed to
be received by the Trust. To the extent any
distribution constitutes a capital gain
distribution with respect to a Closed-End Fund,
each Unit holder will be deemed to have received a
capital gain when the distribution is received by
the Trust. To the extent that any distribution
constitutes a return of capital, each Unit holder
will be deemed to have received a return of
capital when the distribution is received by the
Trust.
(b) To the extent that a distribution is
made on the Equity Securities which constitutes a
return of capital, such distribution should be
applied by a Unit holder to reduce his basis
(determined in accordance with paragraph (II)
hereof) in his pro rata portion of the Equity
Securities held by the Trust until the total of
all cash reductions reduces such basis to zero and
thereafter should be reported by the Unit holder
as a capital gain.
(c) If more than 50% of the value of the
total assets of the Closed- End Fund consist of
stock or securities in foreign corporations, the
Closed-End Fund may elect to pass through to its
shareholders the foreign income and similar taxes
paid by the Closed-End Fund in order to enable its
shareholders to take a credit (or deduction) for
foreign income taxes paid by the Closed-End Fund.
If this election is made, Unit holders of the
Trust, because they deemed to own a pro rata
portion of the Equity Securities held by the
Trust, as described above, must include in their
gross income, for federal income tax purposes,
both their portion of dividends received by the
Trust from the Closed-End Fund and also their
portion of the amount which the Closed-End Fund
deems to be their portion of foreign income taxes
paid with respect to, or withheld from, dividends,
interest, or other income of the Closed-End Fund
from its foreign investments. Unit holders may
then subtract from their federal income tax the
amount of such taxes withheld, or else treat such
foreign taxes as deductions from gross income;
however, as in the case of investors receiving
income directly from foreign sources, the above
described tax credit or deduction is subject to
certain limitations.
IV. A Unit holder's portion of gain, if any, upon the sale
or redemption of Units or the disposition of Equity Securities
held by the Trust will generally be considered a capital gain
except in the case of a dealer or a financial institution and
will be generally long-term if the Unit holder has held his Units
for more than one year. A Unit holder's portion of loss, if any,
upon the sale or redemption of Units or the disposition of
Securities held by the Trust will generally be considered a
capital loss (except in the case of a dealer or a financial
institution) and will be generally long-term if the Unit holder
has held his Units for more than one year.
VII. Under the Indenture, under certain circumstances, a
Unit holder tendering Units for redemption may request an in kind
distribution of Equity Securities upon the redemption of Units or
upon the termination of the Trust. As previously discussed,
prior to the redemption of Units or the termination of the Trust,
a Unit holder is considered as owning a pro rata portion of each
of the particular Trust's assets. The receipt of an in kind
distribution will result in a Unit holder receiving an undivided
interest in the Equity Securities plus, possibly, cash. The
potential federal income tax consequences that may occur under an
in kind distribution with respect to each Equity Security will
depend on whether or not a Unit holder receives cash in addition
to Equity Securities. A Unit holder will not recognize gain or
loss with respect to Equity Securities if a Unit holder only
receives Equity Securities in exchange for his pro rata portion
in each Equity Security held by the Trust. However, if a Unit
holder also receives cash in exchange for a fractional interest
in the Equity Security such Unit holder will generally recognize
gain or loss based upon the difference between the amount of cash
received by the Unit holder and its tax basis in such fractional
interest in the Equity Security. Because the Trust will own many
Equity Securities, a Unit holder who requests an in kind
distribution will have to analyze the tax consequences with
respect to each Equity Security owned by such Trust. The total
amount of taxable gains (or losses) recognized upon such exchange
will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unit holder with respect
to each Equity Security owned by the Trust.
Dividends received by a Trust which are attributable to a
corporation owning Units in a Trust and which are taxable as
ordinary income may be eligible for the 70% dividends received
deduction pursuant to Sections 243(a) of the Code, subject to
limitations imposed by Sections 246 and 246A of the Code. It
should be noted that various legislative proposals that would
affect the dividends received deduction have been introduced.
Each Unit holder's pro rata share of each expense paid by
the Trust is deductible by the Unit holder to the same extent as
though the expense had been paid directly by him. It should be
noted that as a result of the Tax Reform Act of 1986, certain
miscellaneous itemized deductions, such as investment expenses,
tax return preparation fees an employee business expenses will be
deductible by an individual only to the extent they exceed 2% of
such individuals' adjusted gross income. Unit holders may be
required to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including state or local taxes, United States tax consequences to
non-U.S. Unit holders or collateral tax consequences with respect
to the purchase, ownership and disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-13933)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
November 14, 1996
The Chase Manhattan Bank, as Trustee of
The First Trust Special Situations
Trust, Series 157
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 157
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
157 (the "Trust"), which will be established under a Standard
Terms and Conditions of Trust dated November 20, 1991, and a
related Trust Agreement dated as of today (collectively, the
"Indenture"), among Nike Securities L.P., as Depositor (the
"Depositor"); First Trust Advisors L.P., as Evaluator and
Portfolio Supervisor and The Chase Manhattan Bank, as Trustee
(the "Trustee"). Pursuant to the terms of the Indenture, units
of fractional undivided interest in the Trust (the "Units") will
be issued in the aggregate number set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-09183) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name under the captions "What is the Federal Tax Status of
Unit Holders?" and "Legal Opinions" in such Registration
Statement and the preliminary prospectus included therein.
Very truly yours,
CARTER, LEDYARD & MILBURN
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
November 14, 1996
The Chase Manhattan Bank, as Trustee of
The First Trust Special Situations
Trust, Series 157
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 157
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
("Chase") in connection with the execution and delivery of a
Trust Agreement ("the Trust Agreement") dated today's date (which
Trust Agreement incorporates by reference certain Standard Terms
and Conditions of Trust dated November 20, 1991, and the same are
collectively referred to herein as the "Indenture") among Nike
Securities L.P., as Depositor (the "Depositor"), First Trust
Advisors L.P., as Evaluator; First Trust Advisors L.P., as
Portfolio Supervisor; and Chase, as Trustee (the "Trustee"),
establishing The First Trust Special Situations Trust, Series 157
(each, a "Trust"), and the confirmation by Chase, as Trustee
under the Indenture, that it has registered on the registration
books of the Trust the ownership by the Depositor of a number of
units constituting the entire interest in the Trust (such
aggregate units being herein called "Units"), each of which
represents an undivided interest in the respective Trust which
consists of common stocks (including, confirmations of contracts
for the purchase of certain stocks and bonds not delivered and
cash, cash equivalents or an irrevocable letter of credit or a
combination thereof, in the amount required for such purchase
upon the receipt of such stocks), such stocks being defined in
the Indenture as Securities and referenced in the Schedule to the
Indenture.
We have examined the Indenture, a specimen of the
certificates to be issued hereunder (the "Certificates"), the
Closing Memorandum dated today's date, and such other documents
as we have deemed necessary in order to render this opinion.
Based on the foregoing, we are of the opinion that:
1. Chase is a duly organized and existing corporation
having the powers of a Trust Company under the laws of the State
of New York.
2. The Trust Agreement has been duly executed and
delivered by Chase and, assuming due execution and delivery by
the other parties thereto, constitutes the valid and legally
binding obligation of Chase.
3. The Certificates are in proper form for execution and
delivery by Chase, as Trustee.
4. Chase, as Trustee, has registered on the registration
books of the Trust the ownership of the Units by the Depositor.
Upon receipt of confirmation of the effectiveness of the
registration statement for the sale of the Units filed with the
Securities and Exchange Commission under the Securities Act of
1933, the Trustee may deliver Certificates for such Units, in
such names and denominations as the Depositor may request, to or
upon the order of the Depositor as provided in the Closing
Memorandum.
5. Chase, as Trustee, may lawfully advance to the Trust
amounts as may be necessary to provide periodic interest
distributions of approximately equal amounts, and be reimbursed,
without interest, for any such advances from funds in the
interest account, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
First Trust Advisors L.P.
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
November 14, 1996
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 157
Gentlemen:
We have examined the Registration Statement File No.
333-09183 for the above captioned fund. We hereby consent to the
use in the Registration Statement of the references to First
Trust Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Robert M. Porcellino
Vice President
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