SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: THE FIRST TRUST SPECIAL
SITUATIONS TRUST, SERIES 173
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
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 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 the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 173
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER 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 Information as to
depositor Sponsor, Trustee and
Evaluator
3. Name and address of Information as to
trustee Sponsor, Trustee and
Evaluator
4. Name and address of Underwriting
principal underwriters
5. State of organization The First Trust Special
of trust Situations Trust
6. Execution and termination The First Trust Special
of trust agreement Situations Trust; Other
Information
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 Rights of Unit Holders
securities
(b) Cumulative or distributive
securities The First Trust Special
Situations Trust
(c) Redemption Rights of Unit Holders
(d) Conversion, transfer, etc. Rights of Unit Holders
(e) Periodic payment plan
certificates *
(f) Voting rights Rights of Unit Holders;
Other Information
(g) Notice of certificate- Rights of Unit Holders;
holders Other Information
(h) Consents required Rights of Unit Holders;
Other Information
(i) Other provisions The First Trust Special
Situations Trust
11. Types of securities comprising The First Trust Special
units Situations Trust
12. Certain information
regarding periodic payment
plan 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
plan certificates *
(c) Certain percentages Summary of Essential
Information; The First
Trust Special Situations
Trust; Public Offering
(d) Difference in price offered Public Offering
for any class of transactions
to any class or group of
individuals
(e) Certain other load fees, Rights of Unit Holders
expenses, etc. payable by
holders
(f) Certain profits receivable The First Trust Special
by depositor, principal Situations Trust
underwriters, trustee or
affiliated persons
(g) Ratio of annual charges to
income *
14. Issuance of trust's Rights of Unit Holders
securities
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
disposition of income Rights of Unit Holders
(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 and
successor Information as to
Sponsor, Trustee and
Evaluator
(e) and (f) Depositor, removal Information as to
and successor 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 other *
persons 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
securities by states Public Offering
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;
Underwriting
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) N.A.S.D. membership of Information as to
principal underwriters Sponsor, Trustee and
Evaluator
40. Certain fee received by See Items 13(a) and 13(e)
principal underwriters
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 Public Offering; Rights
in underlying securities of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation Information as to
of trustee 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 OR
SECURITIES
51. Insurance of holders of *
trust's securities
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust Special
agreement with respect Situations Trust; Rights
to selection or elimination of Unit Holders
of underlying securities
(b) Transactions involving
elimination of underlying
securities *
(c) Policy regarding The First Trust Special
substitution or elimination Situations Trust; Rights
of underlying securities 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. Certain information regarding
periodic payment plan
certificates
56. Certain information regarding
periodic payment plan
certificates
57. Certain information regarding *
periodic payment plan
certificates
58. Certain information regarding
periodic payment plan
certificates
59. Financial statements Report of Independent
(Instruction 1(b) to Auditors; Statement of
Form S-6) Net Assets
__________________________
* Inapplicable, answer negative or not required.
Preliminary Prospectus Dated November 01, 1996
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 173
10,000 Units (A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Fund is
hereby used as a preliminary Prospectus for the above stated Series. The
narrative information and structure of the attached final Prospectus will
be substantially the same as that of the final Prospectus for this
Series. Information with respect to pricing, the number of Units, dates
and summary information regarding the characteristics of securities to be
deposited in this Series is not now available and will be different since
each Series has a unique Portfolio. Accordingly the information
contained herein with regard to the previous Series should be considered
as being included for informational purposes only. Ratings of the
securities in this Series are expected to be comparable to those of the
securities deposited in the previous Series. However, the Estimated
Current Return for this Series will depend on the interest rates and
offering prices of the securities in this Series and may vary materially
from that of the previous Series.
A registration statement relating to the units of this Series will
be filed with the Securities and Exchange Commission but has not yet
become effective. Information contained herein is subject to completion
or amendment. Such Units may not be sold nor may offer to buy be
accepted prior to the time the registration statement becomes effective.
This Prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the Units in any state
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state.
Part I of II
First Trust (registered trademark)
Target 5 Trust, November 1996 Series
Target 10 Trust, November 1996 Series
Global Target 15 Trust, November 1996 Series
(The First Trust Special Situations Trust, Series 172)
THIS PART I OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY THE PART II OF THE PROSPECTUS DATED NOVEMBER 1, 1996. BOTH PARTS I AND
II OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
The Trusts. The First Trust Special Situations Trust, Series 172
consists of the underlying separate unit investment trusts set forth
above. The various trusts are sometimes collectively referred to herein
as the "Trusts" and each as a "Trust." Each Trust consists of a
portfolio containing common stocks issued by companies which provide
income and are considered to have the potential for capital appreciation
(the "Equity Securities").
Target 5 Trust, November 1996 Series (the "Target 5 Trust") consists of
common stock of the five companies with the lowest per share stock price
of the ten companies in the Dow Jones Industrial Average (the "DJIA")
that have the highest dividend yield as of the close of business on the
date prior to this Prospectus. Target 10 Trust, November 1996 Series
(the "Target 10 Trust") consists of common stock of the ten companies in
the DJIA that have the highest dividend yield as of the close of
business on the date prior to this Prospectus. Global Target 15 Trust,
November 1996 Series (the "Global Target 15 Trust") consists of 15
common stocks of companies which are components of the DJIA, the
Financial Times Industrial Ordinary Share Index ("FT Index") or the Hang
Seng Index. Specifically, the Global Target 15 Trust, November 1996
Series consists of common stocks of the five companies with the lowest
per share stock price of the ten companies in each of the DJIA, FT Index
and Hang Seng Index, respectively, that have the highest dividend yield
in the respective index as of close of business on the business day
prior to the date of this Prospectus in the case of the DJIA stocks and
three business days prior to the date of this Prospectus in the case of
the FT Index and Hang Seng Index stocks. See "Schedule of Investments"
for each Trust. The objective of each Trust is to provide an above-
average total return through a combination of dividend income and
capital appreciation. Units of both the Target 5 Trust and the Target 10
Trust have not been designed so that their prices will parallel or
correlate with movements in the DJIA, and it is expected that their
prices will not do so. Units of the Global Target 15 Trust have not been
designed so that their prices will parallel or correlate with movements
in the DJIA, FT Index or Hang Seng Index, either individually or
collectively, and it is expected that their prices will not do so. Each
Trust has a mandatory termination date (the "Mandatory Termination
Date") of approximately one year from the date of this Prospectus as set
forth under "Summary of Essential Information." Investors of the Global
Target 15 Trust should note
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 1, 1996
Page 1
that an investment in a portfolio which contains foreign equity
securities, such as the Global Target 15 Trust, involves risks in
addition to those normally associated with an investment in a portfolio
consisting solely of domestic equity securities. Also, the reversion of
Hong Kong to Chinese control on July 1, 1997 may adversely affect the
Equity Securities of Hong Kong issuers contained in the Global Target 15
Trust. There is, of course, no guarantee that the objective of a Trust
will be achieved.
The publishers of the DJIA, FT Index and the Hang Seng Index are not
affiliated with the Sponsor, and these publishers have not granted the
Trusts or the Sponsor a license to use these indexes, and have not
participated in the creation of the Trusts or in the selection of the
stocks therein, and have not approved any information herein related thereto.
Each Unit of a Trust represents an undivided interest in all Equity
Securities deposited therein. The Sponsor may deposit additional Equity
Securities or cash to create new Units after the Initial Date of Deposit
in the manner described in "What is the First Trust Special Situations
Trust?" in Part II of this Prospectus.
Unless otherwise indicated, all amounts herein are stated in U.S.
dollars. In the case of the common stocks which are components of the FT
Index or Hang Seng Index (the "Foreign Equity Securities"), these
amounts are computed on the basis of the exchange rate for British
pounds sterling or Hong Kong dollars, as applicable, on the business day
prior to the Initial Date of Deposit.
Public Offering Price. The Public Offering Price per Unit of each Trust
is equal to the aggregate underlying value of the Equity Securities in
such Trust (generally determined by their closing sale prices) plus or
minus a pro rata share of cash, if any, in the Capital and Income
Accounts of such Trust, plus an initial sales charge for
each Trust equal to the difference between the maximum sales charge for
each Trust (2.70% of the Public Offering Price for the Target 5 Trust
and 2.90% of the Public Offering Price for the Target 10 Trust and
Global Target 15 Trust, respectively) and the maximum remaining deferred
sales charge (initially $.190 per Unit for each Trust). Subsequent to
the Initial Date of Deposit, the amount of the initial sales charge will
vary with changes in the aggregate value of the Equity Securities.
Commencing December 31, 1996, and on the last business day of each month
thereafter, through September 30, 1997, a deferred sales charge of $.019
also will be assessed per Unit. Units purchased subsequent to the
initial deferred sales charge payment will be subject to the initial
sales charge and the remaining deferred sales charge payments. The
deferred sales charge will be paid from funds in the Capital Account, 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 2.70% of the Public Offering Price for the Target 5 Trust and 2.90%
of the Public Offering Price for the Target 10 Trust and Global Target
15 Trust (equivalent to 2.722% of the net amount invested for the Target
5 Trust and 2.929% of the net amount invested for the Target 10 Trust
and Global Target 15 Trust, 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 minimum purchase for each
Trust is $1,000 ($250 for an Individual Retirement Account or other
retirement plans). The sales charge for each Trust is reduced on a
graduated scale for sales involving at least $50,000. See "How is the
Public Offering Price Determined?" in Part II of this Prospectus.
Estimated Net Annual Distributions. The estimated net annual dividend
distributions to Unit holders (based on the most recent quarterly or
semi-annual ordinary dividend declared with respect to the domestic
Equity Securities and the most recent interim and final ordinary
dividend declared with respect to the Foreign Equity Securities and
converted into U.S. dollars, if applicable, at the offer side of the
exchange rate at the Evaluation Time) at the opening of business on the
Initial Date of Deposit for the Target 5 Trust was $.2581 per Unit, for
the Target 10 Trust was $.3016 per Unit and for the Global Target 15
Trust was $.4851 per Unit. This estimate will vary with changes in a
Trust's fees and expenses, in dividends received, in currency exchange
rates, and with the sale of Equity Securities. There is no assurance
that the estimated net annual dividend distributions will be realized in
the future.
Dividend and Capital Distributions. Cash dividends received by a Trust
will be paid on December 31, 1996 and June 30, 1997 to Unit holders of
record on December 15, 1996 and June 15, 1997, respectively, and again
as part of the final liquidation distribution. Distributions of funds in
the Capital Account, if any, will be made as part of the final
liquidation distribution, and in certain circumstances, earlier. Any
distribution of income and/or capital will be net of expenses of a
Trust. See "What is the Federal Tax Status of Unit Holders?" in Part II
of this Prospectus. Additionally, upon termination of a Trust, the
Trustee will distribute, upon surrender of Units, to each remaining Unit
holder (other than a Rollover Unit holder as defined below) his pro rata
Page 2
share of such Trust's assets, less expenses, in the manner set forth
under "Rights of Unit Holders-How are Income and Capital Distributed?"
in Part II of this Prospectus. For distributions to Rollover Unit
holders, see "Special Redemption, Liquidation and Investment in New
Trusts." Any Unit holder may elect to have each distribution of income
or capital on his Units, other than the final liquidating distribution,
automatically reinvested in additional Units of such Trust subject only
to remaining deferred sales charge payments. See "Rights of Unit Holders-
How are Income and Capital Distributed?" in Part II of this Prospectus.
Foreign Investors. If you are not a United States citizen or resident,
distributions from a Trust will generally not be subject to U.S. federal
withholding tax. See "What is the Federal Tax Status of Unit Holders?"
in Part II of this Prospectus. Such investors should consult their tax
adviser regarding the imposition of U.S. withholding on distributions.
Secondary Market for Units. Although not obligated to do so, the Sponsor
may maintain a market for Units and offer to repurchase the Units at
prices based on the aggregate value of the Equity Securities, plus or
minus cash, if any, in the Capital and Income Accounts of such Trust. If
a secondary market is not maintained, a Unit holder may still redeem his
Units through the Trustee. A Unit holder of the Target 5 Trust or Target
10 Trust tendering 2,500 Units or more may request a distribution of
shares of Equity Securities (reduced by customary transfer and
registration charges) in lieu of payment in cash (an "In-Kind
Distribution"). See "Will There be a Secondary Market?" and "How May
Units be Redeemed?" in Part II of this Prospectus. Any deferred sales
charge remaining on Units at the time of their sale or redemption will
be collected at that time.
Special Redemption, Liquidation and Investment in a New Trust. The
Sponsor intends to create a separate 1997 trust (the "New Trust") in
conjunction with the termination of each Trust. The portfolio of the New
Trusts will contain equity securities of the companies which satisfy
each such Trust's investment strategy at the time such Trust is
established. Unit holders who hold their Units in book entry form may
specify by November 3, 1997 to have their Units redeemed In-Kind, the
distributed securities sold, and the proceeds invested in a New Trust at
a reduced sales charge, provided such New Trust is offered and Units are
available. Cash not invested in a New Trust will be distributed. (Such
Unit holders are "Rollover Unit holders"). Rollover Unit holders
therefore will not receive a final liquidation distribution, but will
receive Units in a New Trust. This exchange option may be modified,
terminated or suspended. See "Special Redemption, Liquidation and
Investment in a New Trust" in Part II of this Prospectus.
Termination. Commencing on the Mandatory Termination Date, the Equity
Securities will begin to be sold as prescribed by the Sponsor. The
Trustee will provide written notice of the termination to Unit holders
which will specify when certificates may be surrendered and include a
form to enable a Unit holder to elect an In-Kind Distribution, if such
Unit holder owns at least 2,500 Units of a Target 5 Trust or Target 10
Trust. Unit holders not electing the "Rollover Option" or those not
electing or eligible for an In-Kind Distribution will receive a cash
distribution within a reasonable time after their respective Trust's
termination. See "How are Income and Capital Distributed?" and "Other
Information" in Part II of this Prospectus.
Risk Factors. An investment in a 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 or the general condition of the applicable stock market,
governmental, political, economic and fiscal policies of the
representative countries (especially Hong Kong following the July 1,
1997 reversion to Chinese control), volatile interest rates, economic
recession, the lack of adequate financial information concerning an
issuer and exchange control restrictions impacting foreign issuers. An
investment in the Global Target 15 Trust will also be subject to the
risks of currency fluctuations associated with investments in foreign
Equity Securities trading in non-U.S. currencies. An investment in the
Target 5 Trust may subject a Unit holder to additional risk due to the
relative lack of diversity in its portfolio since the portfolio contains
only five stocks. Therefore, Units of the Target 5 Trust may be subject
to greater market risk than other trusts which contain a more
diversified portfolio of securities. The Target 10 Trust is considered
to be concentrated in common stocks of petroleum refining companies
which involves certain additional risks including the effect of energy
conservation, production controls, the success of exploration projects
and tax and other regulatory policies of various governments. Each Trust
is not actively managed and Equity Securities will not be sold to take
advantage of market fluctuations or changes in anticipated rates of
appreciation. See "What are Equity Securities?-Risk Factors" in Part II
of this Prospectus.
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-November 1, 1996
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Target 5 Trust
November 1996
Series
______________
General Information
<S> <C>
Initial Number of Units (1) 14,883
Fractional Undivided Interest in the Trust per Unit (1) 1/14,883
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $147,647
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.920
Maximum Sales Charge 2.70% of the Public Offering Price per Unit
(2.722% of the net amount invested, exclusive of the deferred sales charge) (3) $ .270
Less Deferred Sales Charge per Unit $ (.190)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.730
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.730
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 33718R 872
Reinvestment CUSIP Number 33718R 880
First Settlement Date November 6, 1996
Rollover Notification Date November 3, 1997
Special Redemption and Liquidation
Period November 15, 1997 to December 3, 1997
Mandatory Termination Date December 3, 1997
Discretionary Liquidation Amount A Trust may be terminated if the value of the Equity Securities is less than
the lower of $2,000,000 or 20% of the total value of Equity Securities
deposited in a Trust during the primary offering period.
Trustee's Annual Fee $.0085 per Unit outstanding.
Evaluator's Annual Fee $.0025 per Unit outstanding. 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 $.0025 per Unit outstanding annually payable to an affiliate of the
Sponsor.
Income Distribution Record Date Fifteenth day of June and December, commencing December 15, 1996.
Income Distribution Date (6) Last day of 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 is
valued at the opening sale price on the New York Stock Exchange on the
Initial Date of Deposit, or if no such price exists at the opening ask
price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" contained herein and "Public
Offering" in Part II for additional information regarding these charges.
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?" in Part II of this Prospectus.
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0010 per Unit.
(6) At the Rollover Notification Date for Rollover Unit holders or upon
termination of the Trust for other Unit holders, amounts in the Income
Account (which consist of dividends on the Equity Securities) will be
included in amounts distributed to or on behalf of Unit holders.
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 as part of the final liquidation
distribution.
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-November 1, 1996
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Target 10 Trust
November 1996
Series
________________
General Information
<S> <C>
Initial Number of Units (1) 14,892
Fractional Undivided Interest in the Trust per Unit (1) 1/14,892
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $147,438
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.900
Maximum Sales Charge 2.90% of the Public Offering Price per Unit
(2.929% of the net amount invested, exclusive of the deferred sales charge) (3) $ .290
Less Deferred Sales Charge per Unit $ (.190)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.710
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.710
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 33718T 100
Reinvestment CUSIP Number 33718T 118
First Settlement Date November 6, 1996
Rollover Notification Date November 3, 1997
Special Redemption and Liquidation
Period November 15, 1997 to December 3, 1997
Mandatory Termination Date December 3, 1997
Discretionary Liquidation Amount A Trust may be terminated if the value of the Equity Securities is less than
the lower of $2,000,000 or 20% of the total value of Equity Securities
deposited in a Trust during the primary offering period.
Trustee's Annual Fee $.0085 per Unit outstanding.
Evaluator's Annual Fee $.0025 per Unit outstanding. 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 $.0025 per Unit outstanding annually payable to an affiliate of the
Sponsor.
Income Distribution Record Date Fifteenth day of June and December, commencing December 15, 1996.
Income Distribution Date (6) Last day of 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 is
valued at the opening sale price on the New York Stock Exchange on the
Initial Date of Deposit, or if no such price exists at the opening ask
price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" contained herein and "Public
Offering" in Part II for additional information regarding these charges.
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?" in Part II of this Prospectus.
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0010 per Unit.
(6) At the Rollover Notification Date for Rollover Unit holders or upon
termination of the Trust for other Unit holders, amounts in the Income
Account (which consist of dividends on the Equity Securities) will be
included in amounts distributed to or on behalf of Unit holders.
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 as part of the final liquidation
distribution.
Page 5
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-November 1, 1996
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Global Target 15
November 1996 Series
____________________
<S> <C>
General Information
Initial Number of Units (1) 14,919
Fractional Undivided Interest in the Trust per Unit (1) 1/14,919
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $147,703
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.900
Maximum Sales Charge 2.90% of the Public Offering Price per Unit
(2.929% of the net amount invested, exclusive of the deferred sales charge) (3) $ .290
Less Deferred Sales Charge per Unit $ (.190)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.710
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.710
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 33718R 856
Reinvestment CUSIP Number 33718R 864
Initial Date of Deposit November 1, 1996
First Settlement Date November 6, 1996
Rollover Notification Date November 3, 1997
Special Redemption and Liquidation
Period November 15, 1997 to December 3, 1997
Mandatory Termination Date December 3, 1997
Discretionary Liquidation Amount A Trust may be terminated if the value of the Equity Securities 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 $.0090 per Unit outstanding.
Evaluator's Annual Fee $.0025 per Unit outstanding.
Supervisory Fee (5) Maximum of $.0025 per Unit outstanding annually payable to an affiliate of the
Sponsor.
Income Distribution Record Date Fifteenth day of each June and December commencing December 15, 1996
Income Distribution Date (6) Last day of each June and December commencing December 31, 1996
Evaluation Time 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.
</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 securities exchange is valued at the
last closing sale price on the relevant stock exchange (generally 4:00
p.m. Eastern time on the New York Stock Exchange, 11:30 a.m. Eastern
time on the London Stock Exchange and 3:30 a.m. Eastern time on the Hong
Kong Stock Exchange) on the business day prior to the Initial Date of
Deposit, or if no such price exists at the closing ask price thereof.
The aggregate value of the Foreign Equity Securities in the Trust
represents the U.S. dollar value based on the offering side value of the
currency exchange rate for the British pound sterling or the Hong Kong
dollar at the Evaluation Time on the business day prior to the Initial
Date of Deposit.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" contained herein and "Public
Offering" in Part II of this Prospectus for additional information
regarding these charges. On the business day prior to 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
per Unit is based on the aggregate value of the Equity Securities
computed on the basis of the offering side value of the relevant
currency exchange rate expressed in U.S. dollars. The Public Offering
Price as shown reflects the value of the Equity Securities at the
Evaluation Time on the business day prior to 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 generally 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?" in Part II of this Prospectus.
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0010 per Unit.
(6) At the Rollover Notification Date for Rollover Unit holders or upon
termination of the Trust for other Unit holders, amounts in the Income
Account (which consist of dividends on the Equity Securities) will be
included in amounts distributed to or on behalf of Unit holders.
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 as part of the final liquidation
distribution.
Page 6
FEE TABLE-Target 5 Trust, November 1996 Series
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?" in Part II of this
Prospectus. Although the Trust has a term of only one year and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming the principal amount
and distributions are rolled over each year into a New Trust subject
only to the deferred sales charge.
<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) 0.80%(a) $ .080
Deferred sales charge
(as a percentage of public offering price) 1.90%(b) .190
________ ________
2.70% $ .270
======== ========
Maximum Sales Charge per year imposed on
Reinvested Dividends 1.90%(c) .190
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee .085% $.0085
Portfolio supervision, bookkeeping, administrative and
evaluation fees .060% .0060
Other operating expenses .022% .0022
________ ________
Total .167% $.0167
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_________
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
_______ ________ ________ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Target 5 Trust, November 1996 Series
estimated operating expense ratio of .167% and a 5% annual
return on the investment throughout the periods $ 29 $ 72 $ 117 $ 243
</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.
[FN]
______________
(a) The Initial Sales Charge would exceed 0.8% if the Public Offering
Price exceeds $10.00 per Unit.
(b) The actual fee is $.019 per month per Unit, irrespective of purchase
or redemption price deducted over a ten-month period for each one-year
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than 1.90% for the Trust. If the Unit price is less
than $10.00 per Unit, the deferred sales charge will exceed 1.90% for
the Trust. Units purchased subsequent to the initial deferred sales
charge payment will also be subject to the remaining deferred sales
charge payments.
(c) Reinvested Dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "How are Income and
Capital Distributed?" in Part II of this Prospectus.
Page 7
FEE TABLE-Target 10 Trust, November 1996 Series
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?" in Part II of this
Prospectus. Although the Trust has a term of only one year and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming the principal amount
and distributions are rolled over each year into a New Trust subject
only to the deferred sales charge.
<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) 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 1.90%(b) .190
________ ________
2.90% $ .290
======== ========
Maximum Sales Charge per year imposed on
Reinvested Dividends 1.90%(c) .190
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee .086% $.0085
Portfolio supervision, bookkeeping, administrative and
evaluation fees .060% .0060
Other operating expenses .022% .0022
________ ________
Total .168% $.0167
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
________ ________ ________ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Target 10 Trust, November 1996 Series
estimated operating expense ratio of .168% and a 5% annual
return on the investment throughout the periods $ 31 $ 73 $ 119 $ 244
</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.
[FN]
______________
(a) The Initial Sales Charge would exceed 1.0% if the Public Offering
Price exceeds $10.00 per Unit.
(b) The actual fee is $.019 per month per Unit, irrespective of purchase
or redemption price deducted over a ten-month period for each one-year
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than 1.90% for the Trust. If the Unit price is less
than $10.00 per Unit, the deferred sales charge will exceed 1.90% for
the Trust. Units purchased subsequent to the initial deferred sales
charge payment will also be subject to the remaining deferred sales
charge payments.
(c) Reinvested Dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "How are Income and
Capital Distributed?" in Part II of this Prospectus.
Page 8
FEE TABLE-Global Target 15 Trust, November 1996 Series
This Fee Table is intended to help you understand the costs and expenses
that you will bear directly or indirectly. See "Public Offering" and
"What are the Expenses and Charges?" in Part II of this Prospectus.
Although the Trust has a term of only one year and is a unit investment
trust rather than a mutual fund, this information is presented to permit
a comparison of fees, assuming the principal amount and distributions
are rolled over each year into a New Trust subject only to the deferred
sales charge.
<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) 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 1.90%(b) .190
________ ________
2.90% $ .290
======== ========
Maximum sales charge imposed on
reinvested dividends 1.90%(c) .190
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee .090% $ .0090
Portfolio supervision, bookkeeping, administrative and
evaluation fees .060% .0060
Other operating expenses .112% .0111
________ ________
Total .262% $ .0261
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Global Target 15 Trust, November
1996 Series estimated operating expense ratio of .262% and
a 5% annual return on the investment throughout the periods $ 32 $ 76 $ 123 $ 254
</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.
[FN]
______________
(a) The Initial Sales Charge would exceed 1.00% if the Public Offering
Price exceeds $10.00 per Unit.
(b) The actual fee is $.019 per month per Unit, irrespective of purchase
or redemption price deducted over a ten-month period for each one-year
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than 1.90% for the Trust. If the Unit price is less
than $10.00 per Unit, the deferred sales charge will exceed 1.90% for
the Trust. Units purchased subsequent to the initial deferred sales
charge payment will be subject to the Initial Sales Charge and to the
remaining deferred sales charge payments.
(c) Reinvested Dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "How are Income and
Capital Distributed" in Part II of this Prospectus.
Page 9
Equity Securities Selected for Target 5 Trust, November 1996 Series
AT&T Corporation, headquartered in New York, New York, provides
products, services and systems for the movement and management of
information. The company also provides voice, data and image
telecommunications services, including domestic and international long
distance telecommunications services. In addition, the company also
markets AT&T products, systems and services in the United States and abroad.
Chevron Corporation, headquartered in San Francisco, California, is an
international oil company with activities in the United States and
abroad. The company is involved in worldwide, integrated petroleum
operations which explore for, develop and produce petroleum liquids and
natural gas as well as transporting the products. The company is also
involved in the mineral and chemical industry.
General Motors Corporation, which is headquartered in Detroit, Michigan,
manufactures and sells cars and trucks worldwide under the trademarks
"Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn", "Cadillac" and
"GMC Trucks."
International Paper Company, headquartered in Purchase, New York, is a
worldwide producer of printing papers, packaging and forest products.
The company also operates specialty businesses and a broadly-based paper
distribution network.
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
Equity Securities Selected for Target 10 Trust, November 1996 Series
AT&T Corporation, headquartered in New York, New York, provides
products, services and systems for the movement and management of
information. The company also provides voice, data and image
telecommunications services, including domestic and international long
distance telecommunications services. In addition, the company also
markets AT&T products, systems and services in the United States and abroad.
Chevron Corporation, headquartered in San Francisco, California, is an
international oil company with activities in the United States and
abroad. The company is involved in worldwide, integrated petroleum
operations which explore for, develop and produce petroleum liquids and
natural gas as well as transporting the products. The company is also
involved in the mineral and chemical industry.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, is a research and techology-based global supplier of chemical
and energy derived products. DuPont offers more than 100 product lines
to the global automotive industry including finishes, fibers, plastics,
fabricated products, specialty chemicals, refrigerants and lubricants.
Exxon Corporation, headquartered in Irving, Texas, is principally
involved in the energy industry. The company explores for and produces
crude oil and natural gas, manufactures petroleum products, explores for
and mines coal and minerals and transports and sells crude oil, natural
gas and petroleum products.
General Motors Corporation, which is headquartered in Detroit, Michigan,
manufactures and sells cars and trucks worldwide under the trademarks
"Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn", "Cadillac" and
"GMC Trucks."
International Paper Company, headquartered in Purchase, New York, is a
worldwide producer of printing papers, packaging and forest products.
The company also operates specialty businesses and a broadly based paper
distribution network.
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
J.P. Morgan & Company, Inc., headquartered in New York, New York, is a
global investment banking firm that serves clients with complex needs
through an integrated range of advisory, financing, trading, investment
and related capabilities.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Page 10
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
Texaco, Inc., headquartered in White Plains, New York, is engaged in the
worldwide exploration, production, transportation, refining and
marketing of crude oil, natural gas and petroleum products, including
petrochemicals. Texaco owns, leases or has interest in extensive
production, manufacturing, marketing, transportation and other
facilities throughout the world.
Equity Securities Selected for Global Target 15 Trust,
November 1996 Series
DJIA
AT&T Corporation, headquartered in New York, New York, provides
products, services and systems for the movement and management of
information. The company also provides voice, data and image
telecommunications services, including domestic and international long
distance telecommunications services. In addition, the company also
markets AT&T products, systems and services in the United States and abroad.
Chevron Corporation, headquartered in San Francisco, California, is an
international oil company with activities in the United States and
abroad. The company is involved in worldwide, integrated petroleum
operations which explore for, develop and produce petroleum liquids and
natural gas as well as transporting the products. The company is also
involved in the mineral and chemical industry.
General Motors Corporation, which is headquartered in Detroit, Michigan,
manufactures and sells cars and trucks worldwide under the trademarks
"Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn", "Cadillac" and
"GMC Trucks."
International Paper Company, headquartered in Purchase, New York, is a
worldwide producer of printing papers, packaging and forest products.
The company also operates specialty businesses and a broadly based paper
distribution network.
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
FT INDEX
BICC Plc manufactures cables and provides construction and engineering
services. The company's construction and engineering activities are
primarily located in North America and Asia-Pacific while the cable
business is managed through regional operations based in Europe, North
America, Australia and Asia-Pacific. BICC serves the power,
communications, transport and building sectors.
BTR Plc is a holding company with subsidiaries in industrial,
transportation, construction, control systems and electrical and
consumer-related divisions. The company produces and sells building
products, agricultural equipment and aircraft equipment and distributes
electrical, healthcare, environmental control and paper and printing
products.
British Gas Plc buys, transmits and distributes gas. The company
supplies gas and services to customers in Great Britain and markets gas
appliances. British Gas also explores for and produces oil and gas in
the United Kingdom and overseas.
British Telecom Plc provides local and long-distance telephone call
products and services in the United Kingdom, telephone exchange lines to
homes and businesses, international telephone calls to and from the
United Kingdom and telecommunications equipment for customers' premises.
British Telecom has operations throughout the world.
Hanson Plc is an industrial management company with operations in the
United Kingdom, the United States and to a lesser extent in Australia,
South Africa and other regions of the world. The company's business
activities include the manufacture and sale of chemicals, building
materials and consumer and recreational products, the mining of coal,
house building and the sale and distribution of propane.
HANG SENG INDEX
Amoy Properties Ltd. is a property investment company and a subsidiary
of Hang Lung Development Company Ltd. The company invests in commercial,
Page 11
office, residential and industrial properties in Hong Kong. The company
is also involved in car park management and property management.
Cathay Pacific Airways is a major airline operator with services
covering the Far East, the Middle East, Europe, North America and South
Africa. The company is also involved in aircraft engineering, aircraft
leasing, airline catering and airport security.
Henderson Investment Ltd., a partially-owned subsidiary of Henderson
Land Development Co., is a holding company with interests in property
development and investment and utilities. Its property portfolio is
composed of residential, commercial and industrial properties on Hong
Kong Island and in Kowloon and the New Territories.
Shun Tak Holdings Ltd. is involved in shipping, property, restaurants,
air transportation and hotels in the Asia-Pacific region. The company
operates jet-foil services, develops residential and commercial
properties in Hong Kong, Macau and Australia, has interests in 3
restaurants and 5 hotels and operates air cargo services to 9
destinations in Europe and Asia.
South China Morning Post (Holdings) Ltd. publishes, prints and
distributes the "South China Morning Post", "South China Sunday Morning
Post" and "Wah Kiu Yat Po". The company also has operations in book
selling, magazine publishing and distribution. All of their activities
are based in Hong Kong, with 90% of the Group's turnover resulting from
publishing and printing of newspaper.
Page 12
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 172
We have audited the accompanying statements of net assets, including the
schedules of investments, of The First Trust Special Situations Trust,
Series 172, comprised of the Target 5 Trust, November 1996 Series,
Target 10 Trust, November 1996 Series and Global Target 15 Trust,
November 1996 Series as of the opening of business on November 1, 1996.
These statements of net assets are the responsibility of the Trusts'
Sponsor. Our responsibility is to express an opinion on these statements
of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of net assets
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
statements of net assets. Our procedures included confirmation of the
letters of credit held by the Trustee and deposited in the Trusts on
November 1, 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 statements of net assets.
We believe that our audit of the statements of net assets provides a
reasonable basis for our opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of The First
Trust Special Situations Trust, Series 172, comprised of the Target 5
Trust, November 1996 Series, Target 10 Trust, November 1996 Series and
Global Target 15 Trust, November 1996 Series at the opening of business
on November 1, 1996 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
November 1, 1996
Page 13
Statement of Net Assets
TARGET 5 TRUST, NOVEMBER 1996 SERIES
The First Trust Special Situations Trust, Series 172
At the Opening of Business on the Initial Date of Deposit
November 1, 1996
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $147,647
Less liability for deferred sales charge (3) (2,828)
________
Net assets $144,819
========
Units outstanding 14,883
ANALYSIS OF NET ASSETS
Cost to investors (4) $148,838
Less sales charge (4) (4,019)
________
Net assets $144,819
========
</TABLE>
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 $200,000 issued by
Bankers Trust Company has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Equity Securities
pursuant to purchase contracts for such Equity Securities.
(3) Represents the amount of mandatory distributions from the Trust ($.19
per Unit), payable to the Sponsor in ten equal monthly installments
beginning on December 31, 1996 and on the last business day of each
month thereafter through September 30, 1997. If Units are redeemed prior
to September 30, 1997 the remaining amount of the deferred sales charge
applicable to such Units will be payable at the time of redemption.
(4) The aggregate cost to investors includes a maximum total sales charge
computed at the rate of 2.70% of the Public Offering Price (equivalent
to 2.722% of the net amount invested, exclusive of the deferred sales
charge), assuming no reduction of sales charge for quantity purchases.
Page 14
Statement of Net Assets
TARGET 10 TRUST, NOVEMBER 1996 SERIES
The First Trust Special Situations Trust, Series 172
At the Opening of Business on the Initial Date of Deposit
November 1, 1996
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $147,438
Less liability for deferred sales charge (3) (2,829)
________
Net assets $144,609
========
Units outstanding 14,892
ANALYSIS OF NET ASSETS
Cost to investors (4) $148,928
Less sales charge (4) (4,319)
________
Net assets $144,609
========
</TABLE>
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 $200,000 issued by The
Chase Manhattan Bank has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Equity Securities
pursuant to purchase contracts for such Equity Securities.
(3) Represents the amount of mandatory distributions from the Trust ($.19
per Unit), payable to the Sponsor in ten equal monthly installments
beginning on December 31, 1996 and on the last business day of each
month thereafter through September 30, 1997. If Units are redeemed prior
to September 30, 1997 the remaining amount of the deferred sales charge
applicable to such Units will be payable at the time of redemption.
(4) The aggregate cost to investors includes a maximum total sales charge
computed at the rate of 2.90% of the Public Offering Price (equivalent
to 2.929% of the net amount invested, exclusive of the deferred sales
charge), assuming no reduction of sales charge for quantity purchases.
Page 15
Statement of Net Assets
GLOBAL TARGET 15 TRUST, NOVEMBER 1996 SERIES
The First Trust Special Situations Trust, Series 172
At the Opening of Business on the Initial Date of Deposit
November 1, 1996
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $147,703
Less liability for deferred sales charge (3) (2,835)
________
Net assets $144,868
========
Units outstanding 14,919
ANALYSIS OF NET ASSETS
Cost to investors (4) $149,195
Less sales charge (4) (4,327)
________
Net assets $144,868
========
</TABLE>
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 $200,000 issued by Bankers
Trust Company has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Equity Securities
pursuant to purchase contracts for such Equity Securities.
(3) Represents the amount of mandatory distributions from the Trust ($.19
per Unit), payable to the Sponsor in ten equal monthly installments
beginning on December 31, 1996 and on the last business day of each
month thereafter through September 30, 1997. If Units are redeemed prior
to September 30, 1997, the remaining amount of the deferred sales charge
applicable to such Units will be payable at the time of redemption.
(4) The aggregate cost to investors includes a maximum total sales charge
computed at the rate of 2.90% of the Public Offering Price (equivalent
to 2.929% of the net amount invested, exclusive of the deferred sales
charge), assuming no reduction of sales charge for quantity purchases.
Page 16
Schedule of Investments
TARGET 5 TRUST, NOVEMBER 1996 SERIES
The First Trust Special Situations Trust, Series 172
At the Opening of Business on the Initial Date of Deposit
November 1, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Number of Aggregate Value Equity Current
of Ticker Symbol and Name of Offering per Securities to Dividend
Shares Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ ______________________________ ____________ _______ _____________ _________
<C> <S> <C> <C> <C> <C>
838 T AT&T Corporation 20% $34.875 $ 29,225 2.71%
444 CHV Chevron Corporation 20% 65.750 29,193 3.29%
551 GM General Motors Corporation 20% 53.875 29,685 2.97%
692 IP International Paper Company 20% 42.750 29,583 2.34%
391 MMM Minnesota Mining & Manufacturing
Company 20% 76.625 29,961 2.56%
______ ________
Total Investments 100% $147,647
====== ========
</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
purchase contracts for the Equity Securities were entered into by the
Sponsor on October 31, 1996. The Trust has a mandatory termination date
of December 3, 1997.
(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 closing sale prices of the Equity
Securities on October 31, 1996, the business day prior to 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 $147,647. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $147,730 and $83, respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
on that Equity Security and dividing the result by that Equity
Security's closing sale price on the business day prior to the Initial
Date of Deposit.
Page 17
Schedule of Investments
TARGET 10 TRUST, NOVEMBER 1996 SERIES
The First Trust Special Situations Trust, Series 172
At the Opening of Business on the Initial Date of Deposit
November 1, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Number of Aggregate Value Equity Current
of Ticker Symbol and Name of Offering per Securities to Dividend
Shares Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ ______________________________ __________ ________ ____________ ________
<C> <S> <C> <C> <C> <C>
418 T AT&T Corporation 10% $34.875 $ 14,578 2.71%
222 CHV Chevron Corporation 10% 65.750 14,596 3.29%
159 DD E.I. du Pont de Nemours
& Company 10% 92.750 14,747 2.46%
166 XON Exxon Corporation 10% 88.625 14,712 3.57%
275 GM General Motors Corporation 10% 53.875 14,816 2.97%
345 IP International Paper Company 10% 42.750 14,749 2.34%
195 MMM Minnesota Mining & Manufacturing
Company 10% 76.625 14,942 2.56%
174 JPM J.P. Morgan & Company, Inc. 10% 86.375 15,029 3.75%
158 MO Philip Morris Companies, Inc. 10% 92.625 14,635 5.18%
144 TX Texaco, Inc. 10% 101.625 14,634 3.35%
______ ________
Total Investments 100% $147,438
====== ========
</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
purchase contracts for the Equity Securities were entered into by the
Sponsor on October 31, 1996. The Trust has a mandatory termination date
of December 3, 1997.
(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 closing sale prices of the Equity
Securities on October 31, 1996, the business day prior to 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 $147,438. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $147,569 and $131, respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
on that Equity Security and dividing the result by that Equity
Security's closing sale price on the business day prior to the Initial
Date of Deposit.
Page 18
Schedule of Investments
GLOBAL TARGET 15 TRUST, NOVEMBER 1996 SERIES
The First Trust Special Situations Trust, Series 172
At the Opening of Business on the Initial Date of Deposit
November 1, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Number of Aggregate Value Equity Current
of Offering per Securities to Dividend
Shares Name of Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ __________ ________ ____________ _________
<C> <S> <C> <C> <C> <C>
DJIA COMPANIES:
279 AT&T Corporation 6.59% $34.8750 $ 9,730 2.71%
148 Chevron Corporation 6.59% 65.7500 9,731 3.29%
183 General Motors Corporation 6.67% 53.8750 9,859 2.97%
230 International Paper Company 6.66% 42.7500 9,833 2.34%
130 Minnesota Mining & Manufacturing Company 6.74% 76.6250 9,961 2.56%
FT INDEX COMPANIES:
2,060 BICC Plc 6.67% 4.7791 9,845 5.24%
2,300 BTR Plc 6.34% 4.0708 9,363 6.57%
3,160 British Gas Plc 6.64% 3.1019 9,802 9.51%
1,700 British Telecom Plc 6.55% 5.6909 9,675 6.69%
7,500 Hanson Plc 6.78% 1.3352 10,014 11.12%
HANG SENG INDEX COMPANIES:
8,000 Amoy Properties Ltd. 6.69% 1.2348 9,878 4.55%
6,000 Cathay Pacific Airways 6.35% 1.5645 9,387 4.01%
9,000 Henderson Investment Ltd. 6.66% 1.0926 9,833 4.85%
16,000 Shun Tak Holdings Ltd. 7.14% 0.6594 10,551 6.37%
12,000 South China Morning Post (Holdings) Ltd. 6.93% 0.8534 10,241 4.55%
______ ________
Total Investments 100% $147,703
====== ========
</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
purchase contracts for the Equity Securities were entered into by the
Sponsor on October 31, 1996. The Trust has a mandatory termination date
of December 3, 1997.
(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 closing sale prices of the Equity
Securities on the applicable exchange (converted into U.S. dollars at
the offer side of the exchange rate at the Evaluation Time) at the close
of business on October 31, 1996, the business day prior to the Initial
Date of Deposit. The valuation of the Equity Securities has been
determined by the Evaluator, an affiliate of the Sponsor. Such aggregate
underlying value of the Equity Securities on the business day prior to
the Initial Date of Deposit was $147,703. Cost and loss to Sponsor
relating to the Equity Securities sold to the Trust were $148,503 and
$800, respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
adding together the most recent interim and final ordinary dividends
declared in the case of the FT Index Companies and the Hang Seng Index
Companies, or annualizing the last quarterly or semi-annual ordinary
dividend declared in the case of the DJIA Companies, and dividing the
result by that Equity Security's closing sale price on the close of
business on the business day prior to the Initial Date of Deposit.
Generally, United Kingdom and Hong Kong companies pay one interim and
one final dividend per fiscal year while United States companies usually
pay dividends quarterly or semi-annually.
Page 19
FIRST TRUST (registered trademark)
TARGET 5 TRUST, NOVEMBER 1996 SERIES
TARGET 10 TRUST, NOVEMBER 1996 SERIES
GLOBAL TARGET 15 TRUST, NOVEMBER 1996 SERIES
Prospectus
Part I
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
770 Broadway
New York, New York 10003
1-800-682-7520
THIS PART ONE MUST BE
ACCOMPANIED BY PART TWO.
When Units of the Trusts are no longer available, or for investors who
will reinvest into subsequent series of the Trusts, this Prospectus may
be used as a preliminary prospectus for a future series; in which case
investors should note the following:
INFORMATION CONTAINED HEREIN IS SUBJECT TO AMENDMENT. A REGISTRATION
STATEMENT RELATING TO SECURITIES OF A FUTURE SERIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE.
THE PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
November 1, 1996
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 20
Part II of II
First Trust (registered trademark)
TARGET TRUST SERIES
The First Trust Special Situations Trust Series
Prospectus Part II
Dated November 1, 1996
THIS PART II OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY PART I. BOTH PARTS OF THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE
REFERENCE.
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust Series is one of a series of
investment companies created by the Sponsor, all of which are generally
similar, but each of which is separate and is designated by a different
series number. This Series consists of underlying separate unit
investment trusts set forth in Part I of this Prospectus. These
underlying trusts are designated herein as the "Target 5 Trust", "Target
10 Trust", "International Target 5 Trusts-United Kingdom Trust,"
"International Target 5 Trusts-Hong Kong Trust" and "Global Target 15
Trust" and may sometimes be referred to individually as a "Trust" and
collectively as the "Trusts." The "Target 5 Trust" and the "Target 10
Trust" may sometimes be referred to individually as a "Domestic Trust"
and collectively as the "Domestic Trusts" while the "International
Target 5 Trusts-Hong Kong Trust," "International Target 5 Trusts-United
Kingdom Trust" and "Global Target 15 Trust" may sometimes be referred to
individually as an "International Trust" and collectively as the
"International Trusts." Each 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 common stocks issued by
companies which provide income and are considered to have the potential
for capital appreciation (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 securities or contracts to purchase
securities in a Trust, the Trustee delivered to the Sponsor documents
evidencing the entire ownership of such Trust.
The objective of each of the Trusts is to provide an above-average total
return through a combination of dividend income and capital
appreciation. While the objectives of the Trusts are the same, each
Trust follows a different investment strategy (set forth below) in order
to achieve its stated objective.
The Target 5 Trust invests in Equity Securities of the five companies
with the lowest per share stock price of the ten companies in the Dow
Jones Industrial Average ("DJIA") that have the highest dividend yield
as of the close of business on the date prior to the date of Part I of
this Prospectus (the "Domestic Stock Selection Date").
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
Page 1
The Target 10 Trust invests in Equity Securities of the ten companies in
the DJIA that have the highest dividend yield as of the close of
business on the date prior to the date of Part I of this Prospectus (the
"Domestic Stock Selection Date").
The International Target 5 Trusts-United Kingdom Trust (the "United
Kingdom Trust") invests in Equity Securities of the five companies with
the lowest per share stock price of the ten companies in the Financial
Times Industrial Ordinary Share Index ("FT Index") that have the highest
dividend yield as of the close of business two business days prior to
the date of Part I of this Prospectus (the "Foreign Stock Selection
Date").
The International Target 5 Trusts-Hong Kong Trust (the "Hong Kong
Trust") invests in Equity Securities of the five companies with the
lowest per share stock price of the ten companies in the Hang Seng Index
that have the highest dividend yield as of the close of business two
business days prior to the date of Part I of this Prospectus (the
"Foreign Stock Selection Date").
The Global Target 15 Trust invests in a portfolio of 15 Equity
Securities comprised of the five companies with the lowest per share
stock price of the ten companies in each of the DJIA, FT Index and the
Hang Seng Index, respectively, that have the highest dividend yield in
the respective index as of the close of business three business days
prior to the date of Part I of this Prospectus in the case of the FT
Index stocks and the Hang Seng Index stocks (the "Foreign Stock
Selection Date") and one business day prior to the date of Part I of
this Prospectus in the case of the DJIA stocks (the "Domestic Stock
Selection Date").
The publishers of the DJIA, FT Index and the Hang Seng Index are not
affiliated with the Sponsor and have not participated in the creation of
the Trusts or the selection of the Equity Securities included therein.
There is, of course, no guarantee that the objective of the Trusts 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 a 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 a Trust or cash
(including a letter of credit) with instructions to purchase additional
Equity Securities in a Trust. 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 such 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 due to the sale, redemption or
liquidation of any of the Equity Securities deposited in a Trust on the
Initial, or any subsequent, Date of Deposit. See "How May Equity
Securities be Removed from a Trust?" The original percentage
relationship of each Equity Security to a Trust is set forth in Part I
of this Prospectus under "Schedule of Investments" for such Trust. 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 a 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 such Trust will pay the associated
brokerage fees. To minimize this effect, the Trusts will try to purchase
the Equity Securities as close to the evaluation time or as close to the
evaluation price as possible. An affiliate of the Trustee may receive
these brokerage fees or 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 a Trust with respect to acquiring Equity Securities for a
Trust. In acting in such capacity, the Sponsor or its affiliate will be
subject to the restrictions under the Investment Company Act of 1940, as
amended.
On the Initial Date of Deposit, each Unit of a Trust represented an
undivided fractional interest in the Equity Securities deposited in such
Trust, as set forth under "Summary of Essential Information" appearing
in Part I of this Prospectus. To the extent that Units of a Trust are
redeemed, the aggregate value of the Equity Securities in such Trust
will be reduced, and the undivided fractional interest represented by
each outstanding Unit of such Trust will increase. However, if
additional Units are issued by a Trust in connection with the deposit of
additional Equity Securities or cash by the Sponsor, the aggregate value
of the Equity Securities in such Trust will be increased by amounts
allocable to additional Units, and the fractional undivided interest
represented by each Unit of such Trust will be decreased
proportionately. See "How May Units be Redeemed?" Each Trust has a
Page 2
Mandatory Termination Date as set forth under "Summary of Essential
Information" in Part I of this Prospectus.
What are the Expenses and Charges?
With the exception of bookkeeping and other administrative services
provided to the Trusts, for which the Sponsor will be reimbursed in
amounts as set forth under "Summary of Essential Information" in Part I,
the Sponsor will not receive any fees in connection with its activities
relating to the Trusts.
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" in Part I of this Prospectus,
for providing portfolio supervisory services for the Trusts. Such fee is
based on the number of Units outstanding in a 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. 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
Trusts.
Subsequent to the initial offering period, First Trust Advisors L.P.,
the Evaluator and an affiliate of the Sponsor, will receive a fee as
indicated in the "Summary of Essential Information" in Part I of this
Prospectus.
The Trustee pays certain expenses of a Trust for which it is reimbursed
by such Trust. The Trustee will receive for its ordinary recurring
services to a Trust an annual fee as indicated in the "Summary of
Essential Information" in Part I. The fee is computed per Unit in such
Trust, based upon the largest aggregate number of Units of such Trust
outstanding at any time during the calendar year. For a discussion of
the services performed by the Trustee pursuant to its obligations under
the Indenture, see "Rights of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income Account
of a Trust to the extent funds are available, and then from the Capital
Account of such Trust. Since funds being held in the Capital and Income
Accounts are 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 a Trust
is expected to result from the use of these funds. However, the Trustee
may bear from its own resources certain expenses relating to a Trust,
including organization costs and brokerage commissions.
Each of the above mentioned 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. In addition,
with respect to the fees payable to the Sponsor or an affiliate of the
Sponsor for providing bookkeeping and other administrative services,
supervisory services and evaluation services, such individual fees may
exceed the actual costs of providing such services for a Trust, 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 actual cost to the Sponsor or its affiliate
of supplying such services in such year.
The following additional charges are or may be incurred by a Trust: all
legal 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 a 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 a 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 a Trust; foreign custodial and transaction fees,
if any, in the case of the International Trusts; all taxes and other
government charges imposed upon the Equity Securities or any part of a
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 a Trust. In addition, the Trustee is empowered to sell Equity
Securities in a 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 a 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
Page 3
sufficient to meet any or all expenses of a 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?"
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 a Trust.
International Trusts which contain FT Index stocks will report as gross
income earned by U.S. Unit holders their pro rata share of dividends
received by such Trust as well as their pro rata share of the associated
Tax Credit Amount (as defined in "United Kingdom Taxation" below),
notwithstanding that it is not certain that U.S. Unit holders will
receive any refund of U.K. taxes. Although a U.S. Unit holder is
unlikely to be able to directly obtain Treaty Payments (as defined in
"United Kingdom Taxation" below) under the U.S.-U.K. Treaty, the U.K.
Inland Revenue operates a special procedure under which trustees of
funds such as the United Kingdom Trust and Global Target 15 Trust may be
entitled to claim Treaty Payments on behalf of investors. The Trustee
intends to apply to the U.K. Inland Revenue for their approval for such
a procedure to apply in respect of the International Trusts which
contain FT Index stocks. If such approval is given, the amount of any
Treaty Payment to be obtained with respect to a dividend will be
reflected in the net asset value of the United Kingdom Trust or Global
Target 15 Trust, respectively, and will be distributed to investors on
the first Distribution Date after the dividend is received by such
Trust. Those U.S. Unit holders who hold Units on the relevant record
date for dividends on the underlying Equity Securities held by such
Trusts should be entitled, subject to applicable limitations, to either
a credit or a deduction for foreign taxes payable with respect to such
dividend payments. In addition, IRAs and other plans addressed below
under "Why are Investments in the Trusts Suitable for Retirement Plans?"
should note that they are not eligible to claim any Treaty Payment (as
defined below under "United Kingdom Taxation").
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. Each Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of the assets of a Trust under the Code; and
the income of such 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 received by a Trust.
2. Each Unit holder will have a taxable event when a Trust disposes
of an Equity Security (whether by sale, taxable 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 or her Units,
generally including sales charges, is allocated among his or her pro
rata portion of each Equity Security held by a Trust (in proportion to
the fair market values thereof on the date the Unit holder purchases his
or her Units) in order to determine his or her tax basis for his or her
pro rata portion of each Equity Security held by such Trust. For Federal
income tax purposes, a Unit holder's pro rata portion of dividends, as
defined by Section 316 of the Code, paid by a corporation with respect
to an Equity Security held by a 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 exceeds such current and accumulated earnings and
profits will first reduce a Unit holder's tax basis in such Equity
Security, and to the extent that such dividends exceed a Unit holder's
tax basis in such Equity Security shall generally be treated as capital
gain. In general, any such capital gain will be short-term unless a Unit
holder has held his or her 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 a
Trust will generally be considered a capital gain (except in the case of
a dealer or a financial institution) and will be long-term if the Unit
holder has held his or her Units for more than one year (the date on
Page 4
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 a
Trust will generally be considered a capital loss (except in the case of
a dealer or a financial institution) and, in general, will be long-term
if the Unit holder has held his or her Units for more than one year. In
particular, a Rollover Unit holder should be aware that a Rollover Unit
holder's loss, if any, incurred in connection with the exchange of Units
for Units in the next new series of a Trust (the "New Trusts"), (the
Sponsor intends to create a separate New Trust in conjunction with the
termination of each of the Trusts) will generally be disallowed with
respect to the disposition of any Equity Securities pursuant to such
exchange to the extent that such Unit holder is considered the owner of
substantially identical securities under the wash sale provisions of the
Code taking into account such Unit holder's deemed ownership of the
securities underlying the Units in a New Trust in the manner described
above, if such substantially identical securities are acquired within a
period beginning 30 days before and ending 30 days after such
disposition. However, any gains incurred in connection with such an
exchange by a Rollover Unit holder would be recognized. Unit holders
should consult their tax advisers regarding the recognition of gains and
losses for Federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unit holder
includes sales charges, and such charges are not deductible. A portion
of the sales charge 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 case, the
non-interest portion of the deferred sales charge should be added to the
Unit holder's tax basis in his or her Units. The deferred sales charge
could cause the Unit holder's Units to be considered to be debt-financed
under Section 264A 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.
Dividends Received Deduction. A Unit holder will be considered to have
received all of the dividends paid on his or her pro rata portion of
each Equity Security when such dividends are received by a Trust
regardless of whether such dividends are used to pay a portion of the
deferred sales charge. Unit holders will be taxed in this manner
regardless of whether distributions from a Trust are actually received
by the Unit holder or are automatically reinvested. See "How are Income
and Capital Distributed?-Distribution Reinvestment Option."
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 a 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 recently been issued which address special rules
that must be considered in determining whether the 46-day holding period
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. 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.
To the extent dividends received by an International 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
Page 5
deduction is generally available only with respect to dividends paid by
domestic corporations.
Limitations on Deductibility of Trust Expenses by Unit holders. Each
Unit holder's pro rata share of each expense paid by a Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by him or her. 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 a
Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
by a Trust or if the Unit holder disposes of a Unit (although losses
incurred by Rollover Unit holders may be subject to disallowance, as
discussed above). 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 or she is deemed thereby to
have disposed of his or her entire pro rata interest in all assets of
the Trust involved including his or her pro rata portion of all the
Equity Securities represented by the Unit.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units, Termination of a Trust and Investment in a New 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 of a Domestic Trust may request an In-Kind
Distribution upon the redemption of Units or the termination of such
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 a Trust, a Unit holder is considered as
owning a pro rata portion of each of such Trust's assets for Federal
income tax purposes. The receipt of an In-Kind Distribution upon the
redemption of Units or the termination of a Domestic Trust would be
deemed an exchange of such Unit holder's pro rata portion of each of the
shares of stock and other assets held by such Trust in exchange for an
undivided interest in whole shares of stock 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. An "Equity Security" for this purpose
is a particular class of stock issued by a particular corporation. A
Unit holder will not recognize gain or loss if a Unit holder only
receives Equity Securities in exchange for his or her pro rata portion
in the Equity Securities held by a Trust. However, if a Unit holder also
receives cash in exchange for a fractional share of an Equity Security
held by a Domestic 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 or her tax basis in such fractional share of an
Equity Security held by such Trust.
Because a Domestic 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 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 such Trust. Unit holders who request an In-Kind Distribution
are advised to consult their tax advisers in this regard.
As discussed in "Rights of Unit Holders-Special Redemption, Liquidation
and Investment in a New Trust," a Unit holder may elect to become a
Page 6
Rollover Unit holder. To the extent a Rollover Unit holder exchanges his
or her Units for Units of a New Trust in a taxable transaction, such
Unit holder will recognize gains, if any, but generally will not be
entitled to a deduction for any losses recognized upon the disposition
of any Equity Securities pursuant to such exchange to the extent that
such Unit holder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into
account such Unit holder's deemed ownership of the securities underlying
the Units in such New Trust in the manner described above, if such
substantially identical securities were acquired within a period
beginning 30 days before and ending 30 days after such disposition under
the wash sale provisions contained in Section 1091 of the Code. In the
event a loss is disallowed under the wash sale provisions, special rules
contained in Section 1091(d) of the Code apply to determine the Unit
holder's tax basis in the securities acquired. Rollover Unit holders are
advised to consult their tax advisers.
Computation of the Unit holder's Tax Basis. Initially, a Unit holder's
tax basis in his or her Units will generally equal the price paid by
such Unit holder for his or her Units. The cost of the Units is
allocated among the Equity Securities held in the Trust in accordance
with the proportion of the fair market values of such Equity Securities
on the date the Units are purchased in order to determine such Unit
holder's tax basis for his or her pro rata portion of each Equity
Security.
A Unit holder's tax basis in his or her Units and his or her pro rata
portion of an Equity Security held by a Trust will be reduced to the
extent dividends paid with respect to such Equity Security are received
by a 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 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 a Trust to such Unit holder (including amounts received
upon the redemption of Units) will be subject to back-up withholding.
Distributions by a Trust will 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.
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 corporations 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 tax
advisers regarding the imposition of U.S. withholding on distributions
from the International Trusts.
It should be noted that payments to the International 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 tax advisers regarding the potential tax
consequences relating to the payment of any such withholding taxes by
the International 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 is deemed to have paid
directly his share of foreign taxes that have been paid or accrued, if
any, an investor may be entitled to a foreign tax credit or deduction
for United States 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 income
dividends 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 Trusts Suitable for
Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trusts for New York tax matters, under the existing income tax laws of
the State of New York, each Trust is not an association taxable as a
corporation and the income of each Trust will be treated as the income
of the Unit holders thereof.
The foregoing discussion relates only to the tax treatment of U.S. Unit
holders ("U.S. Unit holders") with regard to federal and certain aspects
Page 7
of New York State and City income taxes. Unit holders may be subject to
taxation in New York or in other jurisdictions and should consult their
own tax advisers in this regard. As used herein, the term "U.S. Unit
holder" means an owner of a Unit in the Trusts that (a) is (i) for
United States federal income tax purposes a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created
or organized in or under the laws of the United States or of any
political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of
its source or (b) does not qualify as a U.S. Unit holder in paragraph
(a) but whose income from a Unit is effectively connected with such Unit
holder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and
gain on the Units will be taxable.
UNITED KINGDOM TAXATION
Tax Consequences of Ownership of Ordinary Shares. In the opinion of
Linklaters & Paines, United Kingdom special counsel to the Sponsor,
based on the terms of the United Kingdom Trust and Global Target 15
Trust as described herein and on certain representations made by special
U.S. counsel to the Sponsor, the following summary accurately describes
the U.K. tax consequences to certain U.S. Unit holders who beneficially
hold Units in the United Kingdom Trust or Global Target 15 Trust as
capital assets. This summary is based upon current U.S. law, U.K.
taxation law and Inland Revenue practice in the U.K., the U.S./U.K.
convention relating to income and capital gains (the "Treaty") and the
U.S./U.K. convention relating to estate and gift taxes (the "Estate Tax
Treaty"). The summary is a general guide only and is subject to any
changes in U.K. or U.S. law or the practice relating thereto, and in the
Treaty or Estate Tax Treaty occurring after the date of this Prospectus
which may affect (including possibly on a retroactive basis) the tax
consequences described herein. Accordingly, Unit holders should consult
their own tax advisers as to the U.K. tax consequences applicable to
their particular circumstances of ownership of the Units in the United
Kingdom Trust or Global Target 15 Trust.
Taxation of Dividends. Where a U.K. resident receives a dividend from a
U.K. company (other than a foreign income dividend (see below)), such
resident is generally entitled to a tax credit, which may be offset
against such resident's U.K. taxes or, in certain circumstances, repaid.
Under the Treaty, a U.S. Unit holder who is resident in the U.S. for the
purposes of the Treaty may, in appropriate circumstances, be entitled to
a repayment of that tax credit, but any such repayment is subject to
U.K. withholding tax at the rate of 15% of the sum of the dividend and
the credit. The tax credit, before such withholding, is equal to one
quarter of the dividend (the "Tax Credit Amount"). Although such a U.S.
Unit holder who held shares directly in a company resident in the U.K.
for the purposes of the Treaty, could generally claim a refund of a
portion of the Tax Credit Amount attributable to the dividend (a "Treaty
Payment") pursuant to the terms of the Treaty, the ability of such a
U.S. Unit holder who holds Units in the United Kingdom Trust or Global
Target 15 Trust to claim such a Treaty Payment relating to the dividends
received on the Equity Securities listed in the FT Index is unclear
where dividend payments are made directly to an entity such as the
United Kingdom Trust or Global Target 15 Trust. Any claim for such a
Treaty Payment would have to be supported by evidence of such U.S. Unit
holder's entitlement to the relevant dividend. There is no established
procedure for proving such entitlement where the U.K. company pays the
dividend to an entity such as the United Kingdom Trust or Global Target
15 Trust unless a specific procedure is negotiated in advance with the
U.K. Inland Revenue (see "What is the Federal Tax Status of Unit
Holders?"). In the absence of agreeing to such a special procedure, U.S.
Unit holders should note that they may not in practice be able to claim
a Treaty Payment relating to the dividends received on the Equity
Securities listed in the FT Index held in the United Kingdom Trust or
Global Target 15 Trust from the U.K. Inland Revenue.
A U.K. company may elect to pay a dividend as a foreign income dividend
rather than as an ordinary dividend. If a company, the shares of which
are held in the United Kingdom Trust or Global Target 15 Trust, pays a
foreign income dividend, no tax credit will be attributable to such
dividend. Accordingly, a U.S. Unit holder would not be entitled to any
repayment of a tax credit under the Treaty.
Taxation of Capital Gains. U.S. Unit holders who are not resident nor
ordinarily resident for tax purposes in the U.K. will not be liable for
U.K. tax on capital gains realized on the disposal of their Units unless
such Units are used, held or acquired for the purposes of a trade,
profession or vocation carried on in the U.K. through a branch or agency
or for the purposes of such branch or agency.
Page 8
U.K. Inheritance Tax. An individual Unit holder who is domiciled in the
U.S. for the purposes of the Estate Tax Treaty and who is not a national
of the U.K. for the purposes of the Estate Tax Treaty will generally not
be subject to U.K. inheritance tax in respect of Units in the United
Kingdom Trust or Global Target 15 Trust on the individual's death or on
a gift or other non-arm's length transfer of such Units during the
individual's lifetime provided that any applicable U.S. federal gift or
estate tax liability is paid, unless the Units are part of the business
property of a permanent establishment of the individual in the U.K. or
pertain to a fixed base in the U.K. used by the individual for the
performance of independent personal services. Where the Units have been
placed in trust by a settlor, the Units will generally not be subject to
U.K. inheritance tax if the settlor, at the time of settlement, was
domiciled in the U.S. for the purposes of the Estate Tax Treaty and was
not a U.K. national, provided that any applicable U.S. federal gift or
estate tax liability is paid. In the exceptional case where the Units
are subject both to U.K. inheritance tax and to U.S. federal gift or
estate tax, the Estate Tax Treaty generally provides for the tax paid in
the U.K. to be credited against tax paid in the U.S. or for tax paid in
the U.S. to be credited against tax payable in the U.K. based on
priority rules set out in that Treaty.
Stamp Tax. In connection with a transfer of Equity Securities listed in
the FT Index and held in the United Kingdom Trust or Global Target 15
Trust, there is generally imposed a U.K. stamp duty or stamp duty
reserve tax payable upon transfer, which tax is usually imposed on the
purchaser of such Equity Securities. Upon acquisition of the Equity
Securities in the United Kingdom Trust or Global Target 15 Trust, such
Trust paid such tax. It is anticipated that upon the sale of such Equity
Securities such tax will be paid by the purchaser thereof and not by the
United Kingdom Trust or Global Target 15 Trust, respectively.
HONG KONG TAXATION
The following summary describes the Hong Kong tax consequences relating
to those Equity Securities held by the Hong Kong Trust or Global Target
15 Trust and listed on the Hang Seng Index under existing law to U.S.
Unit holders of Units of the Hong Kong Trust or Global Target 15 Trust.
This discussion is for general purposes only and assumes that such Unit
holder is not carrying on a trade, profession or business in Hong Kong
and has no profits sourced in Hong Kong arising from the carrying on of
such trade, profession or business. Unit holders should consult their
tax advisers as to the Hong Kong tax consequences of ownership of the
Units of the Hong Kong Trust or Global Target 15 Trust applicable to
their particular circumstances.
Taxation of Dividends. Amounts in respect of dividends paid to Unit
holders of the Hong Kong Trust or Global Target 15 Trust relating to
those Equity Securities listed on the Hang Seng Index are not taxable
and therefore will not be subject to the deduction of any withholding tax.
Profits Tax. A Unit holder of the Hong Kong Trust or Global Target 15
Trust (other than a person carrying on a trade, profession or business
in Hong Kong) will not be subject to profits tax imposed by Hong Kong on
any gain or profits made on the realization or other disposal of his or
her Units.
Hong Kong Estate Duty. Units of the Hong Kong Trust or Global Target 15
Trust will not give rise to a liability to Hong Kong estate duty.
Why are Investments in the Trusts Suitable for Retirement Plans?
Units of the Trusts 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 Target 5 Trust consists of the five companies with the lowest per
share stock price of the ten companies in the DJIA that have the highest
Page 9
dividend yield as of the close of business on the Domestic Stock
Selection Date. The Target 10 Trust consists of the ten common stocks in
the DJIA that have the highest dividend yield as of the Domestic Stock
Selection Date. The United Kingdom Trust consists of the five companies
with the lowest per share stock price of the ten companies in the FT
Index that have the highest dividend yield as of the Foreign Stock
Selection Date. The Hong Kong Trust consists of the five companies with
the lowest per share stock price of the ten companies in the Hang Seng
Index that have the highest dividend yield as of the Foreign Stock
Selection Date. The Portfolio of the Global Target 15 Trust consists of
15 common stocks of companies which are components of the DJIA, the FT
Index or the Hang Seng Index, respectively. Specifically, the portfolio
of the Global Target 15 Trusts consists of common stocks of the five
companies with the lowest per share stock price of the ten companies in
each of the DJIA, FT Index and the Hang Seng Index, respectively, that
have the highest dividend yield in the respective index as of the
Domestic Stock Selection Date in the case of the DJIA stocks and the
Foreign Stock Selection Date in the case of the FT Index stocks and Hang
Seng Index stocks.
The yield for each Equity Security listed on the DJIA was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
and dividing the result by the market value of such Equity Security as
of the close of business on the Domestic Stock Selection Date. The yield
for each Equity Security listed on the FT Index or the Hang Seng Index
was calculated by adding together the most recent interim and final
dividend declared and dividing the result by the market value of such
Equity Security as of the close of business on the Foreign Stock
Selection Date. An investment in a Trust involves the purchase of a
quality portfolio of attractive equities with high dividend yields in
one convenient purchase. Investing in the stocks of the DJIA, FT Index
and/or the Hang Seng Index with the highest dividend yields may be
effective in achieving a Trust's investment objectives, because regular
dividends are common for established companies, and dividends have
accounted for a substantial portion of the total return on stocks of
each Index as a group. Due to the short duration of the Trusts, there is
no guarantee that either a Trust's objective will be achieved or that a
Trust will provide for capital appreciation in excess of such Trust's
expenses.
Any changes in the components of any of the respective indices made
after the respective Stock Selection Date will not cause a change in the
identity of the common stocks included in a Trust, including any
additional Equity Securities deposited thereafter.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust Portfolios as of the
respective Stock Selection Date. Since the Sponsor may deposit
additional Equity Securities which were originally selected through this
process, the Sponsor may continue to sell Units of the Trusts even
though the yields on these Equity Securities may have changed subsequent
to the Initial Date of Deposit. These Equity Securities may no longer be
included in the respective index, or may not currently meet a Trust's
selection criteria, and therefore, such Equity Securities would no
longer be chosen for deposit into the Trusts if the selection process
was to be performed again at a later time.
The Dow Jones Industrial Average
The DJIA was first published in The Wall Street Journal in 1896.
Initially consisting of just 12 stocks, the DJIA expanded to 20 stocks
in 1916 and to its present size of 30 stocks on October 1, 1928. The
stocks are chosen by the editors of The Wall Street Journal as
representative of the broad market and of American industry. The
companies are major factors in their industries and their stocks are
widely held by individuals and institutional investors. Changes in the
components of the DJIA are made entirely by the editors of The Wall
Street Journal without consultation with the companies, the stock
exchange or any official agency. For the sake of continuity, changes are
made rarely. Most substitutions have been the result of mergers, but
from time to time, changes may be made to achieve a better
representation. The components of the DJIA may be changed at any time
for any reason. The following is a list of the companies which currently
comprise the DJIA.
AT&T Corporation Goodyear Tire & Rubber Company
Allied Signal International Business Machines
Corporation
Aluminum Company of America International Paper Company
American Express Company McDonald's Corporation
Bethlehem Steel Corporation Merck & Company, Inc.
Page 10
Boeing Company Minnesota Mining & Manufacturing
Company
Caterpillar Inc. J.P. Morgan & Company, Inc.
Chevron Corporation Philip Morris Companies, Inc.
Coca-Cola Company Proctor & Gamble Company
Walt Disney Company Sears, Roebuck & Company
E.I. du Pont de Nemours & Texaco, Inc.
Company
Eastman Kodak Company Union Carbide Corporation
Exxon Corporation United Technologies Corporation
General Electric Company Westinghouse Electric Corporation
General Motors Corporation Woolworth Corporation
The Financial Times Industrial Ordinary Share Index
The FT Index began as the Financial News Industrial Ordinary Share Index
in London in 1935 and became the Financial Times Industrial Ordinary
Share Index in 1947. The FT Index is comprised of 30 common stocks
chosen by the editors of The Financial Times as representative of the
British industry and commerce. This index is an unweighted average of
the share prices of selected companies, which are highly capitalized,
major factors in their industries and their stocks are widely held by
individuals and institutional investors. Changes in the components of
the FT Index are made entirely by the editors of The Financial Times
without consultation with the companies, the stock exchange or any
official agency. For the sake of continuity, changes are made rarely.
Most substitutions have been the result of mergers or because of poor
share performance, but from time to time, changes may be made to achieve
a better representation. The components of the FT Index may be changed
at any time for any reason. The following stocks are currently
represented in the FT Index:
ASDA Group Glaxo Wellcome Plc
Allied Domecq Plc Grand Metropolitan
BICC Plc Guest Keen & Nettlefolds (GKN) Plc
BOC Group Guinness
BTR Plc Hanson Plc
Blue Circle Industries Plc Imperial Chemical Industries Plc
Boots Co. Lucas Varity Plc
British Airways Marks & Spencer
British Gas Plc National Westminster Bank
British Petroleum Peninsular & Oriental Steam
Navigation Company
British Telecom Plc Reuters Holdings
Cadbury Schweppes Royal Insurance Holdings
Courtaulds Plc SmithKline Beecham
EMI Group Plc Tate & Lyle
General Electric Plc Vodaphone Plc
The Hang Seng Index
The Hang Seng Index was first published in 1969 and presently consists
of 33 of the 358 stocks currently listed on the Stock Exchange of Hong
Kong Ltd. (the "Hong Kong Stock Exchange"), and it includes companies
intended to represent four major market sectors: commerce and industry,
finance, properties and utilities. The Hang Seng Index is a recognized
indicator of stock market performance in Hong Kong. It is computed on an
arithmetic basis, weighted by market capitalization, and is therefore
strongly influenced by stocks with large market capitalizations. The
Hang Seng Index represents approximately 70% of the total market
capitalization of the stocks listed on the Hong Kong Stock Exchange. The
Hang Seng Index is comprised of the following companies:
Amoy Properties Ltd. Hong Kong Telecommunications Ltd.
Bank of East Asia Hopewell Holdings
Cathay Pacific Airways Hutchison Whampoa
Cheung Kong Hysan Development Company Ltd.
Page 11
China Light & Power Johnson Electric Holdings
Citic Pacific New World Development Co. Ltd.
First Pacific Company Ltd. Oriental Press Group
Great Eagle Holdings Shangri-La Asia Ltd.
Guangdong Investment Shun Tak Holdings Ltd.
HSBC Holdings Plc Sino Land Co. Ltd.
Hang Lung Development Company South China Morning Post (Holdings)
Ltd.
Hang Seng Bank Sun Hung Kai Properties Ltd.
Henderson Investment Ltd. Swire Pacific (A)
Henderson Land Development Television Broadcasts
Co. Ltd.
Hong Kong and China Gas Wharf Holdings
Hong Kong Electric Holdings Wheelock & Co.
Ltd.
Hong Kong and Shanghai Hotels
Neither the publishers of the DJIA, FT Index nor the Hang Seng Index
have granted the Trusts or the Sponsor a license to use their respective
Index. Units of the Trusts are not designed so that prices will parallel
or correlate with movements in any particular index or a combination
thereof and it is expected that their prices will not parallel or
correlate with such movements. The publishers of the DJIA, FT Index and
the Hang Seng Index have not participated in any way in the creation of
the Trusts or in the selection of stocks in the Trusts and have not
approved any information related thereto.
The following table compares the actual performance of the Ten Highest
Dividend Yielding Stocks Strategy for the DJIA, Five Lowest Priced
Stocks of the Ten Highest Dividend Yielding Stocks Strategies in each of
the FT Index, Hang Seng Index and the DJIA, a combination of the Five
Lowest Priced Stocks of the Ten Highest Dividend Yielding Stocks
Strategies in the FT Index, Hang Seng Index and the DJIA (the "Combined
Strategy"), the FT Index, the Hang Seng Index, the DJIA and a
combination of the three indices (the "Combined Indices") in each of the
20 years listed below, as of December 31 in each of those years and for
1996, through September 30, 1996. All of the figures set forth below
have been adjusted to take into account the effect of currency exchange
rate fluctuations of the U.S. dollar, where applicable (i.e., returns
are stated in U.S. dollar terms).
Page 12
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN (2)
Strategy Total Returns Index Total Returns
______________________________________________________________ ______________________________________________
10 Highest
Dividend Yielding 5 Lowest Priced
Stocks (1) of the 10 Highest Dividend Yielding Stocks (1)
Hang Seng Combined Hang Seng Combined
Year DJIA FT Index Index DJIA Strategy FT Index Index DJIA Indices
____ ____ ________ _____ ____ ________ ________ _____ ____ _______
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1976 34.93 -13.84% 35.73% 40.80% 20.90% -31.50% 42.72% 22.75% 11.32%
1977 -1.75 87.78% -8.82% 5.64% 28.20% 82.48% -4.04% -12.76% 21.89%
1978 0.12 10.27% 4.16% 1.26% 5.23% 17.06% -8.82% 2.62% 14.26%
1979 12.99 12.28% 111.92% 9.91% 44.70% 12.57% 77.99% 10.52% 33.69%
1980 27.23 52.30% 64.71% 40.53% 52.51% 41.90% 65.48% 21.45% 12.57%
1981 7.73 -2.47% -1.08% 3.64% 0.03% -24.09% -12.34% -3.40% -13.27%
1982 26.05 -5.86% -44.35% 41.88% -2.77% -15.15% -48.01% 25.84% -12.44%
1983 38.75 25.52% -14.81% 36.11% 15.61% 9.39% -2.04% 25.68% 11.01%
1984 5.75 16.66% 62.09% 10.88% 29.88% -18.51% 42.61% 1.07% 8.39%
1985 29.40 78.24% 46.09% 37.84% 54.06% 93.09% 50.95% 32.83% 58.96%
1986 34.79 22.02% 61.99% 30.31% 38.11% 27.59% 51.16% 26.96% 35.24%
1987 6.07 47.39% -1.32% 11.06% 19.04% 76.82% -6.67% 6.00% 25.38%
1988 24.33 21.17% 48.87% 21.22% 30.42% 2.50% 20.55% 15.97% 13.01%
1989 25.66 24.71% 9.03% 10.49% 14.74% 9.34% 10.17% 31.74% 17.08%
1990 -7.57 20.25% 8.68% -15.27% 4.55% 32.01% 12.03% -0.61% 14.48%
1991 34.02 25.79% 55.75% 61.79% 47.78% 11.13% 48.31% 23.99% 27.81%
1992 7.79 0.88% 25.21% 22.88% 16.32% -21.14% 33.67% 7.37% 6.63%
1993 26.91 43.64% 115.23% 33.82% 64.23% 15.81% 121.23% 16.74% 51.26%
1994 4.05 6.79% -28.54% 8.08% -4.56% 7.90% -28.85% 4.94% -5.34%
1995 36.51 10.81% 4.52% 30.26% 15.19% 16.49% 26.98% 36.47% 26.65%
1/1/96- 16.73 4.49% 5.69% 19.11% 9.76% 8.47% 20.65% 16.80% 15.30%
9/30/96
</TABLE>
[FN]
______________
(1) The Ten Highest Dividend Yielding Stocks in the DJIA and the Five
Lowest Priced Stocks of the Ten Highest Dividend Yielding Stocks in the
FT Index, Hang Seng Index and the DJIA, respectively, for any given
period were selected by ranking the dividend yields for each of the
stocks in the respective index, as of the beginning of the period, and
dividing by that stock's market value on the first trading day on the
exchange where that stock principally trades in the given period. The
Combined Strategy merely averages the Total Return of the stocks which
comprise the Five Lowest Priced Stocks of the Ten Highest Dividend
Yielding Stocks in the FT Index, Hang Seng Index and the DJIA,
respectively.
(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first trading day of a period
and the total dividends paid on each group of stocks during the period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return does not take into
consideration any sales charges, commissions, expenses or taxes. Total
Return does not take into consideration any reinvestment of dividend
income and all returns are stated in terms of the United States dollar.
Based on the year-by-year returns contained in the table, over the 20
years listed above, and for 1996, through September 30, 1996, the Ten
Highest Dividend Yielding Stocks in the DJIA achieved an average annual
total return of 17.74%, while the Five Lowest Priced Stocks of the Ten
Highest Dividend Yielding Stocks in the DJIA, FT Index, Hang Seng Index
and Combined Strategy achieved an average annual total return of 20.72%,
20.90%, 20.08% and 22.50%, respectively. In addition, over this period,
with the exception of the Five Lowest Priced Stocks of the Ten Highest
Dividend Yielding Hang Seng Stocks, each individual strategy achieved a
greater average annual total return than that of its corresponding
index, the DJIA, FT Index or a combination of the three indices, which
were 14.14%, 12.55% and 17.85%, respectively. Over this period, the
Hang Seng Index total annual return of 20.23% exceeded the total annual
return of the Five Lowest Priced Stocks of the Ten Highest Dividend
Yielding Hang Seng Stocks, as set forth above. For the five year period
between January 1, 1971 and December 31, 1975, the Ten Highest Dividend
Yielding Stocks in the DJIA achieved an annual total return of 4.70% in
1971, 23.32% in 1972, 3.96% in 1973, -0.72% in 1974 and 56.03% in 1975;
the Five Lowest Priced Stocks of the Ten Highest Dividend Yielding Stocks
in the DJIA achieved an annual total return of 9.37% in 1971, 22.49% in
1972, 19.64% in 1973, -4.98% in 1974 and 64.54% in 1975; and the DJIA
achieved an annual total return of 9.78% in 1971, 18.18% in 1972, -
13.16% in 1973, -23.21% in 1974 and 44.48% in 1975. Although each Trust
seeks to achieve a better performance than its respective index as a
whole, there can be no assurance that a Trust will achieve a better
performance over its one-year life or over consecutive rollover periods,
if available.
Page 13
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the Ten Highest
Dividend Yielding DJIA Stocks and the Five Lowest Priced Stocks of the
Ten Highest Dividend Yielding DJIA Stocks (but not the Target 10 Trust
or the Target 5 Trust) from January 1, 1971 through September 30, 1996
and should not be considered indicative of future results. Further,
these results are hypothetical. The chart assumes that all dividends
during a year are reinvested at the end of that year and does not reflect
sales charges, commissions, expenses or taxes. There can be no assurance
that either the Target 10 Trust or the Target 5 Trust will outperform the
DJIA over its one-year life or over consecutive rollover periods, if
available.
Page 14
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the FT Index and the Five
Lowest Priced Stocks of the Ten Highest Dividend Yielding FT Index
Stocks (but not the United Kingdom Trust) from January 1, 1976 through
September 30, 1996 and should not be considered indicative of future
results. Further, these results are hypothetical. The chart assumes that
all dividends during a year are reinvested at the end of that year and
does not reflect sales charges, commissions, expenses or taxes. The annual
figures in the chart have been adjusted to take into account the effect
of currency exchange rate fluctuations of the U.S. dollar as described in
the footnote below*. There can be no assurance that the United Kingdom Trust
will outperform the FT Index over the Trust's one-year life or over
consecutive rollover periods, if available.
______________
* The $10,000 initial investment was converted into local currency,
where applicable, using the opening exchange rate at the beginning of
each period. The year-end total in British pounds sterling was converted
into U.S. dollars using the ending exchange rate. This amount was then
converted back into the appropriate local currency using the opening
exchange rate at the beginning of the next period.
Page 15
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the Hang Seng Index and
the Five Lowest Priced Stocks of the Ten Highest Dividend Yielding Hang
Seng Stocks (but not the Hong Kong Trust) from January 1, 1976 through
September 30, 1996 and should not be considered indicative of future
results. Further, these results are hypothetical. The chart assumes that
all dividends during a year are reinvested at the end of that year and
does not reflect sales charges, commissions, expenses or taxes. The annual
figures in the chart have been adjusted to take into account the effect
of currency exchange rate fluctuations of the U.S. dollar as described
in the footnote below*. There can be no assurance that the Hong Kong Trust
will outperform the Hang Seng Index over the Trust's one-year life or over
consecutive rollover periods, if available.
______________
* The $10,000 initial investment was converted into local currency,
where applicable, using the opening exchange rate at the beginning of
each period. The year-end total in Hong Kong dollars was converted into
U.S. dollars using the ending exchange rate. This amount was then
converted back into the appropriate local currency using the opening
exchange rate at the beginning of the next period.
Page 16
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the Combined Strategy as
opposed to the Combined Indices from January 1, 1976 through September 30,
1996 and should not be considered indicative of future results. Further,
these results are hypothetical. The chart assumes that all dividends during
a year are reinvested at the end of that year and does not reflect sales
charges, commissions, expenses or taxes. The annual figures in the chart
have been adjusted to take into account the effect of currency exchange
rate fluctuations of the U.S. dollar as described in the footnote below*.
There can be no assurance that the Global Target 15 Trust will outperform
either the Combined Strategy or the Combined Indices over its one-year life
or over consecutive rollover periods, if available.
______________
* The $10,000 initial investment was converted into local currency,
where applicable, using the opening exchange rate at the beginning of
each period. The year-end total in either British pounds sterling or
Hong Kong dollars was converted into U.S. dollars using the ending
exchange rate. This amount was then converted back into the appropriate
local currency using the opening exchange rate at the beginning of the
next period.
Page 17
The returns shown in the above graphs are not guarantees of future
performance and should not be used as a predictor of returns to be
expected in connection with a Trust Portfolio. Both stock prices (which
may appreciate or depreciate) and dividends (which may be increased,
reduced or eliminated) will affect the returns. As indicated in the
previous tables, each strategy underperformed its respective index in
certain years. Accordingly, there can be no assurance that a Trust's
Portfolio will outperform its respective index (or combination thereof,
where applicable) over the life of a Trust or over consecutive rollover
periods, if available. A Holder of Units in a Trust would not
necessarily realize as high a Total Return on an investment in the
stocks upon which the returns shown above are based. The Total Return
figures shown above do not reflect sales charges, commissions, Trust
expenses or taxes, and a Trust may not be fully invested at all times.
What are Some Additional Considerations for Investors?
The Trusts consist of different issues of Equity Securities, all of
which are listed on a securities exchange. In addition, each of the
companies whose Equity Securities are included in a portfolio are
actively-traded, well-established corporations.
A Trust consists of such of the Equity Securities listed under "Schedule
of Investments" appearing in Part I of this Prospectus as may continue
to be held from time to time in such Trust and any additional Equity
Securities acquired and held by such 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 a 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.
Risk Factors. 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 a Trust will
retain for any length of time its present size and composition. Although
the Portfolios are 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 offered such new or exchanged securities or property, the Trustee
shall reject the offer. However, in the event such securities or
property are nonetheless acquired by a Trust, they may be accepted for
deposit in such Trust and either sold by the Trustee or held in such
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 a Trust?" Equity Securities, however, will not be sold by a
Trust to take advantage of market fluctuations or changes in anticipated
rates of appreciation or depreciation or if the Equity Securities no
longer meet the criteria by which they were selected for a Trust.
Whether or not the Equity Securities are listed on a 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, a 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 a 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 relevant stock market may worsen, and the value
of the Equity Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
Page 18
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 Trusts have a
right to receive dividends only when and if, and in the amounts,
declared by the issuer's board of directors and have a right to
participate in amounts available for distribution by the issuer only
after all other claims on the issuer have been paid or provided for.
Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy.
Cumulative preferred stock dividends must be paid before common stock
dividends, and any cumulative preferred stock dividend omitted is added
to future dividends payable to the holders of cumulative preferred
stock. Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in a 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 a Trust and will vote
such stocks in accordance with the instructions of the Sponsor.
Investors should be aware of certain other considerations before making
a decision to invest in a Trust. 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 will fluctuate
over the life of a Trust and may be more or less than the price at which
they were deposited in such 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 a Trust and
during the Special Redemption and Liquidation Period) and other factors.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Equity Security. In the event of a
notice that any Equity Security will not be delivered ("Failed Contract
Obligations") to a 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
a 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 such 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 a Trust.
The Indenture also authorizes the Sponsor to increase the size of a
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 such Trust and
the issuance of a corresponding number of additional Units. If the
Sponsor deposits cash, existing and new investors could experience a
dilution of their investments and a reduction in anticipated income
because of fluctuations in the prices of the Equity Securities between
the time of the cash deposit and the actual purchase of the Equity
Securities and because the Trust will pay the brokerage fees associated
therewith.
Once all of the Equity Securities in a Trust are acquired, the Trustee
will have no power to vary the investments of such Trust, i.e., the
Page 19
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, but may dispose of
Equity Securities only under limited circumstances. See "How May Equity
Securities be Removed from a Trust?"
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit with respect to any Equity Security
which might reasonably be expected to have a material adverse effect on
the Trusts. 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 Trusts.
Petroleum Refining Companies. Certain Trusts may be considered to be
concentrated in common stocks of companies engaged in refining and
marketing oil and related products. See "Risk Factors" in Part I of this
Prospectus which will indicate, if applicable, the Trust's concentration
in the petroleum industry. According to the U.S. Department of Commerce,
the factors which will most likely shape the industry include the price
and availability of oil from the Middle East, changes in United States
environmental policies and the continued decline in U.S. production of
crude oil. Possible effects of these factors may be increased U.S. and
world dependence on oil from the Organization of Petroleum Exporting
Countries ("OPEC") and highly uncertain and potentially more volatile
oil prices. Factors which the Sponsor believes may increase the
profitability of oil and petroleum operations include increasing demand
for oil and petroleum products as a result of the continued increases in
annual miles driven and the improvement in refinery operating margins
caused by increases in average domestic refinery utilization rates. The
existence of surplus crude oil production capacity and the willingness
to adjust production levels are the two principal requirements for
stable crude oil markets. Without excess capacity, supply disruptions in
some countries cannot be compensated for by others. Surplus capacity in
Saudi Arabia and a few other countries and the utilization of that
capacity prevented during the Persian Gulf crisis, and continues to
prevent, severe market disruption. Although unused capacity contributed
to market stability in 1990 and 1991, it ordinarily creates pressure to
overproduce and contributes to market uncertainty. The likely
restoration of a large portion of Kuwait and Iraq's production and
export capacity over the next few years could lead to such a development
in the absence of substantial growth in world oil demand. Formerly, OPEC
members attempted to exercise control over production levels in each
country through a system of mandatory production quotas. Because of the
crisis in the Middle East, the mandatory system has since been replaced
with a voluntary system. Production under the new system has had to be
curtailed on at least one occasion as a result of weak prices, even in
the absence of supplies from Kuwait and Iraq. The pressure to deviate
from mandatory quotas, if they are reimposed, is likely to be
substantial and could lead to a weakening of prices. In the longer term,
additional capacity and production will be required to accommodate the
expected large increases in world oil demand and to compensate for
expected sharp drops in U.S. crude oil production and exports from the
Soviet Union. Only a few OPEC countries, particularly Saudi Arabia, have
the petroleum reserves that will allow the required increase in
production capacity to be attained. Given the large-scale financing that
is required, the prospect that such expansion will occur soon enough to
meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the industry
over the coming decade. Refiners are likely to be required to make heavy
capital investments and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as
the 1990 amendments to the Clean Air Act. If the cost of these changes
is substantial enough to cut deeply into profits, smaller refiners may
be forced out of the industry entirely. Moreover, lower consumer demand
due to increases in energy efficiency and conservation, gasoline
reformulations that call for less crude oil, warmer winters or a general
slowdown in economic growth in this country and abroad, could negatively
affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will
increase or that any increases will not be marked by great volatility.
Some oil companies may incur large cleanup and litigation costs relating
to oil spills and other environmental damage. Oil production and
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the
disposal of hazardous materials. Increasingly stringent environmental
laws and regulations are expected to require companies with oil
Page 20
production and refining operations to devote significant financial and
managerial resources to pollution control. General problems of the oil
and petroleum products industry include the ability of a few influential
producers significantly to affect production, the concomitant volatility
of crude oil prices and increasing public and governmental concern over
air emissions, waste product disposal, fuel quality and the
environmental effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry
or the environment could have a negative impact on the petroleum
products industry. While legislation has been enacted to deregulate
certain aspects of the oil industry, no assurances can be given that new
or additional regulations will not be adopted. Each of the problems
referred to could adversely affect the financial stability of the
issuers of any petroleum industry stocks in the Trusts.
Legislation. From time to time Congress considers proposals to reduce
the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unit holders are
urged to consult their own tax advisers. Further, at any time after the
Initial Date of Deposit, legislation may be enacted that could
negatively affect the Equity Securities in the Trusts or the issuers of
the Equity Securities. Changing approaches to regulation, particularly
with respect to the environment or with respect to the petroleum
industry, may have a negative impact on certain companies represented in
the Trusts. There can be no assurance that future legislation,
regulation or deregulation will not have a material adverse effect on
the Trusts or will not impair the ability of the issuers of the Equity
Securities to achieve their business goals.
Foreign Issuers. Since certain or all of the Equity Securities included
in the International Trusts consist of securities of foreign issuers, an
investment in such Trusts involves certain investment risks that are
different in some respects from an investment in a trust which invests
entirely in the securities of domestic issuers. These investment risks
include future political or governmental restrictions which might
adversely affect the payment or receipt of payment of dividends on the
relevant Equity Securities, the possibility that the financial condition
of the issuers of the Equity Securities may become impaired or that the
general condition of the relevant stock market may worsen (both of which
would contribute directly to a decrease in the value of the Equity
Securities and thus in the value of the Units), the limited liquidity
and relatively small market capitalization of the relevant securities
market, expropriation or confiscatory taxation, economic uncertainties
and foreign currency devaluations and fluctuations. In addition, for
foreign issuers that are not subject to the reporting requirements of
the Securities Exchange Act of 1934, there may be less publicly
available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. The securities of
many foreign issuers are less liquid and their prices more volatile than
securities of comparable domestic issuers. In addition, fixed brokerage
commissions and other transaction costs on foreign securities exchanges
are generally higher than in the United States and there is generally
less government supervision and regulation of exchanges, brokers and
issuers in foreign countries than there is in the United States.
However, due to the nature of the issuers of the Equity Securities
selected for the International Trusts, the Sponsor believes that
adequate information will be available to allow the Supervisor to
provide portfolio surveillance for such Trusts.
Equity securities issued by non-U.S. issuers generally pay dividends in
foreign currencies and are principally traded in foreign currencies.
Therefore, there is a risk that the United States dollar value of these
securities will vary with fluctuations in the U.S. dollar foreign
exchange rates for the various Equity Securities. See "Exchange Rate"
below.
On the basis of the best information available to the Sponsor at the
present time, none of the Equity Securities in the International Trusts
are subject to exchange control restrictions under existing law which
would materially interfere with payment to such Trusts of dividends due
on, or proceeds from the sale of, the Equity Securities. However, there
can be no assurance that exchange control regulations might not be
adopted in the future which might adversely affect payment to such a
Trust. In addition, the adoption of exchange control regulations and
other legal restrictions could have an adverse impact on the
marketability of international securities in the International Trusts
and on the ability of such Trusts to satisfy their obligation to redeem
Units tendered to the Trustee for redemption. In addition, restrictions
on the settlement of transactions on either the purchase or sale side,
Page 21
or both, could cause delays or increase the costs associated with the
purchase and sale of the foreign Equity Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all Equity
Securities at the same time because of the unavailability of any Equity
Security, and restrictions applicable to a Trust relating to the
purchase of an Equity Security by reason of the federal securities laws
or otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Equity Securities by a
Trust in the United States securities markets are subject to severe
restrictions and may not be practicable. Accordingly, sales of these
Equity Securities by a Trust will generally be effected only in foreign
securities markets. Although the Sponsor does not believe that the
International Trusts will encounter obstacles in disposing of the Equity
Securities, investors should realize that the Equity Securities may be
traded in foreign countries where the securities markets are not as
developed or efficient and may not be as liquid as those in the United
States. The value of the Equity Securities will be adversely affected if
trading markets for the Equity Securities are limited or absent.
The information provided below details certain important factors which
impact the economies of both the United Kingdom and Hong Kong. This
information has been extracted from various governmental and private
publications, but no representation can be made as to its accuracy;
furthermore, no representation is made that any correlation exists
between the economies of the United Kingdom and Hong Kong and the value
of the Equity Securities held by an International Trust.
United Kingdom. The emphasis of the United Kingdom's economy is in the
private services sector, which includes the wholesale and retail sector,
banking, finance, insurance and tourism. Services as a whole account for
a majority of the United Kingdom's gross national product and makes a
significant contribution to the country's balance of payments. The
United Kingdom experienced a recovery of output in 1993-1994 accompanied
by falling rates of inflation despite expectations to the contrary.
Quarterly changes in real gross domestic product ("GDP") in the United
Kingdom grew moderately during 1994 and 1995 with an approximate .5%
increase in the last quarter of 1995 over the previous quarter. The
average quarterly rate of GDP growth in the United Kingdom (as well as
in Europe generally) has been decelerating since 1994. The United
Kingdom is a member of the European Union (the "EU"), formerly known as
the European Economic Community (the "EEC"). The EU was created through
the formation of the Maastricht Treaty on European Union in late 1993.
It is expected that the Treaty will have the effect of eliminating most
remaining trade barriers between the 15 member nations and make Europe
one of the largest common markets in the world. The EU has the potential
to become a powerful trade bloc with a population of over 350 million
people and an annual gross national product of more than $4 trillion.
However, the effective implementation of the Treaty provisions and the
rate at which trade barriers are eliminated is uncertain at this time.
Furthermore, the recent rapid political and social change throughout
Europe make the extent and nature of future economic development in the
United Kingdom and Europe and the impact of such development upon the
value of the Equity Securities in the United Kingdom Trust or Global
Target 15 Trust impossible to predict. Volatility in oil prices could
slow economic development throughout Western Europe. Moreover, it is not
possible to accurately predict the effect of the current political and
economic situation upon long-term inflation and balance of trade cycles
and how these changes would affect the currency exchange rate between
the U.S. dollar and the British pound sterling.
Hong Kong. Hong Kong, established as a British colony in the 1840's, is
currently ruled by the British Government through an appointed Governor.
Hong Kong will revert to Chinese sovereignty effective July 1, 1997 with
Hong Kong becoming a Special Administrative Region ("SAR") of China.
Hong Kong's new constitution will be the Basic Law (promulgated by China
in 1990), which will take effect upon the resumption of Chinese
sovereignty. The current Hong Kong government generally follows a
laissez-faire policy toward industry. There are no major import, export
or foreign exchange restrictions. At the present time, regulation of
business is generally minimal with certain exceptions, including
regulated entry into certain sectors of the economy and a fixed exchange
rate regime by which the Hong Kong dollar has been pegged to the U.S.
dollar. Over the ten year period between 1983 and 1993, real gross
domestic product increased at an average annual rate of approximately 6%.
Page 22
Although China has committed by treaty to preserve for 50 years the
economic and social freedoms currently enjoyed in Hong Kong, the
continuation of the economic system in Hong Kong after the reversion
will be dependent on the Chinese government, and there can be no
assurances that the commitment made by China regarding Hong Kong will be
maintained. Legislation has been enacted in Hong Kong that will extend
democratic voting procedures for Hong Kong's legislature. China has
expressed disagreement with this legislation, which it states is in
contravention of the principles evidenced in the Basic Law of the Hong
Kong SAR. The National Peoples' Congress of China has passed a
resolution to the effect that the Legislative Council and certain other
councils and boards of the Hong Kong Government will be terminated on
June 30, 1997. It is expected that such bodies will be subsequently
reconstituted in accordance with China's interpretation of the Basic
Law. China and Great Britain have also yet to resolve their differences
on other issues relating to the reversion to sovereignty. Any increase
in uncertainty as to the future economic and political status of Hong
Kong could have a materially adverse effect on the value of the Hong
Kong Trust or Global Target 15 Trust.
It should be noted by investors that the Hong Kong Trust and the Global
Target 15 Trust both terminate after the July 1, 1997 reversion to the
sovereignty of China. The Sponsor is unable to predict the level of
market liquidity or volatility which may occur after the reversion to
sovereignty, both of which may negatively impact such Trusts and the
value of the Units.
China currently enjoys a most favored nation status ("MFN Status") with
the United States. MFN Status is subject to annual review by the
President of the United States. President Clinton recently signed an
executive order renewing China's MFN Status for another year which
Congress must review. Revocation of the MFN Status would have a severe
effect on China's trade and thus could have a materially adverse effect
on the value of the Hong Kong Trust or Global Target 15 Trust. The
performance of certain companies listed on the Hong Kong Stock Exchange
is linked to the economic climate of China. For example, between 1985
and 1990, Hong Kong businesses invested $20 billion in the nearby
Chinese province of Guangdong to take advantage of the lower property
and labor costs than were available in Hong Kong. Recently, however,
high economic growth in this area (industrial production grew at an
annual rate of about 20% in 1991, 24% in 1992, and 36.5% in 1993) has
been associated with rising inflation and concerns about the devaluation
of the Chinese currency. Any downturn in economic growth or increase in
the rate of inflation in China could have a materially adverse effect on
the value of the Hong Kong Trust or Global Target 15 Trust.
Securities prices on the Hong Kong Stock Exchange, and specifically the
Hang Seng Index, can be highly volatile and are sensitive to
developments in Hong Kong and China, as well as other world markets. For
example, in 1989, the Hang Seng Index dropped 1,216 points
(approximately 58%) in early June following the events at Tiananmen
Square. The Hang Seng Index gradually climbed in subsequent months but
fell by 181 points on October 13, 1989 (approximately 6.5%) following a
substantial fall in the U.S. stock markets. During 1994, the Hang Seng
Index lost approximately 31% of its value. The Hang Seng Index is
subject to change, and delisting of any issues may have an adverse
impact on the performance of the Hong Kong Trust or Global Target 15
Trust, although delisting would not necessarily result in the disposal
of the stock of these companies, nor would it prevent such Trusts from
purchasing additional Equity Securities. In recent years, a number of
companies, comprising approximately 10% of the total capitalization of
the Hang Seng Index, have delisted.
Exchange Rate. The International Trusts are comprised either totally or
substantially of Equity Securities that are principally traded in
foreign currencies and as such, involve investment risks that are
substantially different from an investment in a fund which invests in
securities that are principally traded in United States dollars. The
United States dollar value of the portfolios (and hence of the Units)
and of the distributions from the portfolios will vary with fluctuations
in the United States dollar foreign exchange rates for the relevant
currencies. Most foreign currencies have fluctuated widely in value
against the United States dollar for many reasons, including supply and
demand of the respective currency, the rate of inflation in the
respective economies compared to the United States, the impact of
interest rate differentials between different currencies on the movement
of foreign currency rates, the balance of imports and exports goods and
services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and
other countries.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty which established a system of
Page 23
fixed exchange rates and the convertibility of the United States dollar
into gold through foreign central banks. Starting in 1971, growing
volatility in the foreign exchange markets caused the United States to
abandon gold convertibility and to effect a small devaluation of the
United States dollar. In 1973, the system of fixed exchange rates
between a number of the most important industrial countries of the
world, among them the United States and most Western European countries,
was completely abandoned. Subsequently, major industrialized countries
have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have
continued to "peg" their currencies to the United States dollar although
there has been some interest in recent years in "pegging" currencies to
"baskets" of other currencies or to a Special Drawing Right administered
by the International Monetary Fund. Since 1983, the Hong Kong dollar has
been pegged to the U.S. dollar. In Europe, a European Currency Unit
("ECU") has been developed. Currencies are generally traded by leading
international commercial banks and institutional investors (including
corporate treasurers, money managers, pension funds and insurance
companies). From time to time, central banks in a number of countries
also are major buyers and sellers of foreign currencies, mostly for the
purpose of preventing or reducing substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well-particularly with respect to
transfers of capital). Investor psychology may also be an important
determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.
The following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and
end of month equivalent U.S. dollar rates of exchange for the United
Kingdom pound sterling and the Hong Kong dollar:
<TABLE>
<CAPTION>
Foreign Exchange Rates
Range of Fluctuations in Foreign Currencies
United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar U.S. Dollar
______ ______________ ___________
<S> <C> <C>
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
</TABLE>
Source: Bloomberg L.P.
Page 24
<TABLE>
<CAPTION>
End of Month Exchange Rates
for Foreign Currencies
___________________________________________
United Kingdom Hong
Pound Sterling/ Kong/U.S.
Monthly Period U.S. Dollar Dollar
____________ _______________ _________
<S> <C> <C>
1992:
January .559 7.762
February .569 7.761
March .576 7.740
April .563 7.757
May .546 7.749
June .525 7.731
July .519 7.732
August .503 7.729
September .563 7.724
October .641 7.736
November .659 7.742
December .662 7.744
1993:
January .673 7.734
February .701 7.734
March .660 7.731
April .635 7.730
May .640 7.724
June .671 7.743
July .674 7.761
August .670 7.755
September .668 7.734
October .676 7.733
November .673 7.725
December .677 7.723
1994:
January .664 7.724
February .673 7.727
March .674 7.737
April .659 7.725
May .662 7.726
June .648 7.730
July .648 7.725
August .652 7.728
September .634 7.727
October .611 7.724
November .639 7.731
December .639 7.738
1995:
January .633 7.732
February .631 7.730
March .617 7.733
April .620 7.742
May .630 7.735
June .627 7.736
July .626 7.738
August .645 7.741
September .631 7.732
October .633 7.727
November .652 7.731
December .645 7.733
1996:
January .661 7.728
February .653 7.731
March .655 7.734
April .664 7.735
May .645 7.736
June .644 7.741
July .642 7.735
August .639 7.733
September .639 7.733
October .615 7.732
</TABLE>
Source: Bloomberg L.P.
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing,
depending on the activity at any particular time of the large
international commercial banks, various central banks, large multi-
national corporations, speculators and other buyers and sellers of
foreign currencies, and since actual foreign currency transactions may
not be instantly reported, the exchange rates estimated by the Evaluator
may not be indicative of the amount in United States dollars the
International Trusts would receive had the Trustee sold any particular
currency in the market. The foreign exchange transactions of the
International Trusts will be conducted by the Trustee with foreign
exchange dealers acting as principals on a spot (i.e., cash) buying
basis. Although foreign exchange dealers trade on a net basis, they do
realize a profit based upon the difference between the price at which
they are willing to buy a particular currency (bid price) and the price
at which they are willing to sell the currency (offer price).
Page 25
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price, which is based on the
aggregate underlying U.S. dollar value of the Equity Securities in a
Trust, plus or minus cash, if any, in the Income and Capital Accounts of
such Trust, plus an initial sales charge with respect to each Trust
equal to the difference between the maximum sales charge for each Trust
(as set forth in Part I of this Prospectus) and the maximum remaining
deferred sales charge (initially $.190 per Unit for each Trust) divided
by the amount of Units of such Trust outstanding. A deferred sales
charge of $.0190 will also be assessed per Unit per month on the dates
set forth under "Public Offering Price" in Part I. Units purchased
subsequent to the initial deferred sales charge payment will be subject
to the initial sales charge and the remaining deferred sales charge
payments. For each Trust, the deferred sales charge will be paid from
funds in the Capital Account, if sufficient, or from the periodic sale
of Equity Securities.
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying U.S. dollar value of the Equity
Securities in a Trust, plus or minus cash, if any, in the Income and
Capital Accounts of such Trust divided by the number of Units of such
Trust outstanding.
The minimum purchase of each Trust is $1,000 ($250 for an Individual
Retirement Account or other retirement plans), except for Rollover Unit
holders who are not subject to a minimum purchase amount. The applicable
sales charge of the Target 5 Trust, United Kingdom Trust and Hong Kong
Trust for primary market sales is reduced by a discount as indicated
below for volume purchases as a percentage of the Public Offering Price
(except for sales made pursuant to a "wrap fee account" or similar
arrangements as set forth below):
<TABLE>
<CAPTION>
Dollar Amount of Maximum
Transaction at Sales Net Dealer
Public Offering Price Discount Charge Concession
_________________ _________ _______ ____________
<S> <C> <C> <C>
$ 50,000 but less than $100,000 0.25% 2.45% 1.65%
$100,000 but less than $150,000 0.60% 2.10% 1.30%
$150,000 but less than $1,000,000 0.80% 1.90% 1.10%
$1,000,000 or more 1.70% 1.00% 0.50%
</TABLE>
The applicable sales charge of the Target 10 Trust and the Global Target
15 Trust for primary market sales is reduced by a discount as indicated
below for volume purchases as a percentage of the Public Offering Price
(except for sales made pursuant to a "wrap fee account" or similar
arrangements as set forth below):
<TABLE>
<CAPTION>
Dollar Amount of Maximum
Transaction at Sales Net Dealer
Public Offering Price Discount Charge Concession
_________________ _________ _______ ____________
<S> <C> <C> <C>
$ 50,000 but less than $100,000 0.30% 2.60% 1.75%
$100,000 but less than $150,000 0.65% 2.25% 1.50%
$150,000 but less than $1,000,000 1.00% 1.90% 1.15%
$1,000,000 or more 1.90% 1.00% 0.50%
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
dealer. An investor may aggregate purchases of Units of the Trusts for
purposes of qualifying for volume purchase discounts listed above. The
sales charge reduction for quantity purchases will not apply to Rollover
Unit holders. The reduced sales charge structure will apply on all
purchases of Units in a Trust by the same person on any one day from any
one dealer. Additionally, Units purchased in the name of the spouse of a
purchaser or in the name of a child of such purchaser 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 dealer of any such combined
purchase prior to the sale in order to obtain the indicated discount. In
addition, Unit holders of other unit investment trusts having a similar
Page 26
strategy as the Trusts may utilize their termination proceeds to
purchase Units of the Trusts, subject to a deferred sales charge of
$.0190 per Unit per month to be collected on each of the remaining
deferred sales charge payment dates as provided herein. Employees,
officers and directors (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, dealers and their affiliates will be able to
purchase Units at the Public Offering Price, less the applicable dealer
concession.
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 market,
subject only to the deferred portion of the sales charge, or during the
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 Trusts 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" appearing
in Part I of this Prospectus. 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 local currency prices of the
underlying Equity Securities, changes in relevant currency exchange
rates and changes in applicable commissions, stamp taxes, custodial fees
and other costs associated with foreign trading. During the initial
offering period, the aggregate value of the Units of a Trust shall be
determined on the basis of the aggregate underlying U.S. dollar value of
the Equity Securities therein plus or minus cash, if any, in the Income
and Capital Accounts of such Trust. The aggregate underlying value of
the Equity Securities will be determined in the following manner: if the
Equity Securities are listed on a 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 U.S.
dollar value of the Equity Securities on the ask side of the market or
(c) by any combination of the above. The aggregate U.S. dollar value of
the Equity Securities during the initial offering period is computed on
the basis of the offering side value of the relevant currency exchange
rate expressed in U.S. dollars as of the Evaluation Time.
The Evaluator on each business day will appraise or cause to be
appraised the value of the underlying Equity Securities in a Trust as of
the Evaluation Time and will adjust the Public Offering Price of the
Units commensurate with such valuation. Such Public Offering Price will
be effective for all orders received prior to the Evaluation Time on
each such day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a
business day, will be held until the next determination of price. The
term "business day," as used herein and under "How May Units be
Redeemed?", shall exclude Saturdays, Sundays and the following holidays
as observed by the New York Stock Exchange, Inc.: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
U.S. dollar value of the Equity Securities therein, plus or minus cash,
if any, in the Income and Capital Accounts of a Trust plus the
applicable sales charge.
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 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
Page 27
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. During such period, the Sponsor may deposit additional Equity
Securities or cash in a Trust and create additional Units. Units
reacquired by the Sponsor during the initial offering period 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 Trusts for
sale in a number of states. With respect to the Target 5 Trust, United
Kingdom Trust and Hong Kong Trust, respectively, sales will be made to
dealers and others at prices which represent a concession or agency
commission of 1.80% of the Public Offering Price for primary and
secondary market sales. With respect to the Target 10 Trust and Global
Target 15 Trust, respectively, sales will be made to dealers and others
at prices which represent a concession or agency commission of 2.00% of
the Public Offering Price for primary and secondary market sales.
Dealers and others will receive a concession or agency commission of
$0.10 of the Public Offering Price on purchases by Rollover Unit
holders. However, resales of Units of the Trusts by such dealers and
others to the public will be made at the Public Offering Price described
in the prospectus. Notwithstanding the foregoing, with respect to sales
of Units of a Trust with total assets which equal or exceed $30 million,
dealers and others who sell over $10 million in Units of such Trust will
receive a total concession of $.20 per Unit ($.120 per Unit for Rollover
Units) for a Target 5 Trust, United Kingdom Trust and Hong Kong Trust,
respectively and $.215 per Unit ($.120 per Unit for Rollover Units) for
a Target 10 Trust and Global Target 15 Trust, respectively, while
dealers and others who sell over $20 million in Units of such Trust will
receive a total concession of $.215 per Unit ($.135 per Unit for
Rollover Units) for a Target 5 Trust, United Kingdom Trust and Hong Kong
Trust, respectively and $.230 per Unit ($.135 per Unit for Rollover
Units) for a Target 10 Trust and Global Target 15 Trust, respectively.
With respect to sales of Units of a Trust with total assets of less than
$30 million, dealers and others who sell over $10 million in Units of
such Trust will receive a total concession of $.19 per Unit ($.110 per
Unit for Rollover Units) for a Target 5 Trust, United Kingdom Trust and
Hong Kong Trust, respectively, and $.205 per Unit ($.110 per Unit for
Rollover Units) for a Target 10 Trust and Global Target 15 Trust,
respectively, while dealers and others who sell over $20 million in
Units of such Trust will receive a total concession of $.20 per Unit
($.120 per Unit for Rollover Units) for a Target 5 Trust, United Kingdom
Trust and Hong Kong Trust, respectively and $.215 per Unit ($.120 per
Unit for Rollover Units) for a Target 10 Trust and Global Target 15
Trust, respectively. The dealer concessions set forth above are not
available for sales of Units at a discount as described in "How is the
Public Offering Price Determined?"; for such sales, the dealer
concessions are those described in the applicable table under the
caption "Net Dealer Concession." The Sponsor reserves the right to
change the amount of the concession or agency commission from time to
time. In the event the Sponsor reacquires, or the Trustee redeems, Units
from brokers, dealers and others while a market is being maintained for
such Units, such entities agree to repay immediately to the Sponsor any
such concession or agency commission relating to such reacquired Units.
Certain commercial banks may be making Units of the Trusts available to
their customers on an agency basis. A portion of the sales charge paid
by these customers is 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. The Sponsor expects to recoup the foregoing payments from the
Page 28
deferred sales charge payments related to such Trusts.
From time to time the Sponsor may implement programs under which dealers
of a 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
dealer 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 Trusts. Such
payments are made by the Sponsor out of its own assets, and not out of
the assets of a Trust. These programs will not change the price Unit
holders pay for their Units or the amount that a 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 of a Trust and returns over
specified periods of other similar trusts sponsored by Nike Securities
L.P. with returns on other taxable investments such as the common stocks
comprising the DJIA, 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 Trusts.
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 each Trust are described more fully
elsewhere in this Prospectus.
Advertisements and other sales material for the Trusts may also show the
total returns (price changes plus dividends received, divided by the
maximum public offering price) of each completed prior series and the
total and average annualized return of all series in the same quarterly
cycle, assuming the holder rolled over at the termination of each prior
series. These returns will reflect all applicable sales charges and
expenses.
Trust performance may be compared to performance on a total return basis
of the DJIA, 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 a Trust's relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trusts will receive a gross sales commission equal to
the maximum sales charge per Unit for each Trust as set forth in Part I
of this Prospectus, less any reduced sales charge for quantity purchases
as described under "Public Offering-How is the Public Offering Price
Determined?" In addition, the Sponsor may be 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 a 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 on subsequent deposits) and the cost
of such Equity Securities to the Sponsor. See Note (2) of "Schedule of
Investments" appearing in Part I of this Prospectus. During the initial
offering period, the dealers and others also may realize profits or
sustain losses as a result of fluctuations after the Date of Deposit in
the Public Offering Price received by such dealers and others 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 maximum sales charge for each Trust as
set forth in Part I of this Prospectus) or redeemed. The secondary
market public offering price of Units may be greater or less than the
cost of such Units to the Sponsor. The Sponsor may also realize profits
or sustain losses in connection with the creation of additional Units
for the Distribution Reinvestment Option.
Page 29
Will There be a Secondary Market?
After the initial offering period, although it is 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 a Trust plus or minus cash, if any, in the Income and Capital
Accounts of such Trust. The aggregate underlying value of the Equity
Securities is computed on the basis of the bid side value of the
relevant currency exchange rate (offer side during the initial offering
period) expressed in U.S. dollars. 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 or may be redeemed by presentation and surrender to the
Trustee 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 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. Record
ownership may occur before settlement.
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. Only
Unit holders who elect to hold Units in uncertificated form are eligible
to participate as a Rollover Unit holder. 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 a 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.
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.
Page 30
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the Equity Securities in a Trust on or about the Income Distribution
Dates to Unit holders of record on the preceding Income Record Date. See
"Summary of Essential Information" in Part I of this Prospectus. 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. Proceeds received on the sale of any Equity Securities in
a Trust, to the extent not used to meet redemptions of Units, pay the
deferred sales charge or pay expenses, will, however, be distributed on
the last day of each month to Unit holders of record on the fifteenth
day of each 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 a 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 as part of the final liquidation distribution, and in
certain circumstances, earlier. 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 of a Trust and that amounts in the Capital Account
will be sufficient to cover the cost of the deferred sales charge. 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
a 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 under certain circumstances by
contacting the Trustee, otherwise the amount may be recoverable 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 a Trust is terminated, each Unit holder
who is not a Rollover 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, in the case of a Domestic
Trust, he elects an In-Kind Distribution as described below and (ii) a
pro rata share of any other assets of such Trust, less expenses of such
Trust. Not less than 30 days prior to the Mandatory Termination Date of
a Domestic 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 (an "In-
Kind Distribution"), if such Unit holder owns at least 2,500 Units of
such 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 a
Domestic 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 a 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 a Trust.
Dividends received with respect to the foreign Equity Securities, if
any, are converted into U.S. dollars at the applicable exchange rate.
The Trustee may establish reserves (the "Reserve Account") within a
Trust for state and local taxes, if any, and any governmental charges
payable out of such Trust.
Distribution Reinvestment Option. Any Unit holder may elect to have each
distribution of income or capital on his Units, other than the final
liquidating distribution in connection with the termination of a Trust,
Page 31
automatically reinvested in additional Units of such Trust. Each person
who purchases Units of a Trust may elect to become a participant in the
Distribution Reinvestment Option by notifying the Trustee of their
election. The Distribution Reinvestment Option may not be available in
all states. In order to enable a Unit holder to participate in the
Distribution Reinvestment Option with respect to a particular
distribution on his Units, the card must be received by the Trustee
within 10 days prior to the Record Date for such distribution. Each
subsequent distribution of income or capital on the participant's Units
will be automatically applied by the Trustee to purchase additional
Units of a Trust. The remaining deferred sales charge payments will be
assessed on Units acquired pursuant to the Distributions Reinvestment
Option. IT SHOULD BE REMEMBERED THAT EVEN IF DISTRIBUTIONS ARE
REINVESTED, THEY ARE STILL TREATED AS DISTRIBUTIONS FOR INCOME TAX
PURPOSES.
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 a Trust the following information in reasonable detail: (1) a summary
of transactions in such Trust for such year; (2) any Equity Securities
sold during the year and the Equity Securities held at the end of such
year by such 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 a 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
that as regards 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 of a Domestic Trust 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 a 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
Page 32
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.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of a 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 a Trust.
The Trustee is empowered to sell Equity Securities of a Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of a 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 and the secondary market Public Offering
Price will be determined on the basis of the aggregate underlying value
of the Equity Securities in a Trust plus or minus cash, if any, in the
Income and Capital Accounts of such Trust (net of applicable liquidation
costs for foreign Equity Securities, if any). 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 a 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
(including "when issued" contracts, if any) held in such Trust, as
determined by the Evaluator on the basis of the aggregate underlying
value of the Equity Securities in such 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
such Trust; (2) any amounts owing to the Trustee for its advances; (3)
an amount representing estimated accrued expenses of such Trust,
including but not limited to fees and expenses of the Trustee (including
legal fees), the Evaluator and supervisory fees, if any; (4) cash held
for distribution to Unit holders of record of such Trust as of the
business day prior to the evaluation being made; and (5) other
liabilities incurred by such Trust; and finally dividing the results of
such computation by the number of Units of such 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 for purposes of the
Redemption Price and Secondary Market Public Offering Price will be
determined in the following manner: if the Equity Securities are listed
on a 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 therefore 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 value of the Equity Securities is converted to their U.S.
dollar equivalent by computing the aggregate value on the basis of the
bid side value of the relevant currency exchange as of the Evaluation
Time and includes the applicable liquidation costs associated with the
sale of foreign Equity Securities.
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
Page 33
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.
Special Redemption, Liquidation and Investment in a New Trust
It is expected that a special redemption and liquidation will be made of
all Units of the Trusts held by any Unit holder (a "Rollover Unit
holder") who affirmatively notifies the Trustee in writing that he so
desires by the Rollover Notification Date specified in the "Summary of
Essential Information" appearing in Part I of this Prospectus.
All Units of Rollover Unit holders will be redeemed In-Kind on the
Special Redemption and Liquidation Date and the underlying Equity
Securities will be distributed to the Distribution Agent on behalf of
the Rollover Unit holders. On the Special Redemption and Liquidation
Date (as set forth in "Summary of Essential Information" in Part I), the
Distribution Agent will be required to sell all of the underlying Equity
Securities on behalf of Rollover Unit holders. The sales proceeds will
be net of brokerage fees, governmental charges or any expenses involved
in the sales.
The Distribution Agent will engage the Sponsor as its agent to sell the
distributed Equity Securities. The Sponsor will attempt to sell the
Equity Securities as quickly as is practicable on the Special Redemption
and Liquidation Date. The Sponsor does not anticipate that the period
will be longer than one day, given that the Equity Securities are
usually highly liquid. The liquidity of any Equity Security depends on
the daily trading volume of the Equity Security and the amount that the
Sponsor has available for sale on any particular day.
Pursuant to an exemptive order from the Securities and Exchange
Commission, each terminating Trust (and the Distribution Agent on behalf
of Rollover Unit holders) will sell Equity Securities to the New Trusts
if those Equity Securities continue to meet the individual Trust's
strategy as set forth under "What is The First Trust Special Situations
Trust?" The exemption will enable each Trust to eliminate commission
costs on these transactions. The price for those Equity Securities will
be the closing sale price on the sale date on the exchange where the
Equity Securities are principally traded, as certified by the Sponsor
and confirmed by the Trustee of each Trust.
The Rollover Unit holders' proceeds will be invested in a New Trust or a
trust with a similar investment strategy (as selected by the Unit
holder), if then registered in such state and being offered. The
proceeds of redemption will be used to buy New Trust units as the
proceeds become available. Any Rollover Unit holder may thus be redeemed
out of a Trust and become a holder of an entirely different trust, a New
Trust, with a different portfolio of Equity Securities. In accordance
with the Rollover Unit holders' offer to purchase the New Trust units,
the proceeds of the sales (and any other cash distributed upon
redemption) will be invested in a New Trust, at the public offering
price, including the applicable maximum sales charge per Unit (which for
Rollover Unit holders is currently expected to be $.190 per unit for the
New Series of a Trust, all of which will be deferred as provided herein).
The Sponsor intends to create New Trust units as quickly as possible,
dependent upon the availability and reasonably favorable prices of the
Equity Securities included in a New Trust portfolio, and it is intended
that Rollover Unit holders will be given first priority to purchase the
New Trust units. Rollover Unit holders may also elect to have their
proceeds invested in a trust with a similar investment strategy, if such
trust is then registered in the Unit holder's state of residence and
being offered. There can be no assurance, however, as to the exact
timing of the creation of the New Trust units or the aggregate number of
New Trust units which the Sponsor will create. The Sponsor may, in its
sole discretion, stop creating new units (whether permanently or
temporarily) at any time it chooses, regardless of whether all proceeds
of the Special Redemption and Liquidation have been invested on behalf
of Rollover Unit holders. Cash which has not been invested on behalf of
the Rollover Unit holders in New Trust units will be distributed within
a reasonable time after such occurrence. However, since the Sponsor can
create units, the Sponsor anticipates that sufficient units can be
created, although moneys in a New Trust may not be fully invested on the
next business day.
The process of redemption, liquidation, and investment in a New Trust is
intended to allow for the fact that the portfolios selected by the
Page 34
Sponsor are chosen on the basis of growth and income potential only for
a year, at which point a new portfolio is chosen. It is contemplated
that a similar process of redemption, liquidation and investment in a
New Trust will be available as each Trust terminates.
It should also be noted that Rollover Unit holders may realize taxable
capital gains on the Special Redemption and Liquidation but, in certain
unlikely circumstances, will not be entitled to a deduction for certain
capital losses and, due to the procedures for investing in a New Trust,
no cash would be distributed at that time to pay any taxes. Included in
the cash for the Special Redemption and Liquidation will be an amount of
cash attributable to the second semi-annual distribution of dividend
income; accordingly, Rollover Unit holders also will not have cash from
this source distributed to pay any taxes. See "What is the Federal Tax
Status of Unit holders?"
In addition, during this period a Unit holder will be at risk to the
extent that Equity Securities are not sold and will not have the benefit
of any stock appreciation to the extent that moneys have not been
invested; for this reason, the Sponsor will be inclined to sell and
purchase the Equity Securities in as short a period as they can without
materially adversely affecting the price of the Equity Securities.
Unit holders who do not inform the Distribution Agent that they wish to
have their Units so redeemed and liquidated ("Remaining Unit holders")
will not realize capital gains or losses due to the Special Redemption
and Liquidation, and will not be charged any additional sales charge.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor the New Trusts or any subsequent series of the Trusts, without
penalty or incurring liability to any Unit holder. If the Sponsor so
decides, the Sponsor shall notify the Unit holders before the Special
Redemption and Liquidation. All Unit holders will then be remaining Unit
holders, with rights to ordinary redemption as before. See "How May
Units be Redeemed?" The Sponsor may modify the terms of the New Trusts
or any subsequent series of the Trusts. The Sponsor may also modify,
suspend or terminate the Rollover Option upon notice to the Unit holders
of such amendment at least 60 days prior to the effective date of such
amendment.
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
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 a Trust?
The portfolios of the Trusts are 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 a Trust.
Except as stated under "Portfolio-What are Some Additional
Considerations for Investors?" for Failed Obligations, the acquisition
by a 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
Page 35
acquired in exchange for Equity Securities such as those acquired in
connection with a merger or other transaction. If offered such new or
exchanged securities or property, the Trustee shall reject the offer.
However, in the event such securities or property are nonetheless
acquired by a Trust, they may be accepted for deposit in a Trust and
either sold by the Trustee or held in a 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 by the Trustee are credited
to the Capital Account of a 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 Trusts with respect to selling Equity Securities from the
Trusts. 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 a 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 a 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. The Sponsor
may consider sales of Units of unit investment trusts which it sponsors
in making recommendations to the Trustee as to the selection of
broker/dealers to execute the Trusts' portfolio transactions.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
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, The
First Trust GNMA, Templeton Growth and Treasury Trust, Templeton Foreign
Fund & U.S. Treasury Securities Trust and The Advantage Growth and
Treasury Securities Trust. 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 Trusts 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 770 Broadway, New York, New York 10003. Unit
holders who have questions regarding the Trusts 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
Page 36
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 Equity Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of a 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
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 and 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
Page 37
(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 a Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information" in Part I of this Prospectus. Each Trust may be liquidated
at any time by consent of 100% of the Unit holders of a Trust or by the
Trustee when the value of the Equity Securities owned by such Trust as
shown by any evaluation, is less than the lower of $2,000,000 or 20% of
the total value of Equity Securities deposited in such Trust during the
primary offering period, or in the event that Units of such Trust not
yet sold aggregating more than 60% of the Units of such Trust are
tendered for redemption by the Underwriter, including the Sponsor. If a
Trust is liquidated because of the redemption of unsold Units of such
Trust by the Underwriter, the Sponsor will refund to each purchaser of
Units of such Trust the entire sales charge paid by such purchaser;
however, liquidation of a Trust in other circumstances will result in
all remaining unpaid deferred sales charges being deducted from
termination proceeds paid to Unit holders. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit holders
of a Trust. Within a reasonable period after termination, the Trustee
will follow the procedures set forth under "How are Income and Capital
Distributed?" Also, because of the Special Redemption and Liquidation in
a New Trust, there is a possibility that a Trust may be reduced below
the Discretionary Liquidation Amount and that a Trust could therefore be
terminated at that time before the Mandatory Termination Date of the Fund.
Commencing on the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of a Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of a 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 such Trust
maintained by the Trustee. Not less than 30 days prior to the Mandatory
Termination Date of the Domestic Trusts 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 a Domestic 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 a Domestic Trust. Unit
holders not electing a distribution of shares of Equity Securities and
who do not elect the Rollover Option will receive a cash distribution
from the sale of the remaining Equity Securities within a reasonable
time after a Trust is terminated. Regardless of the distribution
involved, the Trustee will deduct from the funds of a 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 a 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 statements of net assets, including the schedules of investments, of
the Trusts at the opening of business on the Initial Date of Deposit
appearing in Part I of this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing in Part I of this Prospectus and in the
Registration Statement, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and
auditing.
Page 38
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Page 39
CONTENTS:
The First Trust Special Situations Trust Series
What is The First Trust Special Situations Trust? 1
What are the Expenses and Charges? 3
What is the Federal Tax Status of Unit Holders? 4
United Kingdom Taxation 8
Hong Kong Taxation 9
Why are Investments in the Trusts Suitable for
Retirement Plans? 9
Portfolio:
What are Equity Securities? 9
The Dow Jones Industrial Average 10
The Financial Times Industrial Ordinary Share
Index 11
The Hang Seng Index 11
What are Some Additional Considerations
for Investors? 18
Risk Factors 18
Petroleum Refining Companies 20
Legislation 21
Foreign Issuers 21
United Kingdom 22
Hong Kong 22
Exchange Rate 23
Public Offering:
How is the Public Offering Price Determined? 26
How are Units Distributed? 28
What are the Sponsor's Profits? 29
Will There be a Secondary Market? 30
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 30
How are Income and Capital Distributed? 31
What Reports will Unit Holders Receive? 32
How May Units be Redeemed? 32
Special Redemption, Liquidation and
Investment in a New Trust 34
How May Units be Purchased by the Sponsor? 35
How May Equity Securities be Removed
from a Trust? 35
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 36
Who is the Trustee? 36
Limitations on Liabilities of Sponsor and Trustee 37
Who is the Evaluator? 37
Other Information:
How May the Indenture be Amended
or Terminated? 37
Legal Opinions 38
Experts 38
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 FUND
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)
TARGET TRUST SERIES
Prospectus
Part II
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
770 Broadway
New York, New York 10003
1-800-682-7520
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 40
-APPENDIX-
The graph which appears on page 14 of Part II of the Prospectus
represents a comparison between a $10,000 investment made on January 1,
1971 in those stocks which comprise the Dow Jones Industrial Average,
the ten common stocks in the Dow Jones Industrial Average having the
highest dividend yield and the five lowest priced stocks of the ten
common stocks in the Dow Jones Industrial Average having the highest
dividend yield as of December 31 of each respective year. The chart
indicates that $10,000 invested on January 1, 1971 in the stocks which
comprise the Dow Jones Industrial Average would on September 30, 1996 be
worth $200,898, as opposed to $641,921 had the $10,000 been invested in
the ten common stocks in the Dow Jones Industrial Average having the
highest dividend yield and $1,306,526 had the $10,000 been invested in the
five lowest priced stocks of the ten common stocks in the Dow Jones
Industrial Average having the highest dividend yield as of December 31
of each respective year. Each figure assumes that dividends received
during each year will be reinvested at year end and sales charges,
commissions, expenses and taxes were not considered in determining total
returns.
The graph which appears on page 15 of Part II of the Prospectus
represents a comparison between a $10,000 investment made on January 1,
1976 in those stocks which comprise the FT Index and the common stock of
the five companies with the lowest per share stock price of the ten
companies in the FT Index having the highest dividend yield as of
December 31 of each respective year. The chart indicates that $10,000
invested on January 1, 1976 and reinvested as of each December 31 in the
stocks which comprise the FT Index would be worth $119,682 on September
30, 1996. The same $10,000 invested on January 1, 1976 and reinvested as
of each December 31 in the five lowest priced stocks of the ten common
stocks in the FT Index having the highest dividend yield as of December
31 of each respective year would be worth $538,447 on September 30,
1996. Each figure assumes that dividends received during each year will
be reinvested at year end and sales charges, commissions, expenses and
taxes were not considered in determining total returns. The figures have
been adjusted to take into account currency exchange rate fluctuations
in the U.S. dollar.
The graph which appears on page 16 of Part II of the Prospectus
represents a comparison between a $10,000 investment made on January 1,
1976 in those stocks which comprise the Hang Seng Index and the common
stock of the five companies with the lowest per share stock price of the
ten companies in the Hang Seng Index having the highest dividend yield
as of December 31 of each respective year. The chart indicates that
$10,000 invested on January 1, 1976 and reinvested as of each December
31 in the stocks which comprise the Hang Seng Index would be worth
$466,784 on September 30, 1996. The same $10,000 invested on January 1,
1976 and reinvested as of each December 31 in the five lowest priced of
the ten common stocks in the Hang Seng Index having the highest dividend
yield as of December 31 of each respective year would be worth $478,902
on September 30, 1996. Each figure assumes that dividends received
during each year will be reinvested at year end and sales charges,
commissions, expenses and taxes were not considered in determining total
returns. The figures have been adjusted to take into account currency
exchange rate fluctuations in the U.S. dollar.
The graph which appears on page 17 of Part II of the Prospectus
represents a comparison between a $10,000 investment made on January 1,
1976 in those stocks which comprise the Combined Strategy and the
Combined Indices as of December 31 of each respective year. The chart
indicates that $10,000 invested on January 1, 1976 and reinvested as of
each December 31 in the stocks which comprise the Combined Strategy
would be worth $709,611 on September 30, 1996. The same $10,000,
invested on January 1, 1976 and reinvested as of each December 31 in the
Combined Indices would be worth $314,978 on September 30, 1996. Each
figure assumes that dividends received during each year will be
reinvested at year end and sales charges, commissions, expenses and
taxes were not considered in determining total returns. The figures have
been adjusted to take into account currency exchange rate fluctuations
in the U.S. dollar.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 172 Prospectus relate to the series number and size and
the date and various items of information which will be derived
from and apply specifically to the securities deposited in the
Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
173 has duly caused this 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 01, 1996.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 173
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
Robert D. Van Kampen Sole Director of
Nike Securities November 01, 1996
Corporation, the
General Partner of
Nike Securities L.P. Robert M. Porcellino
Attorney-in-Fact**
___________________________
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., the Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to form S-6 of The First Trust Combined
Series 258 (File No. 33-63483) and the same is hereby
incorporated by this reference.
S-2
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF ERNST & YOUNG LLP
The consent of Ernst & Young LLP to the use of its name and
to the reference to such firm in the Prospectus included in this
Registration Statement will be filed by amendment.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-3
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-43693] filed on behalf of The First Trust
Special Situations Trust, Series 22).
1.1.1* Form of Trust Agreement for Series 173 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 Corporaiton, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5
