SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 October 15, 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 1 of 2
First Trust (registered trademark)
Global Target 15 Trust, October 1996 Series
(The First Trust Special Situations Trust, Series 168)
THIS PART I OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY THE PART II OF THE PROSPECTUS DATED OCTOBER 2, 1996. BOTH PARTS I AND
II OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
The Trust. The First Trust Special Situations Trust, Series 168 (the
"Trust") is a unit investment trust consisting of a diversified
portfolio of common stocks issued by companies incorporated or
headquartered in the United States, United Kingdom and Hong Kong which
provide income and are considered to have the potential for capital
appreciation (the "Equity Securities").
The portfolio of the Trust consists of 15 common stocks of companies
which are components of the Dow Jones Industrial Average (the "DJIA"),
the Financial Times Industrial Ordinary Share Index (the "FT Index") and
the Hang Seng Index. Specifically, the portfolio 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 close of business two days prior to the date of this
Prospectus in the case of the DJIA stocks and three 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 the Trust. The objective of
the Trust is to provide an above-average total return through a
combination of dividend income and capital appreciation. Units of the
Trust are not designed for their prices to 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.
The 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 should note
that an investment in a portfolio which contains foreign equity
securities, such as the 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 Portfolio. See "Risk
Factors." There is, of course, no guarantee that the objective of the
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
Trust or the Sponsor a license to use these indexes, and have not
participated in the creation of the Trust or in the selection of stocks
therein, and have not approved any information herein related thereto.
Each Unit of the Trust represents an undivided interest in all Equity
Securities deposited therein. The Sponsor may deposit additional Equity
Securities or cash in the Trust with instructions to purchase Equity
Securities in the Trust 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.
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 October 2, 1996
Page 1
Public Offering Price. The Public Offering Price per Unit is equal to
the aggregate underlying value of the Equity Securities in the 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 the Trust equal to the
difference between the maximum sales charge for the Trust (2.90% of the
Public Offering Price) and the maximum remaining deferred sales charge
(initially $.1900 per Unit). 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 November 29, 1996,
and on the last business day of each month thereafter, through August
29, 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 2.90% of the Public Offering
Price (equivalent to 2.930% of the net amount invested, exclusive of the
deferred sales charge). A pro rata share of accumulated dividends, if
any, in the Income Account is included in the Public Offering Price. The
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 during the
initial offering period and on the bid side value for the secondary
market transactions and includes the liquidation costs associated with
selling Equity Securities to meet redemptions or upon Trust termination.
The minimum purchase for the Trust is $1,000 ($250 for an Individual
Retirement Account or other retirement plans). The sales charge for the
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
distribution to Unit holders (based on the most recent interim and final
ordinary dividend declared with respect to the Equity Securities and
converted into U.S. dollars, if applicable, at the offer side of the
exchange rate at the Evaluation Time) on the business day prior to the
Initial Date of Deposit was $.4954 per Unit. This estimate will vary
with changes in the 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 distribution will
be realized in the future.
Dividend and Capital Distributions. Cash dividends received by the 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 the
Trust. See "What is the Federal Tax Status of Unit Holders?" in Part II
of this Prospectus. Additionally, upon termination of the 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
share of the 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 a New
Trust." 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 the 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 the 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 the Trust. If
a secondary market is not maintained, a Unit holder may still redeem his
Units through the Trustee. 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.
Page 2
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 the Trust. The portfolio of the New
Trust will contain the 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 close of business three
days prior to the Initial Date of Deposit of such New Trust for the FT
Index and Hang Seng Index stocks and two business days prior to the
Initial Date of Deposit of such New Trust for the DJIA stocks. Unit
holders who hold their Units in book entry form may specify by October
1, 1997 to have their Units redeemed in-kind, the distributed securities
sold, and the proceeds invested in a New Trust or a trust with a similar
investment strategy at a reduced sales charge, provided such New Trust
or other similar trusts are offered and Units are available. Cash not
invested in a New Trust or such other trusts 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 or other eligible 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. Unit holders
not electing the "Rollover Option" will receive a cash distribution
within a reasonable time after the Trust's termination. See "How are
Income and Capital Distributed?" and "Other Information" in Part II of
this Prospectus.
Risk Factors. An investment in the Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers 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 Trust will also be subject to the risks of currency
fluctuations associated with investments in Foreign Equity Securities
trading in non-U.S. currencies. The 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 Some Additional Considerations for Investors?-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-October 2, 1996
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Global Target 15 Trust
October 1996 Series
______________________
<S> <C>
General Information
Initial Number of Units (1) 15,000
Fractional Undivided Interest in the Trust per Unit (1) 1/15,000
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $ 150,470
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 10.0313
Maximum Sales Charge 2.90% of the Public Offering Price per Unit
(2.930% of the net amount invested, exclusive of the deferred sales charge) (3) $ .2939
Less Deferred Sales Charge per Unit $ (.1900)
Public Offering Price per Unit (3) $ 10.1352
Sponsor's Initial Repurchase Price per Unit $ 9.8413
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.8413
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 33718R 724
Reinvestment CUSIP Number 33718R 732
Initial Date of Deposit October 2, 1996
First Settlement Date October 7, 1996
Rollover Notification Date October 1, 1997
Special Redemption and Liquidation
Period October 15, 1997 to October 31, 1997
Mandatory Termination Date October 31, 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 4
FEE TABLE-Global Target 15 Trust, October 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) 1.03%(a) $ .104
Deferred sales charge
(as a percentage of public offering price) 1.87%(b) .190
________ ________
2.90% $ .294
======== ========
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 .089% $.0090
Portfolio supervision, bookkeeping, administrative and
evaluation fees .059% .0060
Other operating expenses .110% .0111
________ ________
Total .258% $.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, October
1996 Series estimated operating expense ratio of .258% and
a 5% annual return on the investment throughout the periods $ 32 $ 76 $ 124 $ 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 5
Equity Securities Selected for Global Target 15 Trust, October 1996 Series
DJIA INDEX Portfolio
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, and 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 Portfolio
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 Portfolio
Amoy Properties Ltd. is a property investment company and a
subsidiary of Hang Lung Development Company Ltd. The company invests in
commercial, office, residential and industrial properties in Hong Kong.
The company is also involved in car park management and property
management.
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.
Page 6
Hong Kong Telecommunications Ltd. provides telecommunications,
computer, engineering and other services. The company also sells and
rents telecommunications equipment. The principal activities of the
company are conducted in Hong Kong.
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 7
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 168
We have audited the accompanying statement of net assets, including the
schedule of investments, of The First Trust Special Situations Trust,
Series 168, comprised of Global Target 15 Trust, October 1996 Series, as
of the opening of business on October 2, 1996. This statement of net
assets is the responsibility of the Trust's Sponsor. Our responsibility
is to express an opinion on this statement of net assets based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the statement
of net assets. Our procedures included confirmation of the letter of
credit held by the Trustee and deposited in the Trust on October 2,
1996. An audit also includes assessing the accounting principles used
and significant estimates made by the Sponsor, as well as evaluating the
overall presentation of the statement of net assets. We believe that our
audit of the statement of net assets provides a reasonable basis for our
opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of The First
Trust Special Situations Trust, Series 168, comprised of Global Target
15 Trust, October 1996 Series, at the opening of business on October 2,
1996 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
October 2, 1996
Page 8
Statement of Net Assets
GLOBAL TARGET 15 TRUST, OCTOBER 1996 SERIES
The First Trust Special Situations Trust, Series 168
At the Opening of Business on October 2, 1996,
the Initial Date of Deposit
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $150,470
Less liability for deferred sales charge (3) (2,850)
________
Net assets $147,620
========
Units outstanding 15,000
ANALYSIS OF NET ASSETS
Cost to investors (4) $152,029
Less sales charge (4) (4,409)
________
Net assets $147,620
========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" is based on their aggregate underlying value at the close
of business on October 1, 1996, the business day prior to the Initial
Date of Deposit.
(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 November 29, 1996 and on the last business day of each
month thereafter through August 29, 1997. If Units are redeemed prior to
August 29, 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 2.930% of the net amount invested, exclusive of the deferred sales
charge), assuming no reduction of sales charge for quantity purchases.
Page 9
Schedule of Investments
GLOBAL TARGET 15 TRUST, OCTOBER 1996 SERIES
The First Trust Special Situations Trust, Series 168
At the Opening of Business on October 2, 1996,
the Initial Date of Deposit
<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 Trust (2) Yield (3)
______ _______________________________________ ____________ ______ _____________ _________
<C> <S> <C> <C> <C> <C>
DJIA Companies:
_______________
259 AT&T Corporation 6.69% $38.8750 $ 10,069 3.40%
160 Chevron Corporation 6.72% 63.2500 10,120 3.42%
205 General Motors Corporation 6.73% 49.3750 10,122 3.24%
234 International Paper Company 6.67% 42.8750 10,033 2.33%
144 Minnesota Mining & Manufacturing Company 6.64% 69.3750 9,990 2.83%
FT Index Companies:
___________________
2,160 BICC Plc 6.63% 4.6156 9,970 5.22%
2,320 BTR Plc 6.52% 4.2322 9,819 6.08%
3,200 British Gas Plc 6.64% 3.1214 9,988 9.09%
1,755 British Telecom Plc 6.51% 5.5778 9,789 6.56%
6,750 Hanson Plc 6.63% 1.4785 9,980 9.65%
Hang Seng Index Companies:
__________________________
8,500 Amoy Properties Ltd. 6.61% 1.1702 9,946 4.81%
9,000 Henderson Investment Ltd. 6.65% 1.1120 10,008 4.77%
5,600 Hong Kong Telecommunications Ltd. 6.81% 1.8296 10,246 4.79%
16,000 Shun Tak Holdings Ltd. 6.87% .6465 10,344 6.50%
14,000 South China Morning Post (Holdings) Ltd. 6.68% .7176 10,046 5.41%
_______ ________
Total Investments 100% $150,470
======= ========
</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 1, 1996. The Trust has a mandatory termination date
of October 31, 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 1, 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 $150,470. Cost and loss to Sponsor
relating to the Equity Securities sold to the Trust were $151,693 and
$1,223, 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, on that Equity
Security in the period 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 10
This page is intentionally left blank.
Page 11
FIRST TRUST (registered trademark)
GLOBAL TARGET 15 TRUST
OCTOBER 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 Trust are no longer available, or for investors who
will reinvest into subsequent series of the Trust, 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.
October 2, 1996
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 12
Part 2 of 2
FIRST TRUST (REGISTERED TRADEMARK)
GLOBAL TARGET 15 TRUST
The First Trust Special Situations Trust Series
Prospectus Part II
Dated October 2, 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 trust set forth in Part I of this Prospectus (the "Trust").
The Trust was created under the laws of the State of New York pursuant
to the 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 the Trust, the Trustee delivered to the Sponsor documents
evidencing the entire ownership of such Trust.
The objective of the Trust is to provide an above-average total return
through a combination of dividend income and capital appreciation by
investing in a diversified portfolio of common stocks issued by
companies incorporated or headquartered in the United States, United
Kingdom and Hong Kong. The portfolio of the Trust consists of 15 common
stocks of companies which are components of the Dow Jones Industrial
Average (the "DJIA"), the Financial Times Industrial Ordinary Share
Index (the "FT Index") or the Hang Seng Index. Specifically, the
portfolio 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 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 and two business
days prior to the date of Part I of this Prospectus in the case of the
DJIA stocks.
The publishers of the DJIA, FT Index and the Hang Seng Index are not
affiliated with the Sponsor. There is, of course, no guarantee that the
objective of the Trust will be achieved.
Today's global equities marketplace offers a compelling investment
opportunity. Many countries, including Hong Kong and the United Kingdom,
follow the United States in economic activity, altogether accounting for
a significant portion of the world's economic activity.
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
Additionally, international equity markets offer attractive growth
potential, which can help investors diversify their portfolios globally
and give them above-average capital appreciation potential. Equities, as
most investors know, have historically outperformed bonds and other
fixed-income securities and have outpaced the inflation rate over the
long term. The Trust allows investors to make an investment in global-
based companies in the United States, Hong Kong and the United Kingdom.
With the deposit of the Equity Securities on the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
amounts of Equity Securities in the Trust's portfolio. From time to time
following the Initial Date of Deposit, the Sponsor, pursuant to the
Indenture, may deposit additional Equity Securities in the Trust or cash
(including a letter of credit) with instructions to purchase additional
Equity Securities in the Trust. Units may be continuously offered for
sale to the public by means of this Prospectus, resulting in a potential
increase in the outstanding number of Units of the Trust. Any deposit by
the Sponsor of additional Equity Securities or the purchase of
additional Equity Securities pursuant to a cash deposit will duplicate,
as nearly as is practicable, the original proportionate relationship and
not the actual proportionate relationship on the subsequent date of
deposit, since the two may differ. Any such difference may be due to the
sale, redemption or liquidation of any of the Equity Securities
deposited in the Trust on the Initial, or any subsequent, Date of
Deposit. See "How May Equity Securities be Removed from the Trust?" The
original percentage relationship of each Equity Security to the Trust is
set forth in Part I of this Prospectus under "Schedule of Investments."
Since the prices of the underlying Equity Securities will fluctuate
daily, the ratio, on a market value basis, will also change daily. The
portion of Equity Securities represented by each Unit will not change as
a result of the deposit of additional Equity Securities in the Trust. If
the Sponsor deposits cash, however, existing and new investors may
experience a dilution of their investment and a reduction in their
anticipated income because of fluctuations in the prices of the Equity
Securities between the time of the cash deposit and the purchase of the
Equity Securities and because the Trust will pay the associated
brokerage fees. To minimize this effect, the Trust will try to purchase
the Equity Securities as close to the evaluation time or as close to the
evaluation price as possible. 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 the Trust with respect to acquiring Equity Securities for
the Trust. In acting in such capacity, the Sponsor will be held subject
to the restrictions under the Investment Company Act of 1940, as amended.
On the Initial Date of Deposit, each Unit of the Trust represented the
undivided fractional interest in the Equity Securities deposited in such
Trust, as set forth under "Summary of Essential Information" appearing
in Part I of this Prospectus. To the extent that Units of the 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 the 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?" The Trust has a
Mandatory Termination Date as set forth under "Summary of Essential
Information" for such Trust in Part I of this Prospectus.
What are the Expenses and Charges?
With the exception of bookkeeping and other administrative services
provided to the Trust, for which the Sponsor will be reimbursed from the
Trust in amounts as set forth under "Summary of Essential Information"
in Part I of this Prospectus, the Sponsor will not receive any fees in
connection with its activities relating to the Trust. Such bookkeeping
and administrative charges may be increased without approval of the Unit
holders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor. The fees payable to
the Sponsor for such services may exceed the actual costs of providing
such services for this Trust, 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 of supplying such services in such year.
First Trust Advisors L.P. will receive an annual supervisory fee from
the Trust, which is not to exceed the amount set forth under such
Trust's "Summary of Essential Information" in Part I of this Prospectus,
Page 2
for providing portfolio supervisory services for the Trust. Such fee is
based on the number of Units outstanding in the Trust on January 1 of
each year, except for the year or years in which an initial offering
period occurs in which case the fee for a month is based on the number
of Units outstanding at the end of such month. This fee may exceed the
actual costs of providing such supervisory services for this Trust, but
at no time will the total amount received for portfolio supervisory
services rendered to all unit investment trusts of which Nike Securities
L.P. is the Sponsor in any calendar year exceed the aggregate cost to
First Trust Advisors L.P. of supplying such services in such year. In
providing such supervisory services, the Portfolio Supervisor may
purchase research services from a variety of sources which may include
underwriters or dealers of the Trust.
Subsequent to the initial offering period, 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 fee may exceed the actual costs of providing such
evaluation services for this Trust, but at no time will the total amount
received for evaluation services rendered to all unit investment trusts
of which Nike Securities L.P. is the Sponsor in any calendar year exceed
the aggregate cost to First Trust Advisors L.P. of supplying such
services in such year. The Trustee pays certain expenses of the Trust
for which it is reimbursed by the Trust. The Trustee will receive for
its ordinary recurring services to the Trust an annual fee as indicated
in "Summary of Essential Information" in Part I of this Prospectus. The
fee is computed per Unit in such Trust outstanding 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, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income Account
of the Trust to the extent funds are available, and then from the
Capital Account of such Trust. Since the Trustee has the use of the
funds being held in the Capital and Income Accounts for payment of
expenses and redemptions and since such Accounts are noninterest-bearing
to Unit holders, the Trustee benefits thereby. Part of the Trustee's
compensation for its services to the Trust is expected to result from
the use of these funds. However, the Trustee may bear from its own
resources certain expenses relating to the Trust, including organization
costs and brokerage commissions. The Trustee's and Evaluator's 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.
The following additional charges are or may be incurred by the 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 the Trust and the rights and
interests of the Unit holders; fees of the Trustee for any extraordinary
services performed under the Indenture; indemnification of the Trustee
for any loss, liability or expense incurred by it without negligence,
bad faith or willful misconduct on its part, arising out of or in
connection with its acceptance or administration of the Trust;
indemnification of the Sponsor for any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct in
acting as Depositor of the Trust; foreign custodial and transaction
fees; and all taxes and other government charges imposed upon the
Securities or any part of the Trust (no such taxes or charges are being
levied or made or, to the knowledge of the Sponsor, contemplated). The
above expenses and the Trustee's annual fee, when paid or owing to the
Trustee, are secured by a lien on the Trust. In addition, the Trustee is
empowered to sell Equity Securities in the Trust in order to make funds
available to pay all these amounts if funds are not otherwise available
in the Income and Capital Accounts of the Trust. Since the Equity
Securities are all common stocks and the income stream produced by
dividend payments is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses
of the Trust. As described above, if dividends are insufficient to cover
expenses, it is likely that Equity Securities will have to be sold to
meet Trust expenses. These sales may result in capital gains or losses
to Unit holders. See "What is the Federal Tax Status of Unit Holders?"
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
Page 3
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 (the
"Code"). Unit holders should consult their tax advisers in determining
the Federal, state, local and any other tax consequences of the
purchase, ownership and disposition of Units in the Trust. The Trust
will report as gross income earned by U.S. Unit holders their pro rata
share of dividends received by the Trust as well as their pro rata share
of the associated Tax Credit Amount (as defined in "United Kingdom
Taxation" below) relating to Equity Securities listed on the FT Index,
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 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 Trust. 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 Trust and will be distributed to investors on the
first Distribution Date after the dividend is received by the Trust.
Those U.S. Unit holders who hold Units on the relevant record date for
dividends on the underlying Securities held by the Trust 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 Trust 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. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of the assets of the Trust under the Code;
and the income of the Trust will be treated as income of the Unit
holders thereof under the Code. Each Unit holder will be considered to
have received his pro rata share of the income derived from each Equity
Security when such income is considered to be received by the Trust.
2. 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 the 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 the Trust are actually received by the Unit holder or are
automatically reinvested. See "How are Income and Capital Distributed?-
Distribution Reinvestment Option."
3. Each Unit holder will have a taxable event when the 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 the Trust (in
proportion to the fair market values thereof on the valuation date
closest to 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 the 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 the Trust is taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." A Unit
holder's pro rata portion of dividends paid on such Equity Security
which 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.
4. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held by the
Trust will generally be considered a capital gain (except in the case of
a dealer or a financial institution) and will generally be long-term if
Page 4
the Unit holder has held his or her Units for more than one year (the
date on which the Units are acquired (i.e., the "trade date") is
excluded for purposes of determining whether the Units have been held
for more than one year). A Unit holder's portion of loss, if any, upon
the sale or redemption of Units or the disposition of Equity Securities
held by the Trust will generally be considered a capital loss (except in
the case of a dealer 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. Unit holders should consult their tax advisers regarding the
recognition of gains and losses for federal income tax purposes. 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 the Trust (the "New Trust"), (the
Sponsor intends to create a separate New Trust in conjunction with the
termination of the Trust) 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 were 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.
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 corporation that owns Units will
generally be entitled to a 70% dividends received deduction with respect
to such Unit holder's pro rata portion of dividends received by the
Trust (to the extent such dividends are taxable as ordinary income, as
discussed above, and are attributable to domestic corporations) 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 the Trust are attributable to
foreign corporations, a corporation that owns Units will not be entitled
to the dividends received deduction with respect to its pro rata portion
of such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unit holders. Each
Unit holder's pro rata share of each expense paid by the Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by him or her. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
Page 5
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by
the Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
by the 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 marginal stated 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, including his or her pro rata portion of all the Equity
Securities represented by the Unit.
Special Tax Consequences of Termination of the Trust and of Investment
in a New Trust. As discussed in "Rights of Unit Holders-Special
Redemption, Liquidation and Investment in a New Trust," a Unit holder
may elect to become a 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 valuation date nearest 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 the Trust will be reduced to the
extent dividends paid with respect to such Equity Security are received
by the Trust which are not taxable as ordinary income as described above.
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified that payments to the Unit holder are
subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by the Trust to such Unit holder (including amounts
received upon the redemption of Units) will be subject to back-up
withholding. Distributions by the Trust (other than those that are not
treated as United States source income, if any) 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
Page 6
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 Trust.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes and Unit holders should consult their tax
advisers regarding the potential tax consequences relating to the
payment of any such withholding taxes by the Trust. Any dividends
withheld as a result thereof will nevertheless be treated as income to
the Unit holders. Because, under the grantor trust rules, an investor is
deemed to have paid directly his share of foreign taxes that have been
paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States 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 and
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 Trust Suitable for
Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trust for New York tax matters, under the existing income tax laws of
the State of New York, the Trust is not an association taxable as a
corporation and the income of the Trust will be treated as the income of
the Unit holders thereof.
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
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 Trust 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 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 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 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
Page 7
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 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 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 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 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 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.
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 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 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 Trust, the 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 Trust.
HONG KONG TAXATION
The following summary describes the Hong Kong tax consequences relating
to those Equity Securities held by the Trust and listed on the Hang Seng
Index under existing law to U.S. Unit holders of Units of the 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 applicable to their particular circumstances.
Taxation of Dividends. Amounts in respect of dividends paid to Unit
holders of the 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 Trust (other than a person carrying on
a trade, profession or business in Hong Kong) will not be subject to
Page 8
profits tax on any gain or profits made on the realization or other
disposal of his Units.
Hong Kong Estate Duty. Units of the Trust will not give rise to a
liability to Hong Kong estate duty.
Why are Investments in the Trust Suitable for Retirement Plans?
Units of the Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to capital
gains and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible
for special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are Equity Securities?
The portfolio of the Trust consists of 15 common stocks of companies
which are components of the DJIA, the FT Index and the Hang Seng Index.
Specifically, the portfolio 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 close
of business three 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 and two
days prior to the date of Part I of this Prospectus in the case of the
DJIA stocks. The yield for each Equity Security was calculated by adding
together the most recent interim and final dividend declared (in the
case of the Equity Securities listed in the FT Index and the Hang Seng
Index) or annualizing the most recent quarterly or semi-annual dividend
declared (in the case of the Equity Securities listed in the DJIA) and
dividing the result by the market value of the Equity Security 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 and two business days prior to the date of Part I of this
Prospectus in the case of the DJIA stocks (the "Stock Selection Date").
An investment in the 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 the Hang
Seng Index with the highest dividend yields may be effective in
achieving the 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 Trust, there is no guarantee
that the Trust's objective will be achieved or that the Trust will
provide for capital appreciation in excess of the Trust's expenses.
The DJIA is comprised of 30 common stocks 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. Any changes in the components of the DJIA made
after the Stock Selection Date will not cause a change in the identity
of the common stocks included in the Trust Portfolio, including any
additional Equity Securities deposited in the Trust.
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
Page 9
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. Any changes in the components of the FT Index made
after the Stock Selection Date will not cause a change in the identity
of the common stocks included in the Trust, including any additional
Equity Securities deposited thereafter.
The Hang Seng Index consists of 33 of the stocks currently listed on the
Stock Exchange of Hong Kong Ltd. (the "Hong Kong Stock Exchange"), and
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. Any changes in the components in
the Hang Seng Index made after the Stock Selection Date will not cause a
change in the identity of the common stocks included in the 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 Portfolio as of the 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 Trust 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 the Trust's selection
criteria, and therefore, such Equity Securities would no longer be
chosen for deposit into the Trust 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
companies which make up the DJIA have remained relatively constant over
the life of the DJIA. Taking into account name changes, 9 of the
original DJIA companies are still in the DJIA today. For two periods of
17 consecutive years, March 14, 1939-July 1956 and June 1, 1959-August
6, 1976, there were no changes made to the list. 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.
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 & Company Texaco, Inc.
Eastman Kodak Company Union Carbide Corporation
Exxon Corporation United Technologies Corporation
General Electric Company Westinghouse Electric Corporation
General Motors Corporation Woolworth Corporation
Page 10
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 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 Industries 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 consists of 33 of
the 358 stocks currently 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.
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 Co. Ltd. Television Broadcasts
Hong Kong and China Gas Wharf Holdings
Hong Kong Electric Holdings Ltd. Wheelock & Co.
Hong Kong and Shanghai Hotels
Neither the publishers of the DJIA, FT Index nor the Hang Seng Index
have granted the Trust or the Sponsor a license to use their respective
Index. Units of the Trust 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 Trust or in the selection of stocks in the Trust and have not
approved any information related thereto.
The following table compares the actual performance of the Five Lowest
Priced Stocks of the Ten Highest Dividend Yielding Stocks 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 in the FT
Page 11
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).
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN (2)
Total Returns of the 5 Lowest Priced
of the 10 Highest Dividend Yielding Strategies (1) Index Total Returns
__________________________________________________ _____________________________________________________
Hang Seng Combined Hang Seng Combined
Year FT Index Index DJIA Strategy FT Index Index DJIA Indices
____ ________ _________ ____ ________ ________ _________ ____ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1976 -13.84% 35.73% 40.80% 20.90% -31.50% 42.72% 22.75% 11.32%
1977 87.78% -8.82% 5.64% 28.20% 82.48% -4.04% -12.76% 21.89%
1978 10.27% 4.16% 1.26% 5.23% 17.06% 23.10% 2.62% 14.26%
1979 12.28% 111.92% 9.91% 44.70% 12.57% 77.99% 10.52% 33.69%
1980 52.30% 64.71% 40.53% 52.51% 41.90% 65.48% 21.45% 42.94%
1981 -2.47% -1.08% 3.64% 0.03% -24.09% -12.34% -3.40% -13.27%
1982 -5.86% -44.35% 41.88% -2.77% -15.15% -48.01% 25.84% -12.44%
1983 25.52% -14.81% 36.11% 15.61% 9.39% -2.04% 25.68% 11.01%
1984 16.66% 62.09% 10.88% 29.88% -18.51% 42.61% 1.07% 8.39%
1985 78.24% 46.09% 37.84% 54.06% 93.09% 50.95% 32.83% 58.96%
1986 22.02% 61.99% 30.31% 38.11% 27.59% 51.16% 26.96% 35.24%
1987 47.39% -1.32% 11.06% 19.04% 76.82% -6.67% 6.00% 25.38%
1988 21.17% 48.87% 21.22% 30.42% 2.50% 20.55% 15.97% 13.01%
1989 24.71% 9.03% 10.49% 14.74% 9.34% 10.17% 31.74% 17.08%
1990 20.25% 8.68% -15.27% 4.55% 32.01% 12.03% -0.61% 14.48%
1991 25.79% 55.75% 61.79% 47.78% 11.13% 48.31% 23.99% 27.81%
1992 0.88% 25.21% 22.88% 16.32% -21.14% 33.67% 7.37% 6.63%
1993 43.64% 115.23% 33.82% 64.23% 15.81% 121.23% 16.74% 51.26%
1994 6.79% -28.54% 8.08% -4.56% 7.90% -28.85% 4.94% -5.34%
1995 10.81% 4.52% 30.26% 15.19% 16.49% 26.98% 36.47% 26.65%
1/1/96- 4.49% 5.69% 19.11% 9.76% 8.47% 20.65% 16.80% 15.30%
9/30/96
</TABLE>
[FN]
______________
Source: Datastream International, Inc. The Sponsor has not
independently verified this data but has no reason to believe that this
data is incorrect in any material respect. Reasonable assumptions were
relied on where data was either unavailable or only partially available
and these assumptions could have a material impact on the historical
performance calculations. The annual figures in the charts have been
adjusted to take into account the effect of currency exchange rate
fluctuations against the U.S. dollar.
(1) 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
Combined Strategy of the Five Lowest Priced Stocks of the Ten Highest
Dividend Yielding Stocks achieved an average annual total return of
22.50%, which exceeded that of the average total return of the Five
Lowest Priced Stocks of the Ten Highest Dividend Yielding Stocks in each
of the FT Index, Hang Seng Index and the DJIA, which were 20.90%, 20.08%
and 20.72%, respectively. In addition, over this period the Combined
Strategy of the Five Lowest Priced Stocks of the Ten Highest Dividend
Yielding Stocks achieved a greater average annual total return than that
of the FT Index, Hang Seng Index, DJIA and a combination of all three
indices, which were 12.55%, 20.23%, 14.14% and 17.85%, respectively.
Although the Trust seeks to achieve a better performance than the Five
Lowest Priced Stocks of the Ten Highest Dividend Yielding Stocks in each
of the respective indices and each of the indices as a whole, and a
combination thereof, there can be no assurance that the Trust will
achieve a better performance over its one-year life or over consecutive
rollover periods, if available.
Page 12
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 and
the Combined Indices 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
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 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 13
The returns shown above are not guarantees of future performance and
should not be used as a predictor of returns to be expected in
connection with the 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
table, the Five Lowest Priced Stocks of the Ten Highest Dividend
Yielding Stocks in the Combined Strategy underperformed the Five Lowest
Priced Stocks of the Ten Highest Dividend Yielding Stocks of each
respective index and each index as a whole or combination thereof,
respectively, in certain years. Accordingly, there can be no assurance
that the Trust's Portfolio will outperform the Five Lowest Priced Stocks
of the Ten Highest Dividend Yielding Stocks of each respective index and
each index as a whole or combination thereof over the life of the Trust
or over consecutive rollover periods, if available. A Holder of Units in
the 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 the Trust may not be fully
invested at all times.
What are Some Additional Considerations for Investors?
The Trust consists of different issues of Equity Securities, all of
which are listed on either domestic or foreign securities exchanges. In
addition, each of the companies whose Equity Securities are included in
a portfolio are actively traded, well established corporations.
The Trust consists of such of the Equity Securities listed under the
Trust's "Schedule of Investments" appearing in Part I of this Prospectus
as may continue to be held from time to time in the Trust and any
additional Equity Securities acquired and held by the Trust pursuant to
the provisions of the Trust Agreement, together with cash held in the
Income and Capital Accounts. Neither the Sponsor nor the Trustee shall
be liable in any way for any failure in any of the Equity Securities.
However, should any contract for the purchase of any of the Equity
Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the Trust to cover such purchase
are reinvested in substitute Equity Securities in accordance with the
Trust Agreement, refund the cash and sales charge attributable to such
failed contract to all Unit holders on the next distribution date.
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 the 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 the Trust, they may be accepted for
deposit in the Trust and either sold by the Trustee or held in the Trust
pursuant to the direction of the Sponsor (who may rely on the advice of
the Portfolio Supervisor). See "How May Equity Securities be Removed
from the Trust?" Equity Securities, however, will not be sold by the
Trust to take advantage of market fluctuations or changes in anticipated
rates of appreciation or depreciation or if the Equity Securities are no
longer among the five lowest priced of the ten common stocks in the
respective Index with the highest dividend yield.
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, the Trust may
be restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions and the value of the Trust
will be adversely affected if trading markets for the Equity Securities
are limited or absent.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that
Page 14
the financial condition of the issuers of the Equity Securities orthe
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
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Shareholders of common
stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or
holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by the Trust have a right
to receive dividends only when and if, and in the amounts, declared by
the issuer's board of directors and have a right to participate in
amounts available for distribution by the issuer only after all other
claims on the issuer have been paid or provided for. Common stocks do
not represent an obligation of the issuer and, therefore, do not offer
any assurance of income or provide the same degree of protection of
capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its
common stock or the rights of holders of common stock with respect to
assets of the issuer upon liquidation or bankruptcy. Cumulative
preferred stock dividends must be paid before common stock dividends,
and any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in the Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee will
have the right to vote all of the voting stocks in the Trust and will
vote such stocks in accordance with the instructions of the Sponsor.
Investors should be aware of certain other considerations before making
a decision to invest in the 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 the Trust and may be more or less than the price at
which they were deposited in the Trust. The Equity Securities may
appreciate or depreciate in value (or pay dividends) depending on the
full range of economic and market influences affecting these securities,
including the impact of the Sponsor's purchase and sale of the Equity
Securities (especially during the primary offering period of Units of
the Trust and 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 the Trust, the Sponsor is authorized under the
Indenture to direct the Trustee to acquire other Equity Securities
("Replacement Securities"). Any Replacement Security will be identical
to those which were the subject of the failed contract. The Replacement
Securities must be purchased within 20 days after delivery of the notice
of a failed contract, and the purchase price may not exceed the amount
of funds reserved for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
the Trust, and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in the Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of the Trust.
The Indenture also authorizes the Sponsor to increase the size of the
Trust and the number of Units thereof by the deposit of additional
Equity Securities, or cash (including a letter of credit) with
instructions to purchase additional Equity Securities, in the Trust and
Page 15
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 the Trust are acquired, the Trustee
will have no power to vary the investments of the Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, but may dispose of
Equity Securities only under limited circumstances. See "How May Equity
Securities be Removed from the Trust?"
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit in respect of any Equity Security
which might reasonably be expected to have a material adverse effect on
the Trust. At any time after the Initial Date of Deposit, litigation may
be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on the Trust.
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 Trust or the issuers of
the Equity Securities. Changing approaches to regulation may have a
negative impact on certain companies represented in the Trust. There can
be no assurance that future legislation, regulation or deregulation will
not have a material adverse effect on the Trust or will not impair the
ability of the issuers of the Equity Securities to achieve their
business goals.
Foreign Issuers. Since certain of the Equity Securities included in the
Trust consist of securities of foreign issuers, an investment in the
Trust involves certain investment risks that are different in some
respects from an investment in the 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 Trust, the Sponsor believes that adequate information
will be available to allow the Supervisor to provide portfolio
surveillance for the Trust.
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 Trust are subject to
exchange control restrictions under existing law which would materially
interfere with payment to the Trust 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 the Trust. In addition,
the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of
Page 16
international securities in the Trust and on the ability of the Trust to
satisfy their obligation to redeem Units tendered to the Trustee for
redemption. In addition, restrictions on the settlement of transactions
on either the purchase or sale side, or both, could cause delays or
increase the costs associated with the purchase and sale of the Foreign
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 the 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 the
Trust in the United States securities markets are subject to severe
restrictions and may not be practicable. Accordingly, sales of these
Equity Securities by the Trust will generally be effected only in
foreign securities markets. Although the Sponsor does not believe that
the Trust 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 the 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 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.
Page 17
dollar. Over the ten year period between 1983 and 1993, real gross
domestic product increased at an average annual rate of approximately 6%.
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
or 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 Trust.
It should be noted by investors that the Trust terminates 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
the Trust and the value of the Units.
China currently enjoys a most favored nation status ("MFN Status") with
the United States. MFN Status is subject to annual review by the
President of the United States. 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 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 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 Trust, although delisting would not
necessarily result in the disposal of the stock of these companies, nor
would it prevent the Trust 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 Trust is mainly comprised 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 portfolio (and
hence of the Units) and of the distributions from the portfolio will
vary with fluctuations in the United States dollar foreign exchange
rates for the relevant currencies. Most foreign currencies have
fluctuated widely in value against the United States dollar for many
reasons, including supply and demand of the respective currency, the
rate of inflation in the respective economies compared to the United
States, the impact of interest rate differentials between different
currencies on the movement of foreign currency rates, the balance of
imports and exports goods and services, the soundness of the world
economy and the strength of the respective economy as compared to the
economies of the United States and other countries.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty which established a system of
fixed exchange rates and the convertibility of the United States dollar
Page 18
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 19
<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
July .642 7.735
August .639 7.733
September .639 7.733
</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 Trust
would receive had the Trustee sold any particular currency in the
market. The foreign exchange transactions of the Trust 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 20
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 the
Trust, plus or minus cash, if any, in the Income and Capital Accounts of
the Trust, plus an initial sales charge with respect to the Trust equal
to the difference between the maximum sales charge for the Trust (2.90%
of the Public Offering Price) and the maximum remaining deferred sales
charge (initially $.19 per Unit) divided by the amount of Units
outstanding. A deferred sales charge of $.019 will also be assessed per
Unit per month on the dates set forth under "Public Offering Price" in
Part I of this Prospectus. 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 2.90% of the Public Offering Price.
During the initial period, the Sponsor's Repurchase Price is based on
the aggregate underlying U.S. dollar value of the Equity Securities in
the Trust, plus or minus cash, if any, in the Income and Capital
Accounts of the Trust divided by the number of Units of the Trust
outstanding.
The aggregate U.S. dollar value of the Equity Securities will be
computed on the basis of the offering side value of the relevant
exchange rate as of the Evaluation Time during the initial offering
period and on the bid side value for secondary market transactions.
The minimum purchase of Units of the 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 sales charge 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 or more No upfront load 1.90% 1.15%
</TABLE>
Any such reduced sales charge shall be the responsibility of the selling
dealer. An investor may aggregate purchases of Units of the Global
Target 15 Trust, United Kingdom Trust, Hong Kong Trust, Target 5 Trust
or the Target 10 Trust for purposes of qualifying for volume purchase
discounts listed above. The reduced sales charge structure will apply on
all purchases of Units in the Trust by the same person on any one day
from any one 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 the 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 strategy as the Trust may utilize their
termination proceeds to purchase Units of the Trust subject to a
deferred sales charge of $.019 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.
Page 21
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 Trust been available for sale at the close of
business 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 the 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 the
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, this evaluation is generally based on the
closing sale prices on that exchange (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, at the closing ask prices. If the
Equity Securities are not so listed or, if so listed and the principal
market therefor is other than on the exchange, the evaluation shall
generally be based on the current ask prices on the over-the-counter
market (unless it is determined that these prices are inappropriate as a
basis for evaluation). If current ask prices are unavailable, the
evaluation is generally determined (a) on the basis of current ask
prices for comparable securities, (b) by appraising the value of the
Equity Securities on the ask side of the market or (c) by any
combination of the above. The aggregate 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 the 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 the 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
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
Page 22
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 the 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 Trust for
sale in a number of states. 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. Dealers
and others will receive a concession or agency commission of $0.10 per
Unit on purchases by Rollover Unit holders. However, resales of Units of
the Trust 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 the Trust with total assets
which equal or exceed $30 million, dealers and others who sell over $10
million in Units will receive a total concession of $.20 per Unit ($.120
per Unit for Rollover Units) while dealers and others who sell over $20
million in Units will receive a total concession of $.215 per Unit
($.135 per Unit for Rollover Units). With respect to sales of Units of
the Trust with total assets of less than $30 million, dealers and others
who sell over $10 million in Units will receive a total concession of
$.19 per Unit ($.110 per Unit for Rollover Units) while dealers and
others who sell over $20 million in Units will receive a total
concession of $.20 per Unit ($.120 per Unit for Rollover Units). 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 Trust available to their customers on an
agency basis. A portion of the sales charge paid by these customers is
retained by or remitted to the banks in the amounts indicated above.
Under the Glass-Steagall Act, banks are prohibited from underwriting
Trust Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that these
particular agency transactions are not permitted under such Act. In
Texas and in certain other states, any banks making Units available must
be registered as broker/dealers under state law. The Sponsor expects to
recoup the foregoing payments from the deferred sales charge payments
related to the Trust.
From time to time the Sponsor may implement programs under which dealers
of the Trust may receive nominal awards from the Sponsor for each of
their registered representatives who have sold a minimum number of UIT
Units during a specified time period. In addition, at various times the
Sponsor may implement other programs under which the sales force of a
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 Trust. Such
payments are made by the Sponsor out of its own assets, and not out of
the assets of the Trust. These programs will not change the price Unit
holders pay for their Units or the amount that the Trust will receive
from the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on the Trust and returns over
specified periods on other similar trusts sponsored by Nike Securities
L.P. with returns on other taxable investments such as the common stocks
comprising the Dow Jones Industrial Average ("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 Trust. U.S. Government bonds, for example, are backed by
the full faith and credit of the U.S. Government and bank CDs and money
Page 23
market accounts are insured by an agency of the federal government.
Money market accounts and money market funds provide stability of
principal, but pay interest at rates that vary with the condition of the
short-term debt market. The investment characteristics of the Trust are
described more fully elsewhere in this Prospectus.
Advertisements and other sales material for the Trust 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 Standard & Poor's 500 Composite Stock Price Index, or
performance data from Lipper Analytical Services, Inc. and Morningstar
Publications, Inc. or from publications such as Money, The New York
Times, U.S. News and World Report, Business Week, Forbes or Fortune. As
with other performance data, performance comparisons should not be
considered representative of the Trust's relative performance for any
future period.
What are the Sponsor's Profits?
The Sponsor of the Trust will receive a gross sales commission equal to
a maximum of 2.90% of the Public Offering Price of the Units, 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 the Trust (which is based on the
Evaluator's determination of the aggregate offering price of the
underlying Equity Securities of the Trust on the Initial Date of
Deposit) and the cost of such Equity Securities to the Sponsor. See Note
(2) of the "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 of 2.90%) 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.
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 the Trust plus or minus cash, if any, in the Income and Capital
Accounts of the 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.
Page 24
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 the Trust; the number
of Units issued or transferred; the name, address and taxpayer
identification number, if any, of the new registered owner; a notation
of any liens and restrictions of the issuer and any adverse claims to
which such Units are or may be subject or a statement that there are no
such liens, restrictions or adverse claims; and the date the transfer
was registered. Uncertificated Units are transferable through the same
procedures applicable to Units evidenced by certificates (described
above), except that no certificate need be presented to the Trustee and
no certificate will be issued upon the transfer unless requested by the
Unit holder. A Unit holder may at any time request the Trustee to issue
certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the securities in the Trust on or about the Income Distribution Dates
to Unit holders of record on the preceding Income Record Date. See each
"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
the 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 the Trust (but may itself earn
interest thereon and therefore benefit from the use of such funds).
Notwithstanding, distributions of funds in the Capital Account, if any,
will be made 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 and that amounts in the Capital Account will be
Page 25
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
the Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder 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.
Not less than 30 days prior to the Mandatory Termination Date of the
Trust the Trustee will provide written notice thereof to all Unit
holders. Within a reasonable time after the 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, and (ii) a pro rata
share of any other assets of the Trust, less expenses of the Trust.
The Trustee will credit to the Income Account of the Trust any dividends
received on the Equity Securities therein. All other receipts (e.g.,
return of capital, etc.) are credited to the Capital Account of the
Trust. Dividends received with respect to the Equity Securities are
converted into U.S. dollars at the applicable exchange rate.
The Trustee may establish reserves (the "Reserve Account") within the
Trust for state and local taxes, if any, and any governmental charges
payable out of the Trust.
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 the
Trust, automatically reinvested in additional Units of the Trust. Each
person who purchases Units of the 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 Unit holder must inform the
Trustee of their election 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 the 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 the Trust, the following information in reasonable detail: (1) a
summary of transactions in the Trust for such year; (2) any Equity
Securities sold during the year and the Equity Securities held at the
end of such year by the Trust; (3) the redemption price per Unit based
upon a computation thereof on the 31st day of December of such year (or
the last business day prior thereto); and (4) amounts of income and
capital distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trust furnished to it by the Evaluator.
Page 26
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 and converted into U.S. dollars as
of the Evaluation Time set forth under the "Summary of Essential
Information" in Part I of this Prospectus. The "date of tender" is
deemed to be the date on which Units are received by the Trustee, except
that with respect to Units received after the applicable Evaluation Time
(or as of any earlier closing time on a day on which the applicable
securities exchange is scheduled in advance to close at such earlier
time), or on a day which is not a business day, as defined under "How is
the Public Offering Price Determined?", the date of tender is the next
business day 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. The London Stock Exchange and the Hong Kong Stock Exchange are
open for trading on certain days which are U.S. holidays on which the
Trust will not transact business. The Equity Securities will continue to
trade on those days and thus the value of the Trust may be significantly
affected on days when a Unit holder cannot sell or redeem his Units.
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.
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 the Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of the Trust.
The Trustee is empowered to sell Equity Securities of the Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of the Trust will be
reduced. Such sales may be required at a time when Equity Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The Redemption Price per Unit and the secondary market Public Offering
Price will be determined on the basis of the aggregate underlying value
of the Equity Securities in the Trust, plus or minus cash, if any, in
the Income and Capital Accounts of the Trust (net of applicable
liquidation costs). The Redemption Price per Unit is the pro rata share
of each Unit determined by the Trustee by adding: (1) the cash on hand
in the Trust other than cash deposited in the Trust to purchase Equity
Securities not applied to the purchase of such Equity Securities; (2)
the aggregate value of the Equity Securities (including "when issued"
contracts, if any) held in the Trust, as determined by the Evaluator on
the basis of the aggregate underlying value of the Equity Securities in
the Trust next computed; and (3) dividends receivable on the Equity
Securities trading ex-dividend as of the date of computation; and
deducting therefrom: (i) amounts representing any applicable taxes or
governmental charges payable out of the Trust; (ii) any amounts owing to
the Trustee for its advances; (iii) an amount representing estimated
accrued expenses of the Trust, including but not limited to fees and
expenses of the Trustee (including legal fees), the Evaluator and
supervisory fees, if any; (iv) cash held for distribution to Unit
holders of record of the Trust as of the business day prior to the
evaluation being made; and (v) other liabilities incurred by the Trust;
and finally dividing the results of such computation by the number of
Units of the Trust outstanding as of the date thereof. The redemption
price per Unit will be assessed the amount, if any, of the remaining
deferred sales charge at the time of redemption.
Page 27
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, this evaluation is generally based on the
closing sale prices on that exchange (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, 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
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 Trust 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 during the
Special Redemption and Liquidation Period and the underlying Equity
Securities will be distributed to the Trustee, acting in its capacity as
Distribution Agent, on behalf of the Rollover Unit holders. During the
Special Redemption and Liquidation Period (as set forth in each "Summary
of Essential Information" in Part I of this Prospectus), 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 an affiliate of the Trustee as its
agent to sell the distributed Equity Securities. The Sponsor will
attempt to sell the Equity Securities as quickly as is practicable
during the Special Redemption and Liquidation Period. The Sponsor does
not anticipate that the period will be longer than one day, given that
the Equity Securities are usually highly liquid. However, certain of the
factors discussed under "Risk Factors" could affect the ability of the
Sponsor to sell the Equity Securities of the Trust and thereby affect
the length of the sale period somewhat. 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, the terminating Trust (and the Distribution Agent on behalf
of Rollover Unit holders) may sell Equity Securities to the New Trust if
those Equity Securities continue to meet the Trust's strategy by
remaining among the five lowest priced of the ten highest dividend-
yielding securities in the respective Index. The exemption will enable
the 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 the Trust.
The Rollover Unit holders' proceeds will be invested in the 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
portfolio of a New Trust will contain common stocks of the five
companies with the lowest per share stock price of the ten companies in
Page 28
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 Initial Date of Deposit in
the case of FT Index stocks and Hang Seng Index stocks and two business
days prior to the Initial Date of Deposit in the case of DJIA stocks.
Any Rollover Unit holder may thus be redeemed out of the 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 $.19 per Unit for the New Series of
the 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, whether units of similar
trusts will be available 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 or units of a similar trust 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
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 the 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
or similar 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 Trust or any subsequent series of the Trust, 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 Period would have commenced. 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 Trust or any subsequent series of the Trust. 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
Page 29
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding 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 the Trust?
The Portfolio of the Trust is not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of an Equity Security in
the event that an issuer defaults in the payment of a dividend that has
been declared, that any action or proceeding has been instituted
restraining the payment of dividends or there exists any legal question
or impediment affecting such Equity Security, that the issuer of the
Equity Security has breached a covenant which would affect the payments
of dividends, the credit standing of the issuer or otherwise impair the
sound investment character of the Equity Security, that the issuer has
defaulted on the payment on any other of its outstanding obligations,
that the price of the Equity Security has declined to such an extent or
other such credit factors exist so that in the opinion of the Sponsor,
the retention of such Equity Securities would be detrimental to the
Trust. Except as stated under "Portfolio-What are Some Additional
Considerations for Investors?" for Failed Obligations, the acquisition
by the Trust of any securities or other property other than the Equity
Securities is prohibited. Pursuant to the Indenture and with limited
exceptions, the Trustee may sell any securities or other property
acquired in exchange for Equity Securities such as those acquired in
connection with a merger or other transaction. If 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 the Trust, they may be accepted for deposit in the Trust and
either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Portfolio
Supervisor). Proceeds from the sale of Equity Securities by the Trustee
are credited to the Capital Account of the Trust for distribution to
Unit holders or to meet redemptions. The Trustee may, from time to time,
retain and pay compensation to the Sponsor (or an affiliate of the
Sponsor) to act as agent for the Trust with respect to selling Equity
Securities from the Trust. In acting in such capacity, the Sponsor or
its affiliate will be held subject to the restrictions under the
Investment Company Act of 1940, as amended.
The Trustee may also sell Equity Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose of
redeeming Units of the Trust tendered for redemption and the payment of
expenses. The Trustee may, from time to time, retain and pay
compensation to the Sponsor (or an affiliate of the Sponsor) to act as
agent for the Trust with respect to selling Equity Securities for the
Trust. In acting in such capacity, the Sponsor will be held subject to
the restrictions under the Investment Company Act of 1940, as amended.
The Sponsor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares
of individual issues of Equity Securities. To the extent this is not
practicable, the composition and diversity of the Equity Securities may
be altered. In order to obtain the best price for the Trust, it may be
necessary for the Sponsor to specify minimum amounts (generally 100
shares) in which blocks of Equity Securities are to be sold. 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 Trust's portfolio transactions.
Page 30
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 Trust have been deposited. The Sponsor's employees
include a team of professionals with many years of experience in the
unit investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (630) 241-4141. As of
December 31, 1995, the total partners' capital of Nike Securities L.P.
was $9,033,760 (audited). (This paragraph relates only to the Sponsor
and not to the Trust or to any series thereof or to any other
Underwriter. The information is included herein only for the purpose of
informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 770 Broadway, New York, New York 10003. Unit
holders who have questions regarding the Trust may call the Customer
Service Help Line at 1-800-682-7520. The Trustee is subject to
supervision by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of the 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 the 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 the Trustee may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the 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.
Page 31
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 the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
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
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information" in Part I of this Prospectus. The Trust may be liquidated
at any time by consent of 100% of the Unit holders of the Trust or by
the Trustee when the value of the Equity Securities owned by the Trust
as shown by any evaluation, is less than the lower of $2,000,000 or 20%
of the total value of Equity Securities deposited in the Trust during
the primary offering period, or in the event that Units of the Trust not
yet sold aggregating more than 60% of the Units of the Trust are
tendered for redemption by the Underwriter, including the Sponsor. If
the Trust is liquidated because of the redemption of unsold Units of the
Trust by the Underwriter, the Sponsor will refund to each purchaser of
Units of the Trust the entire sales charge paid by such purchaser. In
the event of termination, written notice thereof will be sent by the
Trustee to all Unit holders of the Trust. Within a reasonable period
after termination, the Trustee will follow the procedures set forth
under "How are Income and Capital Distributed?" Also, because of the
Special Redemption and Liquidation in a New Trust, there is a
possibility that the Trust may be reduced below the Discretionary
Liquidation Amount and that the 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 the Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of the Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
Page 32
holder at his address appearing on the registration books of the Trust
maintained by the Trustee. Not less than 30 days prior to the Mandatory
Termination Date of the Trust, the Trustee will provide written notice
thereof to all Unit holders. Unit holders 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 the Trust is
terminated. Regardless of the distribution involved, the Trustee will
deduct from the funds of the Trust any accrued costs, expenses, advances
or indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee and costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or
other governmental charges. Any sale of Equity Securities in the Trust
upon termination may result in a lower amount than might otherwise be
realized if such sale were not required at such time. The Trustee will
then distribute to each Unit holder his pro rata share of the balance of
the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
United States Federal tax law have been passed upon by Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as counsel for
the Sponsor. Carter, Ledyard & Milburn, will act as counsel for the
Trustee and as special New York tax counsel for the Trust.
Experts
The statement of net assets, including the schedule of investments, of
the Trust at the opening of business on the Initial Date of Deposit
appearing in Part I of this Prospectus and Registration Statement has
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 is included in reliance upon such report
given upon the authority of such firm as experts in accounting and
auditing.
Page 33
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Page 34
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Page 35
CONTENTS:
The First Trust Special Situations Trust Series:
What is The First Trust Special Situations Trust? 1
What are the Expenses and Charges? 2
What is the Federal Tax Status of Unit Holders? 3
United Kingdom Taxation 7
Hong Kong Taxation 8
Why are Investments in the Trust 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? 14
Risk Factors 14
Legislation 16
Foreign Issuers 16
United Kingdom 17
Hong Kong 17
Exchange Rate 18
Public Offering:
How is the Public Offering Price Determined? 21
How are Units Distributed? 22
What are the Sponsor's Profits? 24
Will There be a Secondary Market? 24
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 25
How are Income and Capital Distributed? 25
What Reports will Unit Holders Receive? 26
How May Units be Redeemed? 27
Special Redemption, Liquidation and
Investment in a New Trust 28
How May Units be Purchased by the Sponsor? 29
How May Equity Securities be Removed
from the Trust? 30
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 31
Who is the Trustee? 31
Limitations on Liabilities of Sponsor and Trustee 31
Who is the Evaluator? 32
Other Information:
How May the Indenture be Amended
or Terminated? 32
Legal Opinions 33
Experts 33
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)
GLOBAL TARGET 15 TRUST
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 36
-APPENDIX-
The graph which appears on page 13 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 in the stocks which
comprise the Combined Strategy would on September 30, 1996 be worth
$709,611 and $314,978, had the $10,000 been invested in the Combined
Indices 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 figures have been adjusted to take
into account currency exchange rate fluctuations in the U.S. dollar.
MEMORANDUM
Re: The First Trust Special Situations Trust, Series 173
As indicated in our cover letter transmitting the
Registration Statement on Form S-6 and other related material
under the Securities Act of 1933 to the Commission, the only
difference of consequence (except as described below) between The
First Trust Special Situations Trust, Series 168, which is the
current fund, and The First Trust Special Situations Trust,
Series 173, the filing of which this memorandum accompanies, is
the change in the series number. The list of securities
comprising the Fund, the evaluation, record and distribution
dates and other changes pertaining specifically to the new
series, such as size and number of Units in the Fund and the
statement of condition of the new Fund, will be filed by
amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 168 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 October 15, 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 October 15, 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).
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* To be filed by amendment.
S-5
