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 187
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN AND CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title and Amount of
Securities Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. Proposed Maximum 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 187
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 February 24, 1997
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 187
10,000 Units (A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Fund is
hereby used as a preliminary Prospectus for the above stated Series. The
narrative information and structure of the attached final Prospectus will
be substantially the same as that of the final Prospectus for this
Series. Information with respect to pricing, the number of Units, dates
and summary information regarding the characteristics of securities to be
deposited in this Series is not now available and will be different since
each Series has a unique Portfolio. Accordingly the information
contained herein with regard to the previous Series should be considered
as being included for informational purposes only. Ratings of the
securities in this Series are expected to be comparable to those of the
securities deposited in the previous Series. However, the Estimated
Current Return for this Series will depend on the interest rates and
offering prices of the securities in this Series and may vary materially
from that of the previous Series.
A registration statement relating to the units of this Series will
be filed with the Securities and Exchange Commission but has not yet
become effective. Information contained herein is subject to completion
or amendment. Such Units may not be sold nor may offer to buy be
accepted prior to the time the registration statement becomes effective.
This Prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the Units in any state
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state.
Part I of II
First Trust (registered trademark)
Target 5 Trust, October 1996 Wrap Series
Target 10 Trust, October 1996 Wrap Series
(The First Trust Special Situations Trust, Series 167)
THIS PART I OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY THE PART II OF THE PROSPECTUS DATED OCTOBER 1, 1996. BOTH PARTS I AND
II OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
The Trusts. The First Trust Special Situations Trust, Series 167
consists of the underlying separate unit investment trusts set forth
above. The various trusts are sometimes collectively referred to herein
as the "Trusts" and each as a "Trust." Each Trust consists of a
portfolio containing common stocks issued by companies which provide
income and are considered to have the potential for capital appreciation
(the "Equity Securities").
Target 5 Trust, October 1996 Wrap Series consists of common stock of the
five companies with the lowest per share stock price of the ten
companies in the Dow Jones Industrial Average (the "DJIA") that have the
highest dividend yield as of the close of business on the date prior to
this Prospectus. Target 10 Trust, October 1996 Wrap Series consists of
common stock of the ten companies in the DJIA that have the highest
dividend yield as of the close of business on the date prior to this
Prospectus. See "Schedule of Investments" for each Trust. The objective
of each Trust is to provide an above-average total return through a
combination of dividend income and capital appreciation. Units are not
designed for their prices to parallel or correlate with movements in the
DJIA, and it is expected that their prices will not do so. Each Trust
has a mandatory termination date (the "Mandatory Termination Date") of
approximately one year from the date of this Prospectus as set forth
under "Summary of Essential Information." There is, of course, no
guarantee that the objective of either Trust will be achieved.
Both the Target 5 Trust, October 1996 Wrap Series and the Target 10
Trust, October 1996 Wrap Series are available only to investors who
purchase Units through registered broker-dealers who charge periodic
fees for financial planning, investment advisory or asset management
services, or who provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed, and to employees of the Sponsor, dealers and
their affiliates.
The DJIA is not affiliated with the Sponsor and is the property of Dow
Jones & Company, Inc. Dow Jones & Company, Inc. has not granted the
Trusts or the Sponsor a license to use the DJIA, participated in the
creation of the Trusts or in the selection of stocks therein, and has
not approved any information herein related thereto.
Each Unit of a Trust represents an undivided interest in all Equity
Securities deposited therein. The Sponsor may deposit additional Equity
Securities or cash to create new Units after the Initial Date of Deposit
in the manner described in "What is the First Trust Special Situations
Trust?" in Part II of this Prospectus.
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 1, 1996
Page 1
Public Offering Price. The Public Offering Price per Unit of the Target
5 Trust, October 1996 Wrap Series and the Target 10 Trust, October 1996
Wrap Series, respectively, is equal to the aggregate underlying value of
the Equity Securities in such Trust (generally determined by their
closing sale prices) plus or minus a pro rata share of cash, if any, in
the Capital and Income Accounts of such Trust, plus a deferred sales
charge of $.09 per Unit for each Trust assessed as set forth below.
Commencing November 29, 1996, and on the last business day of each month
thereafter through July 31, 1997, a deferred sales charge of $.01 will
be assessed per Unit. Units purchased subsequent to the initial deferred
sales charge payment will be subject only to the remaining deferred
sales charge payments not yet collected. The deferred sales charge will
be paid from funds in the Capital Account, if sufficient, or from the
periodic sale of Equity Securities. The sales charge, as a percentage of
the Public Offering Price on the Initial Date of Deposit for each Trust,
is 0.9%. The total maximum sales charge which may be assessed to Unit
holders of either Trust on a per Unit basis is 1.5% of the Public
Offering Price (equivalent to a maximum of 1.523% 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 minimum purchase for each Trust is $1,000
($250 for an Individual Retirement Account or other retirement plans).
See "How is the Public Offering Price Determined?" in Part II of this
Prospectus.
Estimated Net Annual Distributions. The estimated net annual dividend
distributions to Unit holders (based on the most recent quarterly or
semi-annual ordinary dividend declared with respect to the Equity
Securities) at the opening of business on the Initial Date of Deposit
for the Target 5 Trust, October 1996 Wrap Series was $.2932 per Unit,
and for the Target 10 Trust, October 1996 Wrap Series was $.3292 per
Unit. This estimate will vary with changes in a Trust's fees and
expenses, in dividends received, and with the sale of Equity Securities.
There is no assurance that the estimated net annual dividend
distributions will be realized in the future.
Dividend and Capital Distributions. Cash dividends received by a Trust
will be paid on December 31, 1996 and June 30, 1997 to Unit holders of
record on December 15, 1996 and June 15, 1997, respectively, and again
as part of the final liquidation distribution. Distributions of funds in
the Capital Account, if any, will be made as part of the final
liquidation distribution, and in certain circumstances, earlier. Any
distribution of income and/or capital will be net of expenses of a
Trust. See "What is the Federal Tax Status of Unit Holders?" in Part II
of this Prospectus. Additionally, upon termination of a Trust, the
Trustee will distribute, upon surrender of Units, to each remaining Unit
holder (other than a Rollover Unit holder as defined below) his pro rata
share of such Trust's assets, less expenses, in the manner set forth
under "Rights of Unit Holders-How are Income and Capital Distributed?"
in Part II of this Prospectus. For distributions to Rollover Unit
holders, see "Special Redemption, Liquidation and Investment in New
Trusts." Any Unit holder may elect to have each distribution of income
or capital on his Units, other than the final liquidating distribution,
automatically reinvested in additional Units of such Trust subject only
to remaining deferred sales charge payments. See "Rights of Unit Holders-
How are Income and Capital Distributed?" in Part II of this Prospectus.
Secondary Market for Units. Although not obligated to do so, the Sponsor
may maintain a market for Units and offer to repurchase the Units at
prices based on the aggregate value of the Equity Securities, plus or
minus cash, if any, in the Capital and Income Accounts of such Trust. If
a secondary market is not maintained, a Unit holder may still redeem his
Units through the Trustee. A Unit holder tendering 2,500 Units or more
may request a distribution of shares of Equity Securities (reduced by
customary transfer and registration charges) in lieu of payment in cash
(an "In-Kind Distribution"). See "Will There be a Secondary Market?" and
"How May Units be Redeemed?" in Part II of this Prospectus. Any deferred
sales charge remaining on Units at the time of their sale or redemption
will be collected at that time.
Special Redemption, Liquidation and Investment in New Trusts. The
Sponsor intends to create a separate 1997 trust (collectively, the "New
Trusts" and each a "New Trust") in conjunction with the termination of
each Trust. The portfolio of the New Trust designed to replace the
Target 5 Trust, October 1996 Wrap Series, will contain the common stock
of the five companies with the lowest per share stock price of the ten
companies in the DJIA that have the highest dividend yield as of the
business day prior to the Initial Date of Deposit of the New Trust. The
portfolio of the New Trust designed to replace the Target 10 Trust,
October 1996 Wrap Series, will contain the ten common stocks in the DJIA
Page 2
that have the highest dividend yield as of the business day prior to the
Initial Date of Deposit of the New Trust. 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 at a reduced sales charge, provided
such New Trust is offered and Units are available. Cash not invested in
a New Trust will be distributed. (Such Unit holders are "Rollover Unit
holders"). Rollover Unit holders therefore will not receive a final
liquidation distribution, but will receive Units in either New Trust.
This exchange option may be modified, terminated or suspended. See
"Special Redemption, Liquidation and Investment in a New Trust" in Part
II of this Prospectus.
Termination. Commencing on the Mandatory Termination Date, the Equity
Securities will begin to be sold as prescribed by the Sponsor. The
Trustee will provide written notice of the termination to Unit holders
which will specify when certificates may be surrendered and include a
form to enable a Unit holder to elect an In-Kind Distribution, if such
Unit holder owns at least 2,500 Units of a Trust. Unit holders not
electing the "Rollover Option" or an In-Kind Distribution 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 a Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers or the general condition of the stock market, volatile
interest rates or an economic recession. An investment in the Target 5
Trust, October 1996 Wrap Series may subject a Unit holder to additional
risk due to the relative lack of diversity in its portfolio since the
portfolio contains only five stocks. Therefore, Units of the Target 5
Trust, October 1996 Wrap Series may be subject to greater market risk
than other trusts which contain a more diversified portfolio of
securities. Each Trust is not actively managed and Equity Securities
will not be sold to take advantage of market fluctuations or changes in
anticipated rates of appreciation. See "What are Equity Securities?-Risk
Factors" in Part II of this Prospectus.
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-October 1, 1996
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Target 5 Trust
October 1996 Wrap Series
________________________
General Information
<S> <C>
Initial Number of Units (1) 14,959
Fractional Undivided Interest in the Trust per Unit (1) 1/14,959
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $149,596
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 10.000
Sales Charge .9% of the Public Offering Price per Unit
(.9% of the net amount invested, exclusive of the deferred sales charge) (3) $ .090
Less Deferred Sales Charge per Unit $ (.090)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.910
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.910
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 33718R 799
Reinvestment CUSIP Number 33718R 807
First Settlement Date October 4, 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
a Trust during the primary offering period.
Trustee's Annual Fee $.0085 per Unit outstanding.
Evaluator's Annual Fee $.0025 per Unit outstanding. Evaluations for purposes of sale, purchase or
redemption of Units are made as of the close of trading (4:00 p.m. Eastern time)
on the New York Stock Exchange on each day on which it is open.
Supervisory Fee (5) Maximum of $.0025 per Unit outstanding annually payable to an affiliate of the
Sponsor.
Income Distribution Record Date Fifteenth day of June and December, commencing December 15, 1996.
Income Distribution Date (6) Last day of June and December, commencing December 31, 1996.
</TABLE>
[FN]
______________
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of the Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each Equity Security listed on a national securities exchange is
valued at the opening sale price on the New York Stock Exchange on the
Initial Date of Deposit, or if no such price exists at the opening ask
price thereof.
(3) The sales charge consists of a deferred sales charge of $.09 per
Unit. See "Fee Table" contained herein and "Public Offering" in Part II
for additional information regarding this charge. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in such Income Account. The Public Offering Price
as shown reflects the value of the Equity Securities at the opening of
business on the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales
to investors will be executed at this price. Additional Equity
Securities will be deposited during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
(4) See "How May Units be Redeemed?" in Part II of this Prospectus.
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0010 per Unit.
(6) At the Rollover Notification Date for Rollover Unit holders or upon
termination of the Trust for other Unit holders, amounts in the Income
Account (which consist of dividends on the Equity Securities) will be
included in amounts distributed to or on behalf of Unit holders.
Distributions from the Capital Account will be made monthly payable on
the last day of the month to Unit holders of record on the fifteenth day
of such month if the amount available for distribution equals at least
$1.00 per 100 Units. Notwithstanding, distributions of funds in the
Capital Account, if any, will be made as part of the final liquidation
distribution.
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-October 1, 1996
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Target 10 Trust
October 1996 Wrap Series
________________________
General Information
<S> <C>
Initial Number of Units (1) 14,975
Fractional Undivided Interest in the Trust per Unit (1) 1/14,975
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $149,757
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 10.000
Sales Charge .9% of the Public Offering Price per Unit
(.9% of the net amount invested, exclusive of the deferred sales charge) (3) $ .090
Less Deferred Sales Charge per Unit $ (.090)
Public Offering Price per Unit (3) $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.910
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.910
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash CUSIP Number 33718R 815
Reinvestment CUSIP Number 33718R 823
First Settlement Date October 4, 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
a Trust during the primary offering period.
Trustee's Annual Fee $.0085 per Unit outstanding.
Evaluator's Annual Fee $.0025 per Unit outstanding. Evaluations for purposes of sale, purchase or
redemption of Units are made as of the close of trading (4:00 p.m. Eastern time)
on the New York Stock Exchange on each day on which it is open.
Supervisory Fee (5) Maximum of $.0025 per Unit outstanding annually payable to an affiliate of the
Sponsor.
Income Distribution Record Date Fifteenth day of June and December, commencing December 15, 1996.
Income Distribution Date (6) Last day of June and December, commencing December 31, 1996.
</TABLE>
[FN]
______________
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of the Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each Equity Security listed on a national securities exchange is
valued at the opening sale price on the New York Stock Exchange on the
Initial Date of Deposit, or if no such price exists at the opening ask
price thereof.
(3) The sales charge consists of a deferred sales charge of $.09 per
Unit. See "Fee Table" contained herein and "Public Offering" in Part II
for additional information regarding this charge. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in such Income Account. The Public Offering Price
as shown reflects the value of the Equity Securities at the opening of
business on the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales
to investors will be executed at this price. Additional Equity
Securities will be deposited during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
(4) See "How May Units be Redeemed?" in Part II of this Prospectus.
(5) In addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $.0010 per Unit.
(6) At the Rollover Notification Date for Rollover Unit holders or upon
termination of the Trust for other Unit holders, amounts in the Income
Account (which consist of dividends on the Equity Securities) will be
included in amounts distributed to or on behalf of Unit holders.
Distributions from the Capital Account will be made monthly payable on
the last day of the month to Unit holders of record on the fifteenth day
of such month if the amount available for distribution equals at least
$1.00 per 100 Units. Notwithstanding, distributions of funds in the
Capital Account, if any, will be made as part of the final liquidation
distribution.
Page 5
FEE TABLE-Target 5 Trust, October 1996 Wrap Series
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" in Part II of this
Prospectus. Although the Trust has a term of only one year and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming the principal amount
and distributions are rolled over each year into a New Trust subject to
the deferred sales charge.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 0.00%(a) $ .000
Deferred sales charge
(as a percentage of public offering price) 0.90%(b) .090
________ ________
0.90% $ .090
======== ========
Maximum sales charge per year imposed on
Reinvested dividends .9%(c) 0.090
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee .084% $.0085
Portfolio supervision, bookkeeping, administrative and
evaluation fees .059% .0060
Other operating expenses .022% .0022
________ ________
Total .165% $.0167
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 $ 21 $ 64 $109 $236
investment, assuming the Target 5 Trust, October 1996 Wrap
Series estimated operating expense ratio of .165% and a 5%
annual return on the investment throughout the periods
</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) There is no Initial Sales Charge on Trust Units.
(b) The actual fee is $.01 per month per Unit, irrespective of purchase
or redemption price deducted over a nine-month period for each one-year
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than .90% for the Trust. If the Unit price is less
than $10.00 per Unit, the deferred sales charge will exceed .90% for the
Trust. Units purchased subsequent to the initial deferred sales charge
payment will be subject to only 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 6
FEE TABLE-Target 10 Trust, October 1996 Wrap Series
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" in Part II of this
Prospectus. Although the Trust has a term of only one year and is a unit
investment trust rather than a mutual fund, this information is
presented to permit a comparison of fees, assuming the principal amount
and distributions are rolled over each year into a New Trust subject to
the deferred sales charge.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 0.00%(a) $ .000
Deferred sales charge
(as a percentage of public offering price) 0.90%(b) .090
________ ________
0.90% $ .090
======== ========
Maximum sales charge per year imposed on
Reinvested dividends .9%(c) 0.090
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee .084% $.0085
Portfolio supervision, bookkeeping, administrative and
evaluation fees .059% .0060
Other operating expenses .022% .0022
________ ________
Total .165% $.0167
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 $ 21 $ 64 $110 $236
investment, assuming the Target 10 Trust, October 1996 Wrap
Series estimated operating expense ratio of .165% and a 5%
annual return on the investment throughout the periods
</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) There is no Initial Sales Charge on Trust Units.
(b) The actual fee is $.01 per month per Unit, irrespective of purchase
or redemption price deducted over a nine-month period for each one-year
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than .90% for the Trust. If the Unit price is less
than $10.00 per Unit, the deferred sales charge will exceed .90% for the
Trust. Units purchased subsequent to the initial deferred sales charge
payment will be subject to only the remaining deferred sales charge
payments.
(c) Reinvested Dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "How are Income and
Capital Distributed?" in Part II of this Prospectus.
Page 7
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 167
We have audited the accompanying statements of net assets, including the
schedules of investments, of The First Trust Special Situations Trust,
Series 167, comprised of the Target 5 Trust, October 1996 Wrap Series
and Target 10 Trust, October 1996 Wrap Series, as of the opening of
business on October 1, 1996. These statements of net assets are the
responsibility of the Trusts' Sponsor. Our responsibility is to express
an opinion on these statements of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of net assets
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
statements of net assets. Our procedures included confirmation of the
letters of credit held by the Trustee and deposited in the Trusts on
October 1, 1996. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well
as evaluating the overall presentation of the statements of net assets.
We believe that our audit of the statements of net assets provides a
reasonable basis for our opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of The First
Trust Special Situations Trust, Series 167, comprised of the Target 5
Trust, October 1996 Wrap Series and Target 10 Trust, October 1996 Wrap
Series, at the opening of business on October 1, 1996 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
October 1, 1996
Page 8
Statement of Net Assets
TARGET 5 TRUST, OCTOBER 1996 WRAP SERIES
The First Trust Special Situations Trust, Series 167
At the Opening of Business on the Initial Date of Deposit
October 1, 1996
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $149,596
Less liability for deferred sales charge (3) (1,346)
_________
Net assets $148,250
=========
Units outstanding 14,959
ANALYSIS OF NET ASSETS
Cost to investors (4) $149,596
Less sales charge (4) (1,346)
_________
Net assets $148,250
=========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $200,000 issued by Bankers
Trust Company has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Equity Securities
pursuant to purchase contracts for such Equity Securities.
(3) Represents the amount of mandatory distributions from the Trust ($.09
per Unit), payable to the Sponsor in nine equal monthly installments
beginning on November 29, 1996 and on the last business day of each
month thereafter through July 31, 1997. If Units are redeemed prior to
July 31, 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 .9% of the Public Offering Price (equivalent to
.9% of the net amount invested, exclusive of the deferred sales charge),
assuming no reduction of sales charge for quantity purchases.
Page 9
Statement of Net Assets
TARGET 10 TRUST, OCTOBER 1996 WRAP SERIES
The First Trust Special Situations Trust, Series 167
At the Opening of Business on the Initial Date of Deposit
October 1, 1996
<TABLE>
<CAPTION>
NET ASSETS
<S> <C>
Investment in Equity Securities represented by purchase contracts (1) (2) $149,757
Less liability for deferred sales charge (3) (1,348)
_________
Net assets $148,409
=========
Units outstanding 14,975
ANALYSIS OF NET ASSETS
Cost to investors (4) $149,757
Less sales charge (4) (1,348)
_________
Net assets $148,409
=========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" is based on their aggregate underlying value.
(2) An irrevocable letter of credit totaling $200,000 issued by Bankers
Trust Company has been deposited with the Trustee as collateral,
covering the monies necessary for the purchase of the Equity Securities
pursuant to purchase contracts for such Equity Securities.
(3) Represents the amount of mandatory distributions from the Trust ($.09
per Unit), payable to the Sponsor in nine equal monthly installments
beginning on November 29, 1996 and on the last business day of each
month thereafter through July 31, 1997. If Units are redeemed prior to
July 31, 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 .9% of the Public Offering Price (equivalent to
.9% of the net amount invested, exclusive of the deferred sales charge),
assuming no reduction of sales charge for quantity purchases.
Page 10
Schedule of Investments
TARGET 5 TRUST, OCTOBER 1996 WRAP SERIES
The First Trust Special Situations Trust, Series 167
At the Opening of Business on the Initial Date of Deposit
October 1, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Number of Aggregate Value Equity Current
of Ticker Symbol and Name of Offering per Securities to Dividend
Shares Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ ____________ ______ _____________ _________
<C> <S> <C> <C> <C> <C>
797 T AT&T Corporation 20% $37.625 $ 29,987 3.51%
479 CHV Chevron Corporation 20% 62.625 29,997 3.45%
625 GM General Motors Corporation 20% 47.750 29,844 3.35%
706 IP International Paper Company 20% 42.250 29,829 2.37%
430 MMM Minnesota Mining & Manufacturing
Company 20% 69.625 29,939 2.82%
_____ _________
Total Investments 100% $149,596
===== =========
</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 opening sale prices of the Equity
Securities on the Initial Date of Deposit). The valuation of the Equity
Securities has been determined by the Evaluator, an affiliate of the
Sponsor. The aggregate underlying value of the Equity Securities on the
Initial Date of Deposit was $149,596. Cost and loss to Sponsor relating
to the Equity Securities sold to the Trust were $150,961 and $1,365,
respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
on that Equity Security and dividing the result by that Equity
Security's opening sale price on the Initial Date of Deposit.
Page 11
Schedule of Investments
TARGET 10 TRUST, OCTOBER 1996 WRAP SERIES
The First Trust Special Situations Trust, Series 167
At the Opening of Business on the Initial Date of Deposit
October 1, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Number of Aggregate Value Equity Current
of Ticker Symbol and Name of Offering per Securities to Dividend
Shares Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ ____________ ______ _____________ _________
<C> <S> <C> <C> <C> <C>
399 T AT&T Corporation 10% $37.625 $ 15,012 3.51%
240 CHV Chevron Corporation 10% 62.625 15,030 3.45%
170 DD E.I. du Pont de Nemours
& Company 10% 87.875 14,939 2.59%
180 XON Exxon Corporation 10% 83.250 14,985 3.80%
313 GM General Motors Corporation 10% 47.750 14,946 3.35%
353 IP International Paper Company 10% 42.250 14,914 2.37%
215 MMM Minnesota Mining & Manufacturing
Company 10% 69.625 14,969 2.82%
169 JPM J.P. Morgan & Company, Inc. 10% 88.625 14,978 3.66%
167 MO Philip Morris Companies, Inc. 10% 89.750 14,988 5.35%
163 TX Texaco, Inc. 10% 92.000 14,996 3.70%
_____ ________
Total Investments 100% $149,757
===== ========
</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 opening sale prices of the Equity
Securities on the Initial Date of Deposit). The valuation of the Equity
Securities has been determined by the Evaluator, an affiliate of the
Sponsor. The aggregate underlying value of the Equity Securities on the
Initial Date of Deposit was $149,757. Cost and loss to Sponsor relating
to the Equity Securities sold to the Trust were $150,782 and $1,025,
respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
on that Equity Security and dividing the result by that Equity
Security's opening sale price on the Initial Date of Deposit.
Page 12
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Page 13
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Page 14
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Page 15
FIRST TRUST (registered trademark)
TARGET 5 TRUST, OCTOBER 1996 WRAP SERIES
TARGET 10 TRUST, OCTOBER 1996 WRAP 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
When Units of the Trusts are no longer available, or for investors who
will reinvest into subsequent series of the Trusts, this Prospectus may
be used as a preliminary prospectus for a future series; in which case
investors should note the following:
Information contained herein is subject to amendment. A registration
statement relating to securities of a future series has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective.
The Prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these securities in
any State in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such State.
October 1, 1996
THIS PART ONE MUST BE
ACCOMPANIED BY PART TWO.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 16
First Trust (registered trademark)
TARGET 5 TRUST WRAP SERIES
TARGET 10 TRUST WRAP SERIES
The First Trust Special Situations Trust Series
Prospectus Part II
Dated October 1, 1996
THIS PART II OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY PART I. BOTH PARTS OF THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE
REFERENCE.
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust Series is one of a series of
investment companies created by the Sponsor, all of which are generally
similar, but each of which is separate and is designated by a different
series number. This Series consists of underlying separate unit
investment trusts set forth in Part I of this Prospectus. These
underlying trusts are designated herein as the "Target 5 Trust, Wrap
Series" and "Target 10 Trust, Wrap Series" and may sometimes be referred
to individually as a "Trust" and collectively as the "Trusts." Each
Trust was created under the laws of the State of New York pursuant to a
Trust Agreement (the "Indenture"), dated the Initial Date of Deposit,
with Nike Securities L.P., as Sponsor, The Chase Manhattan Bank, as
Trustee and First Trust Advisors L.P., as Portfolio Supervisor and
Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of common stocks issued by
companies which provide income and are considered to have the potential
for capital appreciation (the "Equity Securities"), together with an
irrevocable letter or letters of credit of a financial institution in an
amount at least equal to the purchase price of such Equity Securities.
In exchange for the deposit of securities or contracts to purchase
securities in a Trust, the Trustee delivered to the Sponsor documents
evidencing the entire ownership of such Trust.
The objective of the Target 5 Trust, Wrap Series is to provide an above-
average total return through a combination of dividend income and
capital appreciation by investing in Equity Securities of the five
companies with the lowest per share stock price of the ten companies in
the Dow Jones Industrial Average ("DJIA") that have the highest dividend
yield as of the close of business on the date prior to the date of Part
I of this Prospectus.
The objective of the Target 10 Trust, Wrap Series is to provide an above-
average total return through a combination of dividend income and
capital appreciation by investing in Equity Securities of the ten
companies which are in the DJIA that have the highest dividend yield as
of the close of business on the date prior to the date of Part I of this
Prospectus.
Both the Target 5 Trust, Wrap Series and the Target 10 Trust, Wrap
Series are available only to 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, and to
employees of the Sponsor, dealers and their affiliates.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Nike Securities L.P.
Sponsor of First Trust (registered trademark)
1-800-621-9533
Page 1
The DJIA is not affiliated with the Sponsor and is the property of Dow
Jones & Company, Inc. Dow Jones & Company, Inc. has not granted the
Trusts or the Sponsor a license to use the DJIA, participated in the
creation of the Trusts or in the selection of stocks therein, and has
not approved any information herein related thereto. There is, of
course, no guarantee that the objective of either Trust will be achieved.
With the deposit of the Equity Securities on the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
amounts of Equity Securities in a Trust's portfolio. From time to time
following the Initial Date of Deposit, the Sponsor, pursuant to the
Indenture, may deposit additional Equity Securities in a Trust or cash
(including a letter of credit) with instructions to purchase additional
Equity Securities in a Trust. Units may be continuously offered for sale
to the public by means of this Prospectus, resulting in a potential
increase in the outstanding number of Units of such Trust. Any deposit
by the Sponsor of additional Equity Securities or the purchase of
additional Equity Securities pursuant to a cash deposit will duplicate,
as nearly as is practicable, the original proportionate relationship and
not the actual proportionate relationship on the subsequent date of
deposit, since the two may differ. Any such difference may be due to the
sale, redemption or liquidation of any of the Equity Securities
deposited in a Trust on the Initial, or any subsequent, Date of Deposit.
See "How May Equity Securities be Removed from a Trust?" The original
percentage relationship of each Equity Security to a Trust is set forth
in Part I of this Prospectus under "Schedule of Investments" for such
Trust. Since the prices of the underlying Equity Securities will
fluctuate daily, the ratio, on a market value basis, will also change
daily. The portion of Equity Securities represented by each Unit will
not change as a result of the deposit of additional Equity Securities in
a Trust. If the Sponsor deposits cash, however, existing and new
investors may experience a dilution of their investment and a reduction
in their anticipated income because of fluctuations in the prices of the
Equity Securities between the time of the cash deposit and the purchase
of the Equity Securities and because the Trust will pay the associated
brokerage fees. To minimize this effect, the Trust will try to purchase
the Equity Securities as close to the evaluation time or as close to the
evaluation price as possible. The Trustee may, from time to time, retain
and pay compensation to the Sponsor (or an affiliate of the Sponsor) to
act as agent for the Trusts with respect to acquiring Equity Securities
for the Trusts. In acting in such capacity, the Sponsor or its affiliate
will be held subject to the restrictions under the Investment Company
Act of 1940, as amended.
On the Initial Date of Deposit, each Unit of a 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 a Trust are
redeemed, the aggregate value of the Equity Securities in such Trust
will be reduced, and the undivided fractional interest represented by
each outstanding Unit of such Trust will increase. However, if
additional Units are issued by a Trust in connection with the deposit of
additional Equity Securities or cash by the Sponsor, the aggregate value
of the Equity Securities in such Trust will be increased by amounts
allocable to additional Units, and the fractional undivided interest
represented by each Unit of such Trust will be decreased
proportionately. See "How May Units be Redeemed?" Each Trust has a
Mandatory Termination Date as set forth under "Summary of Essential
Information" in Part I of this Prospectus.
What are the Expenses and Charges?
With the exception of bookkeeping and other administrative services
provided to the Trusts, for which the Sponsor will be reimbursed in
amounts as set forth under "Summary of Essential Information" in Part I,
the Sponsor will not receive any fees in connection with its activities
relating to the Trusts. 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
these Trusts, 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, which is not to exceed the
Page 2
amount set forth under "Summary of Essential Information" in Part I of
this Prospectus, for providing portfolio supervisory services for the
Trusts. Such fee is based on the number of Units outstanding in a Trust
on January 1 of each year, except for the year or years in which an
initial offering period occurs in which case the fee for a month is
based on the number of Units outstanding at the end of such month. This
fee may exceed the actual costs of providing such supervisory services
for these Trusts, 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 Trusts.
Subsequent to the initial offering period, First Trust Advisors L.P.,
the Evaluator and an affiliate of the Sponsor, will receive a fee as
indicated in the "Summary of Essential Information" in Part I of this
Prospectus. The fee may exceed the actual costs of providing such
evaluation services for these Trusts, 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 a Trust for
which it is reimbursed by such Trust. The Trustee will receive for its
ordinary recurring services to a Trust an annual fee as indicated in the
"Summary of Essential Information" in Part I. The fee is computed per
Unit in such Trust 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 a 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 a Trust is expected to result from the
use of these funds. However, the Trustee may bear from its own resources
certain expenses relating to 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 a Trust: all
legal expenses of the Trustee incurred by or in connection with its
responsibilities under the Indenture; the expenses and costs of any
action undertaken by the Trustee to protect such 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 such 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 such Trust; all taxes and other government
charges imposed upon the Securities or any part of such Trust (no such
taxes or charges are being levied or made or, to the knowledge of the
Sponsor, contemplated). The above expenses and the Trustee's annual fee,
when paid or owing to the Trustee, are secured by a lien on a Trust. In
addition, the Trustee is empowered to sell Equity Securities in a Trust
in order to make funds available to pay all these amounts if funds are
not otherwise available in the Income and Capital Accounts of such
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 a Trust. As described above, if dividends are
insufficient to cover expenses, it is likely that Equity Securities will
have to be sold to meet Trust expenses. These sales may result in
capital gains or losses to Unit holders. See "What is the Federal Tax
Status of Unit Holders?"
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal income
tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as
"capital assets" (generally, property held for investment) within the
Page 3
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 a Trust.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. Each Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of the assets of a Trust under the Code; and
the income of such Trust will be treated as income of the Unit holders
thereof under the Code. Each Unit holder will be considered to have
received his pro rata share of the income derived from each Equity
Security when such income is received by a Trust.
2. Each Unit holder will have a taxable event when a Trust disposes
of an Equity Security (whether by sale, taxable exchange, liquidation,
redemption, or otherwise) or upon the sale or redemption of Units by
such Unit holder. The price a Unit holder pays for his or her Units,
including sales charges, is allocated among his or her pro rata portion
of each Equity Security held by a Trust (in proportion to the fair
market values thereof on the date the Unit holder purchases his or her
Units) in order to determine his or her tax basis for his or her pro
rata portion of each Equity Security held by such Trust. For Federal
income tax purposes, a Unit holder's pro rata portion of dividends, as
defined by Section 316 of the Code, paid by a corporation with respect
to an Equity Security held by a Trust is taxable as ordinary income to
the extent of such corporation's current and accumulated "earnings and
profits." A Unit holder's pro rata portion of dividends paid on such
Equity Security which exceeds such current and accumulated earnings and
profits will first reduce a Unit holder's tax basis in such Equity
Security, and to the extent that such dividends exceed a Unit holder's
tax basis in such Equity Security shall generally be treated as capital
gain. In general, any such capital gain will be short-term unless a Unit
holder has held his or her Units for more than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held by a
Trust will generally be considered a capital gain (except in the case of
a dealer) and will be long-term if 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 a Trust will generally be
considered a capital loss (except in the case of a dealer) and, in
general, will be long-term if the Unit holder has held his or her Units
for more than one year. In particular, a Rollover Unit holder should be
aware that a Rollover Unit holder's loss, if any, incurred in connection
with the exchange of Units for Units in the next new series of the
Target 5 Trust, Wrap Series or Target 10 Trust, Wrap Series (the "New
Trusts"), (the Sponsor intends to create a separate New Trust in
conjunction with the termination of each of the Trusts) will generally
be disallowed with respect to the disposition of any Equity Securities
pursuant to such exchange to the extent that such Unit holder is
considered the owner of substantially identical securities under the
wash sale provisions of the Code taking into account such Unit holder's
deemed ownership of the securities underlying the Units in a New Trust
in the manner described above, if such substantially identical
securities are acquired within a period beginning 30 days before and
ending 30 days after such disposition. However, any gains incurred in
connection with such an exchange by a Rollover Unit holder would be
recognized. Unit holders should consult their tax advisers regarding the
recognition of gains and losses for Federal income tax purposes.
4. 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
Page 4
dividends-received deduction. In any case, the income (or proceeds from
redemption) a Unit holder must take into account for federal income tax
purposes is not reduced by amounts deducted to pay the deferred sales
charge. Unit holders should consult their own tax advisers as to the
income tax consequences of the deferred sales charge.
Dividends Received Deduction. A Unit holder will be considered to have
received all of the dividends paid on his or her pro rata portion of
each Equity Security when such dividends are received by a Trust
regardless of whether such dividends are used to pay a portion of the
deferred sales charge. Unit holders will be taxed in this manner
regardless of whether distributions from a Trust are actually received
by the Unit holder or are automatically reinvested. See "How are Income
and Capital Distributed?-Distribution Reinvestment Option."
A corporation that owns Units will generally be entitled to a 70%
dividends received deduction with respect to such Unit holder's pro rata
portion of dividends received by a Trust (to the extent such dividends
are taxable as ordinary income, as discussed above) in the same manner
as if such corporation directly owned the Equity Securities paying such
dividends (other than corporate Unit holders, such as "S" corporations
which are not eligible for the deduction because of their special
characteristics and other than for purposes of special taxes such as the
accumulated earnings tax and the personal holding corporation tax).
However, a corporation owning Units should be aware that Sections 246
and 246A of the Code impose additional limitations on the eligibility of
dividends for the 70% dividends received deduction. These limitations
include a requirement that stock (and therefore Units) must generally be
held at least 46 days (as determined under Section 246(c) of the Code).
Final regulations have recently been issued which address special rules
that must be considered in determining whether the 46-day holding period
requirement is met. Moreover, the allowable percentage of the deduction
will be reduced from 70% if a corporate Unit holder owns certain stock
(or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation.
It should be noted that various legislative proposals that would affect
the dividends received deduction have been introduced. Unit holders
should consult with their tax advisers with respect to the limitations
on and possible modifications to the dividends received deduction.
Limitations on Deductibility of Trust Expenses by Unit holders. Each
Unit holder's pro rata share of each expense paid by a Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by him or her, subject to the following
limitation. It should be noted that as a result of the Tax Reform Act of
1986, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses
will be deductible by an individual only to the extent they exceed 2% of
such individual's adjusted gross income. Unit holders may be required to
treat some or all of the expenses of the Trust as miscellaneous itemized
deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by a
Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
by a Trust or if the Unit holder disposes of a Unit (although losses
incurred by Rollover Unit holders may be subject to disallowance, as
discussed above). For taxpayers other than corporations, net capital
gains are subject to a maximum stated marginal tax rate of 28%. However,
it should be noted that legislative proposals are introduced from time
to time that affect tax rates and could affect relative differences at
which ordinary income and capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax
rates on ordinary income while capital gains remain subject to a 28%
maximum stated rate for taxpayers other than corporations. Because some
or all capital gains are taxed at a comparatively lower rate under the
Tax Act, the Tax Act includes a provision that recharacterizes capital
gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered
into after April 30, 1993. Unit holders and prospective investors should
consult with their tax advisers regarding the potential effect of this
provision on their investment in Units.
If the Unit holder disposes of a Unit, he or she is deemed thereby to
have disposed of his or her entire pro rata interest in all assets of
the Trust involved including his or her pro rata portion of all the
Equity Securities represented by the Unit.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units, Termination of a Trust and Investment in a New Trust. As
discussed in "Rights of Unit Holders-How are Income and Capital
Distributed?", under certain circumstances a Unit holder who owns at
least 2,500 Units of a Trust may request an In-Kind Distribution upon
the redemption of Units or the termination of such Trust. The Unit
Page 5
holder requesting an In-Kind Distribution will be liable for expenses
related thereto (the "Distribution Expenses") and the amount of such In-
Kind Distribution will be reduced by the amount of the Distribution
Expenses. See "Rights of Unit Holders-How are Income and Capital
Distributed?" As previously discussed, prior to the redemption of Units
or the termination of a Trust, a Unit holder is considered as owning a
pro rata portion of each of such Trust's assets for Federal income tax
purposes. The receipt of an In-Kind Distribution upon the redemption of
Units or the termination of a Trust would be deemed an exchange of such
Unit holder's pro rata portion of each of the shares of stock and other
assets held by such Trust in exchange for an undivided interest in whole
shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an In-Kind
Distribution will depend on whether or not a Unit holder receives cash
in addition to Equity Securities. An "Equity Security" for this purpose
is a particular class of stock issued by a particular corporation. A
Unit holder will not recognize gain or loss if a Unit holder only
receives Equity Securities in exchange for his or her pro rata portion
in the Equity Securities held by a Trust. However, if a Unit holder also
receives cash in exchange for a fractional share of an Equity Security
held by a Trust, such Unit holder will generally recognize gain or loss
based upon the difference between the amount of cash received by the
Unit holder and his or her tax basis in such fractional share of an
Equity Security held by a Trust.
Because a Trust will own many Equity Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by such Trust.
The amount of taxable gain (or loss) recognized upon such exchange will
generally equal the sum of the gain (or loss) recognized under the rules
described above by such Unit holder with respect to each Equity Security
owned by a Trust. Unit holders who request an In-Kind Distribution are
advised to consult their tax advisers in this regard.
As discussed in "Rights of Unit Holders-Special Redemption, Liquidation
and Investment in a New Trust," a Unit holder may elect to become a
Rollover Unit holder. To the extent a Rollover Unit holder exchanges his
or her Units for Units of either New Trust in a taxable transaction,
such Unit holder will recognize gains, if any, but generally will not be
entitled to a deduction for any losses recognized upon the disposition
of any Equity Securities pursuant to such exchange to the extent that
such Unit holder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into
account such Unit holder's deemed ownership of the securities underlying
the Units in such New Trust in the manner described above, if such
substantially identical securities were acquired within a period
beginning 30 days before and ending 30 days after such disposition under
the wash sale provisions contained in Section 1091 of the Code. In the
event a loss is disallowed under the wash sale provisions, special rules
contained in Section 1091(d) of the Code apply to determine the Unit
holder's tax basis in the securities acquired. Rollover Unit holders are
advised to consult their tax advisers.
Computation of the Unit holder's Tax Basis. Initially, a Unit holder's
tax basis in his or her Units will generally equal the price paid by
such Unit holder for his or her Units. The cost of the Units is
allocated among the Equity Securities held in the Trust in accordance
with the proportion of the fair market values of such Equity Securities
on the date the Units are purchased in order to determine such Unit
holder's tax basis for his or her pro rata portion of each Equity
Security.
A Unit holder's tax basis in his or her Units and his or her pro rata
portion of an Equity Security held by a Trust will be reduced to the
extent dividends paid with respect to such Equity Security are received
by a Trust which are not taxable as ordinary income as described above.
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified that payments to the Unit holder are
subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by a Trust to such Unit holder (including amounts received
upon the redemption of Units) will be subject to back-up withholding.
Distributions by a Trust will generally be subject to United States
income taxation and withholding in the case of Units held by non-
resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
Unit holders will be notified annually of the amounts of income
dividends includable in the Unit holder's gross income and amounts of
Trust expenses which may be claimed as itemized deductions.
Page 6
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Why are Investments in the Trusts Suitable for
Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trusts for New York tax matters, under the existing income tax laws of
the State of New York, each Trust is not an association taxable as a
corporation and the income of each Trust will be treated as the income
of the Unit holders thereof.
Why are Investments in the Trusts Suitable for Retirement Plans?
Units of the Trusts may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to capital
gains and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible
for special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are Equity Securities?
Target 5 Trust, Wrap Series consists of the five companies with the
lowest per share stock price of the ten companies in the DJIA that have
the highest dividend yield as of the close of business on the date prior
to the date of Part I of this Prospectus. Target 10 Trust, Wrap Series
consists of the ten common stocks in the DJIA that have the highest
dividend yield as of the close of business on the date prior to the date
of Part I of this Prospectus. The yield for each Equity Security was
calculated by annualizing the last quarterly or semi-annual ordinary
dividend declared and dividing the result by the market value of the
Equity Security as of the opening of business on the date of Part I of
this Prospectus. An investment in a Trust involves the purchase of a
quality portfolio of attractive equities with high dividend yields in
one convenient purchase. Investing in the DJIA stocks with the highest
dividend yields may be effective in achieving the Trusts' investment
objectives, because regular dividends are common for established
companies, and dividends have accounted for a substantial portion of the
total return on DJIA stocks as a group. Due to the short duration of the
Trusts, there is no guarantee that either Trust's objective will be
achieved or that a 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 date of Part I of this Prospectus will not cause a change in
the identity of the common stocks included in the Trust Portfolios,
including any additional Equity Securities deposited in a Trust.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust Portfolios as of the
opening of business on the date of Part I of this Prospectus. Since the
Sponsor may deposit additional Equity Securities which were originally
selected through this process, the Sponsor may continue to sell Units of
the Trusts even though the yields on these Equity Securities may have
changed subsequent to the Initial Date of Deposit. These Equity
Securities may no longer be included in the DJIA, or may not currently
meet a Trust's selection criteria, and therefore, such Equity Securities
would no longer be chosen for deposit into the Trusts if the selection
process was to be performed again at a later time.
Page 7
The Dow Jones Industrial Average, Historical Perspective
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
comparison of the list as it appeared on October 1, 1928 and the current
DJIA.
The Dow Jones Industrial Average
List as of October 1, 1928 Current List
__________________________ ____________
Allied Chemical AT&T Corporation
American Can Allied Signal
American Smelting Aluminum Company of America
American Sugar American Express Company
American Tobacco Bethlehem Steel Corporation
Atlantic Refining Boeing Company
Bethlehem Steel Corporation Caterpillar Inc.
Chrysler Corporation Chevron Corporation
General Electric Company Coca-Cola Company
General Motors Corporation Walt Disney Company
General Railway Signal E.I. du Pont de Nemours & Company
Goodrich Eastman Kodak Company
International Harvester Exxon Corporation
International Nickel General Electric Company
Mack Trucks General Motors Corporation
Nash Motors Goodyear Tire & Rubber Company
North American International Business Machines
Corporation
Paramount Publix International Paper Company
Postum, Inc. McDonald's Corporation
Radio Corporation of America (RCA) Merck & Company, Inc.
Sears, Roebuck & Company Minnesota Mining & Manufacturing Company
Standard Oil of New Jersey J.P. Morgan & Company, Inc.
Texas Corporation Philip Morris Companies, Inc.
Texas Gulf Sulphur Proctor & Gamble Company
Union Carbide Corporation Sears, Roebuck & Company
United States Steel Company Texaco, Inc.
Victor Talking Machine Union Carbide Corporation
Westinghouse Electric Corporation United Technologies Corporation
Woolworth Corporation Westinghouse Electric Corporation
Wright Aeronautical Woolworth Corporation
Dow Jones & Company, Inc., owner of the DJIA, has not granted to the
Trusts or the Sponsor a license to use the DJIA. Units are not designed
so that their prices will parallel or correlate with movements in the
DJIA, and it is expected that their prices will not parallel or
correlate with such movements. Dow Jones & Company, Inc. has not
participated in any way in the creation of the Trusts or in the
selection of stocks included in the Trusts and has not approved any
information herein relating thereto.
The following table compares the actual performance of the DJIA, the
Standard & Poor's 500 Composite Stock Price Index (the "S&P") and
approximately equal values of the five companies with the lowest per
share stock price of the ten companies in the DJIA having the highest
dividend yield (the "Five Lowest Priced Stocks of the Ten Highest
Yielding DJIA Stocks") in each of the 25 years listed below, as of
December 31 in each of these years and for 1996, through September 30, 1996.
Page 8
<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
Five Lowest Priced Stocks of the
Ten Highest Yielding DJIA Stocks (1) Dow Jones Industrial Average (DJIA)
_______________________________________________ _______________________________________________
Actual Actual
Dividend Total Dividend Total
Year Appreciation (2) Yield (3) Return (4) Appreciation (2) Yield (3) Return (4)
_____ _______________ _________ _________ _______________ _________ _________
<S> <C> <C> <C> <C> <C> <C>
1971 4.53% 4.84% 9.37% 6.11% 3.67% 9.78%
1972 16.92 5.57 22.49 14.58 3.60 18.18
1973 14.20 5.44 19.64 -16.58 3.42 -13.16
1974 -12.52 7.54 -4.98 -27.57 4.36 -23.21
1975 55.50 9.04 64.54 38.32 6.16 44.48
1976 33.35 7.45 40.80 17.86 4.89 22.75
1977 -0.40 6.04 5.64 -17.27 4.51 -12.76
1978 -5.94 7.20 1.26 -3.15 5.77 2.62
1979 1.81 8.10 9.91 4.19 6.33 10.52
1980 31.88 8.65 40.53 14.93 6.52 21.45
1981 -4.40 8.04 3.64 -9.23 5.83 -3.40
1982 34.58 7.30 41.88 19.61 6.23 25.84
1983 27.33 8.78 36.11 20.27 5.41 25.68
1984 3.77 7.11 10.88 -3.74 4.81 1.07
1985 30.23 7.61 37.84 27.66 5.17 32.83
1986 24.13 6.18 30.31 22.58 4.38 26.96
1987 6.23 4.83 11.06 2.26 3.74 6.00
1988 15.48 5.74 21.22 11.85 4.12 15.97
1989 5.51 4.98 10.49 26.96 4.78 31.74
1990 -20.60 5.33 -15.27 -4.34 3.73 -0.61
1991 56.41 5.38 61.79 20.32 3.67 23.99
1992 18.46 4.42 22.88 4.17 3.20 7.37
1993 29.82 4.00 33.82 13.72 3.02 16.74
1994 4.20 3.88 8.08 2.14 2.80 4.94
1995 27.27 2.99 30.26 33.45 3.02 36.47
1/1/96- 16.85 2.25 19.10 14.95 1.85 16.80
9/30/96
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Index
________________________________________________
Actual
Dividend Total
Year Appreciation (2) Yield (3) Return (4)
_____ _______________ _________ _________
<S> <C> <C> <C>
1971 10.79% 3.33% 14.12%
1972 15.63 3.09 18.72
1973 -17.37 2.86 -14.51
1974 -29.72 3.71 -26.01
1975 31.55 5.38 36.93
1976 19.15 4.39 23.54
1977 -11.50 4.31 -7.19
1978 1.06 5.34 6.40
1979 12.31 5.70 18.01
1980 25.77 5.73 31.50
1981 -9.73 4.90 -4.83
1982 14.76 5.50 20.26
1983 17.27 5.00 22.27
1984 1.40 4.55 5.95
1985 26.33 5.11 31.44
1986 14.62 3.73 18.35
1987 2.03 3.64 5.67
1988 12.40 4.17 16.57
1989 27.25 3.86 31.11
1990 -6.56 3.36 -3.20
1991 26.31 3.82 30.13
1992 4.46 3.03 7.49
1993 7.06 2.82 9.88
1994 -1.54 2.82 1.28
1995 34.11 2.90 37.01
1/1/96- 11.59 1.81 13.40
9/30/96
</TABLE>
[FN]
(1) The Five Lowest Priced Stocks of the Ten Highest Yielding DJIA
Stocks (the "Stocks") for any given period were selected by ranking the
dividend yields for each of the stocks in the DJIA as of the beginning
of the period, based upon an annualization of the last quarterly or semi-
annual ordinary dividend distribution (which would have been declared in
the preceding year) divided by that stock's market value on the first
trading day on the New York Stock Exchange in the given period.
(2) Appreciation for the Stocks is calculated by subtracting the market
value of the Stocks as of the first trading day on the New York Stock
Exchange in a given period from the market value of the Stocks as of the
last trading day in that period, and dividing the result by the market
value of the Stocks as of the first trading day in that period.
Appreciation for the DJIA and the S&P is calculated by subtracting the
opening value of the DJIA and the S&P as of the first trading day in a
given period from the closing value of the DJIA and the S&P as of the
last trading day in that period, and dividing the result by the opening
value of the DJIA and the S&P as of the first trading day in that
period, respectively.
(3) Actual Dividend Yield for the Stocks is calculated by adding the
total dividends received on the Stocks in a given period and dividing
the result by the market value of the Stocks as of the first trading day
in that period. Actual Dividend Yield for the DJIA and the S&P is
calculated by taking the total dividends credited to the DJIA and the
S&P and dividing the result by the opening value of the DJIA and the S&P
as of the first trading day of the period, respectively.
(4) Total Return represents the sum of Appreciation and Actual Dividend
Yield. 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. Based on the year-by-
year returns contained in the table, over the 25 years listed above,
and for 1996, through 9/30/96, the Stocks achieved an average annual total
return of 20.61%, as compared to the average annual total return of the
DJIA and S&P, which was 12.23% and 12.07%, respectively. The Stocks also
had a higher average dividend yield in each of the above 25 years and for
the period from 1/1/96 - 9/30/96 and outperformed the DJIA and the S&P in
19 of these years and for the period from 1/1/96 - 9/30/96. Although the
Trust seeks to achieve a better performance than the DJIA and S&P, there
can be no assurance that the Trust will outperform the DJIA or the S&P
over its one-year life or over consecutive rollover periods, if available.
Page 9
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the S&P and
the Five Lowest Priced Stocks of the Ten Highest Yielding DJIA Stocks
(but not the Trust) and should not be considered indicative of future
results. Further, these results are hypothetical. The chart assumes that
all dividends during a year are reinvested at the end of that year and
does not reflect sales charges, commissions, expenses or taxes. There
can be no assurance that the Trust will outperform the DJIA or the S&P
over its one-year life or over consecutive rollover periods, if available.
Page 10
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the S&P and
the Ten Highest Yielding DJIA Stocks (but not the Trust) and should not
be considered indicative of future results. Further, these results are
hypothetical. The chart assumes that all dividends during a year are
reinvested at the end of that year and does not reflect sales charges,
commissions, expenses or taxes. There can be no assurance that the Trust
will outperform the DJIA or the S&P over its one-year life or over
consecutive rollover periods, if available.
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 a Trust Portfolio. Both stock prices (which may
appreciate or depreciate) and dividends (which may be increased, reduced
or eliminated) will affect the returns. As indicated in the previous
tables, the Ten Highest Yielding DJIA Stocks, including the Five Lowest
Priced Stocks of the Ten Highest Yielding DJIA Stocks, underperformed
the DJIA and the S&P in certain years, and there can be no assurance
that a Trust's Portfolio will outperform the DJIA or the S&P over the
life of a Trust or over consecutive rollover periods, if available. A
Holder of Units in a Trust would not necessarily realize as high a Total
Return on an investment in the stocks upon which the returns shown above
are based. The Total Return figures shown above do not reflect sales
charges, commissions, Trust expenses or taxes, and a Trust may not be
fully invested at all times.
Page 12
The following table compares the actual performance of the DJIA, the S&P
and approximately equal values of the ten stocks in the DJIA having the
highest dividend yield (the "Ten Highest Yielding DJIA Stocks") in each
of the 25 years listed below, as of December 31 in each of these years and,
for 1996 through September 30, 1996.
<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURNS
Five Lowest Priced Stocks of the
Ten Highest Yielding DJIA Stocks (1) Dow Jones Industrial Average (DJIA)
____________________________________ ___________________________________
Actual Actual
Dividend Total Dividend Total
Year Appreciation (2) Yield (3) Return (4) Appreciation (2) Yield (3) Return (4)
____ ________________ _________ __________ _______________ _________ _________
<S> <C> <C> <C> <C> <C> <C>
1971 -0.35% 5.05% 4.70% 6.11% 3.67% 9.78%
1972 17.89 5.43 23.32 14.58 3.60 18.18
1973 -1.47 5.43 3.96 -16.58 3.42 -13.16
1974 -8.14 7.42 -0.72 -27.57 4.36 -23.21
1975 46.87 9.16 56.03 38.32 6.16 44.48
1976 27.80 7.13 34.93 17.86 4.89 22.75
1977 -7.59 5.84 -1.75 -17.27 4.51 -12.76
1978 -6.96 7.08 0.12 -3.15 5.77 2.62
1979 4.58 8.41 12.99 4.19 6.33 10.52
1980 18.69 8.54 27.23 14.93 6.52 21.45
1981 -0.88 8.61 7.73 -9.23 5.83 -3.40
1982 17.81 8.24 26.05 19.61 6.23 25.84
1983 30.52 8.23 38.75 20.27 5.41 25.68
1984 -0.36 6.11 5.75 -3.74 4.81 1.07
1985 22.41 6.99 29.40 27.66 5.17 32.83
1986 28.66 6.13 34.79 22.58 4.38 26.96
1987 0.94 5.13 6.07 2.26 3.74 6.00
1988 18.51 5.82 24.33 11.85 4.12 15.97
1989 20.26 5.40 25.66 26.96 4.78 31.74
1990 -12.61 5.04 -7.57 -4.34 3.73 -0.61
1991 29.06 4.96 34.02 20.32 3.67 23.99
1992 3.15 4.64 7.79 4.17 3.20 7.37
1993 22.71 4.20 26.91 13.72 3.02 16.74
1994 0.04 4.01 4.05 2.14 2.80 4.94
1995 32.44 4.07 36.51 33.45 3.02 36.47
1/1/96 - 14.15 2.58 16.73 14.95 1.85 16.80
9/30/96
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Index
__________________________________________________
Actual
Dividend Total
Year Appreciation (2) Yield (3) Return (4)
____ _______________ _________ _________
<S> <C> <C> <C>
1971 10.79% 3.33% 14.12%
1972 15.63 3.09 18.72
1973 -17.37 2.86 -14.51
1974 -29.72 3.71 -26.01
1975 31.55 5.38 36.93
1976 19.15 4.39 23.54
1977 -11.50 4.31 -7.19
1978 1.06 5.34 6.40
1979 12.31 5.70 18.01
1980 25.77 5.73 31.50
1981 -9.73 4.90 -4.83
1982 14.76 5.50 20.26
1983 17.27 5.00 22.27
1984 1.40 4.55 5.95
1985 26.33 5.11 31.44
1986 14.62 3.73 18.35
1987 2.03 3.64 5.67
1988 12.40 4.17 16.57
1989 27.25 3.86 31.11
1990 -6.56 3.36 -3.20
1991 26.31 3.82 30.13
1992 4.46 3.03 7.49
1993 7.06 2.82 9.88
1994 -1.54 2.82 1.28
1995 34.11 2.90 37.01
1/1/96- 11.59 1.81 13.40
9/30/96
</TABLE>
[FN]
(1) The Ten Highest Yielding DJIA Stocks (the "Stocks") for any given
period were selected by ranking the dividend yields for each of the
stocks in the DJIA as of the beginning of the period, based upon an
annualization of the last quarterly or semi-annual ordinary dividend
distribution (which would have been declared in the preceding year)
divided by that stock's market value on the first trading day on the New
York Stock Exchange in the given period.
(2) Appreciation for the Stocks is calculated by subtracting the market
value of the Stocks as of the first trading day on the New York Stock
Exchange in a given period from the market value of the Stocks as of the
last trading day in that period, and dividing the result by the market
value of the Stocks as of the first trading day in that period.
Appreciation for the DJIA and the S&P is calculated by subtracting the
opening value of the DJIA and the S&P as of the first trading day in a
given period from the closing value of the DJIA and the S&P as of the
last trading day in that period, and dividing the result by the opening
value of the DJIA and the S&P as of the first trading day in that
period, respectively.
(3) Actual Dividend Yield for the Stocks is calculated by adding the
total dividends received on the Stocks in a given period and dividing
the result by the market value of the Stocks as of the first trading day
in that period. Actual Dividend Yield for the DJIA and the S&P is
calculated by taking the total dividends credited to the DJIA and the
S&P and dividing the result by the opening value of the DJIA and the S&P
as of the first trading day of the period, respectively.
(4) Total Return represents the sum of Appreciation and Actual Dividend
Yield. 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. Based on the year-by-
year returns contained in the table, over the 25 years listed above, and
for 1996, through 9/30/96, the Stocks achieved an average annual total
return of 17.36%, as compared to the average annual total return of all
of the stocks in the DJIA and S&P, which was 12.23% and 12.07%,
respectively. The Stocks also had a higher average dividend yield in each
of the above 25 years and for the period from 1/1/96 - 9/30/96 and
outperformed the DJIA in 19 of these years and the S&P in 16 of these
years and for the period from 1/1/96 - 9/30/96. Although the Trust seeks
to achieve a better performance than the DJIA and S&P, there can be no
assurance that the Trust will outperform the DJIA or S&P over its one-year
life or over consecutive rollover periods, if available.
Page 11
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the S&P and
the Ten Highest Yielding DJIA Stocks (but not the Trust) and should not
be considered indicative of future results. Further, these results are
hypothetical. The chart assumes that all dividends during a year are
reinvested at the end of that year and does not reflect sales charges,
commissions, expenses or taxes. There can be no assurance that the Trust
will outperform the DJIA or the S&P over its one-year life or over
consecutive rollover periods, if available.
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 a Trust Portfolio. Both stock prices (which may
appreciate or depreciate) and dividends (which may be increased, reduced
or eliminated) will affect the returns. As indicated in the previous
tables, the Ten Highest Yielding DJIA Stocks, including the Five Lowest
Priced Stocks of the Ten Highest Yielding DJIA Stocks, underperformed
the DJIA and the S&P in certain years, and there can be no assurance
that a Trust's Portfolio will outperform the DJIA or the S&P over the
life of a Trust or over consecutive rollover periods, if available. A
Holder of Units in a Trust would not necessarily realize as high a Total
Return on an investment in the stocks upon which the returns shown above
are based. The Total Return figures shown above do not reflect sales
charges, commissions, Trust expenses or taxes, and a Trust may not be
fully invested at all times.
Page 12
What are Some Additional Considerations for Investors?
The Trusts consist of different issues of Equity Securities, all of
which are listed on a national securities exchange. In addition, each of
the companies whose Equity Securities are included in a portfolio are
actively traded, well established corporations.
A Trust consists of such of the Equity Securities listed under "Schedule
of Investments" appearing in Part I of this Prospectus as may continue
to be held from time to time in such Trust and any additional Equity
Securities acquired and held by such Trust pursuant to the provisions of
the Trust Agreement, together with cash held in the Income and Capital
Accounts. Neither the Sponsor nor the Trustee shall be liable in any way
for any failure in any of the Equity Securities. However, should any
contract for the purchase of any of the Equity Securities initially
deposited hereunder fail, the Sponsor will, unless substantially all of
the moneys held in a Trust to cover such purchase are reinvested in
substitute Equity Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract to
all Unit holders on the next distribution date.
Risk Factors. Because certain of the Equity Securities from time to time
may be sold under certain circumstances described herein, and because
the proceeds from such events will be distributed to Unit holders and
will not be reinvested, no assurance can be given that a Trust will
retain for any length of time its present size and composition. Although
the Portfolios are not managed, the Sponsor may instruct the Trustee to
sell Equity Securities under certain limited circumstances. Pursuant to
the Indenture and with limited exceptions, the Trustee may sell any
securities or other property acquired in exchange for Equity Securities,
such as those acquired in connection with a merger or other transaction.
If offered such new or exchanged securities or property, the Trustee
shall reject the offer. However, in the event such securities or
property are nonetheless acquired by a Trust, they may be accepted for
deposit in such Trust and either sold by the Trustee or held in such
Trust pursuant to the direction of the Sponsor (who may rely on the
advice of the Portfolio Supervisor). See "How May Equity Securities be
Removed from a Trust?" Equity Securities, however, will not be sold by a
Trust to take advantage of market fluctuations or changes in anticipated
rates of appreciation or depreciation or if the Equity Securities are no
longer among the ten common stocks in the DJIA with the highest dividend
yield, including the five lowest priced of the ten common stocks in the
DJIA with the highest dividend yield.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be
in the over-the-counter market. As a result, the existence of a liquid
trading market for the Equity Securities may depend on whether dealers
will make a market in the Equity Securities. There can be no assurance
that a market will be made for any of the Equity Securities, that any
market for the Equity Securities will be maintained or of the liquidity
of the Equity Securities in any markets made. In addition, a Trust may
be restricted under the Investment Company Act of 1940 from selling
Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions and the value of a Trust will
be adversely affected if trading markets for the Equity Securities are
limited or absent.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities orthe
general condition of the common stock market may worsen, and the value
of the Equity Securities and therefore the value of the Units may
decline. 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 Trusts have a
right to receive dividends only when and if, and in the amounts,
declared by the issuer's board of directors and have a right to
participate in amounts available for distribution by the issuer only
after all other claims on the issuer have been paid or provided for.
Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same
Page 13
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy.
Cumulative preferred stock dividends must be paid before common stock
dividends, and any cumulative preferred stock dividend omitted is added
to future dividends payable to the holders of cumulative preferred
stock. Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in a Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee will
have the right to vote all of the voting stocks in a Trust and will vote
such stocks in accordance with the instructions of the Sponsor.
Investors should be aware of certain other considerations before making
a decision to invest in a Trust. The value of common stocks is subject
to market fluctuations for as long as the common stocks remain
outstanding, and thus, the value of the Equity Securities will fluctuate
over the life of a Trust and may be more or less than the price at which
they were deposited in such Trust. The Equity Securities may appreciate
or depreciate in value (or pay dividends) depending on the full range of
economic and market influences affecting these securities, including the
impact of the Sponsor's purchase and sale of the Equity Securities
(especially during the primary offering period of Units of a Trust and
during the Special Redemption and Liquidation Period) and other factors.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Equity Security. In the event of a
notice that any Equity Security will not be delivered ("Failed Contract
Obligations") to a Trust, the Sponsor is authorized under the Indenture
to direct the Trustee to acquire other Equity Securities ("Replacement
Securities"). Any Replacement Security will be identical to those which
were the subject of the failed contract. The Replacement Securities must
be purchased within 20 days after delivery of the notice of a failed
contract, and the purchase price may not exceed the amount of funds
reserved for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraphs is not utilized to acquire Replacement Securities in the
event of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
a Trust, and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in such Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of a Trust.
The Indenture also authorizes the Sponsor to increase the size of a
Trust and the number of Units thereof by the deposit of additional
Equity Securities, or cash (including a letter of credit) with
instructions to purchase additional Equity Securities, in such Trust and
the issuance of a corresponding number of additional Units. If the
Sponsor deposits cash, existing and new investors could experience a
dilution of their investments and a reduction in anticipated income
because of fluctuations in the prices of the Equity Securities between
the time of the cash deposit and the actual purchase of the Equity
Securities and because the Trust will pay the brokerage fees associated
therewith.
Once all of the Equity Securities in a Trust are acquired, the Trustee
will have no power to vary the investments of such Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, but may dispose of
Equity Securities only under limited circumstances. See "How May Equity
Securities be Removed from a Trust?"
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit in respect of any Equity Security
which might reasonably be expected to have a material adverse effect on
the Trusts. At any time after the Initial Date of Deposit, litigation
may be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on the Trusts.
Petroleum Refining Companies. Certain Trusts may be considered to be
concentrated in common stocks of companies engaged in refining and
marketing oil and related products. See "Risk Factors" in Part I of this
Page 14
Prospectus which will indicate, if applicable, the Trust's concentration
in the petroleum industry. According to the U.S. Department of Commerce,
the factors which will most likely shape the industry include the price
and availability of oil from the Middle East, changes in United States
environmental policies and the continued decline in U.S. production of
crude oil. Possible effects of these factors may be increased U.S. and
world dependence on oil from the Organization of Petroleum Exporting
Countries ("OPEC") and highly uncertain and potentially more volatile
oil prices. Factors which the Sponsor believes may increase the
profitability of oil and petroleum operations include increasing demand
for oil and petroleum products as a result of the continued increases in
annual miles driven and the improvement in refinery operating margins
caused by increases in average domestic refinery utilization rates. The
existence of surplus crude oil production capacity and the willingness
to adjust production levels are the two principal requirements for
stable crude oil markets. Without excess capacity, supply disruptions in
some countries cannot be compensated for by others. Surplus capacity in
Saudi Arabia and a few other countries and the utilization of that
capacity prevented during the Persian Gulf crisis, and continues to
prevent, severe market disruption. Although unused capacity contributed
to market stability in 1990 and 1991, it ordinarily creates pressure to
overproduce and contributes to market uncertainty. The likely
restoration of a large portion of Kuwait and Iraq's production and
export capacity over the next few years could lead to such a development
in the absence of substantial growth in world oil demand. Formerly, OPEC
members attempted to exercise control over production levels in each
country through a system of mandatory production quotas. Because of the
crisis in the Middle East, the mandatory system has since been replaced
with a voluntary system. Production under the new system has had to be
curtailed on at least one occasion as a result of weak prices, even in
the absence of supplies from Kuwait and Iraq. The pressure to deviate
from mandatory quotas, if they are reimposed, is likely to be
substantial and could lead to a weakening of prices. In the longer term,
additional capacity and production will be required to accommodate the
expected large increases in world oil demand and to compensate for
expected sharp drops in U.S. crude oil production and exports from the
Soviet Union. Only a few OPEC countries, particularly Saudi Arabia, have
the petroleum reserves that will allow the required increase in
production capacity to be attained. Given the large-scale financing that
is required, the prospect that such expansion will occur soon enough to
meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the industry
over the coming decade. Refiners are likely to be required to make heavy
capital investments and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as
the 1990 amendments to the Clean Air Act. If the cost of these changes
is substantial enough to cut deeply into profits, smaller refiners may
be forced out of the industry entirely. Moreover, lower consumer demand
due to increases in energy efficiency and conservation, gasoline
reformulations that call for less crude oil, warmer winters or a general
slowdown in economic growth in this country and abroad, could negatively
affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will
increase or that any increases will not be marked by great volatility.
Some oil companies may incur large cleanup and litigation costs relating
to oil spills and other environmental damage. Oil production and
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the
disposal of hazardous materials. Increasingly stringent environmental
laws and regulations are expected to require companies with oil
production and refining operations to devote significant financial and
managerial resources to pollution control. General problems of the oil
and petroleum products industry include the ability of a few influential
producers significantly to affect production, the concomitant volatility
of crude oil prices and increasing public and governmental concern over
air emissions, waste product disposal, fuel quality and the
environmental effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry
or the environment could have a negative impact on the petroleum
products industry. While legislation has been enacted to deregulate
certain aspects of the oil industry, no assurances can be given that new
Page 15
or additional regulations will not be adopted. Each of the problems
referred to could adversely affect the financial stability of the
issuers of any petroleum industry stocks in the Trusts.
Legislation. From time to time Congress considers proposals to reduce
the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unit holders are
urged to consult their own tax advisers. Further, at any time after the
Initial Date of Deposit, legislation may be enacted that could
negatively affect the Equity Securities in the Trusts or the issuers of
the Equity Securities. Changing approaches to regulation, particularly
with respect to the environment or with respect to the petroleum
industry, may have a negative impact on certain companies represented in
the Trusts. There can be no assurance that future legislation,
regulation or deregulation will not have a material adverse effect on
the Trusts or will not impair the ability of the issuers of the Equity
Securities to achieve their business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price, which is based on the
aggregate underlying value of the Equity Securities in the Target 5
Trust, Wrap Series and the Target 10 Trust, Wrap Series, respectively,
plus or minus cash, if any, in the Income and Capital Accounts of such
Trust, plus a deferred sales charge of $0.09 per Unit assessed as set
forth below divided by the amount of Units of such Trust outstanding. A
deferred sales charge of $0.01 will be assessed per Unit per month on
the dates set forth under "Public Offering Price" in Part I. Units
purchased subsequent to the initial deferred sales charge payment will
be subject to only the remaining deferred sales charge payments not yet
collected. For each Trust, the deferred sales charge will be paid from
funds in the Capital Account, if sufficient, or from the periodic sale
of Equity Securities. The sales charge, as a percentage of the Public
Offering Price on the Initial Date of Deposit for each Trust, is 0.9%.
The total maximum sales charge which may be assessed to Unit holders of
either Trust on a per Unit basis is 1.5% of the Public Offering Price
(equivalent to a maximum of 1.523% of the net amount invested, exclusive
of the deferred sales charge).
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying value of the Equity Securities in a
Trust, plus or minus cash, if any, in the Income and Capital Accounts of
such Trust divided by the number of Units of such Trust outstanding.
The minimum purchase of each Trust is $1,000 ($250 for an Individual
Retirement Account or other retirement plans), except for Rollover Unit
holders who are not subject to a minimum purchase amount. Units of the
Trusts are only available to 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. See
"Public Offering-How are Units Distributed?" In addition, 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.
Had the Units of the Trusts been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information" appearing
in Part I of this Prospectus. The Public Offering Price of Units on the
date of the prospectus or during the initial offering period may vary
from the amount stated under "Summary of Essential Information" in
accordance with fluctuations in the prices of the underlying Equity
Securities. During the initial offering period, the aggregate value of
the Units of a Trust shall be determined on the basis of the aggregate
underlying value of the Equity Securities therein plus or minus cash, if
any, in the Income and Capital Accounts of such Trust. The aggregate
underlying value of the Equity Securities will be determined in the
following manner: if the Equity Securities are listed on a national
securities exchange or the NASDAQ National Market System, this
evaluation is generally based on the closing sale prices on that
exchange or that system (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale
price on that exchange or system, at the closing ask prices. If the
Equity Securities are not so listed or, if so listed and the principal
market therefor is other than on the exchange, the evaluation shall
Page 16
generally be based on the current ask prices on the over-the-counter
market (unless it is determined that these prices are inappropriate as a
basis for evaluation). If current ask prices are unavailable, the
evaluation is generally determined (a) on the basis of current ask
prices for comparable securities, (b) by appraising the value of the
Equity Securities on the ask side of the market or (c) by any
combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein, plus or minus cash, if any, in
the Income and Capital Accounts of a Trust plus the applicable sales
charge.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of Units on the date of settlement
provided payment has been received. Cash, if any, made available to the
Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the
Sponsor, subject to the limitations of the Securities Exchange Act of
1934. Delivery of Certificates representing Units so ordered will be
made three business days following such order or shortly thereafter. See
"Rights of Unit Holders-How May Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the Initial
Date of Deposit and (ii) for additional Units issued after such date as
additional Equity Securities or cash are deposited by the Sponsor, Units
will be distributed to the public at the then current Public Offering
Price. During such period, the Sponsor may deposit additional Equity
Securities or cash in a Trust and create additional Units. Units
reacquired by the Sponsor during the initial offering period may be
resold at the then current Public Offering Price. Upon the termination
of the initial offering period, unsold Units created or reacquired
during the initial offering period will be sold or resold at the then
current Public Offering Price.
Upon completion of the initial offering, Units repurchased in the
secondary market (see "Will There be a Secondary Market?") may be
offered by this prospectus at the secondary market public offering price
determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trusts for
sale in a number of states. Resales of Units of the Trusts by dealers
and others to the public will be made at the Public Offering Price
described in the prospectus. Dealers who sell over $10 million or $20
million of Units of a Target 5 Trust, Wrap Series and the corresponding
Target 5 Trust will receive a concession of $.01 per Unit or $.02 per
Unit, respectively, on Target 5 Trust, Wrap Series Units sold and
dealers who sell over $10 million or $20 million of Units of a Target 10
Trust, Wrap Series and the corresponding Target 10 Trust will receive a
concession of $.005 per Unit or $.015 per Unit, respectively, on Target
10 Trust, Wrap Series Units sold. Notwithstanding the foregoing, when
the aggregate size of the Target 5 Trust, Wrap Series and the
corresponding Target 5 Trust exceed $60 million, dealers who sell over
$10 million of Units of a Target 5 Trust, Wrap Series and the
corresponding Target 5 Trust will receive a concession of $.02 per Unit
on Target 5 Trust, Wrap Series Units sold, and dealers who sell over $20
million of Units of a Target 5 Trust, Wrap Series and the corresponding
Target 5 Trust will receive a concession of $.035 per Unit on Target 5
Trust, Wrap Series Units sold. In addition, notwithstanding the
foregoing, when the aggregate size of the Target 10 Trust, Wrap Series
and the corresponding Target 10 Trust exceed $60 million, dealers who
sell over $10 million of Units of a Target 10 Trust, Wrap Series and the
corresponding Target 10 Trust will receive a concession of $.015 per
Unit on Target 10 Trust, Wrap Series Units sold and dealers who sell
over $20 million of Units of a Target 10 Trust, Wrap Series and the
corresponding Target 10 Trust will receive a concession of $.03 per Unit
on Target 10 Trust, Wrap Series Units sold. 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
Page 17
Trusts available to their customers on an agency basis. A portion of the
sales charge paid by these customers is retained by or remitted to the
banks in the amounts indicated above. Under the Glass-Steagall Act,
banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have not indicated that these particular agency transactions
are not permitted under such Act. In Texas and in certain other states,
any banks making Units available must be registered as broker-dealers
under state law. The Sponsor expects to recoup the foregoing payments
from the deferred sales charge payments related to such Trusts.
From time to time the Sponsor may implement programs under which dealers
of a Trust may receive nominal awards from the Sponsor for each of their
registered representatives who have sold a minimum number of UIT Units
during a specified time period. In addition, at various times the
Sponsor may implement other programs under which the sales force of a
dealer may be eligible to win other nominal awards for certain sales
efforts, or under which the Sponsor will reallow to any such dealer that
sponsors sales contests or recognition programs conforming to criteria
established by the Sponsor, or participates in sales programs sponsored
by the Sponsor, an amount not exceeding the total applicable sales
charges on the sales generated by such person at the public offering
price during such programs. Also, the Sponsor in its discretion may from
time to time pursuant to objective criteria established by the Sponsor
pay fees to qualifying dealers for certain services or activities which
are primarily intended to result in sales of Units of the Trusts. Such
payments are made by the Sponsor out of its own assets, and not out of
the assets of a Trust. These programs will not change the price Unit
holders pay for their Units or the amount that a Trust will receive from
the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on a 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 DJIA, corporate or U.S. Government bonds, bank CDs and
money market accounts or money market funds, each of which has
investment characteristics that may differ from those of the Trusts.
U.S. Government bonds, for example, are backed by the full faith and
credit of the U.S. Government and bank CDs and money market accounts are
insured by an agency of the federal government. Money market accounts
and money market funds provide stability of principal, but pay interest
at rates that vary with the condition of the short-term debt market. The
investment characteristics of each Trust are described more fully
elsewhere in this Prospectus.
Advertisements and other sales material for the Trusts may also show the
total returns (price changes plus dividends received, divided by the
maximum public offering price) of each completed prior series and the
total and average annualized return of all series in the same quarterly
cycle, assuming the holder rolled over at the termination of each prior
series. These returns will reflect all applicable sales charges and
expenses.
Trust performance may be compared to performance on a total return basis
of the DJIA, the S&P 500 Composite Stock Price Index, or performance
data from Lipper Analytical Services, Inc. and Morningstar Publications,
Inc. or from publications such as Money, The New York Times, U.S. News
and World Report, Business Week, Forbes or Fortune. As with other
performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trusts will receive a gross sales commission equal to
$.09 per Unit, less any reduced sales charge for quantity purchases as
described under "Public Offering-How is the Public Offering Price
Determined?" In addition, the Sponsor may be considered to have realized
a profit or to have sustained a loss, as the case may be, in the amount
of any difference between the cost of the Equity Securities to a Trust
(which is based on the Evaluator's determination of the aggregate
offering price of the underlying Equity Securities of such Trust on the
Initial Date of Deposit as well as on subsequent deposits) and the cost
of such Equity Securities to the Sponsor. See Note (2) of "Schedule of
Investments" appearing in Part I of this Prospectus. During the initial
offering period, the dealers and others also may realize profits or
sustain losses as a result of fluctuations after the Date of Deposit in
the Public Offering Price received by such dealers and others upon the
sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
Page 18
price at which Units are purchased and the price at which Units are
resold (which price includes a sales charge of .9% with respect to the
Trusts) 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 a Trust plus or minus cash, if any, in the Income and Capital
Accounts of such Trust. All expenses incurred in maintaining a secondary
market, other than the fees of the Evaluator and the costs of the
Trustee in transferring and recording the ownership of Units, will be
borne by the Sponsor. If the supply of Units exceeds demand, or for some
other business reason, the Sponsor may discontinue purchases of Units at
such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS UNITS, HE SHOULD
INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO MAKING A
TENDER FOR REDEMPTION TO THE TRUSTEE. Units subject to a deferred sales
charge which are sold or tendered for redemption prior to such time as
the entire deferred sales charge on such Units has been collected will
be assessed the amount of the remaining deferred sales charge at the
time of sale or redemption.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable or may be redeemed by presentation and surrender to the
Trustee properly endorsed or accompanied by a written instrument or
instruments of transfer. A Unit holder must sign exactly as his name
appears on the face of the certificate with signature guaranteed by a
participant in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority. Record
ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. Only
Unit holders who elect to hold Units in uncertificated form are eligible
to participate as a Rollover Unit holder. The Trustee will maintain an
account for each such Unit holder and will credit each such account with
the number of Units purchased by that Unit holder. Within two business
days of the issuance or transfer of Units held in uncertificated form,
the Trustee will send to the registered owner of Units a written initial
transaction statement containing a description of a Trust; the number of
Units issued or transferred; the name, address and taxpayer
identification number, if any, of the new registered owner; a notation
of any liens and restrictions of the issuer and any adverse claims to
which such Units are or may be subject or a statement that there are no
such liens, restrictions or adverse claims; and the date the transfer
was registered. Uncertificated Units are transferable through the same
procedures applicable to Units evidenced by certificates (described
above), except that no certificate need be presented to the Trustee and
no certificate will be issued upon the transfer unless requested by the
Unit holder. A Unit holder may at any time request the Trustee to issue
certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
Page 19
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the securities in a Trust on or about the Income Distribution Dates
to Unit holders of record on the preceding Income Record Date. See
"Summary of Essential Information" in Part I of this Prospectus. Persons
who purchase Units will commence receiving distributions only after such
person becomes a Record Owner. Notification to the Trustee of the
transfer of Units is the responsibility of the purchaser, but in the
normal course of business such notice is provided by the selling broker-
dealer. Proceeds received on the sale of any Equity Securities in a
Trust, to the extent not used to meet redemptions of Units, pay the
deferred sales charge or pay expenses, will, however, be distributed on
the last day of each month to Unit holders of record on the fifteenth
day of each month if the amount available for distribution equals at
least $1.00 per 100 Units. The Trustee is not required to pay interest
on funds held in the Capital Account of a Trust (but may itself earn
interest thereon and therefore benefit from the use of such funds).
Notwithstanding, distributions of funds in the Capital Account, if any,
will be made as part of the final liquidation distribution, and in
certain circumstances, earlier. See "What is the Federal Tax Status of
Unit Holders?"
It is anticipated that the deferred sales charge will be collected from
the Capital Account and that amounts in the Capital Account will be
sufficient to cover the cost of the deferred sales charge. To the extent
that amounts in the Capital Account are insufficient to satisfy the then
current deferred sales charge obligation, Equity Securities may be sold
to meet such shortfall. Distributions of amounts necessary to pay the
deferred portion of the sales charge will be made to an account
designated by the Sponsor for purposes of satisfying Unit holders'
deferred sales charge obligations.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
a Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder under certain circumstances by
contacting the Trustee, otherwise the amount may be recoverable only
when filing a tax return. Under normal circumstances the Trustee obtains
the Unit holder's tax identification number from the selling broker.
However, a Unit holder should examine his or her statements from the
Trustee to make sure that the Trustee has been provided a certified tax
identification number in order to avoid this possible "back-up
withholding. In the event the Trustee has not been previously provided
such number, one should be provided as soon as possible.
Within a reasonable time after a Trust is terminated, each Unit holder
who is not a Rollover Unit holder will, upon surrender of his Units for
redemption, receive (i) the pro rata share of the amounts realized upon
the disposition of Equity Securities, unless he elects an In-Kind
Distribution as described below and (ii) a pro rata share of any other
assets of such Trust, less expenses of such Trust. Not less than 30 days
prior to the Mandatory Termination Date of a Trust the Trustee will
provide written notice thereof to all Unit holders and will include with
such notice a form to enable Unit holders to elect a distribution of
shares of Equity Securities (an "In-Kind Distribution"), if such Unit
holder owns at least 2,500 Units of such Trust, rather than to receive
payment in cash for such Unit holder's pro rata share of the amounts
realized upon the disposition by the Trustee of Equity Securities. An In-
Kind Distribution will be reduced by customary transfer and registration
charges. To be effective, the election form, together with surrendered
certificates and other documentation required by the Trustee, must be
returned to the Trustee at least five business days prior to the
Mandatory Termination Date of a Trust. A Unit holder may, of course, at
any time after the Equity Securities are distributed, sell all or a
portion of the shares.
The Trustee will credit to the Income Account of a Trust any dividends
received on the Equity Securities therein. All other receipts (e.g.,
return of capital, etc.) are credited to the Capital Account of a Trust.
The Trustee may establish reserves (the "Reserve Account") within a
Trust for state and local taxes, if any, and any governmental charges
payable out of such Trust.
Distribution Reinvestment Option. Any Unit holder may elect to have each
distribution of income or capital on his Units, other than the final
liquidating distribution in connection with the termination of a Trust,
automatically reinvested in additional Units of such Trust. Each person
who purchases Units of a Trust may elect to become a participant in the
Page 20
Distribution Reinvestment Option by notifying the Trustee of their
election. The Distribution Reinvestment Option may not be available in
all states. In order to enable a Unit holder to participate in the
Distribution Reinvestment Option with respect to a particular
distribution on his Units, the card must be received by the Trustee
within 10 days prior to the Record Date for such distribution. Each
subsequent distribution of income or capital on the participant's Units
will be automatically applied by the Trustee to purchase additional
Units of a Trust. The remaining deferred sales charge payments will be
assessed on Units acquired pursuant to the Distributions Reinvestment
Option. IT SHOULD BE REMEMBERED THAT EVEN IF DISTRIBUTIONS ARE
REINVESTED, THEY ARE STILL TREATED AS DISTRIBUTIONS FOR INCOME TAX
PURPOSES.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of a Trust the following information in reasonable detail: (1) a summary
of transactions in such Trust for such year; (2) any Equity Securities
sold during the year and the Equity Securities held at the end of such
year by such Trust; (3) the redemption price per Unit based upon a
computation thereof on the 31st day of December of such year (or the
last business day prior thereto); and (4) amounts of income and capital
distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in a Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender to the
Trustee at its corporate trust office in the City of New York of the
certificates representing the Units to be redeemed, or in the case of
uncertificated Units, delivery of a request for redemption, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as explained above (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates), and
payment of applicable governmental charges, if any. No redemption fee
will be charged. On the third business day following such tender, the
Unit holder will be entitled to receive in cash an amount for each Unit
equal to the Redemption Price per Unit next computed after receipt by
the Trustee of such tender of Units. The "date of tender" is deemed to
be the date on which Units are received by the Trustee (if such day is a
day on which the New York Stock Exchange is open for trading), except
that as regards Units received after 4:00 p.m. Eastern time (or as of
any earlier closing time on a day on which the New York Stock Exchange
is scheduled in advance to close at such earlier time), the date of
tender is the next day on which the New York Stock Exchange is open for
trading and such Units will be deemed to have been tendered to the
Trustee on such day for redemption at the redemption price computed on
that day. Units so redeemed shall be cancelled. Units tendered for
redemption prior to such time as the entire deferred sales charge on
such Units has been collected will be assessed the amount of the
remaining deferred sales charge at the time of redemption.
Any Unit holder tendering 2,500 Units or more of a Trust for redemption
may request by written notice submitted at the time of tender from the
Trustee, in lieu of a cash redemption, a distribution of shares of
Equity Securities in an amount and value of Equity Securities per Unit
equal to the Redemption Price Per Unit, as determined as of the
evaluation next following tender. To the extent possible, in-kind
distributions ("In-Kind Distributions") shall be made by the Trustee
through the distribution of each of the Equity Securities in book-entry
form to the account of the Unit holder's bank or broker-dealer at the
Depository Trust Company. An In-Kind Distribution will be reduced by
customary transfer and registration charges. The tendering Unit holder
will receive his pro rata number of whole shares of each of the Equity
Securities comprising a portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Unit holder is
entitled. The Trustee may adjust the number of shares of any issue of
Equity Securities included in a Unit holder's In-Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made
on the basis of the value of Equity Securities on the date of tender. If
funds in the Capital Account are insufficient to cover the required cash
distribution to the tendering Unit holder, the Trustee may sell Equity
Securities in the manner described above.
Page 21
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"How are Income and Capital Distributed?" In the event the Trustee has
not been previously provided such number, one must be provided at the
time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of a Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of a Trust.
The Trustee is empowered to sell Equity Securities of a Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of a Trust will be reduced.
Such sales may be required at a time when Equity Securities would not
otherwise be sold and might result in lower prices than might otherwise
be realized.
The Redemption Price per Unit and the secondary market Public Offering
Price will be determined on the basis of the aggregate underlying value
of the Equity Securities in a Trust plus or minus cash, if any, in the
Income and Capital Accounts of such Trust. The Redemption Price per Unit
is the pro rata share of each Unit determined by the Trustee by adding:
(1) the cash on hand in a Trust other than cash deposited in the Trust
to purchase Equity Securities not applied to the purchase of such Equity
Securities; (2) the aggregate value of the Equity Securities (including
"when issued" contracts, if any) held in such Trust, as determined by
the Evaluator on the basis of the aggregate underlying value of the
Equity Securities in such Trust next computed; and (3) dividends
receivable on the Equity Securities trading ex-dividend as of the date
of computation; and deducting therefrom: (1) amounts representing any
applicable taxes or governmental charges payable out of such Trust; (2)
any amounts owing to the Trustee for its advances; (3) an amount
representing estimated accrued expenses of such Trust, including but not
limited to fees and expenses of the Trustee (including legal fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of such Trust as of the business day prior to
the evaluation being made; and (5) other liabilities incurred by such
Trust; and finally dividing the results of such computation by the
number of Units of such Trust outstanding as of the date thereof. The
redemption price per Unit will be assessed the amount, if any, of the
remaining deferred sales charge at the time of redemption.
The aggregate value of the Equity Securities for purposes of the
Redemption Price and Secondary Market Public Offering Price will be
determined in the following manner: if the Equity Securities are listed
on a national securities exchange or the NASDAQ National Market System,
this evaluation is generally based on the closing sale prices on that
exchange or that system (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale
price on that exchange or system, at the closing bid prices. If the
Equity Securities are not so listed or, if so listed and the principal
market 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 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.
Page 22
Special Redemption, Liquidation and Investment in a New Trust
It is expected that a special redemption and liquidation will be made of
all Units of the Trusts held by any Unit holder (a "Rollover Unit
holder") who affirmatively notifies the Trustee in writing that he so
desires by the Rollover Notification Date specified in the "Summary of
Essential Information" appearing in Part I of this Prospectus.
All Units of Rollover Unit holders will be redeemed In-Kind on the
Special Redemption and Liquidation Date and the underlying Equity
Securities will be distributed to the Distribution Agent on behalf of
the Rollover Unit holders. On the Special Redemption and Liquidation
Date (as set forth in "Summary of Essential Information" in Part I), the
Distribution Agent will be required to sell all of the underlying Equity
Securities on behalf of Rollover Unit holders. The sales proceeds will
be net of brokerage fees, governmental charges or any expenses involved
in the sales.
The Distribution Agent will engage the Sponsor as its agent to sell the
distributed Equity Securities. The Sponsor will attempt to sell the
Equity Securities as quickly as is practicable on the Special Redemption
and Liquidation Date. The Sponsor does not anticipate that the period
will be longer than one day, given that the Equity Securities are
usually highly liquid. The liquidity of any Equity Security depends on
the daily trading volume of the Equity Security and the amount that the
Sponsor has available for sale on any particular day.
Pursuant to an exemptive order from the Securities and Exchange
Commission, each terminating Target 10 Trust, Wrap Series and Target 5
Trust, Wrap Series (and the Distribution Agent on behalf of Rollover
Unit holders) will sell Equity Securities to the New Trusts if those
Equity Securities continue to meet the Target 10 Trust, Wrap Series and
Target 5 Trust, Wrap Series strategy by remaining among the ten highest
dividend-yielding or five lowest priced of the ten highest dividend-
yielding securities in the respective Trust. The exemption will enable
each Trust to eliminate commission costs on these transactions. The
price for those Equity Securities will be the closing sale price on the
sale date on the exchange where the Equity Securities are principally
traded, as certified by the Sponsor and confirmed by the Trustee of each
Trust.
The Sponsor intends to create a separate New Trust for both the Target 5
Trust, Wrap Series and the Target 10 Trust, Wrap Series. The Rollover
Unit holders' proceeds will be invested in either New Trust (as selected
by the Unit holder), if then registered in such state and being offered,
the portfolio of which will contain, in the case of the Target 5 Trust,
Wrap Series, common stock of the five companies with the lowest per
share stock price of the ten highest dividend yielding stocks in the Dow
Jones Industrial Average as of the business day prior to the Initial
Date of Deposit for the New Trust, and in the case of the Target 10
Trust, Wrap Series, common stock of the ten highest dividend yielding
stocks in the Dow Jones Industrial Average as of the business day prior
to the Initial Date of Deposit for the New Trust. The proceeds of
redemption will be used to buy New Trust units as the proceeds become
available. Any Rollover Unit holder may thus be redeemed out of a Trust
and become a holder of an entirely different trust, a New Trust, with a
different portfolio of Equity Securities. In accordance with the
Rollover Unit holders' offer to purchase the New Trust units, the
proceeds of the sales (and any other cash distributed upon redemption)
will be invested in a New Trust, at the public offering price, including
the applicable maximum sales charge per Unit (which for Rollover Unit
holders is currently expected to be $.09 per unit for the New Series of
the Target 5 Trust, Wrap Series and the Target 10 Trust, Wrap Series,
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. There can be no assurance, however, as to the exact
timing of the creation of the New Trust units or the aggregate number of
New Trust units which the Sponsor will create. The Sponsor may, in its
sole discretion, stop creating new units (whether permanently or
temporarily) at any time it chooses, regardless of whether all proceeds
of the Special Redemption and Liquidation have been invested on behalf
of Rollover Unit holders. Cash which has not been invested on behalf of
the Rollover Unit holders in New Trust units will be distributed within
a reasonable time after such occurrence. However, since the Sponsor can
create units, the Sponsor anticipates that sufficient units can be
created, although moneys in a New Trust may not be fully invested on the
next business day.
The process of redemption, liquidation, and investment in a New Trust is
intended to allow for the fact that the portfolios selected by the
Page 23
Sponsor are chosen on the basis of growth and income potential only for
a year, at which point a new portfolio is chosen. It is contemplated
that a similar process of redemption, liquidation and investment in a
New Trust will be available as each Series of the Target 5 Trust, Wrap
Series and Target 10 Trust, Wrap Series terminates.
It should also be noted that Rollover Unit holders may realize taxable
capital gains on the Special Redemption and Liquidation but, in certain
unlikely circumstances, will not be entitled to a deduction for certain
capital losses and, due to the procedures for investing in a New Trust,
no cash would be distributed at that time to pay any taxes. Included in
the cash for the Special Redemption and Liquidation will be an amount of
cash attributable to the second semi-annual distribution of dividend
income; accordingly, Rollover Unit holders also will not have cash from
this source distributed to pay any taxes. See "What is the Federal Tax
Status of Unit holders?"
In addition, during this period a Unit holder will be at risk to the
extent that Equity Securities are not sold and will not have the benefit
of any stock appreciation to the extent that moneys have not been
invested; for this reason, the Sponsor will be inclined to sell and
purchase the Equity Securities in as short a period as they can without
materially adversely affecting the price of the Equity Securities.
Unit holders who do not inform the Distribution Agent that they wish to
have their Units so redeemed and liquidated ("Remaining Unit holders")
will not realize capital gains or losses due to the Special Redemption
and Liquidation, and will not be charged any additional sales charge.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor the New Trusts or any subsequent series of the Trusts, without
penalty or incurring liability to any Unit holder. If the Sponsor so
decides, the Sponsor shall notify the Unit holders before the Special
Redemption and Liquidation. All Unit holders will then be remaining Unit
holders, with rights to ordinary redemption as before. See "How May
Units be Redeemed?" The Sponsor may modify the terms of the New Trusts
or any subsequent series of the Trusts. The Sponsor may also modify,
suspend or terminate the Rollover Option upon notice to the Unit holders
of such amendment at least 60 days prior to the effective date of such
amendment.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 p.m. Eastern time on the same
business day and by making payment therefor to the Unit holder not later
than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
prospectus describing such Units. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
How May Equity Securities be Removed from a Trust?
The Portfolios of the Trusts are not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of an Equity Security in
the event that an issuer defaults in the payment of a dividend that has
been declared, that any action or proceeding has been instituted
restraining the payment of dividends or there exists any legal question
or impediment affecting such Equity Security, that the issuer of the
Equity Security has breached a covenant which would affect the payments
of dividends, the credit standing of the issuer or otherwise impair the
sound investment character of the Equity Security, that the issuer has
defaulted on the payment on any other of its outstanding obligations,
that the price of the Equity Security has declined to such an extent or
other such credit factors exist so that in the opinion of the Sponsor,
the retention of such Equity Securities would be detrimental to a Trust.
Page 24
Except as stated under "Portfolio-What are Some Additional
Considerations for Investors?" for Failed Obligations, the acquisition
by a Trust of any securities or other property other than the Equity
Securities is prohibited. Pursuant to the Indenture and with limited
exceptions, the Trustee may sell any securities or other property
acquired in exchange for Equity Securities such as those acquired in
connection with a merger or other transaction. If offered such new or
exchanged securities or property, the Trustee shall reject the offer.
However, in the event such securities or property are nonetheless
acquired by a Trust, they may be accepted for deposit in a Trust and
either sold by the Trustee or held in a Trust pursuant to the direction
of the Sponsor (who may rely on the advice of the Portfolio Supervisor).
Proceeds from the sale of Equity Securities by the Trustee are credited
to the Capital Account of a Trust for distribution to Unit holders or to
meet redemptions. The Trustee may, from time to time, retain and pay
compensation to the Sponsor (or an affiliate of the Sponsor) to act as
agent for the Trusts with respect to selling Equity Securities from the
Trusts. In acting in such capacity, the Sponsor or its affiliate will be
held subject to the restrictions under the Investment Company Act of
1940, as amended.
The Trustee may also sell Equity Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose of
redeeming Units of a Trust tendered for redemption and the payment of
expenses.
The Sponsor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares
of individual issues of Equity Securities. To the extent this is not
practicable, the composition and diversity of the Equity Securities may
be altered. In order to obtain the best price for a Trust, it may be
necessary for the Sponsor to specify minimum amounts (generally 100
shares) in which blocks of Equity Securities are to be sold. The Sponsor
may consider sales of Units of unit investment trusts which it sponsors
in making recommendations to the Trustee as to the selection of broker-
dealers to execute the Trusts' portfolio transactions.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, The First Trust Special Situations Trust, The First Trust
Insured Corporate Trust, The First Trust of Insured Municipal Bonds, The
First Trust GNMA, Templeton Growth and Treasury Trust, Templeton Foreign
Fund & U.S. Treasury Securities Trust and The Advantage Growth and
Treasury Securities Trust. First Trust introduced the first insured unit
investment trust in 1974 and to date more than $9 billion in First Trust
unit investment trusts have been deposited. The Sponsor's employees
include a team of professionals with many years of experience in the
unit investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (630) 241-4141. As of
December 31, 1995, the total partners' capital of Nike Securities L.P.
was $9,033,760 (audited). (This paragraph relates only to the Sponsor
and not to the Trusts or to any series thereof or to any other
Underwriter. The information is included herein only for the purpose of
informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 770 Broadway, New York, New York 10003. Unit
holders who have questions regarding the Trusts may call the Customer
Service Help Line at 1-800-682-7520. The Trustee is subject to
supervision by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
Page 25
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Equity Securities. In the event of the failure of
the Sponsor to act under the Indenture, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under
the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Equity Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of a Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor and the Trustee,
in which event the Sponsor and the Trustee are to use their best efforts
to appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
Page 26
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that a Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information" in Part I of this Prospectus. The Trust may be liquidated
at any time by consent of 100% of the Unit holders of a Trust or by the
Trustee when the value of the Equity Securities owned by such Trust as
shown by any evaluation, is less than the lower of $2,000,000 or 20% of
the total value of Equity Securities deposited in such Trust during the
primary offering period, or in the event that Units of such Trust not
yet sold aggregating more than 60% of the Units of such Trust are
tendered for redemption by the Underwriter, including the Sponsor. If a
Trust is liquidated because of the redemption of unsold Units of such
Trust by the Underwriter, the Sponsor will refund to each purchaser of
Units of such Trust the entire sales charge paid by such purchaser;
however, liquidation of the Trust in other circumstances will result in
all remaining unpaid deferred sales charges being deducted from
termination proceeds paid to Unit holders. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit holders
of a Trust. Within a reasonable period after termination, the Trustee
will follow the procedures set forth under "How are Income and Capital
Distributed?" Also, because of the Special Redemption and Liquidation in
a New Trust, there is a possibility that a Trust may be reduced below
the Discretionary Liquidation Amount and that a Trust could therefore be
terminated at that time before the Mandatory Termination Date of the Fund.
Commencing on the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of a Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of a Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
holder at his address appearing on the registration books of such Trust
maintained by the Trustee. Not less than 30 days prior to the Mandatory
Termination Date of the Trust the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges), if
such Unit holder owns at least 2,500 Units of a Trust, rather than to
receive payment in cash for such Unit holder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity
Securities. To be effective, the election form, together with
surrendered certificates and other documentation required by the
Trustee, must be returned to the Trustee at least five business days
prior to the Mandatory Termination Date of a Trust. Unit holders not
electing a distribution of shares of Equity Securities and who do not
elect the Rollover Option will receive a cash distribution from the sale
of the remaining Equity Securities within a reasonable time after a
Trust is terminated. Regardless of the distribution involved, the
Trustee will deduct from the funds of a Trust any accrued costs,
expenses, advances or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee and costs of liquidation
and any amounts required as a reserve to provide for payment of any
applicable taxes or other governmental charges. Any sale of Equity
Securities in a Trust upon termination may result in a lower amount than
might otherwise be realized if such sale were not required at such time.
The Trustee will then distribute to each Unit holder his pro rata share
of the balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Experts
The statements of net assets, including the schedules of investments, of
the Trusts at the opening of business on the Initial Date of Deposit
appearing in Part I of this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing in Part I of this Prospectus and in the
Registration Statement, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and
auditing.
Page 27
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
Why are Investments in the Trusts Suitable for
Retirement Plans? 7
Portfolio:
What are Equity Securities? 7
The Dow Jones Industrial Average, Historical
Perspective 7
What are Some Additional Considerations
for Investors? 13
Risk Factors 13
Public Offering:
How is the Public Offering Price Determined? 16
How are Units Distributed? 17
What are the Sponsor's Profits? 18
Will There be a Secondary Market? 19
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 19
How are Income and Capital Distributed? 20
What Reports will Unit Holders Receive? 21
How May Units be Redeemed? 21
Special Redemption, Liquidation and
Investment in a New Trust 23
How May Units be Purchased by the Sponsor? 24
How May Equity Securities be Removed
from a Trust? 24
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 25
Who is the Trustee? 25
Limitations on Liabilities of Sponsor and Trustee 26
Who is the Evaluator? 26
Other Information:
How May the Indenture be Amended
or Terminated? 26
Legal Opinions 27
Experts 27
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
TARGET 5 TRUST
WRAP SERIES
TARGET 10 TRUST
WRAP SERIES
Prospectus
Part II
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
770 Broadway
New York, New York 10003
1-800-682-7520
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 28
-APPENDIX-
The graph which appears on page 10 of the prospectus represents a
comparison between a $10,000 investment made on January 1, 1971 in those
stocks which comprise the Dow Jones Industrial Average, the Standard &
Poor's 500 Composite Stock Price Index and the five lowest priced stocks
of the ten common stocks in the Dow Jones Industrial Average having the
highest dividend yield as of December 31 of each respective year. The
chart indicates that $10,000 invested on January 1, 1971 in the stocks
which comprise the Dow Jones Industrial Average would on September 30,
1996 be worth $200,898 as opposed to $193,732 had the $10,000 been
invested in the Standard & Poor's 500 Composite Stock Price Index and
$1,306,526 had the $10,000 been invested in the five lowest priced
stocks of the ten common stocks in the Dow Jones Industrial Average
having the highest dividend yield as of December 31 of each respective
year. Each figure assumes that dividends received during each year will
be reinvested at year end and sales charges, commissions, expenses and
taxes were not considered in determining total returns.
The graph which appears on page 12 of the prospectus represents a
comparison between a $10,000 investment made on January 1, 1971 in those
stocks which comprise the Dow Jones Industrial Average, the Standard &
Poor's 500 Composite Stock Price Index and the ten common stocks in the
Dow Jones Industrial Average having the highest dividend yield as of
December 31 of each respective year. The chart indicates that $10,000
invested on January 1, 1971 in the stocks which comprise the Dow Jones
Industrial Average would on September 30, 1996 be worth $200,898 as
opposed to $193,732 had the $10,000 been invested in the Standard &
Poor's 500 Composite Stock Price Index and $641,921 had the $10,000 been
invested in the ten common stocks in the Dow Jones Industrial Average
having the highest dividend yield as of December 31 of each respective
year. Each figure assumes that dividends received during each year will
be reinvested at year end and sales charges, commissions, expenses and
taxes were not considered in determining total returns.
MEMORANDUM
Re: The First Trust Special Situations Trust, Series 187
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 167, which is the
current fund, and The First Trust Special Situations Trust,
Series 187, the filing of which this memorandum accompanies, is
the change in the series number. The list of bonds 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 167 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 bonds 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
187 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 February 24, 1997.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 187
(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 February 24, 1997
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 187 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee and First Trust Advisors L.P., as Evaluator
and Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership Agreement
of Nike Securities L.P. (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporaiton, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5
