SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: THE FIRST TRUST SPECIAL
SITUATIONS TRUST, SERIES 205
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, IL 60606
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 205
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.
SUBJECT TO COMPLETION, DATED JUNE 30, 1997
First Trust (registered trademark)
AMERICA'S LEADING BRANDS GROWTH TRUST, SERIES 2
FINANCIAL SERVICES GROWTH TRUST, SERIES 3
MARKET LEADERS GROWTH TRUST, SERIES 2
PHARMACEUTICAL GROWTH TRUST, SERIES 3
REIT GROWTH & INCOME TRUST, SERIES 2
TECHNOLOGY GROWTH TRUST, SERIES 6
The Trusts. The First Trust (registered trademark) Special Situations
Trust, Series 205 consists of the underlying separate unit investment
trusts set forth above. The various trusts are sometimes collectively
referred to herein as the "Trusts" and individually as a "Trust."
The objective of each Trust is to provide for potential capital
appreciation by investing the Trust's portfolio in common stocks (the
"Equity Securities") of companies in the respective industries
represented by each Trust. See "Schedule of Investments" for each Trust.
Each Trust has a mandatory termination date ("Mandatory Termination
Date" or "Trust Ending Date") as set forth under "Summary of Essential
Information" for each Trust. There is, of course, no guarantee that the
objective of the Trusts will be achieved. Each Unit of a Trust
represents an undivided fractional interest in all the Equity Securities
deposited in such Trust.
The Equity Securities deposited in each Trust's portfolio have no fixed
maturity date and the value of these underlying Equity Securities will
fluctuate with changes in the values of stocks in general. See
"Portfolio."
The Sponsor may, from time to time during a period of up to
approximately 360 days after the Initial Date of Deposit, deposit
additional Equity Securities in the Trusts or cash (including a letter
of credit) with instructions to purchase additional Equity Securities in
the Trusts. Such deposits of additional Equity Securities will be done
in such a manner that the original proportionate relationship amongst
the individual issues of the Equity Securities in each Trust shall be
maintained. Any deposit by the Sponsor of additional Equity Securities,
or the purchase of additional Equity Securities pursuant to a cash
deposit, will duplicate, as nearly as is practicable, the original
proportionate relationship established on the Initial Date of Deposit,
and not the actual proportionate relationship on the subsequent date of
deposit, since the two may differ. Any such difference may be due to the
sale, redemption or liquidation of any Equity Securities deposited in
the Trusts on the Initial, or any subsequent, Date of Deposit. See "What
is the First Trust Special Situations Trust?" and "How May Equity
Securities be Removed from a Trust?"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES 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. THIS 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 STATE.
Nike Securities L.P.
Sponsor of First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is ____________, 1997
Page 1
Public Offering Price. The Public Offering Price per Unit of each Trust
during the initial offering period is equal to the aggregate underlying
value of the Equity Securities in such Trust (generally determined by
the closing sale prices of listed Equity Securities and the ask prices
of over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of such
Trust, plus an initial sales charge equal to the difference between the
maximum sales charge of 4.5% of the Public Offering Price and the
maximum remaining deferred sales charge, initially $.35 per Unit.
Commencing on ____________, 1997, and on the last business day of each
month thereafter, through ____________, 1997, a deferred sales charge of
$ will be assessed per Unit per month. Units purchased subsequent to
the initial deferred sales charge payment but still during the initial
offering period will be subject to the initial sales charge and the
remaining deferred sales charge payments not yet collected. The deferred
sales charge will be paid from funds in the Income and/or Capital
Accounts, if sufficient, or from the periodic sale of Equity Securities.
The sales charge of a Trust is reduced on a graduated scale for sales
involving at least $50,000. The total maximum sales charge assessed to
Unit holders on a per Unit basis will be 4.5% of the Public Offering
Price (equivalent to % of the net amount invested, exclusive of the
deferred sales charge), subject to a reduction beginning ____________,
1998. A pro rata share of accumulated dividends, if any, in the Income
Account of a Trust is included in the Public Offering Price. The minimum
amount which an investor may purchase of a Trust is $1,000 ($250 for
Individual Retirement Accounts). Upon completion of the deferred sales
charge period, the secondary market Public Offering Price per Unit for a
Trust will not include deferred payments, but will instead include only
a one-time initial sales charge of 4.5% of the Public Offering Price
(equivalent to % of the net amount invested), which will be reduced
by 1/2 of 1% on each ____________, commencing ____________, 1998 to a
minimum sales charge of 3.0%. See "How is the Public Offering Price
Determined?"
UNITS OF THE TRUSTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE INVESTMENT RISK
INCLUDING LOSS OF PRINCIPAL.
Dividend and Capital Distributions. Distributions of dividends and
capital, if any, received by a Trust, net of expenses of such Trust,
will be paid on the Distribution Date to Unit holders of record on the
Record Date as set forth in the "Summary of Essential Information" for
each Trust. Distributions of funds in the Capital Account, if any, will
be made at least annually in December of each year. Any distribution of
income and/or capital will be net of the expenses of the respective
Trust. See "What is the Federal Tax Status of Unit Holders?"
Additionally, upon termination of the Trusts, the Trustee will
distribute, upon surrender of Units for redemption, to each Unit holder
his pro rata share of a Trust's assets, less expenses, in the manner set
forth under "Rights of Unit Holders-How are Income and Capital
Distributed?"
Secondary Market for Units. After the initial offering period, while
under no obligation to do so, the Sponsor intends to maintain a market
for Units of the Trusts and offer to repurchase such Units at prices
which are based on the aggregate underlying value of Equity Securities
in such Trusts (generally determined by the closing sale prices of
listed Equity Securities and the bid prices of over-the-counter traded
Equity Securities) plus or minus cash, if any, in the Capital and Income
Accounts of such Trusts. If a secondary market is maintained during the
initial offering period, the prices at which Units will be repurchased
will also be based upon the aggregate underlying value of the Equity
Securities in the Trusts (generally determined by the closing sale
prices of listed Equity Securities and the ask prices of over-the-
counter traded Equity Securities) plus or minus cash, if any, in the
Capital and Income Accounts of such Trusts. If a secondary market is not
maintained, a Unit holder may redeem Units through redemption at prices
based upon the aggregate underlying value of the Equity Securities in a
Trust (generally determined by the closing sale prices of listed Equity
Securities and either the ask prices (during the initial offering
period) or the bid prices (subsequent to the initial offering period) of
over-the-counter traded Equity Securities) plus or minus a pro rata
share of cash, if any, in the Capital and Income Accounts of a Trust. A
Unit holder tendering 2,500 Units or more of a Trust for redemption may
request a distribution of shares of Equity Securities (reduced by
customary transfer and registration charges) in lieu of payment in cash.
Any deferred sales charge remaining on Units at the time of their sale
or redemption will be collected at that time. See "How May Units be
Redeemed?"
Termination. Commencing on the Mandatory Termination Date, Equity
Securities will begin to be sold in connection with the termination of
Page 2
the Trusts. 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. At least 60 days prior to
the Mandatory Termination Date of each 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 will receive a
cash distribution within a reasonable time after a Trust is terminated.
See "Rights of Unit Holders-How are Income and Capital Distributed?"
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 of the Equity Securities or the general condition of the
stock market, changes in interest rates and economic recession.
Volatility in the market price of the Equity Securities in a Trust also
changes the value of the Units of the Trusts. Unit holders tendering
Units for redemption during periods of market volatility may receive
redemption proceeds which are more or less than they paid for the Units.
The Trusts' portfolios are not managed and Equity Securities will not be
sold by the Trusts regardless of market fluctuations, although certain
Equity Securities may be sold under certain limited circumstances. For
further information concerning these risk factors as well as a
discussion of additional risks specific to each Trust, see "What are
Equity Securities?-Risk Factors."
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-____________, 1997
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
America's Leading Financial Market Leaders
Brands Growth Trust Services Growth Trust Growth Trust
Series 2 Trust, Series 3 Series 2
___________________ _____________________ ______________
<S> <C> <C> <C>
General Information
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of
Equity Securities in Portfolio (2) $ $ $
Aggregate Offering Price Evaluation of
Equity Securities per Unit $ $ $
Maximum Sales Charge of 4.5% of the Public
Offering Price per Unit ( % of the net amount
invested, exclusive of the deferred sales charge) (3) $ $ $
Less Deferred Sales Charge per Unit $ ( ) $ ( ) $ ( )
Public Offering Price per Unit (3) $ $ $
Sponsor's Initial Repurchase Price per Unit $ $ $
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less deferred sales charge) (4) $ $ $
CUSIP Number ____________ ____________ ____________
Trustee's Annual Fee per Unit outstanding $ $ $
Evaluator's Annual Fee per Unit outstanding (5) $ $ $
Maximum Supervisory Fee per Unit outstanding (6) $ $ $
Estimated Annual Amortization of Organizational and
Offering Costs per Unit outstanding (7) $ $ $
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date ____________, 1997
Mandatory Termination Date ____________, 2001
Discretionary Liquidation Amount A Trust may be terminated if the value thereof is less than the lower of
$2,000,000 or 20% of the total value of Equity Securities deposited in such
Trust during the primary offering period.
Income Distribution Record Date Fifteenth day of each June and December commencing ____________, 1997.
Income Distribution Date (8) Last day of each June and December commencing ____________, 1997.
</TABLE>
[FN]
_____________
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of a Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each Equity Security listed on a national securities exchange or The
Nasdaq Stock Market is valued at the last closing sale price, or if no
such price exists or if the Equity Security is not so listed, at the
closing ask price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. The initial sales charge applies to all Units and
represents an amount equal to the difference between the maximum sales
charge for a Trust of 4.5% of the Public Offering Price and the amount
of the maximum remaining deferred sales charge (initially $ per
Unit). Subsequent to the Initial Date of Deposit, the amount of the
initial sales charge will vary with changes in the aggregate underlying
value of the Equity Securities underlying the respective Trust. In
addition to the initial sales charge, Unit holders will pay a deferred
sales charge of $ per Unit per month commencing ____________, 1997
and on the last business day of each month thereafter through
____________, 1997. During the initial offering period, Units purchased
subsequent to the initial deferred sales charge payment will be subject
to the initial sales charge and the remaining deferred sales charge
payments not yet collected. These deferred sales charge payments will be
paid from funds in the Income and/or Capital Accounts, if sufficient, or
from the periodic sale of Equity Securities. See "Fee Table" and "Public
Offering" for additional information. Commencing on ____________, 1998,
the secondary market sales charge will not include the deferred sales
charge payments but will instead include only a one-time initial sales
charge of 4.5% of the Public Offering Price and will decrease by 1/2 of
1% on each subsequent ____________, commencing ____________, 1998 to a
minimum sales charge of 3.0% as described under "Public Offering." On
the Initial Date of Deposit there will be no accumulated dividends in
the Income Account. Anyone ordering Units after such date will pay a pro
rata share of any accumulated dividends in such Income Account. The
Public Offering Price as shown reflects the value of the Equity
Securities at the opening of business on the Initial Date of Deposit and
establishes the original proportionate relationship amongst the
individual securities. No sales to investors will be executed at this
price. Additional Equity Securities will be deposited during the day of
the Initial Date of Deposit which will be valued as of 4:00 p.m. Eastern
time and sold to investors at a Public Offering Price per Unit based on
this valuation.
(4) See "How May Units be Redeemed?"
(5) The Evaluator's Fee is payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are
made as of the close of trading (generally 4:00 p.m. Eastern time) on
the New York Stock Exchange on each day on which it is open.
(6) The Supervisory Fee is payable to an affiliate of the Sponsor. In
addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $ per
Unit per Trust.
(7) Each Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of the Trust portfolio, legal fees and the
initial fees and expenses of the Trustee but not including the expenses
incurred in the printing of preliminary and final prospectuses, and
expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational and offering expenses will be charged
off over a period not to exceed the life of the Trusts (approximately
_____ years). See "What are the Expenses and Charges?" and "Statements
of Net Assets." Historically, the sponsors of unit investment trusts
have paid all the costs of establishing such trusts.
(8) Distributions from the Capital Account will be made monthly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
Page 4
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-____________, 1997
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Pharmaceutical REIT Growth & Technology
Growth Trust Income Trust Growth Trust
Series 3 Series 2 Series 6
______________ _____________ ____________
<S> <C> <C> <C>
General Information
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $ $ $
Aggregate Offering Price Evaluation of Equity Securities per Unit $ $ $
Maximum Sales Charge of 4.5% of the Public Offering Price per Unit
( % of the net amount invested, exclusive of the deferred sales $ $ $
charge) (3)
Less Deferred Sales Charge per Unit $ ( ) $ ( ) $ ( )
Public Offering Price per Unit (3) $ $ $
Sponsor's Initial Repurchase Price per Unit $ $ $
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less deferred sales charge) (4) $ $ $
CUSIP Number ____________ ____________ ____________
Trustee's Annual Fee per Unit outstanding $ $ $
Evaluator's Annual Fee per Unit outstanding (5) $ $ $
Maximum Supervisory Fee per Unit outstanding (6) $ $ $
Estimated Annual Amortization of Organizational and
Offering Costs per Unit outstanding (7) $ $ $
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date ____________, 1997
Mandatory Termination Date ____________, 2001
Discretionary Liquidation Amount A Trust may be terminated if the value thereof is less than the lower of
$2,000,000 or 20% of the total value of Equity Securities deposited in such
Trust during the primary offering period.
Income Distribution Record Date Fifteenth day of each month for the REIT Growth & Income Trust, Series 2
commencing February 15, 1997 and the fifteenth day of each June and December
commencing ____________, 1997 for the Technology Growth Trust, Series 6.
Income Distribution Date (8)(9) Last day of each month for the REIT Growth & Income Trust, Series 2 commencing
February 28, 1997 and the last day of each June and December commencing
____________, 1997 for the Technology Growth Trust, Series 6.
</TABLE>
[FN]
______________
(1) As of the close of business on the Initial Date of Deposit, the
number of Units of a Trust may be adjusted so that the Public Offering
Price per Unit will equal approximately $10.00. Therefore, to the extent
of any such adjustment, the fractional undivided interest per Unit will
increase or decrease accordingly, from the amounts indicated above.
(2) Each Equity Security listed on a national securities exchange or The
Nasdaq Stock Market is valued at the last closing sale price, or if no
such price exists or if the Equity Security is not so listed, at the
closing ask price thereof.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. The initial sales charge applies to all Units and
represents an amount equal to the difference between the maximum sales
charge for a Trust of 4.5% of the Public Offering Price and the amount
of the maximum remaining deferred sales charge (initially $ per
Unit). Subsequent to the Initial Date of Deposit, the amount of the
initial sales charge will vary with changes in the aggregate underlying
value of the Equity Securities underlying the respective Trust. In
addition to the initial sales charge, Unit holders will pay a deferred
sales charge of $ per Unit per month commencing ____________, 1997
and on the last business day of each month thereafter through
____________, 1997. During the initial offering period, Units purchased
subsequent to the initial deferred sales charge payment will be subject
to the initial sales charge and the remaining deferred sales charge
payments not yet collected. These deferred sales charge payments will be
paid from funds in the Income and/or Capital Accounts, if sufficient, or
from the periodic sale of Equity Securities. See "Fee Table" and "Public
Offering" for additional information. Commencing on ____________, 1998,
the secondary market sales charge will not include the deferred sales
charge payments but will instead include only a one-time initial sales
charge of 4.5% of the Public Offering Price and will decrease by 1/2 of
1% on each subsequent ____________, commencing ____________, 1998 to a
minimum sales charge of 3.0% as described under "Public Offering." On
the Initial Date of Deposit there will be no accumulated dividends in
the Income Account. Anyone ordering Units after such date will pay a pro
rata share of any accumulated dividends in such Income Account. The
Public Offering Price as shown reflects the value of the Equity
Securities at the opening of business on the Initial Date of Deposit and
establishes the original proportionate relationship amongst the
individual securities. No sales to investors will be executed at this
price. Additional Equity Securities will be deposited during the day of
the Initial Date of Deposit which will be valued as of 4:00 p.m. Eastern
time and sold to investors at a Public Offering Price per Unit based on
this valuation.
(4) See "How May Units be Redeemed?"
(5) The Evaluator's Fee is payable to an affiliate of the Sponsor.
Evaluations for purposes of sale, purchase or redemption of Units are
made as of the close of trading (generally 4:00 p.m. Eastern time) on
the New York Stock Exchange on each day on which it is open.
(6) The Supervisory Fee is payable to an affiliate of the Sponsor. In
addition, the Sponsor will be reimbursed for bookkeeping and other
administrative expenses currently at a maximum annual rate of $ per
Unit per Trust.
(7) Each Trust (and therefore Unit holders) will bear all or a portion of
its organizational and offering costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and
states, the initial audit of the Trust portfolio, legal fees and the
initial fees and expenses of the Trustee but not including the expenses
incurred in the printing of preliminary and final prospectuses, and
expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational and offering expenses will be charged
off over a period not to exceed the life of the Trusts (approximately
_____ years). See "What are the Expenses and Charges?" and "Statements
of Net Assets." Historically, the sponsors of unit investment trusts
have paid all the costs of establishing such trusts.
(8) Distributions from the Capital Account will be made monthly payable
on the last day of the month to Unit holders of record on the fifteenth
day of such month if the amount available for distribution equals at
least $1.00 per 100 Units. Notwithstanding, distributions of funds in
the Capital Account, if any, will be made in December of each year.
(9) The estimated net annual dividend distribution for the REIT Growth &
Income Trust, Series 2 (based on the most recent quarterly dividend
declared on the Equity Securities in the Trust) is $______ per Unit. On
_______________, 1997, the initial distribution date for the Trust, Unit
holders of record as of ____________, 1997 will receive an estimated
distribution of $_____ per Unit. Beginning on ______________, 1997, Unit
holders of record as of _____________, 1997 will receive the regular
estimated monthly distribution of $_____ per Unit.
Page 5
FEE TABLES
These Fee Tables are intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" Although the Trusts
have a term of _____ years and are unit investment trusts rather than a
mutual fund, this information is presented to permit a comparison of fees.
<TABLE>
<CAPTION>
AMERICA'S LEADING BRANDS GROWTH TRUST, SERIES 2
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) %(a) $
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee % $
Portfolio supervision, bookkeeping, administrative, amortization of
organizational and offering expenses and evaluation fees %
Other operating expenses %
________ ________
Total % $
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years
______ _______ _______
<S> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming the America's Leading Brands Growth Trust, Series 2 has an
estimated operating expense ratio of % and a 5% annual return on the
investment throughout the periods $ $ $
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL SERVICES GROWTH TRUST, SERIES 3
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) %(a) $
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee % $
Portfolio supervision, bookkeeping, administrative, amortization of
organizational and offering expenses and evaluation fees %
Other operating expenses %
________ ________
Total % $
======== ========
</TABLE>
Page 6
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years
______ _______ _______
<S> <C> _<C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming the Financial Services Growth Trust, Series 3 has an estimated
operating expense ratio of % and a 5% annual return on the investment
throughout the periods $ $ $
</TABLE>
<TABLE>
<CAPTION>
MARKET LEADERS GROWTH TRUST, SERIES 2
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) %(a) $
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee % $
Portfolio supervision, bookkeeping, administrative, amortization of
organizational and offering expenses and evaluation fees %
Other operating expenses %
________ ________
Total % $
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years
______ _______ _______
<S> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming the Market Leaders Growth Trust, Series 2 has an estimated
operating expense ratio of % and a 5% annual return on the investment
throughout the periods $ $ $
</TABLE>
<TABLE>
<CAPTION>
PHARMACEUTICAL GROWTH TRUST, SERIES 3
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) %(a) $
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee % $
Portfolio supervision, bookkeeping, administrative, amortization of
organizational and offering expenses and evaluation fees %
Other operating expenses %
________ ________
Total % $
======== ========
</TABLE>
Page 7
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years
______ _______ _______
<S> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming the Pharmaceutical Growth Trust, Series 3 has an estimated
operating expense ratio of % and a 5% annual return on the investment
throughout the periods $ $ $
</TABLE>
<TABLE>
<CAPTION>
REIT Growth & Income Trust, Series 2
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) %(a) $
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee % $
Portfolio supervision, bookkeeping, administrative, amortization of
organizational and offering expenses and evaluation fees %
Other operating expenses %
________ ________
Total % $
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years
______ _______ _______
<S> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming the REIT Growth & Income Trust, Series 2 has an estimated
operating expense ratio of % and a 5% annual return on the investment
throughout the periods $ $ $
</TABLE>
<TABLE>
<CAPTION>
TECHNOLOGY GROWTH TRUST, SERIES 6
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) %(a) $
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee % $
Portfolio supervision, bookkeeping, administrative, amortization of
organizational and offering expenses and evaluation fees %
Other operating expenses %
________ ________
Total % $
======== ========
</TABLE>
Page 8
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years
______ _______ _______
<S> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming the Technology Growth Trust, Series 6 has an estimated operating
expense ratio of % and a 5% annual return on the investment throughout the
periods $ $ $
</TABLE>
The examples assume reinvestment of all dividends and distributions and
utilize a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. For purposes
of the examples, 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
examples 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
examples.
[FN]
_______________________
(a) The Initial Sales Charge is actually the difference between the
maximum total sales charge of 4.5% and the maximum remaining deferred
sales charge (initially $.35 per Unit) and would exceed 1.0% if the
Public Offering Price exceeds $10.00 per Unit.
(b) The actual fee is $ per month per Unit, irrespective of purchase
or redemption price deducted monthly commencing ____________, 1997
through ____________, 1997. If a Unit holder sells or redeems Units
before all of these deductions have been made, the balance of the
deferred sales charge payments remaining will be deducted from the sales
or redemption proceeds. If the Unit price exceeds $10.00 per Unit, the
deferred sales charge will be less than 3.5%. Units purchased subsequent
to the initial deferred sales charge payment will also be subject to the
remaining deferred sales charge payments.
Page 9
AMERICA'S LEADING BRANDS GROWTH TRUST, SERIES 2
FINANCIAL SERVICES GROWTH TRUST, SERIES 3
MARKET LEADERS GROWTH TRUST, SERIES 2
PHARMACEUTICAL GROWTH TRUST, SERIES 3
REIT GROWTH & INCOME TRUST, SERIES 2
TECHNOLOGY GROWTH TRUST, SERIES 6
The First Trust Special Situations Trust, Series 205
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust, Series 205 is one of a series
of investment companies created by the Sponsor under the name of The
First Trust Special Situations Trust, all of which are generally similar
but each of which is separate and is designated by a different series
number. This Series consists of the underlying separate unit investment
trusts set forth above. The Trusts were 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 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
securities. In exchange for the deposit of securities or contracts to
purchase securities in the Trusts, the Trustee delivered to the Sponsor
documents evidencing the entire ownership of the Trusts.
America's Leading Brands Growth Trust, Series 2
The objective of the America's Leading Brands Growth Trust, Series 2 is
to provide for capital appreciation potential by investing in common
stocks issued by companies considered to be leaders in their industries.
See "Schedule of Investments" for America's Leading Brands Growth Trust,
Series 2.
The Trust consists of a portfolio of 25 companies involved in the
following industries: apparel manufacturers, beverages, entertainment,
food, household products, medical supplies, pharmaceuticals, recreation,
restaurants, retail, tobacco, toiletries/cosmetics, and toys. This type
of diversification can help offset risk, although it does not eliminate
it entirely. Furthermore, to achieve this type of diversification on
your own would require substantial time and capital commitments.
Almost every American is familiar with brand name companies like Coca-
Cola, Walt Disney, Gap and Mattel. They are household names, and their
products can be found in almost every home across the country.
Increasingly, such companies are becoming household names overseas as
well. Many of these companies already have a strong presence in
international markets; and they stand to benefit even more from the
increasing demands of growing populations, rising standards of living,
more relaxed foreign trade agreements, and improved political climates
in many countries around the world.
Furthermore, these companies have strong financial positions and market
dominance, competitive advantages, skilled management, and essential
products and services. Generally, consumer goods companies with these
attributes perform strongly, even during uncertain economic times.
In addition to their stability, the Sponsor believes that if you "buy
and hold" a portfolio of leading American companies, you will have an
investment which has the potential to weather economic downturns, grow
consistently in a healthy economy, and provide stable, consistent total
return over time.
Financial Services Growth Trust, Series 3
The objective of the Financial Services Growth Trust, Series 3 is to
provide for capital appreciation potential by investing in common stocks
issued primarily by financial services companies. See "Schedule of
Investments" for Financial Services Growth Trust, Series 3.
The portfolio is diversified across financial institutions including
money center banks, major regional banks, regional and local banks and
thrifts, credit card companies, mortgage finance companies and specialty
finance companies.
Despite consistent earnings growth, on average, the companies included
in the portfolio trade at below-market price to earnings ratios. Given
Page 10
their high level of profitability and superior earnings growth, the
companies included in the portfolio trade at compelling valuation levels
relative to the S&P 500 and their historic trading range. The attractive
valuations of the stocks chosen should provide above-average capital
appreciation potential.
The banking and financial services industries are poised to benefit from
strong and improving fundamentals as both businesses and consumers
increase their levels of borrowing due to the low level of interest
rates. Financial institutions are able to enhance their profitability as
they expand their businesses without taking on excessive credit risk due
to the overall strength of the U.S. economy.
The banking and thrift industries continue to experience significant
consolidation, as a nationwide banking law enacted in 1995 allows bank
holding companies to acquire banks anywhere in the U.S.; and secondly,
allows mergers and branching across state lines. The Trust offers a
portfolio which allows investors to hold positions in stocks of
companies which may acquire existing financial institutions and/or be
acquired themselves. The Sponsor believes investors can profit from
institutions expanding their earnings potential through acquisitions and
the resulting efficiency gains. In addition, investors may benefit from
takeover premiums if and when the companies in the Trust are acquired.
Market Leaders Growth Trust, Series 2
The objective of the Market Leaders Growth Trust, Series 2 is to provide
for potential capital appreciation through an investment in equity
securities issued by companies selected for their position as market
leaders within their respective markets. The Sponsor has selected
several blue chip companies which it believes will meet the Trust's
objectives. See "Schedule of Investments" for Market Leaders Growth
Trust, Series 2.
Blue chip companies generally perform strongly, even during uncertain
economic times, since the products and services provided by them
typically remain in demand. In addition to their stability, the Sponsor
believes that if you "buy and hold" a portfolio of blue chip market
leaders, you will have an investment that weathers economic downturns,
grows consistently in a healthy economy and provides stable, consistent
total return over time. However, there is no assurance that the Trust's
objectives will be achieved.
The "Buy and Hold" strategy holds that it is far better to purchase a
well-chosen portfolio of stocks and to hold them for a period of time
than to "play the market." This eliminates the emotion of investing and
the temptation to buy and sell for various reasons that an investor
cannot control: the volatility of the stock market; interest rates;
inflation and the overall economy; political elections; or the latest
investment fad. It requires an investor to have patience and discipline
and avoid looking for short-term appreciation. In return, "Buy and Hold"
advocates say investors will be rewarded with above-average investment
results. In purchasing the Financial Services Growth Trust, you can take
part in this philosophy, since it is intended that an investor hold the
investment for five years.
Pharmaceutical Growth Trust, Series 3
The objective of the Pharmaceutical Growth Trust, Series 3 is to provide
for potential capital appreciation and income through an investment in
equity securities issued by pharmaceutical companies. See "Schedule of
Investments" for Pharmaceutical Growth Trust, Series 3.
The Sponsor believes the portfolio selected for the Trust provides a
diversified blend of companies that are U.S. based and have attractive
participation in the expanding markets of proprietary medicines,
biotechnology, generics, drug delivery and medical supplies. The
companies vary in size from blue chip to emerging growth companies and
have special niche qualities in marketing, manufacturing and research.
In the Sponsor's opinion, the stocks of pharmaceutical companies
selected for deposit in the Trust have the potential to achieve above-
average capital appreciation over the life of the Trust due to the
strong or improving fundamental characteristics of the issuing
companies. The Sponsor believes that each stock selected for the
portfolio is attractively valued based on its price and earnings outlook.
REIT Growth & Income Trust, Series 2
The objective of the REIT Growth & Income Trust, Series 2 is to provide
for potential capital appreciation and potential for increasing dividend
income through an investment in a portfolio of common stocks issued by
publicly traded equity real estate investment trusts ("REIT" or
"REITs"). See "Schedule of Investments" for REIT Growth & Income Trust,
Series 2. Additionally, the Sponsor believes the Trust allows individual
Page 11
investors the opportunity to invest in the real estate market in a more
affordable, practical and liquid alternative to purchasing individual
properties.
For some individuals, ownership in a group of commercial properties may
be difficult to achieve because it can require a substantial capital
commitment, and property management may be time-consuming and expensive.
An easier way to invest in commercial real estate is to buy shares of
publicly-traded companies that own and operate several properties.
Essentially, a REIT is a corporation that combines the capital of many
investors to acquire real estate. Investors can enjoy the benefits of a
diversified portfolio managed by real estate professionals, receive
income from rents, and achieve capital appreciation if properties are
sold at a profit. In addition, REITs are traded on major stock
exchanges, making them highly liquid. The Sponsor believes that the
REITs selected for the portfolio offer the potential for attractive
returns and stable income.
Most individual REITs specialize in a particular type of property or
concentrate in a specific geographic region. This Trust invests in a
diversified portfolio of 25 REITs, which own more than 3,000 real estate
properties, including multi-family, office/industrial, recreation,
retail, hotels, healthcare facilities, and storage.
Several indicators suggest that real estate is poised to produce
attractive returns. Commercial real estate properties currently are
producing improving rental incomes and stable occupancy rates. Real
estate supply is expected to remain tight as most real estate properties
are valued below replacement cost, discouraging new developments. And,
lastly, demand for real estate is positive and is expected to track the
growth of the nation's economy.
REITs are required by law to distribute 95% of earnings; therefore,
dividend payout will likely increase in line with forecasted earnings
growth of 10%, on average, over the next _____ years. In addition, a
portion of a REIT's dividend is treated as a non-taxable return of
capital for tax purposes. (This means you do not pay taxes on that
portion of the income.) Instead, it is used to reduce your cost basis.
This portion of income, normally taxed at personal income tax rates, is
reclassified into a more favorably taxed, long-term capital gain, which
is deferred until shares are sold.
Technology Growth Trust, Series 6
The objective of the Technology Growth Trust, Series 6 is to provide for
capital appreciation potential by investing in common stocks issued by
U.S.-based technology companies with superior historical financial
performance. See "Schedule of Investments" for Technology Growth Trust,
Series 6. The Sponsor believes the companies selected are best
positioned to take advantage of the ongoing technology boom.
A technological revolution which affects our daily lives is currently
spanning the globe. Consider the advancements of the last few years made
possible by technology: personal computers; fax machines; cellular
phones; online data services; and the convergence of computers and the
explosive growth in Internet communications. Corporations continue to
invest in technology to enhance their productivity and to stay ahead of
the competition.
As American companies discover, innovate, research and develop new
technologies, businesses, consumers and governments around the world are
waiting to buy the products resulting from their efforts.
In addition, individuals are increasing their spending on technology.
Consider the sheer number of personal computers in the home, the
proliferation of software for education and entertainment purposes, and
the ever-increasing amount of services and information accessible on the
Internet.
In general, the Sponsor believes the companies selected for the
portfolio have above-average growth prospects for both sales and
earnings, established market shares for their products, and lower-than-
average debt.
Each Trust has a Mandatory Termination Date, as set forth under "Summary
of Essential Information." There is, of course, no guarantee that the
objective of any Trust will be achieved. Each Unit of a Trust represents
an undivided fractional interest in all the Equity Securities deposited
in such Trust.
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 each Trust's portfolio, as set forth
under "Schedule of Investments" for each Trust. 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
Page 12
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 a 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?" Since the
prices of the underlying Equity Securities will fluctuate daily, the
ratio, on a market value basis, will also change daily. The portion of
Equity Securities represented by each Unit will not change as a result
of the deposit of additional Equity Securities in a Trust. If the
Sponsor deposits cash, however, existing and new investors may
experience a dilution of their investment and a reduction in their
anticipated income because of fluctuations in the prices of the Equity
Securities between the time of the cash deposit and the purchase of the
Equity Securities and because such Trust will pay the associated
brokerage fees. To minimize this effect, the Trusts will try to purchase
the Equity Securities as close to the evaluation time 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 a Trust
with respect to acquiring Equity Securities for a Trust. In acting in
such capacity, the Sponsor or its affiliate will be subject to the
restrictions under the Investment Company Act of 1940, as amended.
On the Initial Date of Deposit, each Unit of a Trust represented the
undivided fractional interest in the Equity Securities deposited in such
Trust set forth under "Summary of Essential Information" for each Trust.
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 that 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 that Trust
will be increased by amounts allocable to additional Units, and the
fractional undivided interest represented by each Unit of that Trust
will be decreased proportionately. See "How May Units be Redeemed?"
What are the Expenses and Charges?
With the exception of brokerage fees discussed above and bookkeeping and
other administrative services provided to each Trust, for which the
Sponsor will be reimbursed in amounts as set forth under "Summary of
Essential Information," the Sponsor will not receive any fees in
connection with its activities relating to a Trust.
First Trust Advisors L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Information," for providing portfolio
supervisory services for each Trust. Such fee is based on the number of
Units outstanding in a Trust on January 1 of each year except for the
year or years in which an initial offering period occurs in which case
the fee for a month is based on the number of Units outstanding at the
end of such month. In providing such supervisory services, the Portfolio
Supervisor may purchase research services from a variety of sources
which may include dealers of the Trusts.
Subsequent to the initial offering period, First Trust Advisors L.P., in
its capacity as the Evaluator for the Trusts, will receive a fee as
indicated in the "Summary of Essential Information." The Trustee pays
certain expenses of each Trust for which it is reimbursed by such Trust.
The Trustee will receive for its ordinary recurring services to each
Trust an annual fee set forth in each "Summary of Essential
Information," which is based upon the largest aggregate number of Units
of each Trust outstanding at any time during the year. For a discussion
of the services performed by the Trustee pursuant to its obligations
under the Indenture, reference is made to the material set forth under
"Rights of Unit Holders."
The Trustee's and the above described 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 each Trust is expected to result from
the use of these funds. However, the Trustee may bear from its own
resources certain expenses relating to a Trust, including organization
costs and brokerage commissions.
Page 13
Each of the above mentioned fees may be increased without approval of
the Unit holders by amounts not exceeding proportionate increases under
the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor. In addition,
with respect to the fees payable to the Sponsor or an affiliate of the
Sponsor for providing bookkeeping and other administrative services,
supervisor services and evaluation services, such individual fees may
exceed the actual costs of providing such services for a Trust, but at
no time will the total amount received for such services rendered to all
unit investment trusts of which Nike Securities L.P. is the Sponsor in
any calendar year exceed the actual cost to the Sponsor or its affiliate
of supplying such services in such year.
Expenses incurred in establishing the Trusts, including costs of
preparing the registration statement, the trust indenture and other
closing documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of each Trust's portfolio and
the initial fees and expenses of the Trustee and any other out-of-pocket
expenses, will be paid by each Trust and charged off over a period not
to exceed the life of the Trusts (approximately _____ years). The
following additional charges are or may be incurred by a Trust: all
legal and annual auditing expenses of the Trustee incurred by or in
connection with its responsibilities under the Indenture; the expenses
and costs of any action undertaken by the Trustee to protect a Trust and
the rights and interests of the Unit holders; fees of the Trustee for
any extraordinary services performed under the Indenture;
indemnification of the Trustee for any loss, liability or expense
incurred by it without negligence, bad faith or willful misconduct on
its part, arising out of or in connection with its acceptance or
administration of a Trust; indemnification of the Sponsor for any loss,
liability or expense incurred without gross negligence, bad faith or
willful misconduct in acting as Depositor of such Trust; all taxes and
other government charges imposed upon the Securities or any part of a
Trust (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor, contemplated). The above expenses and the
Trustee's annual fee, when paid or owing to the Trustee, are secured by
a lien on each 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 such Trust expenses.
These sales may result in capital gains or losses to Unit holders. See
"What is the Federal Tax Status of Unit Holders?"
The Indenture requires each Trust to be audited on an annual basis at
the expense of such Trusts by independent auditors selected by the
Sponsor. So long as the Sponsor is making a secondary market for the
Units, the Sponsor is required to bear the cost of such annual audits to
the extent such cost exceeds $0.0050 per Unit. Unit holders of a Trust
covered by an audit may obtain a copy of the audited financial
statements upon request.
What is the Federal Tax Status of Unit Holders?
Grantor Trust
The following applies only to America's Leading Brands Growth Trust,
Series 2, Financial Services Growth Trust, Series 3, Market Leaders
Growth Trust, Series 2, Pharmaceutical Growth Trust, Series 3 and
Technology Growth Trust, Series 6, each of which is organized as a
grantor trust for federal tax purposes. This is a general discussion of
certain of the Federal income tax consequences of the purchase,
ownership and disposition of the Units. The summary is limited to
investors who hold the Units as "capital assets" (generally, property
held for investment) within the meaning of Section 1221 of the Internal
Revenue Code of 1986 (the "Code"). Unit holders should consult their tax
advisers in determining the Federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in the
Trusts.
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 each of the assets of a Trust under the
Code; and the income of each Trust will be treated as income of the Unit
holders thereof under the Code. Each Unit holder will be considered to
have received his pro rata share of the income derived from each Equity
Security when such income is considered to be received by a Trust.
Page 14
2. Each 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 such Trust are actually received by the Unit holder.
3. 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 (except to the extent an In-Kind distribution of stocks
is received by such Unit holder as described below). The price a Unit
holder pays for his Units is allocated among his pro rata portion of
each Equity Security held by a Trust (in proportion to the fair market
values thereof on the valuation date closest to the date the Unit holder
purchases his Units) in order to determine his tax basis for his pro
rata portion of each Equity Security held by 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 exceed such current and accumulated earnings and
profits will first reduce a Unit holder's tax basis in such Equity
Security, and to the extent that such dividends exceed a Unit holder's
tax basis in such Equity Security shall generally be treated as capital
gain. In general, any such capital gain will be short-term unless a Unit
holder has held his Units for more than one year.
4. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held by a
Trust will generally be considered a capital gain except in the case of
a dealer or a financial institution and will be long-term if the Unit
holder has held his 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
or a financial institution) and, in general, will be long-term if the
Unit holder has held his Units for more than one year. Unit holders
should consult their tax advisers regarding the recognition of such
capital gains and losses for Federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unit holder
includes sales charges, and such charges are not deductible. A portion
of the sales charge for a Trust is deferred. It is possible that for
federal income tax purposes a portion of the deferred sales charge may
be treated as interest which would be deductible by a Unit holder
subject to limitations on the deduction of investment interest. In such
a case, the non-interest portion of the deferred sales charge would be
added to the Unit holder's tax basis in his or her Units. The deferred
sales charge could cause the Unit holder's Units to be considered to be
debt-financed under Section 246A of the Code which would result in a
small reduction of the dividends-received deduction. In any case, the
income (or proceeds from redemption) a Unit holder must take into
account for federal income tax purposes is not reduced by amounts
deducted to pay the deferred sales charge. Unit holders should consult
their own tax advisers as to the income tax consequences of the deferred
sales charge.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with respect
to such Unit holder's pro rata portion of dividends received by a Trust
(to the extent such dividends are taxable as ordinary income, as
discussed above, and are attributable to domestic corporations) in the
same manner as if such corporation directly owned the Equity Securities
paying such dividends (other than corporate Unit holders, such as "S"
corporations, which are not eligible for the deduction because of their
special characteristics and other than for purposes of special taxes
such as the accumulated earnings tax and the personal holding
corporation tax). However, a corporation owning Units should be aware
that Sections 246 and 246A of the Code impose additional limitations on
the eligibility of dividends for the 70% dividends received deduction.
These limitations include a requirement that stock (and therefore Units)
must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have 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
Page 15
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 a Trust's 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 such Unit holder. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of a
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. For taxpayers other
than corporations, net capital gains (which is defined as net long-term
capital gain over net short-term capital loss for a taxable year) are
subject to a maximum stated marginal tax rate of 28%. However, it should
be noted that legislative proposals are introduced from time to time
that affect tax rates and could affect relative differences at which
ordinary income and capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "Tax Act") raised tax rates
on ordinary income while capital gains remain subject to a 28% maximum
stated rate for taxpayers other than corporations. Because some or all
capital gains are taxed at a comparatively lower rate under the Tax Act,
the Tax Act includes a provision that recharacterizes capital gains as
ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after
April 30, 1993. Unit holders and prospective investors should consult
with their tax advisers regarding the potential effect of this provision
on their investment in Units.
If the Unit holder disposes of a Unit, he is deemed thereby to have
disposed of his entire pro rata interest in all assets of a Trust
involved including his pro rata portion of all the Equity Securities
represented by the Unit.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units or Termination of a 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 the
Trust. The Unit holder requesting an In-Kind Distribution will be liable
for expenses related thereto (the "Distribution Expenses") and the
amount of such In-Kind Distribution will be reduced by the amount of the
Distribution Expenses. See "Rights of Unit Holders-How are Income and
Capital Distributed?" As previously discussed, prior to the redemption
of Units or the termination of a Trust, a Unit holder is considered as
owning a pro rata portion of each of a Trust's assets for Federal income
tax purposes. The receipt of an In-Kind Distribution will result in a
Unit holder receiving 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 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 a 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.
Page 16
Computation of the Unit Holder's Tax Basis. Initially, a Unit holder's
tax basis in his Units will generally equal the price paid by such Unit
holder for his Units. The cost of the Units is allocated among the
Equity Securities held in a Trust in accordance with the proportion of
the fair market values of such Equity Securities as of the valuation
date nearest the date the Units are purchased in order to determine such
Unit holder's tax basis for his pro rata portion of each Equity Security.
A Unit holder's tax basis in his Units and his pro rata portion of an
Equity Security held by 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 dividends
includable in the Unit holder's gross income and amounts of Trust
expenses which may be claimed as itemized deductions.
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Why are Investments in the Trusts Suitable for
Retirement Plans?"
The foregoing discussion relates only to the tax treatment of United
States Unit holders; Unit holders may be subject to foreign, state and
local taxation. Unit holders should consult their tax advisers regarding
potential state or local taxation with respect to the Units.
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 such Trusts will be treated as the income
of the Unit holders thereof.
Regulated Investment Company
The following discussion applies only to REIT Growth & Income Trust,
Series 2, which is structured to qualify as a regulated investment
company for federal tax purposes.
REIT Growth & Income Trust, Series 2, which is an association taxable as
a corporation under the Internal Revenue Code, intends to qualify on a
continuing basis for special federal income tax treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). If the Trust so qualifies and timely distributes to Unit
holders 90% or more of its taxable income (without regard to its net
capital gain, i.e., the excess of its long-term capital gain over its
net short-term capital loss), it will not be subject to Federal income
tax on the portion of its taxable income (including any net capital
gain) that it distributes to Unit holders. In addition, to the extent
the Trust distributes to Unit holders at least 98% of its taxable income
(including any net capital gain), it will not be subject to the 4%
excise tax on certain undistributed income of "regulated investment
companies." The Trust intends to timely distribute its taxable income
(including any net capital gains) to avoid the imposition of Federal
income tax or the excise tax.
In any taxable year of the Trust, the distributions of the Trust's
income, other than distributions which are designated as capital gain
dividends, will be taxable as ordinary income to the Unit holders. To
the extent that distributions to a Unit holder in any year exceed the
Trust's current and accumulated earnings and profits, they will be
treated as a return of capital and will reduce the Unit holder's basis
in his Units, and to the extent that they exceed his basis, will be
treated as a gain from the sale of his Units as discussed below.
Distributions from the Trust will not be eligible for the dividends
received deduction for corporations. Although distributions generally
will be treated as distributed when paid, distributions declared in
October, November or December, payable to Unit holders of record on a
specified date in one of those months and paid during January of the
following year will be treated as having been distributed by the Trust
(and received by the Unit holders) on December 31 of the year such
distributions are declared.
Distributions of the Trust's net capital gain which are properly
designated as capital gain dividends by the Trust will be taxable to
Unit holders as long-term capital gain, regardless of the length of time
the Units have been held by a Unit holder. A Unit holder may recognize a
Page 17
taxable gain or loss if the Unit holder sells or redeems his Units. Any
gain or loss arising from (or treated as arising from) the sale or
redemption of Units will generally be a capital gain or loss, except in
the case of a dealer or financial institution. For taxpayers other than
corporations, net capital gains are presently 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. A capital loss is long-term if the asset is
held for more than one year and short-term if held for one year or less.
If a Unit holder holds Units for six months or less and subsequently
sells such Units at a loss, the loss will be treated as a long-term
capital loss to the extent that any long-term capital gain distribution
is made with respect to such Units during the six-month period or less
that the Unit holder owns the Units. Distributions in partial
liquidation reflecting the proceeds of prepayments, redemptions,
maturities (including monthly mortgage payments of principal) or sales
of Securities (exclusive of net capital gain) will not be taxable to
Unit holders of such Trust to the extent that they represent a return of
capital for tax purposes. The portion of distributions which represents
a return of capital will, however, reduce a Unit holder's basis in his
Units, and to the extent they exceed the basis of his Units will be
taxable as a capital gain.
Generally, the tax basis of a Unit holder includes sales charges, and
such charges are not deductible. A portion of the sales charge for the
Trust is deferred. It is possible that for federal income tax purposes a
portion of the deferred sales charge may be treated as interest which
would be deductible by a Unit holder subject to limitations on the
deduction of investment interest. In such a case, the non-interest
portion of the deferred sales charge would be added to the Unit holder's
tax basis in his or her Units. 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.
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 advisors regarding the potential effect of this
provision on their investment in Units.
Under the Code, certain miscellaneous itemized deductions, such as
investment expenses, tax return preparation fees and employee business
expenses, will be deductible by individuals only to the extent they
exceed 2% of adjusted gross income. Miscellaneous itemized deductions
subject to this limitation under present law do not include expenses
incurred by the Trust as long as the Units of the Trust are held by or
for 500 or more persons at all times during the taxable year or another
exception is met. In the event the Units of the Trust are held by fewer
than 500 persons, additional taxable income may be realized by the
individual and Unit holders in excess of the distributions received from
the Trust.
Each Unit holder of the Trust shall receive an annual statement
describing the tax status of the distributions paid by the Trust.
Each Unit holder will be requested to provide the Unit holder's taxpayer
identification number to the Trustee and to certify that the Unit holder
has not been notified that payments to the Unit holder are subject to
back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions
by the Trust to such Unit holder (including amounts received upon the
redemption of Units) will be subject to back-up withholding.
Distributions by the Trust 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 advisors.
As discussed in "Rights of Unit holders-How May Units be Redeemed?",
under certain circumstances a Unit holder who owns at least 2,500 Units
may request an In Kind Distribution upon the redemption of Units or the
termination of the Trust. Unit holders electing an In Kind Distribution
of shares of the Securities should be aware that the exchange is subject
to taxation and Unit holders will recognize gain or loss based on the
value of the Securities received.
Page 18
A Unit holder who is a foreign investor (i.e., an investor other than a
United States citizen or resident or a United States corporation,
partnership, estate or trust) should be aware that, generally, subject
to applicable tax treaties, distributions from the Trust which
constitute dividends for Federal income tax purposes (other than
dividends which the Trust designates as capital gain dividends) will be
subject to United States income taxes, including withholding taxes.
However, distributions received by a foreign investor from the Trust
that are designated by the Trust as capital gain dividends should not be
subject to United States Federal income taxes, including withholding
taxes, if all of the following conditions are met: (i) the capital gain
dividend is not effectively connected with the conduct by the foreign
investor of a trade or business within the United States, (ii) the
foreign investor (if an individual) is not present in the United States
for 183 days or more during his or her taxable year, and (iii) the
foreign investor provides all certification which may be required of his
status (foreign investors may contact the Sponsor to obtain a Form W-8
which must be filed with the Trustee and refiled every three calendar
years thereafter). Foreign investors should consult their tax advisors
with respect to United States tax consequences of ownership of Units.
Units in the Trust and Trust distributions may also be subject to state
and local taxation and Unit holders should consult their tax advisors in
this regard.
The federal tax status of each year's distributions will be reported to
Unit holders and to the Internal Revenue Service. The foregoing
discussion relates only to the federal income tax status of the Trust
and to the tax treatment of distributions by the Trust to United States
Unit holders. Distributions by the 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 advisors.
Units in the Trust and Trust distributions may also be subject to state
and local taxation and Unit holders should consult their tax advisor in
this regard.
Investment in the Trust may be particularly well suited for purchase by
funds and accounts of individual investors that are exempt from Federal
income taxes such as Individual Retirement Accounts, Keogh Plans,
pension funds and other tax-deferred retirement plans. (See "Why are
Investments in the Trust Suitable for Retirement Plans?")
Why are Investments in the Trusts Suitable for Retirement Plans?
Units of the Trusts may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to capital
gains and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible
for special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. Such
plans are offered by brokerage firms and other financial institutions.
Fees and charges with respect to such plans may vary.
PORTFOLIO
What are Equity Securities?
The Trusts consist of different issues of Equity Securities which are
listed on a national securities exchange or The Nasdaq Stock Market or
traded in the over-the-counter market. See "What are the Equity
Securities Selected for America's Leading Brands Growth Trust, Series
2?," "What are the Equity Securities Selected for Financial Services
Growth Trust, Series 3?," "What are the Equity Securities Selected for
Market Leaders Growth Trust, Series 2?," "What are the Equity Securities
Selected for Pharmaceutical Growth Trust, Series 3?," "What are the
Equity Securities Selected for REIT Growth & Income Trust, Series 2?"
and "What are the Equity Securities Selected for Technology Growth
Trust, Series 6?" for a general description of the companies.
Risk Factors. An investment in Units of the Trusts should be made with
an understanding of the problems and risks such an investment may entail.
America's Leading Brands Growth Trust, Series 2. An investment in Units
of America's Leading Brands Growth Trust, Series 2 should be made with
an understanding of the problems and risks inherent in the consumer
products industry in general. These include the cyclicality of revenues
and earnings, changing consumer demands, regulatory restrictions,
product liability litigation and other litigation resulting from
accidents, extensive competition (including that of low-cost foreign
companies), unfunded pension fund liabilities and employee and retiree
Page 19
benefit costs and financial deterioration resulting from leveraged buy-
outs, takeovers or acquisitions. In general, expenditures on consumer
products will be affected by the economic health of consumers. A
continuing weak economy with its consequent effect on consumer spending
would have an adverse effect on the industry. Other factors of
particular relevance to the profitability of the industry are the
effects of increasing environmental regulation on packaging and on waste
disposal, the continuing need to conform with foreign regulations
governing packaging and the environment, the outcome of trade
negotiations and the effect on foreign subsidies and tariffs, foreign
exchange rates, the price of oil and its effect on energy costs,
inventory cutbacks by retailers, transportation and distribution costs,
health concerns relating to the consumption of certain products, the
effect of demographics on consumer demand, the availability and cost of
raw materials and the ongoing need to develop new products and to
improve productivity.
Financial Services Growth Trust, Series 3. An investment in Units of
Financial Services Growth Trust, Series 3 should be made with an
understanding of the problems and risks inherent in the bank and
financial services sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in
their fields of business. Banks and thrifts are highly dependent on net
interest margin. Recently, bank profits have come under pressure as net
interest margins have contracted, but volume gains have been strong in
both commercial and consumer products. There is no certainty that such
conditions will continue. Bank and thrift institutions had received
significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic
conditions in the real estate markets, which have been weak in the past,
can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by
real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Equity Securities in the Trust's portfolio cannot be
predicted with certainty. Periodic efforts by recent Administrations to
introduce legislation broadening the ability of banks to compete with
new products have not been successful, but if enacted could lead to more
failures as a result of increased competition and added risks. Failure
to enact such legislation, on the other hand, may lead to declining
earnings and an inability to compete with unregulated financial
institutions. Efforts to expand the ability of federal thrifts to branch
on an interstate basis have been initially successful through
promulgation of regulations, and legislation to liberalize interstate
banking has recently been signed into law. Under the legislation, banks
will be able to purchase or establish subsidiary banks in any state, one
year after the legislation's enactment. Starting in mid-1997, banks
would be allowed to turn existing banks into branches, though states
Page 20
could pass laws to permit interstate branch banking before then.
Consolidation is likely to continue in both cases. The Securities and
Exchange Commission and the Financial Accounting Standards Board require
the expanded use of market value accounting by banks and have imposed
rules requiring market accounting for investment securities held in
trading accounts or available for sale. Adoption of additional such
rules may result in increased volatility in the reported health of the
industry, and mandated regulatory intervention to correct such problems.
Additional legislative and regulatory changes may be forthcoming. For
example, the bank regulatory authorities have proposed substantial
changes to the Community Reinvestment Act and fair lending laws, rules
and regulations, and there can be no certainty as to the effect, if any,
that such changes would have on the Equity Securities in the Trust's
portfolio. In addition, from time to time the deposit insurance system
is reviewed by Congress and federal regulators, and proposed reforms of
that system could, among other things, further restrict the ways in
which deposited moneys can be used by banks or reduce the dollar amount
or number of deposits insured for any depositor. Such reforms could
reduce profitability as investment opportunities available to bank
institutions become more limited and as consumers look for savings
vehicles other than bank deposits. Banks and thrifts face significant
competition from other financial institutions such as mutual funds,
credit unions, mortgage banking companies and insurance companies, and
increased competition may result from legislative broadening of regional
and national interstate banking powers as has been recently enacted.
Among other benefits, the legislation allows banks and bank holding
companies to acquire across previously prohibited state lines and to
consolidate their various bank subsidiaries into one unit. The Sponsor
makes no prediction as to what, if any, manner of bank and thrift
regulatory actions might ultimately be adopted or what ultimate effect
such actions might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Equity Securities or whether such approvals, if necessary,
will be obtained.
Market Leaders Growth Trust, Series 2. An investment in Units of Market
Leaders Growth Trust, Series 2 should be made with an understanding of
the problems and risks associated with an investment in the common stock
of Berkshire Hathaway, Inc. and related companies. Since the Trust is
concentrated in Berkshire Hathaway, Inc. common stock and the common
stock of certain companies in which Berkshire Hathaway, Inc. owns an
equity interest, the Trust's lack of diversity increases risks to
investors. Berkshire Hathaway, Inc. and the other issuers of Equity
Securities included in the Trust have in no way participated in the
creation of this Trust.
Pharmaceutical Growth Trust, Series 3. An investment in Units of
Pharmaceutical Growth Trust, Series 3 should be made with an
understanding of the characteristics of the pharmaceutical and medical
technology industries and the risks which such investment may entail.
Page 21
Pharmaceutical companies are companies involved in drug development and
production services. Such companies have potential risks unique to their
sector of the healthcare field. Such companies are subject to
governmental regulation of their products and services, a factor which
could have a significant and possibly unfavorable effect on the price
and availability of such products or services. Furthermore, such
companies face the risk of increasing competition from generic drug
sales, the termination of their patent protection for drug products and
the risk that technological advances will render their products or
services obsolete. The research and development costs of bringing a drug
to market are substantial and include lengthy governmental review
processes, with no guarantee that the product will ever come to market.
Many of these companies may have losses and not offer certain products
until the late 1990s. Such companies may also have persistent losses
during a new product's transition from development to production, and
revenue patterns may be erratic.
The medical sector has historically provided investors with significant
growth opportunities. One of the industries included in the sector is
pharmaceutical companies. Such companies develop, manufacture and sell
prescription and over-the-counter drugs. In addition, they are well
known for the vast amounts of money they spend on world-class research
and development. In short, such companies work to improve the quality of
life for millions of people and are vital to the nation's health and
well-being.
As the population of the United States ages, the companies involved in
the pharmaceutical field will continue to search for and develop new
drugs through advanced technologies and diagnostics. On a worldwide
basis, such companies are involved in the development and distributions
of drugs and vaccines. These activities may make the pharmaceutical
sector very attractive for investors seeking the potential for growth in
their investment portfolio. However, there are no assurances that the
Trust's objectives will be met.
Legislative proposals concerning healthcare are under consideration by
the Clinton Administration. These proposals span a wide range of topics,
including cost and price controls (which might include a freeze on the
prices of prescription drugs), national health insurance, incentives for
competition in the provision of healthcare services, tax incentives and
penalties related to healthcare insurance premiums and promotion of pre-
paid healthcare plans. The Sponsor is unable to predict the effect of
any of these proposals, if enacted, on the issuers of Equity Securities
in the Trust.
REIT Growth & Income Trust, Series 2. An investment of Units of the REIT
Growth & Income Trust, Series 2 should be made with an understanding of
the many factors which may have an adverse impact on the credit quality
of the real estate industry. Generally, these include economic
recession, the cyclical nature of real estate markets, competitive
overbuilding, unusually adverse weather conditions, changing
demographics, changes in governmental regulations (including tax laws
and environmental, building, zoning and sales regulations), increases in
real estate taxes or costs of material and labor, the inability to
secure performance guarantees or insurance as required, the
unavailability of investment capital and the inability to obtain
construction financing or mortgage loans at rates acceptable to builders
and purchasers of real estate. Additional risks include an inability to
reduce expenditures associated with a property (such as mortgage
payments and property taxes) when rental revenue declines, and possible
loss upon foreclosure of mortgaged properties if mortgage payments are
not paid when due.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
REITs are differentiated by the types of real estate properties held and
the actual geographic location of properties and fall into two major
categories: equity REITs emphasize direct property investment, holding
their invested assets primarily in the ownership of real estate or other
equity interests, while mortgage REITs concentrate on real estate
financing, holding their assets primarily in mortgages secured by real
estate. As of the Initial Date of Deposit, the Trust contains only
equity REITs. REITs obtain capital funds for investment in underlying
real estate assets by selling debt or equity securities in the public or
institutional capital markets or by bank borrowing. Thus, the returns on
common equities of the REITs in which the Trust invests will be
significantly affected by changes in costs of capital and, particularly
in the case of highly "leveraged" REITs (i.e., those with large amounts
of borrowings outstanding), by changes in the level of interest rates.
The objective of an equity REIT is to purchase income-producing real
estate properties in order to generate high levels of cash flow from
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rental income and a gradual asset appreciation, and they typically
invest in properties such as office, retail, industrial, hotel and
apartment buildings and healthcare facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distribute at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail
to qualify for such tax status, the related shareholders (including the
Trust) could be adversely affected by the resulting tax consequences.
The underlying value of the Equity Securities and the Trust's ability to
make distributions to Unit holders may be adversely affected by changes
in national economic conditions, changes in local market conditions due
to changes in general or local economic conditions and neighborhood
characteristics, increased competition from other properties,
obsolescence of property, changes in the availability, cost and terms of
mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
impediments to raising rents, adverse changes in governmental rules and
fiscal policies, dependency on management skill, civil unrest, acts of
God, including earthquakes and other natural disasters (which may result
in uninsured losses), acts of war, adverse changes in zoning laws, and
other factors which are beyond the control of the issuers of the REITs
in the Trust.
The value of the REITs may at times be particularly sensitive to
devaluation in the event of rising interest rates. Equity REITs are less
likely to be affected by interest rate fluctuations than mortgage REITs
and the nature of the underlying assets of an equity REIT may be
considered more tangible than that of a mortgage REIT. Equity REITs are
more likely to be adversely affected by changes in the value of the
underlying property it owns than mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in the Trust may
be adversely affected by increases or decreases in property tax rates
and assessments or reassessments of the properties underlying the REITs
by taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary. In an effort to reduce the impact of the
risks discussed above, the Sponsor has selected REITs that are
diversified among various real estate sectors and geographic locations.
The issuer of REITs generally maintains comprehensive insurance on
presently owned and subsequently acquired real property assets,
including liability, fire and extended coverage. However, certain types
of losses may be uninsurable or not be economically insurable as to
which the underlying properties are at risk in their particular locales.
There can be no assurance that insurance coverage will be sufficient to
pay the full current market value or current replacement cost of any
lost investment. Various factors might make it impracticable to use
insurance proceeds to replace a facility after it has been damaged or
destroyed. Under such circumstances, the insurance proceeds received by
a REIT might not be adequate to restore its economic position with
respect to such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
Page 23
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of
the REITs in the Trust may not be presently liable or potentially liable
for any such costs in connection with real estate assets they presently
own or subsequently acquire while such REITs are held in the Trust.
Technology Growth Trust, Series 6. The Technology Growth Trust, Series 6
concentrates its Equity Securities in the technology industry and, as a
result, the value of the Units of the Trust may be susceptible to
factors affecting the technology industry.
Technology companies generally include companies involved in the
development, design, manufacture and sale of computers, computer-related
equipment, computer networks, communications systems, telecommunications
products, electronic products and other related products, systems and
services. The market for these products, especially those specifically
related to the Internet, is characterized by rapidly changing
technology, rapid product obsolescence, cyclical market patterns,
evolving industry standards and frequent new product introductions. The
success of the issuers of the Equity Securities depends in substantial
part on the timely and successful introduction of new products. An
unexpected change in one or more of the technologies affecting an
issuer's products or in the market for products based on a particular
technology could have a material adverse affect on an issuer's operating
results. Furthermore, there can be no assurance that the issuers of the
Equity Securities will be able to respond timely to compete in the
rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements
of new products or development of new technologies and general
conditions of the industry have caused and are likely to cause the
market price of high-technology common stocks to fluctuate
substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to
the operating performance of such companies. This market volatility may
adversely affect the market price of the Equity Securities and therefore
the ability of a Unit holder to redeem Units at a price equal to or
greater than the original price paid for such Units.
Some key components of certain products of technology issuers are
currently available only from single sources. There can be no assurance
that in the future suppliers will be able to meet the demand for
components in a timely and cost effective manner. Accordingly, an
issuer's operating results and customer relationships could be adversely
affected by either an increase in price for, or an interruption or
reduction in supply of, any key components. Additionally, many
technology issuers are characterized by a highly concentrated customer
base consisting of a limited number of large customers who may require
product vendors to comply with rigorous industry standards. Any failure
to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies of technology
companies are incorporated into other related products, such companies
are often highly dependent on the performance of the personal computer,
electronics and telecommunications industries. There can be no assurance
that these customers will place additional orders, or that an issuer of
Equity Securities will obtain orders of similar magnitude as past orders
from other customers. Similarly, the success of certain technology
companies is tied to a relatively small concentration of products or
technologies. Accordingly, a decline in demand of such products,
technologies or from such customers could have a material adverse impact
on issuers of the Equity Securities.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their
proprietary rights in their products and technologies. There can be no
assurance that the steps taken by the issuers of the Equity Securities
to protect their proprietary rights will be adequate to prevent
misappropriation of their technology or that competitors will not
independently develop technologies that are substantially equivalent or
superior to such issuers' technology. In addition, due to the increasing
public use of the Internet, it is possible that other laws and
regulations may be adopted to address issues such as privacy, pricing,
characteristics, and quality of Internet products and services. For
example, recent proposals would prohibit the distribution of obscene,
lascivious or indecent communications on the Internet. The adoption of
any such laws could have a material adverse impact on the securities in
Page 24
the Trust.
General. Each Trust consists of such Equity Securities listed under the
"Schedule of Investments" for each Trust as may continue to be held from
time to time in the Trust and any additional Equity Securities acquired
and held by the Trusts 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.
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 Portfolio
is not managed, the Sponsor may instruct the Trustee to sell Equity
Securities under certain limited circumstances. Pursuant to the
Indenture and with limited exceptions, the Trustee may sell any
securities or other property acquired in exchange for Equity Securities
such as those acquired in connection with a merger or other transaction.
If 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 the
Trust pursuant to the direction of the Sponsor (who may rely on the
advice of the Portfolio Supervisor). See "How May Equity Securities be
Removed from 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.
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 or the
general condition of the common stock market may worsen and the value of
the Equity Securities and therefore the value of the Units may decline.
The past market and earnings performance of the Equity Securities
included in the Trusts is not predictive of their future performance.
Common stocks are especially susceptible to general stock market
movements and to volatile increases and decreases of value as market
confidence in and perceptions of the issuers change. These perceptions
are based on unpredictable factors including expectations regarding
government, economic, monetary and fiscal policies, inflation and
interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Shareholders of common
stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or
holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by a Trust have a right
to receive dividends only when and if, and in the amounts, declared by
the issuer's board of directors and have a right to participate in
amounts available for distribution by the issuer only after all other
claims on the issuer have been paid or provided for. Common stocks do
not represent an obligation of the issuer and, therefore, do not offer
any assurance of income or provide the same degree of protection of
capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its
common stock or the rights of holders of common stock with respect to
assets of the issuer upon liquidation or bankruptcy. The value of common
stocks is subject to market fluctuations for as long as the common
Page 25
stocks remain outstanding, and thus the value of the Equity Securities
in the Portfolio may be expected to fluctuate over the life of a Trust
to values higher or lower than those prevailing on the Initial Date of
Deposit.
Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Cumulative
preferred stock dividends must be paid before common stock dividends and
any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Unit holders will be unable to dispose of any of the Equity Securities
in 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.
What are the Equity Securities Selected for America's Leading Brands
Growth Trust, Series 2?
APPAREL
Nautica Enterprises, Inc., headquartered in
St. John Knits, Inc., headquartered in
Tommy Hilfiger Corporation, headquartered in
BEVERAGES
The Coca-Cola Company, headquartered in
PepsiCo, Inc., headquartered in
ENTERTAINMENT
The Walt Disney Company, headquartered in
FOOD
H.J. Heinz Company, headquartered in
Sara Lee Corporation, headquartered in
HOUSEHOLD PRODUCTS
The Clorox Company, headquartered in
Colgate-Palmolive Company, headquartered in
Newell Co., headquartered in
The Procter & Gamble Company, headquartered in
MEDICAL SUPPLIES
Johnson & Johnson, headquartered in
PHARMACEUTICALS
American Home Products Corporation, headquartered in
Bristol-Myers Squibb Company, headquartered in
Schering Plough Corporation, headquartered in
RECREATION
Callaway Golf Company, headquartered in
Carnival Corporation, headquartered in
Harley-Davidson, Inc., headquartered in
RESTAURANTS
McDonald's Corporation, headquartered in
RETAIL
Gap Inc., headquartered in
TECHNOLOGY
Intel Corporation, headquartered in
Page 26
TOBACCO
Philip Morris Incorporated, headquartered in
TOILETRIES/COSMETICS
The Gillette Company, headquartered in
TOYS
Mattel, Inc., headquartered in
What are the Equity Securities Selected for Financial Services Growth
Trust, Series 3?
BANKS
BankAmerica Corporation, headquartered in
The Chase Manhattan Corporation, headquartered in
Citicorp, headquartered in
First Chicago NBD Corporation, headquartered in
Firstar Corporation, headquartered in
First Union Corporation, headquartered in
NationsBank Corporation, headquartered in
Norwest Corporation, headquartered in
SouthTrust Corporation, headquartered in
INSURANCE
AFLAC Incorporated, headquartered in
Allstate Insurance Company, headquartered in
American Bankers Insurance Group, Inc., headquartered in
American International Group, Inc., headquartered in
The Chubb Corporation, headquartered in
General Re Corporation, headquartered in
MGIC Investment Corporation, headquartered in
The Progressive Corporation, headquartered in
SPECIALTY FINANCE
Aames Financial Corporation, headquartered in
Capital One Financial Corporation, headquartered in
Countrywide Credit Industries, Inc., headquartered in
Fannie Mae, headquartered in
Green Tree Financial Corp., headquartered in
Household International, headquartered in
MBIA, Inc., headquartered in
MBNA Corporation, headquartered in
What are the Equity Securities Selected for Market Leaders Growth Trust,
Series 2?
American Express Company, headquartered in
Berkshire Hathaway, Inc. (Class B), headquartered in
The Coca-Cola Company, headquartered in
The Walt Disney Company, headquartered in
Federal Home Loan Mortgage Corporation, headquartered in
The Gillette Company, headquartered in
McDonald's Corporation, headquartered in
Washington Post Company (Class B), headquartered in
Wells Fargo & Company, headquartered in
What are the Equity Securities Selected for Pharmaceutical Growth Trust,
Series 3?
Abbott Laboratories, headquartered in
American Home Products Corporation, headquartered in
Amgen, Inc., headquartered in
Page 27
Astra AB (ADR), headquartered in
Biogen, Inc., headquartered in
Bristol-Myers Squibb Company, headquartered in
Elan Corporation plc (ADR), headquartered in
Eli Lilly & Company, headquartered in
Genzyme Corporation (General Division), headquartered in
Glaxo Wellcome plc (ADR), headquartered in
Johnson & Johnson, headquartered in
Merck & Company, Inc., headquartered in
Novartis AG (ADR), headquartered in
Pfizer, Inc., headquartered in
R.P. Scherer Corporation, headquartered in
Roche Holdings AG (ADR), headquartered in
Schering-Plough Corporation, headquartered in
SmithKline Beecham plc (ADR), headquartered in
Teva Pharmaceutical Industries Ltd. (ADR), headquartered in
Zeneca Group plc (ADR), headquartered in
What are the Equity Securities Selected for REIT Growth & Income Trust,
Series 2?
RETAIL
CBL & Associates Properties, Inc., headquartered in
Developers Diversified Realty Corporation, headquartered in
JDN Realty Corporation, headquartered in
JP Realty, Inc., headquartered in
The Macerich Company, headquartered in
Simon DeBartolo Group, Inc., headquartered in
MULTI-FAMILY
Bay Apartment Communities, Inc., headquartered in
Evans Withycombe Residential Inc., headquartered in
Equity Residential Properties Trust, headquartered in
Oasis Residential, Inc., headquartered in
United Dominion Realty Trust, Inc., headquartered in
Walden Residential Properties, Inc., headquartered in
OFFICE/INDUSTRIAL
Arden Realty Inc., headquartered in
CenterPoint Properties Corporation, headquartered in
Duke Realty Investments, Inc., headquartered in
First Industrial Realty Trust, Inc., headquartered in
Liberty Property Trust, headquartered in
HEALTHCARE
Health and Retirement Properties Trust, headquartered in
Healthcare Realty Trust Incorporated, headquartered in
National Health Investors Inc., headquartered in
HOTEL
Hospitality Properties Trust, headquartered in
Winston Hotels, Inc., headquartered in
MANUFACTURED HOUSING
Chateau Communities, Inc., headquartered in
STORAGE
Storage Trust Realty, headquartered in
TRIPLE NET LEASE
Page 28
TriNet Corporate Realty Trust, Inc., headquartered in
What are the Equity Securities Selected for Technology Growth Trust,
Series 6?
COMPUTERS
Compaq Computer Corporation, headquartered in
Dell Computer Corporation, headquartered in
Gateway 2000, Inc., headquartered in
Hewlett-Packard Company, headquartered in
Sun Microsystems, Inc., headquartered in
COMPUTER NETWORKING
3Com Corporation, headquartered in
Cabletron Systems, Inc., headquartered in
Cisco Systems, Inc., headquartered in
Electronics Manufacturing
SCI Systems, Inc., headquartered in
Solectron Corporation, headquartered in
SEMICONDUCTOR EQUIPMENT
Applied Materials, Inc., headquartered in
KLA-Tencor Corporation, headquartered in
SEMICONDUCTORS
Adaptec, Inc., headquartered in
Altera Corporation, headquartered in
Atmel Corporation, headquartered in
Intel Corporation, headquartered in
Maxim Integrated Products, Inc., headquartered in
SMART Modular Technologies, Inc., headquartered in
SOFTWARE
BMC Software, Inc., headquartered in
McAfee Associates, Inc., headquartered in
Microsoft Corporation, headquartered in
Oracle Corp., headquartered in
Parametric Technology Corporation, headquartered in
STORAGE
Seagate Technology, Inc., headquartered in
Western Digital Corporation, headquartered in
What are Some Additional Considerations for Investors?
Investors should be aware of certain other considerations before making
a decision to invest in the Trusts.
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.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Security. In the event of a notice
that any Equity Security will not be delivered ("Failed Contract
Obligations") to 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
paragraph is not utilized to acquire Replacement Securities in the event
Page 29
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 a 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 Trusts will pay the brokerage fees associated
therewith.
Each Trust consists of the Equity Securities listed under "Schedule of
Investments" for each Trust (or contracts to purchase such Securities)
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 Indenture (including provisions with respect to
deposits into such Trust of Equity Securities in connection with the
issuance of additional Units).
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, and 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
a Trust. At any time after the Initial Date of Deposit, litigation may
be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on a Trust.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. During the initial
offering period, the Public Offering Price is based on the aggregate
underlying value of the Equity Securities in a Trust (generally
determined by the closing sale prices of listed Equity Securities and
the ask prices of over-the-counter traded Equity Securities), plus or
minus cash, if any, in the Income and Capital Accounts of a Trust, plus
an initial sales charge equal to the difference between the maximum
sales charge of 4.5% of the Public Offering Price and the maximum
remaining deferred sales charge, initially $ per Unit. Commencing on
____________, 1997, and on the last business day of each month
thereafter, through ____________, 1997, a deferred sales charge of $
will be assessed per Unit per month. Units purchased subsequent to the
initial deferred sales charge payment but still during the initial
offering period will be subject to the initial sales charge and the
remaining deferred sales charge payments not yet collected. The deferred
sales charge will be paid from funds in the Income and/or Capital
Accounts, if sufficient, or from the periodic sale of Equity Securities.
The total maximum sales charge assessed to Unit holders on a per Unit
basis will be 4.5% of the Public Offering Price (equivalent to % of
the net amount invested, exclusive of the deferred sales charge) subject
to reduction beginning ____________, 1998.
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying value of the Equity Securities in a
Trust (generally determined by the closing sale prices of listed Equity
Securities and the ask prices of over-the-counter traded Equity
Securities), plus or minus cash, if any, in the Income and Capital
Accounts of a Trust divided by the number of Units of a Trust
outstanding. For secondary market sales after the completion of the
deferred sales charge period, the Public Offering Price is also based on
the aggregate underlying value of the Equity Securities in a Trust
(generally determined by the closing sale prices of listed Equity
Securities and the bid prices of over-the-counter traded Equity
Securities), plus or minus cash, if any, in the Income and Capital
Page 30
Accounts of a Trust, plus a one-time initial sales charge of 4.5% of the
Public Offering Price (equivalent to % of the net amount invested)
divided by the number of outstanding Units of a Trust and will be
reduced by 1/2 of 1% on each subsequent ____________, commencing
____________, 1998 to a minimum sales charge of 3.0%.
The minimum amount which an investor may purchase of a Trust is $1,000
($250 for an Individual Retirement Account or other retirement plans).
The applicable sales charge for the Trusts for both primary and
secondary market sales is reduced by a discount as indicated below for
aggregate volume purchases of the Trusts (except for sales made pursuant
to a "wrap fee account" or similar arrangements as set forth below):
Primary and Secondary
_________________________
Percent of Percent of
Dollar Amount of Transaction Offering Net Amount
at Public Offering Price Price Invested
_______________ __________ __________
$ 50,000 but less than $100,000 0.25% 0.2506%
$100,000 but less than $250,000 0.50% 0.5025%
$250,000 but less than $500,000 1.00% 1.0101%
$500,000 or more 2.00% 2.0408%
Any such reduced sales charge shall be the responsibility of the selling
broker/dealer, bank or other selling agent. The reduced sales charge
structure will apply on all purchases of Units of a Trust by the same
person on any one day from any one broker/dealer, bank or other selling
agent. Additionally, Units purchased in the name of the spouse of a
purchaser or in the name of a child of such purchaser under 21 years of
age will be deemed, for the purposes of calculating the applicable sales
charge, to be additional purchases by the purchaser. The reduced sales
charges will also be applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary
account. The purchaser must inform the broker/dealer, bank or other
selling agent of any such combined purchase prior to the sale in order
to obtain the indicated discount. Unit holders of other unit investment
trusts in which the Sponsor acted as sole Principal Underwriter and
which at the time of their creation had an estimated life of at least
_____ years may utilize their termination proceeds from such trusts to
purchase Units of Trusts included in this Prospectus subject only to the
remaining deferred sales charge to be collected on such Units. In
addition, with respect to the 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 and
broker/dealers, banks or other selling agents and their subsidiaries and
vendors providing services to the Sponsor, Units may be purchased at the
Public Offering Price less the concession the Sponsor typically allows
to dealers and other selling agents.
Units may be purchased in the primary or secondary market at the Public
Offering Price less the concession the Sponsor typically allows to
dealers and other selling agents for purchases (see "Public Offering-How
are Units Distributed?") by investors who purchase Units through
registered investment advisers, certified financial planners or
registered broker-dealers who in each case either 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.
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." 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 a
Trust. The aggregate underlying value of the Equity Securities during
the initial offering period will be determined in the following manner:
if the Equity Securities are listed on a national securities exchange or
The Nasdaq Stock Market, 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)
Page 31
or, if there is no closing sale price on that exchange or system, at the
closing ask prices. If the Equity Securities are not so listed or, if so
listed and the principal market therefor is other than on the exchange,
the evaluation shall generally be based on the current ask prices on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the
value of the Equity Securities on the ask side of the market or (c) by
any combination of the above.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein, plus or minus cash, if any, in
the Income and Capital Accounts of a Trust plus the applicable sales
charge. The aggregate underlying value of the Equity Securities for
secondary market sales is calculated in the same manner as described
above for sales made during the initial offering period with the
exception that bid prices are used instead of ask prices.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of the Units on the date of
settlement provided payment has been received. Cash, if any, made
available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934. Delivery of Certificates representing
Units so ordered will be made three business days following such order
or shortly thereafter. See "Rights of Unit Holders-How May Units be
Redeemed?" for information regarding the ability to redeem Units ordered
for purchase.
How are Units Distributed?
During the initial offering period (i) for Units issued on the Initial
Date of Deposit and (ii) for additional Units issued after such date as
additional Equity Securities or cash are deposited by the Sponsor, Units
will be distributed to the public at the then current Public Offering
Price. The initial offering period may be up to approximately 360 days.
During such period, the Sponsor may deposit additional Equity Securities
or cash in a Trust and create additional Units. Units reacquired by the
Sponsor during the initial offering period (at prices based upon the
aggregate underlying value of the Equity Securities in a Trust plus or
minus a pro rata share of cash, if any in the Income and Capital
Accounts of such Trust) may be resold at the then current Public
Offering Price. Upon the termination of the initial offering period,
unsold Units created or reacquired during the initial offering period
will be sold or resold at the then current Public Offering Price.
Upon completion of the initial offering, Units repurchased in the
secondary market (see "Will There be a Secondary Market?") may be
offered by this prospectus at the secondary market public offering price
determined in the manner described above.
It is the intention of the Sponsor to qualify Units of the Trusts for
sale in a number of states. Sales initially will be made to dealers and
other selling agents at prices which represent a concession or agency
commission of 3.2% of the Public Offering Price, and, for secondary
market sales, 3.2% of the Public Offering Price (or 65% of the then
current maximum sales charge after ____________, 1998). Dealers and
other selling agents will be allowed volume concessions or agency
commissions during the primary and secondary market of 2.2% of the
Public Offering Price (or 65% of the then current maximum sales charge
after ____________, 1998) on the sale of Units purchased with
termination proceeds from other unit investment trusts of which the
Sponsor acted as sole Principal Underwriter and which at the time of
their creation had an estimated life of at least _____ years. Volume
concessions or agency commissions of an additional 0.30% of the Public
Offering Price will be given to any broker/dealer or bank, who purchases
from the Sponsor, in the aggregate, at least $100,000 of the Trusts on
the Initial Date of Deposit or $250,000 on any day thereafter. In
addition, dealers and other selling agents will receive an additional
volume concession or agency commission with respect to sales of Units of
each individual Trust in the amounts set forth below:
Page 32
<TABLE>
<CAPTION>
Total Sales per Trust Additional Concession
_____________________ _____________________
<S> <C>
$1,000,000 but less than $2,000,000 .10%
$2,000,000 but less than $3,000,000 .15%
$3,000,000 or more .20%
</TABLE>
Effective on each ____________, commencing ____________, 1998, the sales
charge will be reduced by 1/2 of 1% to a minimum sales charge of 3.0%.
However, resales of Units of a Trust by such dealers and other selling
agents to the public will be made at the Public Offering Price described
in the prospectus. The Sponsor reserves the right to change the amount
of the concession or agency commission from time to time. Certain
commercial banks may be making Units of a Trust available to their
customers on an agency basis. A portion of the sales charge paid by
these customers is retained by or remitted to the banks in the amounts
indicated above. Under the Glass-Steagall Act, banks are prohibited from
underwriting Trust Units; however, the Glass-Steagall Act does permit
certain agency transactions and the banking regulators have not
indicated that these particular agency transactions are not permitted
under such Act. In Texas and in certain other states, any banks making
Units available must be registered as broker/dealers under state law.
From time to time the Sponsor may implement programs under which
broker/dealers, banks or other selling agents of 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 broker/dealer,
bank or other selling agent may be eligible to win other nominal awards
for certain sales efforts, or under which the Sponsor will reallow to
any such dealer that sponsors sales contests or recognition programs
conforming to criteria established by the Sponsor, or participates in
sales programs sponsored by the Sponsor, an amount not exceeding the
total applicable sales charges on the sales generated by such person at
the public offering price during such programs. Also, the Sponsor in its
discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying dealers for certain
services or activities which are primarily intended to result in sales
of Units of a Trust. 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
the Trusts will receive from the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns on the Trusts and returns
over specified periods on other similar trusts sponsored by Nike
Securities L.P. with returns on other taxable investments such as
corporate or U.S. Government bonds, bank CDs and money market accounts
or money market funds, each of which has investment characteristics that
may differ from those of the 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 the Trusts are described more fully elsewhere in this Prospectus.
Each Trust's performance may be compared to performance on a total
return basis with the Dow Jones Industrial Average, the S&P 500
Composite Stock Price Index, or performance data from Lipper Analytical
Services, Inc. and Morningstar Publications, Inc. or from publications
such as Money, The New York Times, U.S. News and World Report, Business
Week, Forbes or Fortune. As with other performance data, performance
comparisons should not be considered representative of 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
4.5% of the Public Offering Price of the Units (equivalent to % of
the net amount invested, exclusive of the deferred sales charge), less
any reduced sales charge for quantity purchases as described under
"Public Offering-How is the Public Offering Price Determined?" See
"Public Offering-How are Units Distributed?" for information regarding
the receipt of additional concessions available to dealers and other
selling agents. In addition, the Sponsor may be considered to have
realized a profit or to have sustained a loss, as the case may be, in
Page 33
the amount of any difference between the cost of the Equity Securities
to the Trusts (which is based on the Evaluator's determination of the
aggregate offering price of the underlying Equity Securities of such
Trust on the Initial Date of Deposit as well as subsequent deposits) and
the cost of such Equity Securities to the Sponsor. See Note (2) of
"Schedule of Investments" for each Trust. During the initial offering
period, the dealers and other selling agents also may realize profits or
sustain losses as a result of fluctuations after the Initial Date of
Deposit in the Public Offering Price received by the dealers and other
selling agents upon the sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are
resold (which price includes a sales charge of 4.5% subject to reduction
beginning ____________, 1998) or redeemed. The secondary market public
offering price of Units may be greater or less than the cost of such
Units to the Sponsor.
Will There be a Secondary Market?
After the initial offering period, although not obligated to do so, the
Sponsor intends to maintain a market for the Units and continuously
offer to purchase Units at prices, subject to change at any time, based
upon the aggregate underlying value of the Equity Securities in 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 OR HER UNITS, HE OR
SHE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO
MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. Units subject to a
deferred sales charge which are sold or tendered for redemption prior to
such time as the entire deferred sales charge on such Units has been
collected will be assessed the amount of the remaining deferred sales
charge at the time of sale or redemption.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable by presentation and surrender to the Trustee properly
endorsed or accompanied by a written instrument or instruments of
transfer. Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unit
holder must sign exactly as his name appears on the face of the
certificate with the signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guaranty program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to,
trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of their respective 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
Page 34
Unit holder. A Unit holder may at any time request the Trustee to issue
certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the securities in a Trust on or about the Income Distribution Dates
to Unit holders of record on the preceding Income Distribution Record
Date. See "Summary of Essential Information." Persons who purchase Units
will commence receiving distributions only after such person becomes a
record owner. Notification to the Trustee of the transfer of Units is
the responsibility of the purchaser, but in the normal course of
business such notice is provided by the selling broker-dealer. The pro
rata share of cash in the Capital Account of a Trust will be computed as
of the fifteenth day of each month. Proceeds received on the sale of any
Equity Securities in a Trust, to the extent not used to meet redemptions
of Units or pay expenses, will, however, be distributed on the last day
of each month to Unit holders of record on the fifteenth day of such
month if the amount available for distribution equals at least $1.00 per
100 Units. The Trustee is not required to pay interest on funds held in
the Capital Account of 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 on
the last day of each December to Unit holders of record as of December
15. See "What is the Federal Tax Status of Unit Holders?"
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 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 each Trust is terminated, each Unit
holder will, upon surrender of his Units for redemption, receive: (i)
the pro rata share of the amounts realized upon the disposition of
Equity Securities, unless he elects an In-Kind Distribution as described
under "How May the Indenture be Amended or Terminated?" and (ii) a pro
rata share of any other assets of a Trust, less expenses of such Trust.
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 each
Trust.
The Trustee may establish reserves (the "Reserve Account") within each
Trust for state and local taxes, if any, and any governmental charges
payable out of a Trust.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of 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
Page 35
distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in the Trusts 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 unit investment 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, except that as
regards Units received after 4:00 p.m. Eastern 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.
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 the portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Unit holder is
entitled. The Trustee may adjust the number of shares of any issue of
Equity Securities included in a Unit holder's In-Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made
on the basis of the value of Equity Securities on the date of tender.
See "What is the Federal Tax Status of Unit Holders?" If funds in the
Capital Account are insufficient to cover the required cash distribution
to the tendering Unit holder, the Trustee may sell Equity Securities in
the manner described above.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. Any amount so withheld is transmitted to the Internal
Revenue Service and may be recovered by the Unit holder only when filing
a tax return. Under normal circumstances the Trustee obtains the Unit
holder's tax identification number from the selling broker. However, any
time a Unit holder elects to tender Units for redemption, such Unit
holder should 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 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 each Trust.
The Trustee is empowered to sell Equity Securities of each Trust in
order to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of each Trust will be
reduced. Such sales may be required at a time when Equity Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the aggregate
underlying value of the Equity Securities in 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 a Trust to purchase Equity Securities not applied to the
purchase of such Equity Securities; (2) the aggregate value of the
Equity Securities held in a Trust, as determined by the Evaluator on the
Page 36
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 the Trust; (2) any amounts owing to
the Trustee for its advances; (3) an amount representing estimated
accrued expenses of a Trust, including but not limited to fees and
expenses of the Trustee (including legal and auditing fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of a Trust as of the business day prior to the
evaluation being made; and (5) other liabilities incurred by a Trust;
and finally dividing the results of such computation by the number of
Units of the Trust outstanding as of the date thereof.
The aggregate value of the Equity Securities used to calculate the
Redemption Price per Unit will be determined in the following manner: if
the Equity Securities are listed on a national securities exchange or
The Nasdaq Stock Market, this evaluation is generally based on the
closing sale prices on that exchange or that system (unless it is
determined that these prices are inappropriate as a basis for valuation)
or, if there is no closing sale price on that exchange or system, at the
closing bid prices. If the Equity Securities are not so listed or, if so
listed and the principal market therefor is other than on the exchange,
the evaluation shall generally be based on the current ask or bid prices
(as appropriate) on the over-the-counter market (unless these prices are
inappropriate as a basis for evaluation). If current ask or bid prices
(as appropriate) are unavailable, the evaluation is generally determined
(a) on the basis of current ask or bid prices (as appropriate) for
comparable securities, (b) by appraising the value of the Equity
Securities on the ask or bid side of the market (as appropriate) or (c)
by any combination of the above.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Securities and Exchange Commission determines that trading on the New
York Stock Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances, the
Sponsor may apply to the Securities and Exchange Commission for an order
permitting a full or partial suspension of the right of Unit holders to
redeem their Units. The Trustee is not liable to any person in any way
for any loss or damage which may result from any such suspension or
postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 p.m. Eastern time on the same
business day and by making payment therefor to the Unit holder not later
than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
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,
Page 37
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.
In addition, the Sponsor will instruct the Trustee to dispose of certain
Equity Securities and to take such further action as may be needed from
time to time to ensure that the REIT Growth & Income Trust, Series 2
continues to satisfy the qualifications of a regulated investment
company, including the requirements with respect to diversification
under Section 851 of the Internal Revenue Code. 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
(or any securities or other property received by a Trust in exchange for
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 and
The First Trust GNMA. First Trust introduced the first insured unit
investment trust in 1974 and to date more than $9 billion in First Trust
unit investment trusts have been deposited. The Sponsor's employees
include a team of professionals with many years of experience in the
unit investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (630) 241-4141. As of
December 31, 1996, the total partners' capital of Nike Securities L.P.
was $9,005,203 (audited). (This paragraph relates only to the Sponsor
and not to the Trusts or to any series thereof or to any other dealer.
The information is included herein only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank, with its principal executive
office located at 270 Park Avenue, New York, New York 10017 and its unit
investment trust office at 4 New York Plaza, 6th floor, New York, New
York 10004-2413. Unit holders who have questions regarding the Trusts
Page 38
may call the Customer Service Help Line at 1-800-682-7520. The Trustee
is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Equity Securities. In the event of the failure of
the Sponsor to act under the Indenture, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under
the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor or the Trustee, in
which event the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
Page 39
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that a Trust shall terminate upon the Mandatory
Termination Date indicated herein under "Summary of Essential
Information." A 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 a 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 a Trust not yet sold aggregating more than
60% of the Units of such Trust are tendered for redemption by a
broker/dealer, including the Sponsor. If a Trust is liquidated because
of the redemption of unsold Units of such Trust by a broker/dealer, the
Sponsor will refund to each purchaser of Units of such Trust the entire
sales charge paid by such purchaser. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit holders
of such Trust. Within a reasonable period after termination, the Trustee
will follow the procedures set forth under "How are Income and Capital
Distributed?"
Commencing on the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of 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 the Trust
maintained by the Trustee. At least 60 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 (reduced by customary transfer and registration charges), 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. 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. See "What is the
Federal Tax Status of Unit Holders?" Unit holders not electing a
distribution of shares of Equity Securities will receive a cash
distribution from the sale of the remaining Equity Securities within a
reasonable time after a Trust is terminated. Regardless of the
distribution involved, the Trustee will deduct from the funds of such
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 Trusts.
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 this Prospectus and Registration Statement, have been
Page 40
audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein 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 41
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 205
We have audited the accompanying statements of net assets, including the
schedules of investments, of The First Trust Special Situations Trust,
Series 205, comprised of America's Leading Brands Growth Trust, Series
2, Financial Services Growth Trust, Series 3, Market Leaders Growth
Trust, Series 2, Pharmaceutical Growth Trust, Series 3, REIT Growth &
Income Trust, Series 2, and Technology Growth Trust, Series 6 at the
opening of business on ____________, 1997. 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
____________, 1997. 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 205, comprised of America's
Leading Brands Growth Trust, Series 2, Financial Services Growth Trust,
Series 3, Market Leaders Growth Trust, Series 2, Pharmaceutical Growth
Trust, Series 3, REIT Growth & Income Trust, Series 2, and Technology
Growth Trust, Series 6, at the opening of business on ____________, 1997
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
____________, 1997
Page 42
Statements of Net Assets
The First Trust Special Situations Trust, Series 205
At the Opening of Business on the Initial Date of Deposit
____________, 1997
<TABLE>
<CAPTION>
America's
Leading Financial
Brands Services Market
Growth Growth Leaders
Trust Trust Growth Trust
Series 2 Series 3 Series 2
_________ _________ ____________
<S> <C> <C> <C>
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $ $ $
Organizational and offering costs (3)
________ ________ ________
Less accrued organizational and
offering costs (3) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( )
________ ________ ________
Net assets $ $ $
======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $
Less sales charge (5) ( ) ( ) ( )
________ ________ ________
Net Assets $ $ $
======== ======== ========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) For each Trust, an irrevocable letter of credit totaling $ issued
by The Chase Manhattan Bank has been deposited with the Trustee as
collateral, which is sufficient to cover the monies necessary for the
purchase of the Equity Securities pursuant to contracts for the purchase
of such Equity Securities.
(3) Each Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed the life of the Trusts (approximately _____ years). The
estimated organizational and offering costs are based on
Units of each Trust expected to be issued. To the extent the number of
Units issued is larger or smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from each Trust ($
per Unit), payable to the Sponsor in five equal monthly installments
beginning on ____________, 1997, and on the last business day of each
month thereafter through ____________, 1997. If Units are redeemed prior
to ____________, 1997, the remaining amount of the deferred sales charge
applicable to such Units will be payable at the time of redemption.
(5)The aggregate cost to investors includes a sales charge computed at
the rate of 4.5% of the Public Offering Price (equivalent to % of the
net amount invested, exclusive of the deferred sales charge), assuming
no reduction of sales charge for quantity purchases.
Page 43
Statements of Net Assets
The First Trust Special Situations Trust, Series 205
At the Opening of Business on the Initial Date of Deposit
____________, 1997
<TABLE>
<CAPTION>
REIT
Pharmaceutical Growth & Technology
Growth Trust Income Trust Growth Trust
Series 3 Series 1 Series 5
______________ ____________ ____________
<S> <C> <C> <C>
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $ $ $
Organizational and offering costs (3)
________ ________ ________
Less accrued organizational and offering costs (3) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( )
________ ________ ________
Net assets $ $ $
======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $
Less sales charge (5) ( ) ( ) ( )
________ ________ ________
Net Assets $ $ $
======== ======== ========
</TABLE>
[FN]
NOTES TO STATEMENT OF NET ASSETS
(1) Aggregate cost of the Equity Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) For each Trust, an irrevocable letter of credit totaling $ issued
by The Chase Manhattan Bank has been deposited with the Trustee as
collateral, which is sufficient to cover the monies necessary for the
purchase of the Equity Securities pursuant to contracts for the purchase
of such Equity Securities.
(3) Each Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed the life of the Trusts (approximately _____ years). The
estimated organizational and offering costs are based on
Units of each Trust expected to be issued. To the extent the number of
Units issued is larger or smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from each Trust ($
per Unit), payable to the Sponsor in five equal monthly installments
beginning on ____________, 1997, and on the last business day of each
month thereafter through ____________, 1997. If Units are redeemed prior
to ____________, 1997, the remaining amount of the deferred sales charge
applicable to such Units will be payable at the time of redemption.
(5) The aggregate cost to investors includes a sales charge computed at
the rate of 4.5% of the Public Offering Price (equivalent to % of the
net amount invested, exclusive of the deferred sales charge), assuming
no reduction of sales charge for quantity purchases.
Page 44
Schedule of Investments
AMERICA'S LEADING BRANDS GROWTH TRUST, SERIES 2
The First Trust Special Situations Trust, Series 205
At the Opening of Business on the Initial Date of Deposit
____________, 1997
<TABLE>
<CAPTION>
Approximate
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price (3) Share to Trust (2)
_________ _______________________________________ ____________ ________ _________
<S> <C> <C> <C> <C>
APPAREL
NAUT Nautica Enterprises, Inc. 4-5% $ $
SJK St. John Knits, Inc. 4-5%
TOM Tommy Hilfiger Corporation 4-5%
BEVERAGES
KO The Coca-Cola Company 4-5%
PEP PepsiCo, Inc. 4-5%
ENTERTAINMENT
DIS The Walt Disney Company 4-5%
FOOD
HNZ H.J. Heinz Company 4-5%
SLE Sara Lee Corporation 4-5%
HOUSEHOLD PRODUCTS
CLX The Clorox Company 4-5%
CL Colgate-Palmolive Company 4-5%
NWL Newell Co. 4-5%
PG The Procter & Gamble Company 4-5%
MEDICAL SUPPLIES
JNJ Johnson & Johnson 4-5%
PHARMACEUTICALS
AHP American Home Products Corporation 4-5%
BMY Bristol-Myers Squibb Company 4-5%
SGP Schering Plough Corporation 4-5%
RECREATION
ELY Callaway Golf Company 4-5%
CCL Carnival Corporation 4-5%
HDI Harley-Davidson, Inc. 4-5%
RESTAURANTS
MCD McDonald's Corporation 4-5%
RETAIL
GPS Gap Inc. 4-5%
TECHNOLOGY
INTC Intel Corporation 4-5%
TOBACCO
MO Philip Morris Incorporated 4-5%
TOILETRIES/COSMETICS
G The Gillette Company 4-5%
TOYS
MAT Mattel, Inc. 4-5%
______ _________
Total Investments 100% $
====== =========
</TABLE>
[FN]
____________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on ____________, 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 last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
(3) The portfolio may contain additional Equity Securities each of which
will not exceed approximately 5% of the Aggregate Offering Price.
Although it is not the Sponsor's intention, certain of the Equity
Securities listed above may not be included in the final portfolio.
Also, the percentages of the Aggregate Offering Price for the Equity
Securities are approximate amounts and may vary in the final portfolio.
Page 45
Schedule of Investments
FINANCIAL SERVICES GROWTH TRUST, SERIES 3
The First Trust Special Situations Trust, Series 205
At the Opening of Business on the Initial Date of Deposit
____________, 1997
<TABLE>
<CAPTION>
Approximate
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price (3) Share to Trust (2)
_________ _______________________________________ ____________ ______ ____________
<S> <C> <C> <C> <C>
BANKS
BAC BankAmerica Corporation 4-5% $ $
CMB The Chase Manhattan Corporation 4-5%
CCI Citicorp 4-5%
FCN First Chicago NBD Corporation 4-5%
FSR Firstar Corporation 4-5%
FTU First Union Corporation 4-5%
NB NationsBank Corporation 4-5%
NOB Norwest Corporation 4-5%
SOTR SouthTrust Corporation 4-5%
INSURANCE
AFL AFLAC Incorporated 4-5%
ALL Allstate Insurance Company 4-5%
ABIG American Bankers Insurance Group, Inc. 4-5%
AIG American International Group, Inc. 4-5%
CB The Chubb Corporation 4-5%
GRN General Re Corporation 4-5%
MTG MGIC Investment Corporation 4-5%
PGR The Progressive Corporation 4-5%
SPECIALTY FINANCE
AAM Aames Financial Corporation 4-5%
COF Capital One Financial Corporation 4-5%
CCR Countrywide Credit Industries, Inc. 4-5%
FNM Fannie Mae 4-5%
GNT Green Tree Financial Corp. 4-5%
HI Household International 4-5%
MBI MBIA, Inc. 4-5%
KRB MBNA Corporation 4-5%
______ _________
Total Investments 100% $
====== =========
</TABLE>
[FN]
____________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on ____________, 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 last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
(3) The portfolio may contain additional Equity Securities each of which
will not exceed approximately 5% of the Aggregate Offering Price.
Although it is not the Sponsor's intention, certain of the Equity
Securities listed above may not be included in the final portfolio.
Also, the percentages of the Aggregate Offering Price for the Equity
Securities are approximate amounts and may vary in the final portfolio.
Page 46
Schedule of Investments
MARKET LEADERS GROWTH TRUST, SERIES 2
The First Trust Special Situations Trust, Series 205
At the Opening of Business on the Initial Date of Deposit
____________, 1997
<TABLE>
<CAPTION>
Approximate
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price (3) Share to Trust (2)
_________ _______________________________________ ____________ ______ ____________
<S> <C> <C> <C> <C>
AXP American Express Company 11-12% $ $
BRK/B Berkshire Hathaway, Inc. (Class B) 11-12%
KO The Coca-Cola Company 11-12%
FRE Federal Home Loan Mortgage Corporation 11-12%
G The Gillette Company 11-12%
MCD McDonald's Corporation 11-12%
DIS The Walt Disney Company 11-12%
WPO Washington Post Company (Class B) 11-12%
WFC Wells Fargo & Company 11-12%
______ _________
Total Investments 100% $
====== =========
</TABLE>
[FN]
_____________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on ____________, 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 last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
(3) The portfolio may contain additional Equity Securities each of which
will not exceed approximately 12% of the Aggregate Offering Price.
Although it is not the Sponsor's intention, certain of the Equity
Securities listed above may not be included in the final portfolio.
Also, the percentages of the Aggregate Offering Price for the Equity
Securities are approximate amounts and may vary in the final portfolio.
Page 47
Schedule of Investments
PHARMACEUTICAL GROWTH TRUST, SERIES 3
The First Trust Special Situations Trust, Series 205
At the Opening of Business on the Initial Date of Deposit
____________, 1997
<TABLE>
<CAPTION>
Approximate
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price (3) Share to Trust (2)
________ ____________________________________ ____________ _______ ___________
<S> <C> <C> <C> <C>
ABT Abbott Laboratories 5-6% $ $
AHP American Home Products Corporation 5-6%
AMGN Amgen, Inc. 5-6%
A Astra AB (ADR) 5-6%
BGEN Biogen, Inc. 5-6%
BMY Bristol-Myers Squibb Company 5-6%
ELN Elan Corporation plc (ADR) 5-6%
LLY Eli Lilly & Company 5-6%
GENZ Genzyme Corporation (General Division) 5-6%
GLX Glaxo Wellcome plc (ADR) 5-6%
JNJ Johnson & Johnson 5-6%
MRK Merck & Company, Inc. 5-6%
NVTSY Novartis AG (ADR) 5-6%
PFE Pfizer, Inc. 5-6%
ROHHY Roche Holdings AG (ADR) 5-6%
SHR R.P. Scherer Corporation 5-6%
SGP Schering-Plough Corporation 5-6%
SBH SmithKline Beecham plc (ADR) 5-6%
TEVIY Teva Pharmaceutical Industries Ltd. (ADR) 5-6%
ZEN Zeneca Group plc (ADR) 5-6%
______ _________
Total Investments 100% $
====== =========
</TABLE>
[FN]
____________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on ____________, 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 last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
(3) The portfolio may contain additional Equity Securities each of which
will not exceed approximately 6% of the Aggregate Offering Price.
Although it is not the Sponsor's intention, certain of the Equity
Securities listed above may not be included in the final portfolio.
Also, the percentages of the Aggregate Offering Price for the Equity
Securities are approximate amounts and may vary in the final portfolio.
Page 48
Schedule of Investments
REIT GROWTH & INCOME TRUST, SERIES 2
The First Trust Special Situations Trust, Series 205
At the Opening of Business on the Initial Date of Deposit
____________, 1997
<TABLE>
<CAPTION>
Approximate
Percentage Market Cost of
of Aggregate Value Equity
Number Ticker Symbol and Offering per Securities
of Shares Name of Issuer of Equity Securities (1) Price (3) Share to Trust (2)
_________ _______________________________________ ____________ ______ ____________
<S> <C> <C> <C> <C>
RETAIL
CBL CBL & Associates Properties, Inc. 4-5% $ $
DDR Developers Diversified Realty Corporation 4-5%
JDN JDN Realty Corporation 4-5%
JPR JP Realty, Inc. 4-5%
MAC The Macerich Company 4-5%
SPG Simon DeBartolo Group, Inc. 4-5%
MULTI-FAMILY
BYA Bay Apartment Communities, Inc. 4-5%
EWR Evans Withycombe Residential Inc. 4-5%
EQR Equity Residential Properties Trust 4-5%
OAS Oasis Residential, Inc. 4-5%
UDR United Dominion Realty Trust, Inc. 4-5%
WDN Walden Residential Properties, Inc. 4-5%
OFFICE/INDUSTRIAL
ARI Arden Realty Inc. 4-5%
CNT CenterPoint Properties Corporation 4-5%
DRE Duke Realty Investments, Inc. 4-5%
FR First Industrial Realty Trust, Inc. 4-5%
LRY Liberty Property Trust 4-5%
HEALTHCARE
HRP Health and Retirement Properties Trust 4-5%
HR Healthcare Realty Trust Incorporated 4-5%
NHI National Health Investors Inc. 4-5%
HOTEL
HPT Hospitality Properties Trust 4-5%
WINN Winston Hotels, Inc. 4-5%
MANUFACTURED HOUSING
CPJ Chateau Communities, Inc. 4-5%
STORAGE
SEA Storage Trust Realty 4-5%
TRIPLE NET LEASE
TRI TriNet Corporate Realty Trust, Inc. 4-5%
______ _________
Total Investments 100% $
====== =========
</TABLE>
[FN]
____________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on ____________, 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 last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
(3) The portfolio may contain additional Equity Securities each of which
will not exceed approximately 5% of the Aggregate Offering Price.
Although it is not the Sponsor's intention, certain of the Equity
Securities listed above may not be included in the final portfolio.
Also, the percentages of the Aggregate Offering Price for the Equity
Securities are approximate amounts and may vary in the final portfolio.
Page 49
Schedule of Investments
TECHNOLOGY GROWTH TRUST, SERIES 6
The First Trust Special Situations Trust, Series 205
At the Opening of Business on the Initial Date of Deposit
____________, 1997
<TABLE>
<CAPTION>
Approximate
Percentage Cost of
of Aggregate Market Equity
Number Ticker Symbol and Offering Value Securities
of Shares Name of Issuer of Equity Securities (1) Price (3) per Share to Trust (2)
_________ _______________________________________ ____________ _________ ____________
<S> <C> <C> <C> <C>
COMPUTERS
CPQ Compaq Computer Corporation 4-5% $ $
DELL Dell Computer Corporation 4-5%
GTW Gateway 2000, Inc. 4-5%
HQP Hewlett-Packard Company 4-5%
SUNW Sun Microsystems, Inc. 4-5%
COMPUTER NETWORKING
COMS 3Com Corporation 4-5%
CS Cabletron Systems, Inc. 4-5%
CSCO Cisco Systems, Inc. 4-5%
ELECTRONICS MANUFACTURING
SCI SCI Systems, Inc. 4-5%
SLR Solectron Corporation 4-5%
SEMICONDUCTOR EQUIPMENT
AMAT Applied Materials, Inc. 4-5%
KLAC KLA-Tencor Corporation 4-5%
SEMICONDUCTORS
ADPT Adaptec, Inc. 4-5%
ALTR Altera Corporation 4-5%
ATML Atmel Corporation 4-5%
INTC Intel Corporation 4-5%
MXIM Maxim Integrated Products, Inc. 4-5%
SMOD SMART Modular Technologies, Inc. 4-5%
SOFTWARE
BMCS BMC Software, Inc. 4-5%
MCAF McAfee Associates, Inc. 4-5%
MSFT Microsoft Corporation 4-5%
ORCL Oracle Corp. 4-5%
PMTC Parametric Technology Corporation 4-5%
STORAGE
SEG Seagate Technology, Inc. 4-5%
WDC Western Digital Corporation 4-5%
______ _________
Total Investments 100% $
====== =========
</TABLE>
[FN]
____________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
contracts to purchase Equity Securities were entered into by the Sponsor
on ____________, 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 last sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded
Equity Securities on the business day preceding the Initial Date of
Deposit). The valuation of the Equity Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was $ .
Cost and loss to Sponsor relating to the Equity Securities sold to the
Trust were $ and $ , respectively.
(3) The portfolio may contain additional Equity Securities each of which
will not exceed approximately 5% of the Aggregate Offering Price.
Although it is not the Sponsor's intention, certain of the Equity
Securities listed above may not be included in the final portfolio.
Also, the percentages of the Aggregate Offering Price for the Equity
Securities are approximate amounts and may vary in the final portfolio.
Page 50
This page is intentionally left blank.
Page 51
CONTENTS:
Summary of Essential Information:
America's Leading Brands Growth Trust, Series 2 4
Financial Services Growth Trust, Series 3 4
Market Leaders Growth Trust, Series 2 4
Pharmaceutical Growth Trust, Series 3 5
REIT Growth & Income Trust, Series 2 5
Technology Growth Trust, Series 6 5
The First Trust Special Situations Trust, Series 205:
What is The First Trust Special Situations Trust? 10
What are the Expenses and Charges? 13
What is the Federal Tax Status of Unit Holders? 14
Why are Investments in the Trusts Suitable for
Retirement Plans? 16
Portfolio:
What are Equity Securities? 16
Risk Factors 16
What are the Equity Securities Selected for:
America's Leading Brands Growth Trust, Series 2? 26
Financial Services Growth Trust, Series 3? 27
Market Leaders Growth Trust, Series 2? 27
Pharmaceutical Growth Trust, Series 3? 27
REIT Growth & Income Trust, Series 2? 28
Technology Growth Trust, Series 6? 29
What are Some Additional Considerations for 29
Investors?
Public Offering:
How is the Public Offering Price Determined? 30
How are Units Distributed? 32
What are the Sponsor's Profits? 33
Will There be a Secondary Market? 34
Rights of Unit Holders:
How is Evidence of Ownership Issued and Transferred? 34
How are Income and Capital Distributed? 35
What Reports will Unit Holders Receive? 35
How May Units be Redeemed? 36
How May Units be Purchased by the Sponsor? 37
How May Equity Securities be Removed from a Trust? 37
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 38
Who is the Trustee? 38
Limitations on Liabilities of Sponsor and Trustee 39
Who is the Evaluator? 39
Other Information:
How May the Indenture be Amended or Terminated? 40
Legal Opinions 40
Experts 40
Report of Independent Auditors 42
Statements of Net Assets:
America's Leading Brands Growth Trust, Series 2 43
Financial Services Growth Trust, Series 3 43
Market Leaders Growth Trust, Series 2 43
Pharmaceutical Growth Trust, Series 3 44
REIT Growth & Income Trust, Series 2 44
Technology Growth Trust, Series 6 44
Schedules of Investments:
America's Leading Brands Growth Trust, Series 2 45
Financial Services Growth Trust, Series 3 46
Market Leaders Growth Trust, Series 2 47
Pharmaceutical Growth Trust, Series 3 48
REIT Growth & Income Trust, Series 2 49
Technology Growth Trust, Series 6 50
_____________
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)
AMERICA'S LEADING BRANDS GROWTH TRUST SERIES 2
FINANCIAL SERVICES GROWTH TRUST SERIES 3
MARKET LEADERS GROWTH TRUST SERIES 2
PHARMACEUTICAL GROWTH TRUST, SERIES 3
REIT GROWTH & INCOME TRUST, SERIES 2
TECHNOLOGY GROWTH TRUST, SERIES 6
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
____________, 1997
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 52
MEMORANDUM
Re: The First Trust Special Situations Trust, Series 205
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 193, which is the
current fund, and The First Trust Special Situations Trust,
Series 205, the filing of which this memorandum accompanies, is
the change in the series number. The list of securities
comprising the Fund, the evaluation, record and distribution
dates and other changes pertaining specifically to the new
series, such as size and number of Units in the Fund and the
statement of condition of the new Fund, will be filed by
amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 193 Prospectus relate to the series number and size and
the date and various items of information which will be derived
from and apply specifically to the securities deposited in the
Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
205 has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the Village of Lisle and State of Illinois on June 30, 1997.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 205
(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 June 30, 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 205 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee and First Trust Advisors L.P., as Evaluator
and Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership Agreement
of Nike Securities L.P. (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5
