SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: THE FIRST TRUST SPECIAL
SITUATIONS TRUST, SERIES 212
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN AND CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title and Amount of
Securities Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. Proposed Maximum Offering
Price to the Public of the
Securities Being Registered: Indefinite.
G. Amount of Filing Fee: $0.00
H. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 212
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each Information as to
depositor Sponsor, Trustee and
Evaluator
3. Name and address of Information as to
trustee Sponsor, Trustee and
Evaluator
4. Name and address of Underwriting
principal underwriters
5. State of organization The First Trust Special
of trust Situations Trust
6. Execution and termination The First Trust Special
of trust agreement Situations Trust; Other
Information
7. Changes of name *
8. Fiscal Year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Rights of Unit Holders
securities
(b) Cumulative or distributive
securities The First Trust Special
Situations Trust
(c) Redemption Rights of Unit Holders
(d) Conversion, transfer, etc. Rights of Unit Holders
(e) Periodic payment plan
certificates *
(f) Voting rights Rights of Unit Holders;
Other Information
(g) Notice of certificate- Rights of Unit Holders;
holders Other Information
(h) Consents required Rights of Unit Holders;
Other Information
(i) Other provisions The First Trust Special
Situations Trust
11. Types of securities comprising The First Trust Special
units Situations Trust
12. Certain information
regarding periodic payment
plan certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The First Trust
Special Situations Trust
(b) Certain information
regarding periodic payment
plan certificates *
(c) Certain percentages Summary of Essential
Information; The First
Trust Special Situations
Trust; Public Offering
(d) Difference in price offered Public Offering
for any class of transactions
to any class or group of
individuals
(e) Certain other load fees, Rights of Unit Holders
expenses, etc. payable by
holders
(f) Certain profits receivable The First Trust Special
by depositor, principal Situations Trust
underwriters, trustee or
affiliated persons
(g) Ratio of annual charges to
income *
14. Issuance of trust's Rights of Unit Holders
securities
15. Receipt and handling of
payments from purchasers *
16. Acquisition and disposition
of underlying securities The First Trust Special
Situations Trust; Rights
of Unit Holders
17. Withdrawal or redemption The First Trust Special
Situations Trust; Public
Offering; Rights of Unit
Holders
18. (a) Receipt, custody and
disposition of income Rights of Unit Holders
(b) Reinvestment of
distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and
reports Rights of Unit Holders
20. Certain miscellaneous
provisions of trust
agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal and
successor Information as to
Sponsor, Trustee and
Evaluator
(e) and (f) Depositor, removal Information as to
and successor Sponsor, Trustee and
Evaluator
21. Loans to security holders *
22. Limitations on liability The First Trust Special
Situations Trust;
Information as to
Sponsor, Trustee and
Evaluator
23. Bonding arrangements Contents of Registration
Statement
24. Other material provisions
of trust agreement *
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to *
officials and affiliated
persons of depositor
29. Voting securities of *
depositor
30. Persons controlling *
depositor
31. Payment by depositor for *
certain services rendered
to trust
32. Payment by depositor for *
certain other services
rendered to trust
33. Remuneration of other *
persons for certain
services rendered to trust
34. Remuneration of other *
persons for certain services
rendered to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's
securities by states Public Offering
36. Suspension of sales of
trust's securities *
37. Revocation of authority
to distribute *
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering;
Underwriting
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) N.A.S.D. membership of Information as to
principal underwriters Sponsor, Trustee and
Evaluator
40. Certain fee received by See Items 13(a) and 13(e)
principal underwriters
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal
underwriters *
42. Ownership of trust's
securities by certain
persons *
43. Certain brokerage
commissions received
by principal underwriters *
44. (a) Method of valuation Summary of Essential
Information; The First
Trust Special Situations
Trust; Public Offering
(b) Schedule as to offering
price *
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption
rights *
46. (a) Redemption Valuation Rights of Unit Holders
(b) Schedule as to redemption
price *
47. Maintenance of position Public Offering; Rights
in underlying securities of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation Information as to
of trustee Sponsor, Trustee and
Evaluator
49. Fees and expenses of trustee The First Trust Special
Situations Trust
50. Trustee's lien The First Trust Special
Situations Trust
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OR
SECURITIES
51. Insurance of holders of *
trust's securities
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust Special
agreement with respect Situations Trust; Rights
to selection or elimination of Unit Holders
of underlying securities
(b) Transactions involving
elimination of underlying
securities *
(c) Policy regarding The First Trust Special
substitution or elimination Situations Trust; Rights
of underlying securities of Unit Holders
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The First Trust Special
Situations Trust
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during
last ten years *
55. Certain information regarding
periodic payment plan
certificates
56. Certain information regarding
periodic payment plan
certificates
57. Certain information regarding *
periodic payment plan
certificates
58. Certain information regarding
periodic payment plan
certificates
59. Financial statements Report of Independent
(Instruction 1(b) to Auditors; Statement of
Form S-6) Net Assets
__________________________
* Inapplicable, answer negative or not required.
Preliminary Prospectus Dated August 6, 1997
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 212
10,000 Units (A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Fund is
hereby used as a preliminary Prospectus for the above stated Series. The
narrative information and structure of the attached final Prospectus will
be substantially the same as that of the final Prospectus for this
Series. Information with respect to pricing, the number of Units, dates
and summary information regarding the characteristics of securities to be
deposited in this Series is not now available and will be different since
each Series has a unique Portfolio. Accordingly the information
contained herein with regard to the previous Series should be considered
as being included for informational purposes only. Ratings of the
securities in this Series are expected to be comparable to those of the
securities deposited in the previous Series.
A registration statement relating to the units of this Series will
be filed with the Securities and Exchange Commission but has not yet
become effective. Information contained herein is subject to completion
or amendment. Such Units may not be sold nor may offer to buy be
accepted prior to the time the registration statement becomes effective.
This Prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the Units in any state
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state.
Part I of II
First Trust (registered trademark)
Target 5 Trust, July 1997 Advisory Series
Target 10 Trust, July 1997 Advisory Series
(The First Trust Special Situations Trust, Series 207)
THIS PART I OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY THE PART II OF THE PROSPECTUS DATED JULY 17, 1997. BOTH PARTS
I AND II OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
The Trusts. The First Trust Special Situations Trust, Series 207
consists of the underlying separate unit investment trusts set forth
above. The various trusts are sometimes collectively referred to herein
as the "Trusts" and each as a "Trust." Each Trust consists of a
portfolio containing common stocks issued by companies which provide
income and are considered to have the potential for capital appreciation
(the "Equity Securities").
Target 5 Trust, July 1997 Advisory Series (the "Target 5 Advisory
Trust") consists of common stock of the five companies with the lowest
per share stock price of the ten companies in the Dow Jones Industrial
Average (the "DJIA") that have the highest dividend yield as of the
close of business on the date prior to this Prospectus (the "Stock
Selection Date"). Target 10 Trust, July 1997 Advisory Series (the
"Target 10 Advisory Trust") consists of common stock of the ten
companies in the DJIA that have the highest dividend yield as of the
Stock Selection Date. See "Schedule of Investments" for each Trust.
The objective of each Trust is to provide an above-average total return
through a combination of dividend income and capital appreciation. Units
of both the Target 5 Advisory Trust and the Target 10 Advisory Trust
have not been designed so that their prices will parallel or correlate
with movements in the DJIA, and it is expected that their prices will
not do so. Each Trust has a mandatory termination date (the "Mandatory
Termination Date") of approximately one year from the date of this
Prospectus as set forth under "Summary of Essential Information." There
is, of course, no guarantee that a Trust's objective will be achieved.
Both the Target 5 Trust, July 1997 Advisory Series and the Target 10
Trust, July 1997 Advisory Series are available only to investors who
purchase Units through registered broker/dealers who charge periodic
fees for financial planning, investment advisory or asset management
services, or who provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed, and to employees of the Sponsor, dealers and
their affiliates.
The DJIA is not affiliated with the Sponsor and is the property of Dow
Jones & Company, Inc. Dow Jones & Company, Inc. has not granted the
Trusts or the Sponsor a license to use the DJIA, participated in the
creation of the Trusts or in the selection of stocks therein, and has
not approved any information herein related thereto.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Nike Securities, L.P.
Sponsor of First Trust (registered trademark)
1-800-621-9533
The date of this Prospectus is July 17, 1997
Page 1
Each Unit of a Trust represents an undivided interest in all Equity
Securities deposited therein. The Sponsor may deposit additional Equity
Securities or cash to create new Units after the Initial Date of Deposit
in the manner described in "What is the First Trust Special Situations
Trust?" in Part II of this Prospectus.
Public Offering Price. The Public Offering Price per Unit of each Trust
is equal to the aggregate underlying value of the Equity Securities in
such Trust (generally determined by their closing sale prices) plus or
minus a pro rata share of cash, if any, in the Capital and Income
Accounts of such Trust, plus a deferred sales charge of $.065 per Unit
for each Trust assessed as set forth below. Commencing October 31, 1997,
and on the last business day of each month thereafter, through February
27, 1998, a deferred sales charge of $.013 will be assessed per Unit.
Units purchased subsequent to the initial deferred sales charge payment
will be subject only to the remaining deferred sales charge payments not
collected. The deferred sales charge will be paid from funds in the
Capital Account, if sufficient, or from the periodic sale of Equity
Securities. The sales charge, as a percentage of the Public Offering
Price on the Initial Date of Deposit for each Trust, is .65%. The total
maximum sales charge which may be assessed to Unit holders on a per Unit
basis will be 1.5% of the Public Offering Price (equivalent to a maximum
of 1.523% of the net amount invested, exclusive of the deferred sales
charge). A pro rata share of accumulated dividends, if any, in the
Income Account is included in the Public Offering Price. The minimum
purchase for each Trust is $1,000. See "How is the Public Offering Price
Determined?" in Part II of this Prospectus.
Estimated Net Annual Distributions. The estimated net annual dividend
distributions to Unit holder (based on the most recent quarterly or semi-
annual ordinary dividend declared with respect to the Equity Securities
listed on the DJIA (the "Equity Securities") at the opening of business
on the Initial Date of Deposit) on a per Unit basis was $.2826 and
$.2524 for the Target 5 Advisory Trust and Target 10 Advisory Trust,
respectively. This estimate will vary with changes in a Trust's fees and
expenses, in dividends received and with the sale of Equity Securities.
There is no assurance that the estimated net annual dividend
distributions will be realized in the future.
Dividend and Capital Distributions. Cash dividends received by a Trust
will be paid on December 31, 1997 and June 30, 1998 to Unit holders of
record on December 15, 1997 and June 15, 1998, respectively, and again
as part of the final liquidation distribution. Distributions of funds in
the Capital Account, if any, will be made as part of the final
liquidation distribution, and in certain circumstances, earlier. Any
distribution of income and/or capital will be net of expenses of a
Trust. See "What is the Federal Tax Status of Unit Holders?" in Part II
of this Prospectus. Additionally, upon termination of a Trust, the
Trustee will distribute, upon surrender of Units, to each remaining Unit
holder (other than a Rollover Unit holder as defined below) his pro rata
share of such Trust's assets, less expenses, in the manner set forth
under "Rights of Unit Holders-How are Income and Capital Distributed?"
in Part II of this Prospectus. For distributions to Rollover Unit
holders, see "Special Redemption, Liquidation and Investment in a New
Trust." Any Unit holder may elect to have each distribution of income or
capital on his Units, other than the final liquidating distribution,
automatically reinvested in additional Units of such Trust subject only
to remaining deferred sales charge payments. See "Rights of Unit Holders-
How are Income and Capital Distributed?" in Part II of this Prospectus.
Secondary Market for Units. Although not obligated to do so, the Sponsor
may maintain a market for Units and offer to repurchase the Units at
prices based on the aggregate value of the Equity Securities, plus or
minus cash, if any, in the Capital and Income Accounts of such Trust. If
a secondary market is not maintained, a Unit holder may still redeem his
Units through the Trustee. A Unit holder of the Target 5 Advisory Trust
or Target 10 Advisory Trust tendering 2,500 Units or more may request a
distribution of shares of Equity Securities (reduced by customary
transfer and registration charges) in lieu of payment in cash (an "In-
Kind Distribution"). See "Will There be a Secondary Market?" and "How
May Units be Redeemed?" in Part II of this Prospectus. Any deferred
sales charge remaining on Units at the time of their sale or redemption
will be collected at that time.
Special Redemption, Liquidation and Investment in a New Trust. The
Sponsor intends to create a separate 1998 trust (the "New Trusts") in
conjunction with the termination of each Trust. The portfolio of the New
Trusts will contain equity securities of the companies which satisfy
each such Trust's investment strategy at the time such Trust is
Page 2
established. Unit holders who hold their Units in book entry form may
specify by August 3, 1998 to have their Units redeemed In-Kind, the
distributed Equity Securities sold, and the proceeds invested in a New
Trust at a reduced sales charge, provided such New Trust is offered and
Units are available. Cash not invested in a New Trust will be
distributed. (Such Unit holders are "Rollover Unit holders"). Rollover
Unit holders therefore will not receive a final liquidation
distribution, but will receive Units in a New Trust. This exchange
option may be modified, terminated or suspended. See "Special
Redemption, Liquidation and Investment in a New Trust" in Part II of
this Prospectus.
Termination. Commencing on the Mandatory Termination Date, the Equity
Securities will begin to be sold as prescribed by the Sponsor. The
Trustee will provide written notice of the termination to Unit holders
which will specify when certificates may be surrendered and include a
form to enable a Unit holder to elect an In-Kind Distribution, if such
Unit holder owns at least 2,500 Units of a Target 5 Advisory Trust or
Target 10 Advisory Trust. Unit holders not electing the "Rollover
Option" or those not electing or eligible for an In-Kind Distribution
will receive a cash distribution within a reasonable time after their
respective Trust's termination. See "How are Income and Capital
Distributed?" and "Other Information" in Part II of this Prospectus.
Risk Factors. An investment in a Trust should be made with an
understanding of the risks associated therewith, including, among other
factors, the possible deterioration of either the financial condition of
the issuers or the general condition of the stock market, volatile
interest rates or an economic recession. An investment in the Target 5
Trust, July 1997 Advisory Series may subject a Unit holder to additional
risk due to the relative lack of diversity in its portfolio since the
portfolio contains only five stocks. Therefore, Units of the Target 5
Trust, July 1997 Advisory Series may be subject to greater market risk
than other trusts which contain a more diversified portfolio of
securities.
Each Trust is not actively managed and Equity Securities will not be
sold to take advantage of market fluctuations or changes in anticipated
rates of appreciation. Finally, each strategy has underperformed the
DJIA in certain years and is contrarian in nature. The Trusts may not be
appropriate investments for those who are unable or unwilling to assume
the risks involved generally with an equity investment. Because of the
contrarian nature of the Trusts and the attributes of the common stocks
which caused inclusion in the portfolios, the Trusts may not be
appropriate for investors seeking either preservation of capital or high
current income. The Trusts are not designed to be a complete investment
program for an investor. See "What are Equity Securities?-Risk Factors"
in Part II of this Prospectus.
Page 3
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-July 17, 1997
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Target 5 Trust Target 10 Trust
July 1997 July 1997
Advisory Series Advisory Series
_______________ _______________
<S> <C> <C>
General Information
Initial Number of Units (1) 15,000 15,000
Fractional Undivided Interest in the Trust per Unit (1) 1/15,000 1/15,000
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio (2) $ 150,007 $ 150,003
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 10.000 $ 10.000
Sales Charge .65% of the Public Offering Price per Unit
(.65% of the net amount invested, exclusive of the deferred sales charge) (3) $ .065 $ .065
Less Deferred Sales Charge per Unit $ (.065) $ (.065)
Public Offering Price per Unit (3) $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.935 $ 9.935
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.935 $ 9.935
Cash CUSIP Number 337182 653 337182 679
Reinvestment CUSIP Number 337182 661 337182 687
Trustee's Annual Fee and out-of-pocket expenses per Unit outstanding $ .0087 $ .0087
Evaluator's Annual Fee per Unit outstanding (5) $ .0025 $ .0025
Maximum Supervisory Fee per Unit outstanding (6) $ .0025 $ .0025
Estimated Annual Amortization of Organizational and Offering Costs per Unit outstanding (7) $ .0150 $ .0150
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date July 22, 1997
Rollover Notification Date August 3, 1998
Special Redemption and Liquidation Period August 17, 1998 to August 31, 1998
Mandatory Termination Date August 31, 1998
Discretionary Liquidation Amount A Trust may be terminated if the value of the Equity Securities is
less than the lower of $2,000,000 or 20% of the total value of
Equity Securities deposited in a Trust during the initial offering
period.
Income Distribution Record Date Fifteenth day of June and December, commencing December 15, 1997.
Income Distribution Date (8) Last day of June and December, commencing December 31, 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 listed Equity Security is valued at the closing sale price on
the New York Stock Exchange on the business day prior to the Initial
Date of Deposit.
(3) The sales charge consists of a deferred sales charge of $0.065 per
Unit. See "Fee Table" contained herein and "Public Offering" in Part II
for additional information regarding this charge. On the Initial Date of
Deposit there will be no accumulated dividends in the Income Account.
Anyone ordering Units after such date will pay a pro rata share of any
accumulated dividends in such Income Account. The Public Offering Price
as shown reflects the value of the Equity Securities at the opening of
business on the Initial Date of Deposit and establishes the original
proportionate relationship amongst the individual securities. No sales
to investors will be executed at this price. Additional Equity
Securities will be deposited during the day of the Initial Date of
Deposit which will be valued as of 4:00 p.m. Eastern time and sold to
investors at a Public Offering Price per Unit based on this valuation.
(4) See "How May Units be Redeemed?" in Part II of this Prospectus.
(5) 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 $.0010 per
Unit.
(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 each 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 each Trust (approximately
one year). 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) At the Rollover Notification Date for Rollover Unit holders or upon
termination of a Trust for other Unit holders, amounts in the Income
Account (which consist of dividends on the Equity Securities) will be
included in amounts distributed to or on behalf of Unit holders.
Distributions from the Capital Account will be made monthly payable on
the last day of the month to Unit holders of record on the fifteenth day
of such month if the amount available for distribution equals at least
$1.00 per 100 Units. Notwithstanding, distributions of funds in the
Capital Account, if any, will be made as part of the final liquidation
distribution.
Page 4
FEE TABLE-Target 5 Trust, July 1997 Advisory Series
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" in Part II of this
Prospectus. Although the Trust has a term of approximately one year and
is a unit investment trust rather than a mutual fund, this information
is presented to permit a comparison of fees, assuming the principal
amount and distributions are rolled over each year into a New Trust
subject to the deferred sales charge.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 0.00%(a) $ .000
Deferred sales charge
(as a percentage of public offering price) 0.65%(b) .065
_______ _______
0.65% $ .065
======= =======
Maximum Sales Charge imposed on Reinvested Dividends 0.65%(c) .065
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 .270% $.0275
Other operating expenses .022% .0022
________ _______
Total .292% $.0297
======== =======
</TABLE>
<TABLE>
<CAPTION>
Example
________
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Target 5 Trust, July 1997 Advisory
Series estimated operating expense ratio of .292% and a 5%
annual return on the investment throughout the periods $ 9 $ 30 $ 51 $114
</TABLE>
The above example assumes reinvestment of all dividends and
distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations applicable to mutual
funds. For purposes of the 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 example.
[FN]
______________
(a) There is no Initial Sales Charge on Trust Units.
(b) The actual fee is $.013 per month per Unit, irrespective of purchase
or redemption price deducted over a five-month period for each one-year
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than .65% for the Trust. If the Unit price is less
than $10.00 per Unit, the deferred sales charge will exceed .65% for the
Trust. Units purchased subsequent to the initial deferred sales charge
payment will be subject only to the remaining deferred sales charge
payments not yet collected.
(c) Reinvested Dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "How are Income and
Capital Distributed?" in Part II of this Prospectus.
Page 5
FEE TABLE-Target 10 Trust, July 1997 Advisory Series
This Fee Table is intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" in Part II of this
Prospectus. Although the Trust has a term of approximately one year and
is a unit investment trust rather than a mutual fund, this information
is presented to permit a comparison of fees, assuming the principal
amount and distributions are rolled over each year into a New Trust
subject to the deferred sales charge.
<TABLE>
<CAPTION>
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 0.00%(a) $ .000
Deferred sales charge
(as a percentage of public offering price) 0.65%(b) .065
________ ________
0.65% $ .065
======== ========
Maximum Sales Charge imposed on Reinvested Dividends 0.65%(c) .065
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 .270% $.0275
Other operating expenses .022% .0022
________ ________
Total .292% $.0297
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_______
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Target 10 Trust, July 1997 Advisory
Series estimated operating expense ratio of .292% and a 5%
annual return on the investment throughout the periods $ 9 $ 30 $ 51 $114
</TABLE>
The above example assumes reinvestment of all dividends and
distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations applicable to mutual
funds. For purposes of the 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 example.
[FN]
______________
(a) There is no Initial Sales Charge on Trust Units.
(b) The actual fee is $.013 per month per Unit, irrespective of purchase
or redemption price deducted over a five-month period for each one-year
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than .65% for the Trust. If the Unit price is less
than $10.00 per Unit, the deferred sales charge will exceed .65% for the
Trust. Units purchased subsequent to the initial deferred sales charge
payment will be subject only to the remaining deferred sales charge
payments not yet collected.
(c) Reinvested Dividends will be subject only to the deferred sales
charge remaining at the time of reinvestment. See "How are Income and
Capital Distributed?" in Part II of this Prospectus.
Page 6
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 207
We have audited the accompanying statements of net assets, including the
schedules of investments, of The First Trust Special Situations Trust,
Series 207, comprised of the Target 5 Trust, July 1997 Advisory Series
and Target 10 Trust, July 1997 Advisory Series as of the opening of
business on July 17, 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
July 17, 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 207, comprised of the Target 5
Trust, July 1997 Advisory Series and Target 10 Trust, July 1997 Advisory
Series at the opening of business on July 17, 1997 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
July 17, 1997
Page 7
Statements of Net Assets
The First Trust Special Situations Trust, Series 207
At the Opening of Business on the Initial Date of Deposit
July 17, 1997
<TABLE>
<CAPTION>
Target 5 Trust Target 10 Trust
July 1997 July 1997
Advisory Series Advisory Series
_______________ _______________
<S> <C> <C>
NET ASSETS
Investment in Equity Securities represented by purchase contracts (1) (2) $150,007 $150,003
Organizational and offering costs (3) 15,000 15,000
_________ _________
165,007 165,003
Less accrued organizational and offering costs (3) (15,000) (15,000)
Less liability for deferred sales charge (4) (975) (975)
_________ _________
Net assets $149,032 $149,028
========= =========
Units outstanding 15,000 15,000
ANALYSIS OF NET ASSETS
Cost to investors (5) $150,007 $150,003
Less sales charge (5) (975) (975)
_________ _________
Net assets $149,032 $149,028
========= =========
</TABLE>
[FN]
NOTES TO STATEMENTS 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) Two irrevocable letters of credit ($200,000 for each Trust) issued by
The Chase Manhattan Bank have been deposited with the Trustee as
collateral, covering the monies necessary for the purchase of the Equity
Securities pursuant to purchase contracts for such Equity Securities.
(3) Each Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed the life of each Trust (approximately one year). The
estimated organizational and offering costs are based on 1,000,000 Units
of each Trust expected to be issued. To the extent the number of Units
issued is larger or smaller, the estimate will vary.
(4) Represents the amount of mandatory distributions from a Trust ($.065
per Unit), payable to the Sponsor in five equal monthly installments
beginning on October 31, 1997 and on the last business day of each month
thereafter through February 27, 1998. If Units are redeemed prior to
February 27, 1998 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 in a Trust includes a maximum total
sales charge computed at the rate of .65% of the Public Offering Price
(equivalent to .65% of the net amount invested, exclusive of the
deferred sales charge).
Page 8
Schedule of Investments
TARGET 5 TRUST, JULY 1997 ADVISORY SERIES
The First Trust Special Situations Trust, Series 207
At the Opening of Business on the Initial Date of Deposit
July 17, 1997
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Equity Current
of Ticker Symbol and Name of Offering Value per Securities to Dividend
Shares Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ ____________ _________ ______________ _________
<C> <S> <C> <C> <C> <C>
827 T AT&T Corporation 20% $36.3125 $ 30,030 3.64%
475 DD E.I. du Pont de Nemours & Company 20% 63.0625 29,955 2.00%
477 XON Exxon Corporation 20% 62.8750 29,991 2.61%
552 GM General Motors Corporation 20% 54.3750 30,015 3.68%
693 MO Philip Morris Companies, Inc. 20% 43.3125 30,016 3.69%
______ _________
Total Investments 100% $150,007
====== =========
</TABLE>
[FN]
______________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
purchase contracts for the Equity Securities were entered into by the
Sponsor on July 17, 1997. The Trust has a mandatory termination date of
August 31, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the Equity
Securities on July 16, 1997, the business day prior to the Initial Date
of Deposit). The valuation of the Equity Securities has been determined
by the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$150,007. Cost and profit to Sponsor relating to the Equity Securities
sold to the Trust were $149,836 and $171, respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
on that Equity Security and dividing the result by that Equity
Security's closing sale price on the business day prior to the Initial
Date of Deposit.
Page 9
Schedule of Investments
TARGET 10 TRUST, JULY 1997 ADVISORY SERIES
The First Trust Special Situations Trust, Series 207
At the Opening of Business on the Initial Date of Deposit
July 17, 1997
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Equity Current
of Ticker Symbol and Name of Offering Value per Securities to Dividend
Shares Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________ ____________ _________ ______________ _________
<C> <S> <C> <C> <C> <C>
414 T AT&T Corporation 10% $ 36.3125 $ 15,033 3.64%
193 CHV Chevron Corporation 10% 77.5625 14,970 2.99%
238 DD E.I. du Pont de Nemours & Company 10% 63.0625 15,009 2.00%
219 EK Eastman Kodak Company 10% 68.3750 14,974 2.57%
238 XON Exxon Corporation 10% 62.8750 14,964 2.61%
276 GM General Motors Corporation 10% 54.3750 15,008 3.68%
237 GT Goodyear Tire & Rubber Company 10% 63.3750 15,020 1.77%
147 MMM Minnesota Mining & Manufacturing
Company 10% 102.0000 14,994 2.08%
136 JPM J.P. Morgan & Company, Inc. 10% 110.6250 15,045 3.18%
346 MO Philip Morris Companies, Inc. 10% 43.3125 14,986 3.69%
_____ ________
Total Investments 100% $150,003
===== ========
</TABLE>
[FN]
______________
(1) All Equity Securities are represented by regular way contracts to
purchase such Equity Securities for the performance of which an
irrevocable letter of credit has been deposited with the Trustee. The
purchase contracts for the Equity Securities were entered into by the
Sponsor on July 17, 1997. The Trust has a mandatory termination date of
August 31, 1998.
(2) The cost of the Equity Securities to the Trust represents the
aggregate underlying value with respect to the Equity Securities
acquired (generally determined by the closing sale prices of the Equity
Securities on July 16, 1997, the business day prior to the Initial Date
of Deposit). The valuation of the Equity Securities has been determined
by the Evaluator, an affiliate of the Sponsor. The aggregate underlying
value of the Equity Securities on the Initial Date of Deposit was
$150,003. Cost and profit to Sponsor relating to the Equity Securities
sold to the Trust were $149,358 and $645, respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
on that Equity Security and dividing the result by that Equity
Security's closing sale price on the business day prior to the Initial
Date of Deposit.
Page 10
This page is intentionally left blank.
Page 11
FIRST TRUST (registered trademark)
TARGET 5 TRUST, JULY 1997 ADVISORY SERIES
TARGET 10 TRUST, JULY 1997 ADVISORY SERIES
Prospectus
Part I
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
THIS PART ONE MUST BE
ACCOMPANIED BY PART TWO.
When Units of the Trusts are no longer available, or for investors who
will reinvest into subsequent series of the Trusts, this Prospectus may
be used as a preliminary prospectus for a future series; in which case
investors should note the following:
INFORMATION CONTAINED HEREIN IS SUBJECT TO AMENDMENT. A REGISTRATION
STATEMENT RELATING TO SECURITIES OF A FUTURE SERIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE.
THE PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
July 17, 1997
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 12
Part II of II
First Trust (registered trademark)
TARGET ADVISORY TRUST SERIES
The First Trust Special Situations Advisory Trust Series
Prospectus Part II
Dated July 17, 1997
THIS PART II OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY PART I. BOTH PARTS OF THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE
REFERENCE.
FURTHER DETAIL REGARDING CERTAIN OF THE INFORMATION PROVIDED IN THE
PROSPECTUS IN THE FORM OF AN "INFORMATION SUPPLEMENT" MAY BE OBTAINED BY
CALLING THE TRUSTEE AT 1-800-682-7520.
What is The First Trust Special Situations Trust?
The First Trust Special Situations Trust Series is one of a series of
investment companies created by the Sponsor, all of which are generally
similar, but each of which is separate and is designated by a different
series number. This Series consists of underlying separate unit
investment trusts set forth in Part I of this Prospectus. These
underlying trusts are designated herein as the "Target 5 Advisory Trust"
and "Target 10 Advisory Trust" and may sometimes be referred to
individually as a "Trust" and collectively as the "Trusts." Each Trust
was created under the laws of the State of New York pursuant to a Trust
Agreement (the "Indenture"), dated the Initial Date of Deposit, with
Nike Securities L.P., as Sponsor, The Chase Manhattan Bank, as Trustee
and First Trust Advisors L.P., as Portfolio Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of common stocks issued by
companies which provide income and are considered to have the potential
for capital appreciation (the "Equity Securities"), together with an
irrevocable letter or letters of credit of a financial institution in an
amount at least equal to the purchase price of such Equity Securities.
In exchange for the deposit of securities or contracts to purchase
securities in a Trust, the Trustee delivered to the Sponsor documents
evidencing the entire ownership of such Trust.
With the deposit of the Equity Securities on the Initial Date of
Deposit, the Sponsor established a percentage relationship between the
amounts of Equity Securities in a Trust's portfolio, as set forth in
Part I of this Prospectus under "Schedule of Investments" for each
Trust. Following the Initial Date of Deposit, the Sponsor, pursuant to
the Indenture, may deposit additional Equity Securities in a Trust or
cash (including a letter of credit) with instructions to purchase
additional Equity Securities in a Trust. Units may be continuously
offered for sale to the public by means of this Prospectus, resulting in
a potential increase in the outstanding number of Units of such Trust.
Any deposit by the Sponsor of additional Equity Securities or the
purchase of additional Equity Securities pursuant to a cash deposit will
duplicate, as nearly as is practicable, the original proportionate
relationship and not the actual pro-
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Nike Securities L.P.
Sponsor of First Trust (registered trademark)
1-800-621-9533
Page 1
portionate relationship on the subsequent date of deposit, since the two
may differ due to the sale, redemption or liquidation of any of the
Equity Securities deposited in a Trust on the Initial, or any
subsequent, Date of Deposit. See "How May Equity Securities be Removed
from a Trust?" 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. An
affiliate of the Trustee may receive these brokerage fees or the Trustee
may, from time to time, retain and pay compensation to the Sponsor (or
an affiliate of the Sponsor) to act as agent for a Trust with respect to
acquiring Equity Securities for a Trust. In acting in such capacity, the
Sponsor or its affiliate will be subject to the restrictions under the
Investment Company Act of 1940, as amended.
On the Initial Date of Deposit, each Unit of a Trust represented an
undivided fractional interest in the Equity Securities deposited in such
Trust, as set forth under "Summary of Essential Information" appearing
in Part I of this Prospectus. To the extent that Units of a Trust are
redeemed, the aggregate value of the Equity Securities in such Trust
will be reduced, and the undivided fractional interest represented by
each outstanding Unit of such Trust will increase. However, if
additional Units are issued by a Trust in connection with the deposit of
additional Equity Securities or cash by the Sponsor, the aggregate value
of the Equity Securities in such Trust will be increased by amounts
allocable to additional Units, and the fractional undivided interest
represented by each Unit of such Trust will be decreased
proportionately. See "How May Units be Redeemed?" Each Trust has a
Mandatory Termination Date as set forth under "Summary of Essential
Information" in Part I of this Prospectus.
What are the Expenses and Charges?
With the exception of brokerage fees discussed above and bookkeeping and
other administrative services provided to the Trusts, for which the
Sponsor will be reimbursed in amounts as set forth under "Summary of
Essential Information" in Part I, the Sponsor will not receive any fees
in connection with its activities relating to the Trusts.
First Trust Advisors L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Information" in Part I of this Prospectus,
for providing portfolio supervisory services for the Trusts. Such fee is
based on the number of Units outstanding in a Trust on January 1 of each
year, except for the year or years in which an initial offering period
occurs in which case the fee for a month is based on the number of Units
outstanding at the end of such month. In providing such supervisory
services, the Portfolio Supervisor may purchase research services from a
variety of sources which may include underwriters or dealers of the
Trusts.
Subsequent to the initial offering period, First Trust Advisors L.P., in
its capacity as the Evaluator for the Trusts, will receive a fee as
indicated in the "Summary of Essential Information" in Part I of this
Prospectus.
The Trustee pays certain expenses of a Trust for which it is reimbursed
by such Trust. The Trustee will receive for its ordinary recurring
services to a Trust an annual fee as indicated in the "Summary of
Essential Information" in Part I. The fee is computed per Unit in such
Trust, based upon the largest aggregate number of Units of such Trust
outstanding at any time during the calendar year. For a discussion of
the services performed by the Trustee pursuant to its obligations under
the Indenture, see "Rights of Unit Holders."
The Trustee's and 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 funds being held in the Capital and
Income Accounts are for payment of expenses and redemptions and since
such Accounts are noninterest-bearing to Unit holders, the Trustee
benefits thereby. Part of the Trustee's compensation for its services to
a Trust is expected to result from the use of these funds.
Each of the above mentioned fees may be increased without approval of
the Unit holders by amounts not exceeding proportionate increases under
Page 2
the category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor. In addition,
with respect to the fees payable to the Sponsor or an affiliate of the
Sponsor for providing bookkeeping and other administrative services,
supervisory services and evaluation services, such individual fees may
exceed the actual costs of providing such services for a Trust, but at
no time will the total amount received for such services rendered to all
unit investment trusts of which Nike Securities L.P. is the Sponsor in
any calendar year exceed the actual cost to the Sponsor or its affiliate
of supplying such services in such year.
Expenses incurred in establishing the Trusts, including the 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 one year).
The following additional charges are or may be incurred by a Trust: all
legal expenses of the Trustee incurred by or in connection with its
responsibilities under the Indenture; the expenses and costs of any
action undertaken by the Trustee to protect a Trust and the rights and
interests of the Unit holders; fees of the Trustee for any extraordinary
services performed under the Indenture; indemnification of the Trustee
for any loss, liability or expense incurred by it without negligence,
bad faith or willful misconduct on its part, arising out of or in
connection with its acceptance or administration of a Trust;
indemnification of the Sponsor for any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct in
acting as Depositor of a Trust; all taxes and other government charges
imposed upon the Equity Securities or any part of a Trust (no such taxes
or charges are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses and the Trustee's annual fee, when
paid or owing to the Trustee, are secured by a lien on a Trust. In
addition, the Trustee is empowered to sell Equity Securities in a Trust
in order to make funds available to pay all these amounts if funds are
not otherwise available in the Income and Capital Accounts of a Trust.
Since the Equity Securities are all common stocks and the income stream
produced by dividend payments is unpredictable, the Sponsor cannot
provide any assurance that dividends will be sufficient to meet any or
all expenses of a Trust. As described above, if dividends are
insufficient to cover expenses, it is likely that Equity Securities will
have to be sold to meet Trust expenses. These sales may result in
capital gains or losses to Unit holders. See "What is the Federal Tax
Status of Unit Holders?"
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the Federal income
tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as
"capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended
(the "Code"). Unit holders should consult their tax advisers in
determining the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units in a Trust. For
purposes of the following discussion and opinions, it is assumed that
each Equity Security is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor,
under existing law:
1. Each Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unit holder will be treated as the
owner of a pro rata portion of the assets of a Trust under the Code; and
the income of such Trust will be treated as income of the Unit holders
thereof under the Code. Each Unit holder will be considered to have
received his pro rata share of the income derived from each Equity
Security when such income is considered to be received by a Trust.
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 a Trust are actually received by the Unit holder or are
automatically reinvested. See "How are Income and Capital Distributed?-
Distribution Reinvestment Option."
Page 3
3. Each Unit holder will have a taxable event when a Trust disposes
of an Equity Security (whether by sale, exchange, liquidation,
redemption, or otherwise) or upon the sale or redemption of Units by
such Unit holder (except to the extent an In-Kind Distribution of stock
is received by such Unit holder as described below). The price a Unit
holder pays for his or her Units, generally including sales charges, is
allocated among his or her pro rata portion of each Equity Security held
by a Trust (in proportion to the fair market values thereof on the
valuation date closest to the date the Unit holder purchases his or her
Units) in order to determine his or her initial tax basis for his or her
pro rata portion of each Equity Security held by such Trust. It should
be noted that certain legislative proposals have been made which could
affect the calculation of basis for Unit holders holding securities that
are substantially identical to the Equity Securities. Unit holders
should consult their own tax advisers with regard to calculation of
basis. For Federal income tax purposes, a Unit holder's pro rata portion
of dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to an Equity Security held by a Trust is
taxable as ordinary income to the extent of such corporation's current
and accumulated "earnings and profits." A Unit holder's pro rata portion
of dividends paid on such Equity Security which exceeds such current and
accumulated earnings and profits will first reduce a Unit holder's tax
basis in such Equity Security, and to the extent that such dividends
exceed a Unit holder's tax basis in such Equity Security shall generally
be treated as capital gain. In general, any such capital gain will be
short-term unless a Unit holder has held his or her Units for more than
one year.
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, in general, will be long-term
if the Unit holder has held his or her Units for more than one year (the
date on which the Units are acquired (i.e., the "trade date") is
excluded for purposes of determining whether the Units have been held
for more than one year). A Unit holder's portion of loss, if any, upon
the sale or redemption of Units or the disposition of Equity Securities
held by a Trust will generally be considered a capital loss (except in
the case of a dealer or a financial institution) and, in general, will
be long-term if the Unit holder has held his or her Units for more than
one year. In particular, a Rollover Unit holder should be aware that a
Rollover Unit holder's loss, if any, incurred in connection with the
exchange of Units for Units in the next new series of a Trust (the "New
Trusts"), (the Sponsor intends to create a separate New Trust in
conjunction with the termination of each of the Trusts) will generally
be disallowed with respect to the disposition of any Equity Securities
pursuant to such exchange to the extent that such Unit holder is
considered the owner of substantially identical securities under the
wash sale provisions of the Code taking into account such Unit holder's
deemed ownership of the securities underlying the Units in a New Trust
in the manner described above, if such substantially identical
securities are acquired within a period beginning 30 days before and
ending 30 days after such disposition. However, any gains incurred in
connection with such an exchange by a Rollover Unit holder would be
recognized. Unit holders should consult their tax advisers regarding the
recognition of gains and losses for Federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unit holder
includes sales charges, and such charges are not deductible. A portion
of the sales charge is deferred. It is possible that for federal income
tax purposes, a portion of the deferred sales charge may be treated as
interest which would be deductible by a Unit holder subject to
limitations on the deduction of investment interest. In such case, the
non-interest portion of the deferred sales charge should be added to the
Unit holder's tax basis in his or her Units. The deferred sales charge
could cause the Unit holder's Units to be considered to be debt-financed
under Section 264A of the Code which would result in a small reduction
of the dividends-received deduction. In any case, the income (or
proceeds from redemption) a Unit holder must take into account for
federal income tax purposes is not reduced by amounts deducted to pay
the deferred sales charge. Unit holders should consult their own tax
advisers as to the income tax consequences of the deferred sales charge.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with respect
Page 4
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 recently been issued which
address special rules that must be considered in determining whether the
46-day holding period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unit
holder owns certain stock (or Units) the financing of which is directly
attributable to indebtedness incurred by such corporation. It should be
noted that various legislative proposals that would affect the dividends
received deduction have been introduced. Unit holders should consult
with their tax advisers with respect to the limitations on and possible
modifications to the dividends received deduction.
Limitations on Deductibility of Trust Expenses by Unit Holders. Each
Unit holder's pro rata share of each expense paid by a Trust is
deductible by the Unit holder to the same extent as though the expense
had been paid directly by him or her. It should be noted that as a
result of the Tax Reform Act of 1986, certain miscellaneous itemized
deductions, such as investment expenses, tax return preparation fees and
employee business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross income.
Unit holders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by a
Trust or Disposition of Units. As discussed above, a Unit holder may
recognize taxable gain (or loss) when an Equity Security is disposed of
by a Trust or if the Unit holder disposes of a Unit (although losses
incurred by Rollover Unit holders may be subject to disallowance, as
discussed above). For taxpayers other than corporations, net capital
gains (which are defined as net long-term capital gains over net short-
term capital losses 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 or she is deemed thereby to
have disposed of his or her entire pro rata interest in all assets of
the Trust involved including his or her pro rata portion of all the
Equity Securities represented by the Unit. Legislative proposals have
been made that would treat certain transactions designed to reduce or
eliminate risk of loss and opportunities for gain as constructive sales
for purposes of recognition of gain (but not loss). Unit holders should
consult their own tax advisors with regard to any such constructive
sales rules.
Special Tax Consequences of In-Kind Distributions Upon Redemption of
Units, Termination of a Trust and Investment in a New Trust. As
discussed in "Rights of Unit Holders-How are Income and Capital
Distributed?", under certain circumstances a Unit holder who owns at
least 2,500 Units of a Trust may request an In-Kind Distribution upon
the redemption of Units or the termination of such Trust. The Unit
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
Page 5
or the termination of a Trust, a Unit holder is considered as owning a
pro rata portion of each of such Trust's assets for Federal income tax
purposes. The receipt of an In-Kind Distribution 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 or her tax basis in such fractional share of an
Equity Security held by such Trust.
Because a Trust will own many Equity Securities, a Unit holder who
requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by such Trust.
The amount of taxable gain (or loss) recognized upon such exchange will
generally equal the sum of the gain (or loss) recognized under the rules
described above by such Unit holder with respect to each Equity Security
owned by such Trust. Unit holders who request an In-Kind Distribution
are advised to consult their tax advisers in this regard.
As discussed in "Rights of Unit Holders-Special Redemption, Liquidation
and Investment in a New Trust," a Unit holder may elect to become a
Rollover Unit holder. To the extent a Rollover Unit holder exchanges his
or her Units for Units of a New Trust in a taxable transaction, such
Unit holder will recognize gains, if any, but generally will not be
entitled to a deduction for any losses recognized upon the disposition
of any Equity Securities pursuant to such exchange to the extent that
such Unit holder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into
account such Unit holder's deemed ownership of the securities underlying
the Units in such New Trust in the manner described above, if such
substantially identical securities were acquired within a period
beginning 30 days before and ending 30 days after such disposition under
the wash sale provisions contained in Section 1091 of the Code. In the
event a loss is disallowed under the wash sale provisions, special rules
contained in Section 1091(d) of the Code apply to determine the Unit
holder's tax basis in the securities acquired. Rollover Unit holders are
advised to consult their tax advisers.
Computation of the Unit Holder's Tax Basis. Initially, a Unit holder's
tax basis in his or her Units will generally equal the price paid by
such Unit holder for his or her Units. The cost of the Units is
allocated among the Equity Securities held in a Trust in accordance with
the proportion of the fair market values of such Equity Securities on
the valuation date nearest to the date the Units are purchased in order
to determine such Unit holder's tax basis for his or her pro rata
portion of each Equity Security.
A Unit holder's tax basis in his or her Units and his or her pro rata
portion of an Equity Security held by a Trust will be reduced to the
extent dividends paid with respect to such Equity Security are received
by a Trust which are not taxable as ordinary income as described above.
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the
Unit holder has not been notified by the Internal Revenue Service that
payments to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification are
not provided when requested, distributions by 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 (other than
those that are not treated as United States source income, if any) will
generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign
corporations or other non-United States persons. Such persons should
consult their tax advisers.
At the termination of the Trust, the Trustee will furnish to each Unit
holder a statement containing information relating to the dividends
received by the Trust on the Equity Securities, the gross proceeds
received by the Trust from the disposition of any Equity Security
(resulting from redemption or the sale of any Equity Security) and the
fees and expenses paid by the Trust. The Trustee will also furnish
annual information returns to Unit holders and to the Internal Revenue
Service.
Page 6
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts.
Units may also be purchased by persons who already have self-directed
plans established. See "Why are Investments in the Trusts Suitable for
Retirement Plans?"
In the opinion of Carter, Ledyard & Milburn, Special Counsel to the
Trusts for New York tax matters, under the existing income tax laws of
the State of New York, each Trust is not an association taxable as a
corporation and the income of each Trust will be treated as the income
of the Unit holders thereof.
The foregoing discussion relates only to the tax treatment of U.S. Unit
holders ("U.S. Unit holders") with regard to federal and certain aspects
of New York State and City income taxes. Unit holders may be subject to
taxation in New York or in other jurisdictions and should consult their
own tax advisers in this regard. As used herein, the term "U.S. Unit
holder" means an owner of a Unit in the Trusts that (a) is (i) for
United States federal income tax purposes a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created
or organized in or under the laws of the United States or of any
political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of
its source or (b) does not qualify as a U.S. Unit holder in paragraph
(a) but whose income from a Unit is effectively connected with such Unit
holder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and
gain on the Units will be taxable.
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 objective of each of the Trusts is to provide an above-average total
return through a combination of dividend income and capital
appreciation. While the objectives of the Trusts are the same, each
Trust follows a different investment strategy (set forth below) in order
to achieve its stated objective.
The Target 5 Advisory Trust consists of the five companies with the
lowest per share stock price of the ten companies in the Dow Jones
Industrial Average ("DJIA") that have the highest dividend yield as of
the close of business on the business day prior to the date of Part I of
this Prospectus (the "Stock Selection Date"). The Target 10 Advisory
Trust consists of the ten common stocks in the DJIA that have the
highest dividend yield as of the Stock Selection Date.
The yield for each Equity Security listed on the DJIA was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
and dividing the result by the market value of such Equity Security as
of the close of business on the Stock Selection Date. An investment in a
Trust involves the purchase of a quality portfolio of attractive
equities with high dividend yields in one convenient purchase. Investing
in the stocks of the DJIA Index with the highest dividend yields may be
effective in achieving a Trust's investment objectives, because regular
dividends are common for established companies, and dividends have
accounted for a substantial portion of the total return on stocks of
each Index as a group. Due to the short duration of the Trusts, there is
no guarantee that either a Trust's objective will be achieved or that a
Trust will provide for capital appreciation in excess of such Trust's
expenses.
The publisher of the DJIA Index is not affiliated with the Sponsor and
has not participated in the creation of the Trusts or the selection of
the Equity Securities included therein. There is, of course, no
guarantee that the objective of the Trusts will be achieved.
In selecting Equity Securities for deposit in the Trusts based upon the
criteria set forth above, if, as of the Stock Selection Date, changes in
Page 7
the components of the DJIA have been announced, only those companies
which will be included in the revised index will be among those eligible
for deposit in the Trusts even though certain of such companies may not
be included in the DJIA as of the Stock Selection Date. Any changes in
the components of the DJIA made after the Stock Selection Date, except
as noted in the previous sentence, will not cause a change in the
identity of the common stocks included in a Trust, including any
additional Equity Securities deposited thereafter.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust Portfolios as of the
Stock Selection Date. Since the Sponsor may deposit additional Equity
Securities which were originally selected through this process, the
Sponsor may continue to sell Units of the Trusts even though the yields
on these Equity Securities may have changed subsequent to the Initial
Date of Deposit. These Equity Securities may no longer be included in
the index, or may not currently meet a Trust's selection criteria, and
therefore, such Equity Securities would no longer be chosen for deposit
into the Trusts if the selection process was to be performed again at a
later time.
The Dow Jones Industrial Average
The DJIA was first published in The Wall Street Journal in 1896.
Initially consisting of just 12 stocks, the DJIA expanded to 20 stocks
in 1916 and to its present size of 30 stocks on October 1, 1928. The
stocks are chosen by the editors of The Wall Street Journal as
representative of the broad market and of American industry. The
companies are major factors in their industries and their stocks are
widely held by individuals and institutional investors. Changes in the
components of the DJIA are made entirely by the editors of The Wall
Street Journal without consultation with the companies, the stock
exchange or any official agency. For the sake of continuity, changes are
made rarely. However, on March 17, 1997 four companies were added to the
DJIA replacing Bethlehem Steel Corporation, Texaco, Inc., Westinghouse
Electric Corporation and Woolworth Corporation. The companies added to
the DJIA were Hewlett-Packard Co., Johnson & Johnson, Travelers Group,
Inc. and Wal-Mart Stores Inc. Most substitutions have been the result of
mergers, but from time to time, changes may be made to achieve a better
representation. The components of the DJIA may be changed at any time
for any reason. The following is a list of the companies which currently
comprise the DJIA.
AT&T Corporation Hewlett-Packard Co.
Allied Signal International Business Machines
Corporation
Aluminum Company of America International Paper Company
American Express Company Johnson & Johnson
Boeing Company McDonald's Corporation
Caterpillar Inc. Merck & Company, Inc.
Chevron Corporation Minnesota Mining & Manufacturing
Company
Coca-Cola Company J.P. Morgan & Company, Inc.
Walt Disney Company Philip Morris Companies, Inc.
E.I. du Pont de Nemours & Procter & Gamble Company
Company
Eastman Kodak Company Sears, Roebuck & Company
Exxon Corporation Travelers Group, Inc.
General Electric Company Union Carbide Corporation
General Motors Corporation United Technologies Corporation
Goodyear Tire & Rubber Wal-Mart Stores, Inc.
Company
Dow Jones & Company, Inc., owner of the DJIA, has not granted to the
Trusts or the Sponsor a license to use the DJIA. Units are not designed
so that their prices will parallel or correlate with movements in the
DJIA, and it is expected that their prices will not parallel or
correlate with such movements. Dow Jones & Company, Inc. has not
participated in any way in the creation of the Trusts or in the
selection of stocks included in the Trusts and has not approved any
information herein relating thereto.
The following table compares the hypothetical performance of
approximately equal values of the five companies with the lowest per
share stock price of the ten companies in the DJIA having the highest
Page 8
dividend yield (the "Five Lowest Priced Stocks of the Ten Highest
Dividend Yielding DJIA Stocks") and the performance of the DJIA, the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") in
each of the 25 years listed below, as of December 31 in each of these
years (and as of the most recent quarter).
The returns shown in the following tables and graphs are not guarantees
of future performance and should not be used as a predictor of returns
to be expected in connection with a Trust Portfolio. Both stock prices
(which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect the returns. Each strategy
underperformed the DJIA and the S&P 500 in certain years. Accordingly,
there can be no assurance that a Trust's Portfolio will outperform the
DJIA or the S&P 500 over the life of a Trust or over consecutive
rollover periods, if available.
A holder of Units in a Trust would not necessarily realize as high a
Total Return on an investment in the stocks upon which the hypothetical
returns are based for the following reasons: the Total Return figures
shown do not reflect sales charges, commissions, Trust expenses or
taxes; the Trusts are established at different times of the year; the
Trusts may not be fully invested at all times or equally weighted in all
stocks comprising a strategy; and Equity Securities are often purchased
or sold at prices different from the closing prices used in buying and
selling Units.
Page 9
<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
Five Lowest Priced Stocks of the
Ten Highest Dividend Yielding DJIA Stocks (1) Dow Jones Industrial Average (DJIA)
Actual Actual
Dividend Total Dividend Total
Year Appreciation (2) Yield (3) Return (4) Appreciation (2) Yield (3) Return (4)
____ ________________ _________ __________ ________________ _________ __________
<S> <C> <C> <C> <C> <C> <C>
1972 16.92% 5.57% 22.49% 14.58% 3.60% 18.18%
1973 14.20% 5.44% 19.64% -16.58% 3.42% -13.16%
1974 -12.52% 7.54% -4.98% -27.57% 4.36% -23.21%
1975 55.50% 9.04% 64.54% 38.32% 6.16% 44.48%
1976 33.35% 7.45% 40.80% 17.86% 4.89% 22.75%
1977 -0.40% 6.04% 5.64% -17.27% 4.51% -12.76%
1978 -5.94% 7.20% 1.26% -3.15% 5.77% 2.62%
1979 1.81% 8.10% 9.91% 4.19% 6.33% 10.52%
1980 31.88% 8.65% 40.53% 14.93% 6.52% 21.45%
1981 -4.40% 8.04% 3.64% -9.23% 5.83% -3.40%
1982 34.58% 7.30% 41.88% 19.61% 6.23% 25.84%
1983 27.33% 8.78% 36.11% 20.27% 5.41% 25.68%
1984 3.77% 7.11% 10.88% -3.74% 4.81% 1.07%
1985 30.23% 7.61% 37.84% 27.66% 5.17% 32.83%
1986 24.13% 6.18% 30.31% 22.58% 4.38% 26.96%
1987 6.23% 4.83% 11.06% 2.26% 3.74% 6.00%
1988 15.48% 5.74% 21.22% 11.85% 4.12% 15.97%
1989 5.51% 4.98% 10.49% 26.96% 4.78% 31.74%
1990 -20.60% 5.33% -15.27% -4.34% 3.73% -0.61%
1991 56.41% 5.38% 61.79% 20.32% 3.67% 23.99%
1992 18.46% 4.42% 22.88% 4.17% 3.20% 7.37%
1993 29.82% 4.00% 33.82% 13.72% 3.02% 16.74%
1994 4.20% 3.88% 8.08% 2.14% 2.80% 4.94%
1995 27.27% 2.99% 30.26% 33.45% 3.02% 36.47%
1996 23.09% 3.03% 26.12% 26.01% 2.57% 28.58%
1997
thru 6/30 8.37% 1.53% 9.90% 18.99% 1.03% 20.02%
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Index
Actual
Dividend Total
Year Appreciation (2) Yield (3) Return (4)
____ ________________ _________ __________
<S> <C> <C> <C>
1972 15.63% 3.09% 18.72%
1973 -17.37% 2.86% -14.51%
1974 -29.72% 3.71% -26.01%
1975 31.55% 5.38% 36.93%
1976 19.15% 4.39% 23.54%
1977 -11.50% 4.31% -7.19%
1978 1.06% 5.34% 6.40%
1979 12.31% 5.70% 18.01%
1980 25.77% 5.73% 31.50%
1981 -9.73% 4.90% -4.83%
1982 14.76% 5.50% 20.26%
1983 17.27% 5.00% 22.27%
1984 1.40% 4.55% 5.95%
1985 26.33% 5.11% 31.44%
1986 14.62% 3.73% 18.35%
1987 2.03% 3.64% 5.67%
1988 12.40% 4.17% 16.57%
1989 27.25% 3.86% 31.11%
1990 -6.56% 3.36% -3.20%
1991 26.31% 3.82% 30.13%
1992 4.46% 3.03% 7.49%
1993 7.06% 2.82% 9.88%
1994 -1.54% 2.82% 1.28%
1995 34.11% 2.90% 37.01%
1996 20.26% 2.42% 22.68%
1997
thru 6/30 19.49% 1.02% 20.51%
</TABLE>
[FN]
(1) The Five Lowest Priced Stocks of the Ten Highest Dividend Yielding
DJIA Stocks (the "Stocks") for any given period were selected by ranking
the dividend yields for each of the stocks in the DJIA as of the
beginning of the period, based upon an annualization of the last
quarterly or semi-annual ordinary dividend distribution (which would
have been declared in the preceding year) divided by that stock's market
value on the first trading day on the New York Stock Exchange in the
given period.
(2) Appreciation for the Stocks is calculated by subtracting the market
value of the Stocks as of the first trading day on the New York Stock
Exchange in a given period from the market value of the Stocks as of the
last trading day in that period, and dividing the result by the market
value of the Stocks as of the first trading day in that period.
Appreciation for the DJIA and the S&P 500 is calculated by subtracting the
opening value of the DJIA and the S&P 500 as of the first trading day in a
given period from the closing value of the DJIA and the S&P 500 as of the
last trading day in that period, and dividing the result by the opening
value of the DJIA and the S&P 500 as of the first trading day in that
period, respectively.
(3) Actual Dividend Yield for the Stocks is calculated by adding the
total dividends received on the Stocks in a given period and dividing
the result by the market value of the Stocks as of the first trading day
in that period. Actual Dividend Yield for the DJIA and the S&P 500 is
calculated by taking the total dividends credited to the DJIA and the
S&P 500 and dividing the result by the opening value of the DJIA and
the S&P 500 as of the first trading day of the period, respectively.
(4) Total Return represents the sum of Appreciation and Actual Dividend
Yield. Total Return does not take into consideration any sales charges,
commissions, expenses or taxes. Total Return does not take into
consideration any reinvestment of dividend income. Based on the year-by-
year returns contained in the table, over the 25 full years listed above,
the Stocks achieved an average annual total return of 21.36%, as compared
to the average annual total return of the DJIA and S&P 500, which was 12.76%
and 12.35%, respectively. The Stocks also had a higher average dividend
yield in each of the above 25 full years and outperformed the DJIA in 19
years and the S&P 500 in 20 of these years. Although the Trust seeks to
achieve a better performance than the DJIA and S&P 500, there can be no
assurance that the Trust will outperform the DJIA or the S&P 500 over its
one-year life or over consecutive rollover periods, if available.
Page 10
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the S&P 500 and
the Five Lowest Priced Stocks of the Ten Highest Dividend Yielding DJIA
Stocks (but not the Target 5 Advisory Trust) from January 1, 1972
through June 30, 1997 and should not be considered indicative of
future results. Further, these results are hypothetical. The chart
assumes that all dividends during a year are reinvested at the end of
that year and does not reflect sales charges, commissions, expenses or
taxes. There can be no assurance that the Target 5 Advisory Trust will
outperform the DJIA or the S&P 500 over its one-year life or over
consecutive rollover periods, if available.
Page 11
The following table compares the hypothetical performance of
approximately equal values of the ten companies in the DJIA having the
highest dividend yield (the "Ten Highest Dividend Yielding DJIA Stocks")
and the performance of the DJIA and the S&P 500 in each of the 25 full
years listed below, as of December 31 in each of these years (and as of
the most recent quarter).
<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURNS
Ten Highest Dividend Yielding DJIA Stocks (1) Dow Jones Industrial Average (DJIA)
Actual Actual
Dividend Total Dividend Total
Year Appreciation (2) Yield (3) Return (4) Appreciation (2) Yield (3) Return (4)
____ _______________ _________ __________ _______________ _________ __________
<S> <C> <C> <C> <C> <C> <C>
1972 17.89% 5.43% 23.32% 14.58% 3.60% 18.18%
1973 -1.47% 5.43% 3.96% -16.58% 3.42% -13.16%
1974 -8.14% 7.42% -0.72% -27.57% 4.36% -23.21%
1975 46.87% 9.16% 56.03% 38.32% 6.16% 44.48%
1976 27.80% 7.13% 34.93% 17.86% 4.89% 22.75%
1977 -7.59% 5.84% -1.75% -17.27% 4.51% -12.76%
1978 -6.96% 7.08% 0.12% -3.15% 5.77% 2.62%
1979 4.58% 8.41% 12.99% 4.19% 6.33% 10.52%
1980 18.69% 8.54% 27.23% 14.93% 6.52% 21.45%
1981 -0.88% 8.61% 7.73% -9.23% 5.83% -3.40%
1982 17.81% 8.24% 26.05% 19.61% 6.23% 25.84%
1983 30.52% 8.23% 38.75% 20.27% 5.41% 25.68%
1984 -0.36% 6.11% 5.75% -3.74% 4.81% 1.07%
1985 22.41% 6.99% 29.40% 27.66% 5.17% 32.83%
1986 28.66% 6.13% 34.79% 22.58% 4.38% 26.96%
1987 0.94% 5.13% 6.07% 2.26% 3.74% 6.00%
1988 18.51% 5.82% 24.33% 11.85% 4.12% 15.97%
1989 21.26% 5.40% 25.66% 26.96% 4.78% 31.74%
1990 -12.61% 5.04% -7.57% -4.34% 3.73% -0.61%
1991 29.06% 4.96% 34.02% 20.32% 3.67% 23.99%
1992 3.15% 4.64% 7.79% 4.17% 3.20% 7.37%
1993 22.71% 4.20% 26.91% 13.72% 3.02% 16.74%
1994 0.04% 4.01% 4.05% 2.14% 2.80% 4.94%
1995 32.44% 4.07% 36.51% 33.45% 3.02% 36.47%
1996 24.65% 3.53% 28.18% 26.01% 2.57% 28.58%
1997
thru 6/30 13.57% 1.62% 15.19% 18.99% 1.03% 20.02%
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Index
_____________
Actual
Dividend Total
Year Appreciation (2) Yield (3) Return (4)
____ ________________ _________ __________
<S> <C> <C> <C>
1972 15.63% 3.09% 18.72%
1973 -17.37% 2.86% -14.51%
1974 -29.72% 3.71% -26.01%
1975 31.55% 5.38% 36.93%
1976 19.15% 4.39% 23.54%
1977 -11.50% 4.31% -7.19%
1978 1.06% 5.34% 6.40%
1979 12.31% 5.70% 18.01%
1980 25.77% 5.73% 31.50%
1981 -9.73% 4.90% -4.83%
1982 14.76% 5.50% 20.26%
1983 17.27% 5.00% 22.27%
1984 1.40% 4.55% 5.95%
1985 26.33% 5.11% 31.44%
1986 14.62% 3.73% 18.35%
1987 2.03% 3.64% 5.67%
1988 12.40% 4.17% 16.57%
1989 27.25% 3.86% 31.11%
1990 -6.56% 3.36% -3.20%
1991 26.31% 3.82% 30.13%
1992 4.46% 3.03% 7.49%
1993 7.06% 2.82% 9.88%
1994 -1.54% 2.82% 1.28%
1995 34.11% 2.90% 37.01%
1996 20.26% 2.42% 22.68%
1997
thru 6/30 19.49% 1.02% 20.51%
</TABLE>
[FN]
(1) The Ten Highest Dividend Yielding DJIA Stocks (the "Stocks") for any
given period were selected by ranking the dividend yields for each of
the stocks in the DJIA as of the beginning of the period, based upon an
annualization of the last quarterly or semi-annual ordinary dividend
distribution (which would have been declared in the preceding year)
divided by that stock's market value on the first trading day on the New
York Stock Exchange in the given period.
(2) Appreciation for the Stocks is calculated by subtracting the market
value of the Stocks as of the first trading day on the New York Stock
Exchange in a given period from the market value of the Stocks as of the
last trading day in that period, and dividing the result by the market
value of the Stocks as of the first trading day in that period.
Appreciation for the DJIA and the S&P 500 is calculated by subtracting the
opening value of the DJIA and the S&P 500 as of the first trading day in a
given period from the closing value of the DJIA and the S&P 500 as of the
last trading day in that period, and dividing the result by the opening
value of the DJIA and the S&P 500 as of the first trading day in that
period, respectively.
(3) Actual Dividend Yield for the Stocks is calculated by adding the
total dividends received on the Stocks in a given period and dividing
the result by the market value of the Stocks as of the first trading day
in that period. Actual Dividend Yield for the DJIA and the S&P 500 is
calculated by taking the total dividends credited to the DJIA and the
S&P 500 and dividing the result by the opening value of the DJIA and the
S&P 500 as of the first trading day of the period, respectively.
(4) Total Return represents the sum of Appreciation and Actual Dividend
Yield. Total Return does not take into consideration any sales charges,
commissions, expenses or taxes. Total Return does not take into
consideration any reinvestment of dividend income. Based on the year-by-
year returns contained in the table, over the 25 full years listed above,
the Stocks achieved an average annual total return of 18.34%, as compared
to the average annual total return of all of the stocks in the DJIA and
S&P 500, which was 12.76% and 12.35%, respectively. The Stocks also had a
higher average dividend yield in each of the above 25 full years and
outperformed the DJIA in 19 of these years and the S&P 500 in 17 of these
years. Although the Trust seeks to achieve a better performance than the
DJIA and S&P 500, there can be no assurance that the Trust will outperform
the DJIA or S&P 500 over its one-year life or over consecutive rollover
periods, if available.
Page 12
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the Ten Highest
Dividend Yielding DJIA Stocks and the S&P 500 Index (but not the Target
10 Advisory Trust) from January 1, 1972 through June 30, 1997 and
should not be considered indicative of future results. Further, these
results are hypothetical. The chart assumes that all dividends during a
year are reinvested at the end of that year and does not reflect sales
charges, commissions, expenses or taxes. There can be no assurance that
the Target 10 Advisory Trust will outperform the DJIA or the S&P 500
over its one-year life or over consecutive rollover periods, if available.
Page 13
What are Some Additional Considerations for Investors?
The Trusts consist of different issues of Equity Securities, all of
which are listed on a national securities exchange. In addition, each of
the companies whose Equity Securities are included in a portfolio are
actively-traded, well-established corporations.
A Trust consists of such of the Equity Securities listed under "Schedule
of Investments" appearing in Part I of this Prospectus as may continue
to be held from time to time in such Trust and any additional Equity
Securities acquired and held by such Trust pursuant to the provisions of
the Trust Agreement, together with cash held in the Income and Capital
Accounts. Neither the Sponsor nor the Trustee shall be liable in any way
for any failure in any of the Equity Securities. However, should any
contract for the purchase of any of the Equity Securities initially
deposited hereunder fail, the Sponsor will, unless substantially all of
the moneys held in a Trust to cover such purchase are reinvested in
substitute Equity Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract to
all Unit holders on the next distribution date.
Risk Factors. The Equity Securities selected for the Trusts generally
share attributes that have caused them to have lower prices or higher
yields relative to other stocks in their respective index or the New
York Stock Exchange. The Equity Securities may, for example, be
experiencing financial difficulty, or be out of favor in the market
because of weak performance, poor earnings forecasts or negative
publicity; or they may be reacting to general market cycles. There can
be no assurance that the market factors that caused the relatively low
prices and high dividend yields of the Equity Securities will change,
that any negative conditions adversely affecting the stock prices will
not deteriorate, that the dividend rates on the Equity Securities will
be maintained or that share prices will not decline further during the
life of the Trusts, or that the Equity Securities will continue to be
included in the respective indices or the New York Stock Exchange.
Because certain of the Equity Securities from time to time may be sold
under certain circumstances described herein, and because the proceeds
from such events will be distributed to Unit holders and will not be
reinvested, no assurance can be given that a Trust will retain for any
length of time its present size and composition. Although the Portfolios
are not managed, the Sponsor may instruct the Trustee to sell Equity
Securities under certain limited circumstances. Pursuant to the
Indenture and with limited exceptions, the Trustee may elect to keep or
sell any securities or other property acquired in exchange for Equity
Securities, such as those acquired in connection with a merger or other
transaction. See "How May Equity Securities be Removed from a Trust?"
Equity Securities, however, will not be sold by a Trust to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation or if the Equity Securities no longer meet
the criteria by which they were selected for a Trust.
Whether or not the Equity Securities are listed on a 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 in a Trust should be made with an understanding
of the risks which an investment in common stocks entails. In general,
the value of your investment will decline if the financial condition of
the issuers of the common stocks becomes impaired or if the general
condition of the common stock market worsens. 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. The Sponsor cannot predict the direction or
scope of any of these factors. Common stocks have generally inferior
Page 14
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. Moreover, common stocks do not represent an
obligation of the issuer and therefore do not offer any assurance of
income or provide the degree of protection of capital provided by debt
securities.
Unit holders will be unable to dispose of any of the Equity Securities
in a Portfolio, as such, and will not be able to vote the Equity
Securities. As the holder of the Equity Securities, the Trustee will
have the right to vote all of the voting stocks in a Trust and will vote
such stocks in accordance with the instructions of the Sponsor.
Investors should be aware of certain other considerations before making
a decision to invest in a Trust. The value of common stocks is subject
to market fluctuations for as long as the common stocks remain
outstanding, and thus, the value of the Equity Securities will fluctuate
over the life of a Trust and may be more or less than the price at which
they were deposited in such Trust. The Equity Securities may appreciate
or depreciate in value (or pay dividends) depending on the full range of
economic and market influences affecting these securities, including the
impact of the Sponsor's purchase and sale of the Equity Securities
(especially during the primary offering period of Units of a Trust and
during the Special Redemption and Liquidation Period) and other factors.
The Sponsor and the Trustee shall not be liable in any way for any
default, failure or defect in any Equity Security. In the event of a
notice that any Equity Security will not be delivered ("Failed Contract
Obligations") to a Trust, the Sponsor is authorized under the Indenture
to direct the Trustee to acquire other Equity Securities ("Replacement
Securities"). Any Replacement Security will be identical to those which
were the subject of the failed contract. The Replacement Securities must
be purchased within 20 days after delivery of the notice of a failed
contract, and the purchase price may not exceed the amount of funds
reserved for the purchase of the Failed Contract Obligations.
If the right of limited substitution described in the preceding
paragraph is not utilized to acquire Replacement Securities in the event
of a failed contract, the Sponsor will refund the sales charge
attributable to such Failed Contract Obligations to all Unit holders of
a Trust, and the Trustee will distribute the principal attributable to
such Failed Contract Obligations not more than 120 days after the date
on which the Trustee received a notice from the Sponsor that a
Replacement Security would not be deposited in such Trust. In addition,
Unit holders should be aware that, at the time of receipt of such
principal, they may not be able to reinvest such proceeds in other
securities at a yield equal to or in excess of the yield which such
proceeds would have earned for Unit holders of a Trust.
The Indenture also authorizes the Sponsor to increase the size of a
Trust and the number of Units thereof by the deposit of additional
Equity Securities, or cash (including a letter of credit) with
instructions to purchase additional Equity Securities, in such Trust and
the issuance of a corresponding number of additional Units. If the
Sponsor deposits cash, existing and new investors could experience a
dilution of their investments and a reduction in anticipated income
because of fluctuations in the prices of the Equity Securities between
the time of the cash deposit and the actual purchase of the Equity
Securities and because the Trust will pay the brokerage fees associated
therewith.
Once all of the Equity Securities in a Trust are acquired, the Trustee
will have no power to vary the investments of such Trust, i.e., the
Trustee will have no managerial power to take advantage of market
variations to improve a Unit holder's investment, but may dispose of
Equity Securities only under limited circumstances. See "How May Equity
Securities be Removed from a Trust?"
To the best of the Sponsor's knowledge, there is no litigation pending
as of the Initial Date of Deposit with respect to any Equity Security
which might reasonably be expected to have a material adverse effect on
the Trusts. At any time after the Initial Date of Deposit, litigation
may be instituted on a variety of grounds with respect to the Equity
Securities. The Sponsor is unable to predict whether any such litigation
will be instituted, or if instituted, whether such litigation might have
a material adverse effect on the Trusts.
Legislation. From time to time Congress considers proposals to reduce
the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unit holders are
urged to consult their own tax advisers. Further, at any time after the
Initial Date of Deposit, legislation may be enacted that could
Page 15
negatively affect the Equity Securities in the Trusts or the issuers of
the Equity Securities. Changing approaches to regulation, particularly
with respect to the environment or with respect to the petroleum
industry, may have a negative impact on certain companies represented in
the Trusts. There can be no assurance that future legislation,
regulation or deregulation will not have a material adverse effect on
the Trusts or will not impair the ability of the issuers of the Equity
Securities to achieve their business goals.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price, which is based on the
aggregate underlying value of the Equity Securities in a Trust, plus or
minus cash, if any, in the Income and Capital Accounts of such Trust,
plus a deferred sales charge of $0.065 per Unit assessed as set forth
below divided by the amount of Units of such Trust outstanding. A
deferred sales charge of $.013 will be assessed per Unit per month on
the dates set forth under "Public Offering Price" in Part I of this
Prospectus. Units purchased subsequent to the initial deferred sales
charge payment will be subject to only the remaining deferred sales
charge payments not yet collected. For each Trust, the deferred sales
charge will be paid from funds in the Capital Account, if sufficient, or
from the periodic sales of Equity Securities. The sales charge, as a
percentage of the Public Offering Price on the Initial Date of Deposit
for each Trust, is .65%. The total maximum sales charge which may be
assessed to Unit holders of either Trust on a per Unit basis is 1.5% of
the Public Offering Price (equivalent to a maximum of 1.523% of the net
amount invested, exclusive of the deferred sales charge).
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying value of the Equity Securities in a
Trust, plus or minus cash, if any, in the Income and Capital Accounts of
such Trust divided by the number of Units of such Trust outstanding.
The minimum purchase of each Trust is $1,000, except for Rollover Unit
holders who are not subject to a minimum purchase amount. Units of the
Trusts are only available to investors who purchase Units through
registered broker/dealers who charge periodic fees for financial
planning, investment advisory or asset management services, or provide
such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed. See
"Public Offering-How are Units Distributed?"
In addition, employees, officers and directors (including their
immediate family members, defined as spouses, children, grandchildren,
parents, grandparents, siblings, mothers-in-law, fathers-in-law, sons-in-
law and daughters-in-law, and trustees, custodians or fiduciaries for
the benefit of such persons) of the Sponsor, dealers and their
affiliates and vendors providing services to the Sponsor will be able to
purchase Units at the Public Offering Price.
Had the Units of the Trusts been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information" appearing
in Part I of this Prospectus. The Public Offering Price of Units on the
date of the Prospectus or during the initial offering period may vary
from the amount stated under "Summary of Essential Information" in
accordance with fluctuations in the prices of the underlying Equity
Securities. During the initial offering period, the aggregate value of
the Units of a Trust shall be determined on the basis of the aggregate
underlying value of the Equity Securities therein plus or minus cash, if
any, in the Income and Capital Accounts of such Trust. The aggregate
underlying value of the Equity Securities will be determined in the
following manner: if the Equity Securities are listed, this evaluation
is generally based on the closing sale prices on that exchange (unless
it is determined that these prices are inappropriate as a basis for
valuation) or, if there is no closing sale price on that exchange, at
the closing ask prices. If the Equity Securities are not so listed or,
if so listed and the principal market therefor is other than on the
exchange, the evaluation shall generally be based on the current ask
prices on the over-the-counter market (unless it is determined that
these prices are inappropriate as a basis for evaluation). If current
ask prices are unavailable, the evaluation is generally determined (a)
on the basis of current ask prices for comparable securities, (b) by
appraising the value of the Equity Securities on the ask side of the
market or (c) by any combination of the above.
Page 16
The Evaluator on each business day will appraise or cause to be
appraised the value of the underlying Equity Securities in a Trust as of
the Evaluation Time and will adjust the Public Offering Price of the
Units commensurate with such valuation. Such Public Offering Price will
be effective for all orders received prior to the Evaluation Time on
each such day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a
business day, will be held until the next determination of price. The
term "business day," as used herein and under "How May Units be
Redeemed?", shall exclude Saturdays, Sundays and the following holidays
as observed by the New York Stock Exchange, Inc.: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
value of the Equity Securities therein, plus or minus cash, if any, in
the Income and Capital Accounts of a Trust plus the applicable sales
charge.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of Units on the date of settlement
provided payment has been received. Cash, if any, made available to the
Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the
Sponsor, subject to the limitations of the Securities Exchange Act of
1934. Delivery of Certificates representing Units so ordered will be
made three business days following such order or shortly thereafter. See
"Rights of Unit Holders-How May Units be Redeemed?" for information
regarding the ability to redeem Units ordered for purchase.
How are Units Distributed?
During the initial offering period, Units issued on the Initial Date of
Deposit, additional Units created on subsequent Date(s) of Deposit, and
Units reacquired by the Sponsor and resold during the initial offering
period, will be sold at the current Public Offering Price. Upon the
termination of the initial offering period, unsold Units created or
Units reacquired during the initial offering period and Units reacquired
in the secondary market (see "Will There be a Secondary Market?") may be
offered by this Prospectus at the secondary market Public Offering Price.
It is the intention of the Sponsor to qualify Units of the Trusts for
sale in a number of states. Resales of Units of the Trusts by dealers
and others to the public will be made at the Public Offering Price
described in the Prospectus. Dealers and other selling agents who sell
Units of a Trust during the initial offering period in the dollar
amounts set forth below will be entitled to the following sales
concessions as a percentage of the Public Offering Price:
<TABLE>
<CAPTION>
Total Sales per Trust Concession
_____________________ __________
<S> <C>
$ 7,500,000 but less than $15,000,000 0.025%
$ 15,000,000 but less than $25,000,000 0.050%
$ 25,000,000 but less than $40,000,000 0.150%
$ 40,000,000 but less than $50,000,000 0.200%
$ 50,000,000 but less than $75,000,000 0.275%
$ 75,000,000 but less than $100,000,000 0.300%
$100,000,000 or more 0.350%
</TABLE>
However, resales of Units of the Trusts by such dealers and others to
the public will be made at the Public Offering Price described in the
prospectus. In determining the number of Trust Units sold for purposes
of the concessions described above, Target 5 Advisory Trust Units sold
will be aggregated with sales of the currently available Target 5 Trust,
and Target 10 Advisory Trust Units sold will be aggregated with sales of
the currently available Target 10 Trust. The volume concessions set
forth above will be made only to those dealers eligible to receive such
concessions. The Sponsor reserves the right to change the amount of the
concession or agency commission from time to time. In the event the
Sponsor reacquires, or the Trustee redeems, Units from brokers, dealers
and others while a market is being maintained for such Units, such
Page 17
entities agree to repay immediately to the Sponsor any such concession
or agency commission relating to such reacquired Units. Certain
commercial banks may be making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge paid by
these customers is retained by or remitted to the banks in the amounts
indicated above. Under the Glass-Steagall Act, banks are prohibited from
underwriting Trust Units; however, the Glass-Steagall Act does permit
certain agency transactions and the banking regulators have not
indicated that these particular agency transactions are not permitted
under such Act. In Texas and in certain other states, any banks making
Units available must be registered as broker/dealers under state law.
The Sponsor expects to recoup the foregoing payments from the deferred
sales charge payments related to such Trusts.
From time to time the Sponsor may implement programs under which dealers
of a Trust may receive nominal awards from the Sponsor for each of their
registered representatives who have sold a minimum number of UIT Units
during a specified time period. In addition, at various times the
Sponsor may implement other programs under which the sales force of a
dealer may be eligible to win other nominal awards for certain sales
efforts, or under which the Sponsor will reallow to any such dealer that
sponsors sales contests or recognition programs conforming to criteria
established by the Sponsor, or participates in sales programs sponsored
by the Sponsor, an amount not exceeding the total applicable sales
charges on the sales generated by such person at the public offering
price during such programs. Also, the Sponsor in its discretion may from
time to time, pursuant to objective criteria established by the Sponsor,
pay fees to qualifying dealers for certain services or activities which
are primarily intended to result in sales of Units of the Trusts. Such
payments are made by the Sponsor out of its own assets, and not out of
the assets of a Trust. These programs will not change the price Unit
holders pay for their Units or the amount that a Trust will receive from
the Units sold.
The Sponsor may from time to time in its advertising and sales materials
compare the then current estimated returns of a Trust and returns over
specified periods of other similar trusts sponsored by Nike Securities
L.P. or investment strategies utilized by a Trust (which may show
performance net of expenses and charges which such Trust would have
charged) with returns on other taxable investments such as the common
stocks comprising the DJIA, S&P 500, other investment indices, corporate
or U.S. Government bonds, bank CDs and money market accounts or money
market funds, each of which has investment characteristics that may
differ from those of the Trusts. U.S. Government bonds, for example, are
backed by the full faith and credit of the U.S. Government and bank CDs
and money market accounts are insured by an agency of the federal
government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the
condition of the short-term debt market. The investment characteristics
of each Trust are described more fully elsewhere in this Prospectus.
Advertisements and other sales material for the Trusts may also show the
total returns (price changes plus dividends received, divided by the
maximum public offering price) of each completed prior series and the
total and average annualized return of all series in the same quarterly
cycle, assuming the holder rolled over at the termination of each prior
series. These returns will reflect all applicable sales charges and
expenses.
Trust performance may be compared to performance on a total return basis
of the DJIA, the S&P 500 Composite Stock Price Index, or performance
data from Lipper Analytical Services, Inc. and Morningstar Publications,
Inc. or from publications such as Money, The New York Times, U.S. News
and World Report, Business Week, Forbes or Fortune. As with other
performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trusts will receive a gross sales commission equal to
the maximum sales charge per Unit for each Trust as set forth in Part I
of this Prospectus. In addition, the Sponsor may be considered to have
realized a profit or to have sustained a loss, as the case may be, in
the amount of any difference between the cost of the Equity Securities
to a Trust (which is based on the Evaluator's determination of the
aggregate offering price of the underlying Equity Securities of such
Trust on the Initial Date of Deposit as well as on subsequent deposits)
and the cost of such Equity Securities to the Sponsor. See Note (2) of
Page 18
"Schedule of Investments" appearing in Part I of this Prospectus. During
the initial offering period, the dealers and others also may realize
profits or sustain losses as a result of fluctuations after the Date of
Deposit in the Public Offering Price received by such dealers and others
upon the sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are
resold (which price includes a maximum sales charge for each Trust as
set forth in Part I of this Prospectus) or redeemed. The secondary
market public offering price of Units may be greater or less than the
cost of such Units to the Sponsor. The Sponsor may also realize profits
or sustain losses in connection with the creation of additional Units
for the Distribution Reinvestment Option.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated to do
so, the Sponsor intends to maintain a market for the Units and
continuously offer to purchase Units at prices, subject to change at any
time, based upon the aggregate underlying value of the Equity Securities
in a Trust plus or minus cash, if any, in the Income and Capital
Accounts of such Trust. All expenses incurred in maintaining a secondary
market, other than the fees of the Evaluator and the costs of the
Trustee in transferring and recording the ownership of Units, will be
borne by the Sponsor. If the supply of Units exceeds demand, or for some
other business reason, the Sponsor may discontinue purchases of Units at
such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS UNITS, HE SHOULD
INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO MAKING A
TENDER FOR REDEMPTION TO THE TRUSTEE. Units subject to a deferred sales
charge which are sold or tendered for redemption prior to such time as
the entire deferred sales charge on such Units has been collected will
be assessed the amount of the remaining deferred sales charge at the
time of sale or redemption.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable or may be redeemed by presentation and surrender to the
Trustee properly endorsed or accompanied by a written instrument or
instruments of transfer. A Unit holder must sign exactly as his name
appears on the face of the certificate with signature guaranteed by a
participant in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority. Record
ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form. 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
Page 19
no certificate will be issued upon the transfer unless requested by the
Unit holder. A Unit holder may at any time request the Trustee to issue
certificates for Units.
Although no such charge is now made or contemplated, a Unit holder may
be required to pay $2.00 to the Trustee per certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or exchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit
holder may be required to furnish indemnity satisfactory to the Trustee
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Income and Capital Distributed?
The Trustee will distribute any net income received with respect to any
of the Equity Securities in a Trust on or about the Income Distribution
Dates to Unit holders of record on the preceding Income Record Date. See
"Summary of Essential Information" in Part I of this Prospectus. Persons
who purchase Units will commence receiving distributions only after such
person becomes a Record Owner. Notification to the Trustee of the
transfer of Units is the responsibility of the purchaser, but in the
normal course of business such notice is provided by the selling
broker/dealer. Proceeds received on the sale of any Equity Securities in
a Trust, to the extent not used to meet redemptions of Units, pay the
deferred sales charge or pay expenses, will, however, be distributed on
the last day of each month to Unit holders of record on the fifteenth
day of each month if the amount available for distribution equals at
least $1.00 per 100 Units. The Trustee is not required to pay interest
on funds held in the Capital Account of a Trust (but may itself earn
interest thereon and therefore benefit from the use of such funds).
Notwithstanding, distributions of funds in the Capital Account, if any,
will be made as part of the final liquidation distribution, and in
certain circumstances, earlier. See "What is the Federal Tax Status of
Unit Holders?"
It is anticipated that the deferred sales charge will be collected from
the Capital Account of a Trust and that amounts in the Capital Account
will be sufficient to cover the cost of the deferred sales charge. To
the extent that amounts in the Capital Account are insufficient to
satisfy the then current deferred sales charge obligation, Equity
Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made
to an account designated by the Sponsor for purposes of satisfying Unit
holders' deferred sales charge obligations.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of any distribution made by
a Trust if the Trustee has not been furnished the Unit holder's tax
identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and
may be recovered by the Unit holder under certain circumstances by
contacting the Trustee, otherwise the amount may be recoverable only
when filing a tax return. Under normal circumstances the Trustee obtains
the Unit holder's tax identification number from the selling broker.
However, a Unit holder should examine his or her statements from the
Trustee to make sure that the Trustee has been provided a certified tax
identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously provided
such number, one should be provided as soon as possible.
Within a reasonable time after a Trust is terminated, each Unit holder
who is not a Rollover Unit holder will, upon surrender of his Units for
redemption, receive (i) the pro rata share of the amounts realized upon
the disposition of Equity Securities, unless he or she 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 such
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 a Trust.
The Trustee may establish reserves (the "Reserve Account") within a
Trust for state and local taxes, if any, and any governmental charges
payable out of such Trust.
Distribution Reinvestment Option. Any Unit holder may elect to have each
distribution of income or capital on his Units, other than the final
liquidating distribution in connection with the termination of a Trust,
automatically reinvested in additional Units of such Trust. Each person
who purchases Units of a Trust may elect to become a participant in the
Page 20
Distribution Reinvestment Option by notifying the Trustee of their
election. The Distribution Reinvestment Option may not be available in
all states. In order to enable a Unit holder to participate in the
Distribution Reinvestment Option with respect to a particular
distribution on his Units, the card must be received by the Trustee
within 10 days prior to the Record Date for such distribution. Each
subsequent distribution of income or capital on the participant's Units
will be automatically applied by the Trustee to purchase additional
Units of a Trust. The remaining deferred sales charge payments will be
assessed on Units acquired pursuant to the Distributions Reinvestment
Option. IT SHOULD BE REMEMBERED THAT EVEN IF DISTRIBUTIONS ARE
REINVESTED, THEY ARE STILL TREATED AS DISTRIBUTIONS FOR INCOME TAX
PURPOSES.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of a Trust the following information in reasonable detail: (1) a summary
of transactions in such Trust for such year; (2) any Equity Securities
sold during the year and the Equity Securities held at the end of such
year by such Trust; (3) the redemption price per Unit based upon a
computation thereof on the 31st day of December of such year (or the
last business day prior thereto); and (4) amounts of income and capital
distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in a Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender to the
Trustee at its 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 (if such day is a
day on which the New York Stock Exchange is open for trading), except
that as regards Units received after 4:00 p.m. Eastern time (or as of
any earlier closing time on a day on which the New York Stock Exchange
is scheduled in advance to close at such earlier time), the date of
tender is the next day on which the New York Stock Exchange is open for
trading and such Units will be deemed to have been tendered to the
Trustee on such day for redemption at the redemption price computed on
that day. Units so redeemed shall be cancelled. Units tendered for
redemption prior to such time as the entire deferred sales charge on
such Units has been collected will be assessed the amount of the
remaining deferred sales charge at the time of redemption.
Any Unit holder tendering 2,500 Units or more of a Trust for redemption
may request by written notice submitted at the time of tender from the
Trustee, in lieu of a cash redemption, a distribution of shares of
Equity Securities in an amount and value of Equity Securities per Unit
equal to the Redemption Price Per Unit, as determined as of the
evaluation next following tender. To the extent possible, in-kind
distributions ("In-Kind Distributions") shall be made by the Trustee
through the distribution of each of the Equity Securities in book-entry
form to the account of the Unit holder's bank or broker/dealer at the
Depository Trust Company. An In-Kind Distribution will be reduced by
customary transfer and registration charges. The tendering Unit holder
will receive his pro rata number of whole shares of each of the Equity
Securities comprising a portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Unit holder is
entitled. The Trustee may adjust the number of shares of any issue of
Equity Securities included in a Unit holder's In-Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made
Page 21
on the basis of the value of Equity Securities on the date of tender. If
funds in the Capital Account are insufficient to cover the required cash
distribution to the tendering Unit holder, the Trustee may sell Equity
Securities in the manner described above.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming Unit
holder's tax identification number in the manner required by such
regulations. For further information regarding this withholding, see
"How are Income and Capital Distributed?" In the event the Trustee has
not been previously provided such number, one must be provided at the
time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of a Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other
amounts paid on redemption shall be withdrawn from the Capital Account
of a Trust.
The Trustee is empowered to sell Equity Securities of a Trust in order
to make funds available for redemption. To the extent that Equity
Securities are sold, the size and diversity of a Trust will be reduced.
Such sales may be required at a time when Equity Securities would not
otherwise be sold and might result in lower prices than might otherwise
be realized.
The Redemption Price per Unit during the secondary market will be
determined on the basis of the aggregate underlying value of the Equity
Securities in a Trust plus or minus cash, if any, in the Income and
Capital Accounts of such Trust. The Redemption Price per Unit is the pro
rata share of each Unit determined by the Trustee by adding: (1) the
cash on hand in a Trust other than cash deposited in the Trust to
purchase Equity Securities not applied to the purchase of such Equity
Securities; (2) the aggregate value of the Equity Securities (including
"when issued" contracts, if any) held in such Trust, as determined by
the Evaluator on the basis of the aggregate underlying value of the
Equity Securities in such Trust next computed; and (3) dividends
receivable on the Equity Securities trading ex-dividend as of the date
of computation; and deducting therefrom: (1) amounts representing any
applicable taxes or governmental charges payable out of such Trust; (2)
any amounts owing to the Trustee for its advances; (3) an amount
representing estimated accrued expenses of such Trust, including but not
limited to fees and expenses of the Trustee (including legal fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of such Trust as of the business day prior to
the evaluation being made; and (5) other liabilities incurred by such
Trust; and finally dividing the results of such computation by the
number of Units of such Trust outstanding as of the date thereof. The
redemption price per Unit will be assessed the amount, if any, of the
remaining deferred sales charge at the time of redemption.
The aggregate value of the Equity Securities for purposes of the
Redemption Price during the secondary market and the Secondary Market
Public Offering Price will be determined in the following manner: if the
Equity Securities are listed, this evaluation is generally based on the
closing sale prices on that exchange (unless it is determined that these
prices are inappropriate as a basis for valuation) or, if there is no
closing sale price on that exchange, at the closing bid prices. If the
Equity Securities are not so listed or, if so listed and the principal
market therefore is other than on a securities exchange, the evaluation
shall generally be based on the current bid prices on the over-the-
counter market (unless these prices are inappropriate as a basis for
evaluation). If current bid prices are unavailable, the evaluation is
generally determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Equity
Securities on the bid side of the market or (c) by any combination of
the above.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Securities and Exchange Commission determines that trading on the New
York Stock Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances, the
Sponsor may apply to the Securities and Exchange Commission for an order
permitting a full or partial suspension of the right of Unit holders to
redeem their Units. The Trustee is not liable to any person in any way
for any loss or damage which may result from any such suspension or
postponement.
Page 22
Special Redemption, Liquidation and Investment in a New Trust
It is expected that a special redemption and liquidation will be made of
all Units of the Trusts held by any Unit holder (a "Rollover Unit
holder") who affirmatively notifies the Trustee in writing that he or
she desires to participate as a Rollover Unit holder by the Rollover
Notification Date specified in the "Summary of Essential Information"
appearing in Part I of this Prospectus.
All Units of Rollover Unit holders will be redeemed In-Kind during the
Special Redemption and Liquidation Period and the underlying Equity
Securities will be distributed to the Distribution Agent on behalf of
the Rollover Unit holders. During the Special Redemption and Liquidation
Period (as set forth in "Summary of Essential Information" in Part I),
the Distribution Agent will be required to sell all of the underlying
Equity Securities on behalf of Rollover Unit holders. The sales proceeds
will be net of brokerage fees, governmental charges or any expenses
involved in the sales.
The Distribution Agent may engage the Sponsor, as its agent, or other
brokers to sell the distributed Equity Securities. The Equity Securities
will be sold as quickly as is practicable during the Special Redemption
and Liquidation Period. The Sponsor does not anticipate that the period
will be longer than one or two days, given that the Equity Securities
are usually highly liquid. The liquidity of any Equity Security depends
on the daily trading volume of the Equity Security and the amount that
the Sponsor has available for sale on any particular day.
Pursuant to an exemptive order from the Securities and Exchange
Commission, each terminating Trust (and the Distribution Agent on behalf
of Rollover Unit holders) may sell Equity Securities to the New Trusts
if those Equity Securities continue to meet the individual Trust's
strategy as set forth under "What is The First Trust Special Situations
Trust?" The exemption will enable each Trust to eliminate commission
costs on these transactions. The price for those Equity Securities will
be the closing sale price on the sale date on the exchange where the
Equity Securities are principally traded, as certified by the Sponsor
and confirmed by the Trustee of each Trust.
The Rollover Unit holders' proceeds will be invested in a New Trust or a
trust with a similar investment strategy (as selected by the Unit
holder), if then registered and being offered. The proceeds of
redemption will be used to buy New Trust units as the proceeds become
available. Any Rollover Unit holder may thus be redeemed out of a Trust
and become a holder of an entirely different trust, a New Trust, with a
different portfolio of Equity Securities. In accordance with the
Rollover Unit holders' offer to purchase the New Trust units, the
proceeds of the sales (and any other cash distributed upon redemption)
will be invested in a New Trust, at the public offering price, including
the applicable maximum sales charge per Unit (which for Rollover Unit
holders is currently expected to be $.065 per Unit for the New Series of
a Trust, all of which will be deferred as provided herein).
The Sponsor intends to create New Trust units as quickly as possible,
depending upon the availability and reasonably favorable prices of the
Equity Securities included in a New Trust portfolio, and it is intended
that Rollover Unit holders will be given first priority to purchase the
New Trust units. Rollover Unit holders may also elect to have their
proceeds invested in a trust with a similar investment strategy, if such
trust is then registered in the Unit holder's state of residence and
being offered. There can be no assurance, however, as to the exact
timing of the creation of the New Trust units or the aggregate number of
New Trust units which the Sponsor will create. The Sponsor may, in its
sole discretion, stop creating new units (whether permanently or
temporarily) at any time it chooses, regardless of whether all proceeds
of the Special Redemption and Liquidation have been invested on behalf
of Rollover Unit holders. Cash which has not been invested on behalf of
the Rollover Unit holders in New Trust units will be distributed within
a reasonable time after such occurrence. However, since the Sponsor can
create units, the Sponsor anticipates that sufficient units can be
created, although moneys in a New Trust may not be fully invested on the
next business day.
The process of redemption, liquidation, and investment in a New Trust is
intended to allow for the fact that the portfolios selected by the
Sponsor are chosen on the basis of growth and income potential only for
a year, at which point a new portfolio is chosen. It is contemplated
that a similar process of redemption, liquidation and investment in a
New Trust will be available as each Trust terminates.
Page 23
It should also be noted that Rollover Unit holders may realize taxable
capital gains on the Special Redemption and Liquidation but, in certain
unlikely circumstances, will not be entitled to a deduction for certain
capital losses and, due to the procedures for investing in a New Trust,
no cash would be distributed at that time to pay any taxes. Included in
the cash for the Special Redemption and Liquidation will be an amount of
cash attributable to the second semi-annual distribution of dividend
income; accordingly, Rollover Unit holders also will not have cash from
this source distributed to pay any taxes. See "What is the Federal Tax
Status of Unit holders?"
In addition, during this period a Unit holder will be at risk to the
extent that Equity Securities are not sold and will not have the benefit
of any stock appreciation to the extent that moneys have not been
invested; for this reason, the Sponsor will be inclined to sell and
purchase the Equity Securities in as short a period as they can without
materially adversely affecting the price of the Equity Securities.
Unit holders who do not inform the Distribution Agent that they wish to
have their Units so redeemed and liquidated ("Remaining Unit holders")
will not realize capital gains or losses due to the Special Redemption
and Liquidation, and will not be charged any additional sales charge.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor the New Trusts or any subsequent series of the Trusts, without
penalty or incurring liability to any Unit holder. If the Sponsor so
decides, the Sponsor shall notify the Unit holders before the Special
Redemption and Liquidation. All Unit holders will then be remaining Unit
holders, with rights to ordinary redemption as before. See "How May
Units be Redeemed?" The Sponsor may modify the terms of the New Trusts
or any subsequent series of the Trusts. The Sponsor may also modify,
suspend or terminate the Rollover Option upon notice to the Unit holders
of such amendment at least 60 days prior to the effective date of such
amendment.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that time
equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before 1:00 p.m. Eastern time on the same
business day and by making payment therefor to the Unit holder not later
than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does not
purchase Units, the Trustee may sell Units tendered for redemption in
the over-the-counter market, if any, as long as the amount to be
received by the Unit holder is equal to the amount he would have
received on redemption of the Units.
The offering price of any Units acquired by the Sponsor will be in
accord with the Public Offering Price described in the then effective
prospectus describing such Units. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
How May Equity Securities be Removed from a Trust?
The portfolios of the Trusts are not "managed" by the Sponsor or the
Trustee; their activities described herein are governed solely by the
provisions of the Indenture. The Indenture provides that the Sponsor may
(but need not) direct the Trustee to dispose of an Equity Security in
the event that an issuer defaults in the payment of a dividend that has
been declared, that any action or proceeding has been instituted
restraining the payment of dividends or there exists any legal question
or impediment affecting such Equity Security, that the issuer of the
Equity Security has breached a covenant which would affect the payments
of dividends, the credit standing of the issuer or otherwise impair the
sound investment character of the Equity Security, that the issuer has
defaulted on the payment on any other of its outstanding obligations,
that the price of the Equity Security has declined to such an extent or
other such credit factors exist so that in the opinion of the Sponsor,
the retention of such Equity Securities would be detrimental to a Trust.
Except as stated under "Portfolio-What are Some Additional
Considerations for Investors?" for Failed Obligations, the acquisition
by a Trust of any securities or other property other than the Equity
Securities is prohibited. Pursuant to the Indenture and with limited
exceptions, the Trustee may sell any securities or other property
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
Page 24
acquired by a Trust, they may be accepted for deposit in a Trust and
either sold by the Trustee or held in a Trust pursuant to the direction
of the Sponsor (who may rely on the advice of the Portfolio Supervisor).
Proceeds from the sale of Equity Securities by the Trustee are credited
to the Capital Account of a Trust for distribution to Unit holders or to
meet redemptions. The Trustee may, from time to time, retain and pay
compensation to the Sponsor (or an affiliate of the Sponsor) to act as
agent for the Trusts with respect to selling Equity Securities from the
Trusts. In acting in such capacity, the Sponsor or its affiliate will be
held subject to the restrictions under the Investment Company Act of
1940, as amended.
The Trustee may also sell Equity Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose of
redeeming Units of a Trust tendered for redemption and the payment of
expenses.
The Sponsor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares
of individual issues of Equity Securities. To the extent this is not
practicable, the composition and diversity of the Equity Securities may
be altered. In order to obtain the best price for a Trust, it may be
necessary for the Sponsor to specify minimum amounts (generally 100
shares) in which blocks of Equity Securities are to be sold. The Sponsor
may consider sales of Units of unit investment trusts which it sponsors
in making recommendations to the Trustee as to the selection of
broker/dealers to execute the Trusts' portfolio transactions.
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in 1991,
acts as Sponsor for successive series of The First Trust Combined
Series, The First Trust Special Situations Trust, The First Trust
Insured Corporate Trust, The First Trust of Insured Municipal Bonds, The
First Trust GNMA, Templeton Growth and Treasury Trust, Templeton Foreign
Fund & U.S. Treasury Securities Trust and The Advantage Growth and
Treasury Securities Trust. First Trust introduced the first insured unit
investment trust in 1974 and to date more than $9 billion in First Trust
unit investment trusts have been deposited. The Sponsor's employees
include a team of professionals with many years of experience in the
unit investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (630) 241-4141. As of
December 31, 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
may call the Customer Service Help Line at 1-800-682-7520. The Trustee
is subject to supervision by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not
participated in the selection of the Equity Securities. For information
relating to the responsibilities of the Trustee under the Indenture,
reference is made to the material set forth under "Rights of Unit
Holders."
The Trustee and any successor trustee may resign by executing an
instrument in writing and filing the same with the Sponsor and mailing a
copy of a notice of resignation to all Unit holders. Upon receipt of
Page 25
such notice, the Sponsor is obligated to appoint a successor trustee
promptly. If the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Indenture.
If upon resignation of a trustee no successor has accepted the
appointment within 30 days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the
successor Trustee. The Trustee must be a banking corporation organized
under the laws of the United States or any State and having at all times
an aggregate capital, surplus and undivided profits of not less than
$5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit holders
for taking any action or for refraining from taking any action in good
faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own willful misfeasance, bad faith, gross
negligence (ordinary negligence in the case of the Trustee) or reckless
disregard of their obligations and duties. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the
Trustee of any of the Equity Securities. In the event of the failure of
the Sponsor to act under the Indenture, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under
the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Equity Securities or upon the
interest thereon or upon it as Trustee under the Indenture or upon or in
respect of a Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Indenture
contains other customary provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities, then the Trustee may (a)
appoint a successor Sponsor at rates of compensation deemed by the
Trustee to be reasonable and not exceeding amounts prescribed by the
Securities and Exchange Commission, or (b) terminate the Indenture and
liquidate the Trust as provided herein, or (c) continue to act as
Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor and the Trustee,
in which event the Sponsor and the Trustee are to use their best efforts
to appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
Page 26
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" in Part I of this Prospectus. Each Trust may be liquidated
at any time by consent of 100% of the Unit holders of a Trust or by the
Trustee when the value of the Equity Securities owned by such Trust as
shown by any evaluation, is less than the lower of $2,000,000 or 20% of
the total value of Equity Securities deposited in such Trust during the
primary offering period, or in the event that Units of such Trust not
yet sold aggregating more than 60% of the Units of such Trust are
tendered for redemption by underwriters, including the Sponsor. If a
Trust is liquidated because of the redemption of unsold Units of such
Trust by underwriters, the Sponsor will refund to each purchaser of
Units of such Trust the entire sales charge paid by such purchaser;
however, liquidation of a Trust in other circumstances will result in
all remaining unpaid deferred sales charges being deducted from
termination proceeds paid to Unit holders. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit holders
of a Trust. Within a reasonable period after termination, the Trustee
will follow the procedures set forth under "How are Income and Capital
Distributed?" Also, because of the Special Redemption and Liquidation in
a New Trust, there is a possibility that a Trust may be reduced below
the Discretionary Liquidation Amount and that a Trust could therefore be
terminated at that time before the Mandatory Termination Date of the Fund.
Commencing on the Mandatory Termination Date, Equity Securities will
begin to be sold in connection with the termination of a Trust. The
Sponsor will determine the manner, timing and execution of the sale of
the Equity Securities. Written notice of any termination of a Trust
specifying the time or times at which Unit holders may surrender their
certificates for cancellation shall be given by the Trustee to each Unit
holder at his address appearing on the registration books of such Trust
maintained by the Trustee. Not less than 30 days prior to the Mandatory
Termination Date of the Trusts the Trustee will provide written notice
thereof to all Unit holders and will include with such notice a form to
enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges), if
such Unit holder owns at least 2,500 Units of a 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. A Unit holder may,
of course, at any time after the Equity Securities are distributed, sell
all or a portion of the shares. Unit holders not electing a distribution
of shares of Equity Securities and who do not elect the Rollover Option
will receive a cash distribution from the sale of the remaining Equity
Securities within a reasonable time after a Trust is terminated.
Regardless of the distribution involved, the Trustee will deduct from
the funds of a Trust any accrued costs, expenses, advances or
indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee and costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or
other governmental charges. Any sale of Equity Securities in a Trust
upon termination may result in a lower amount than might otherwise be
realized if such sale were not required at such time. The Trustee will
then distribute to each Unit holder his pro rata share of the balance of
the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Page 27
Experts
The statements of net assets, including the schedules of investments, of
the Trusts at the opening of business on the Initial Date of Deposit
appearing in Part I of this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing in Part I of this Prospectus and in the
Registration Statement, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and
auditing.
Supplemental Information
Upon written or telephonic request to the Trustee, investors will
receive at no cost to the investor supplemental information about this
Series, which has been filed with the Securities and Exchange Commission
and is hereby incorporated by reference. The supplemental information
includes more specific risk information concerning the Trusts.
Page 28
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Page 30
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Page 31
CONTENTS:
The First Trust Special Situations Trust Series:
What is The First Trust Special Situations Trust? 1
What are the Expenses and Charges? 2
What is the Federal Tax Status of Unit Holders? 3
Why are Investments in the Trusts Suitable for
Retirement Plans? 7
Portfolio:
What are Equity Securities? 7
The Dow Jones Industrial Average 8
What are Some Additional Considerations
for Investors? 14
Risk Factors 14
Legislation 15
Public Offering:
How is the Public Offering Price Determined? 16
How are Units Distributed? 17
What are the Sponsor's Profits? 18
Will There be a Secondary Market? 19
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 19
How are Income and Capital Distributed? 20
What Reports will Unit Holders Receive? 21
How May Units be Redeemed? 21
Special Redemption, Liquidation and
Investment in a New Trust 23
How May Units be Purchased by the Sponsor? 24
How May Equity Securities be Removed
from a Trust? 24
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 25
Who is the Trustee? 25
Limitations on Liabilities of Sponsor and Trustee 26
Who is the Evaluator? 26
Other Information:
How May the Indenture be Amended
or Terminated? 27
Legal Opinions 27
Experts 28
Supplemental Information 28
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
TARGET TRUST ADVISORY SERIES
Prospectus
Part II
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 32
First Trust (registered trademark)
TARGET ADVISORY TRUST SERIES
The First Trust Special Situations Trust Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of unit investment trusts ("Trusts")
contained in The First Trust Special Situations Trust, Target Advisory
Trust Series not found in the prospectuses for the Trusts. This
Information Supplement is not a prospectus and does not include all of
the information that a prospective investor should consider before
investing in a Trust. This Information Supplement should be read in
conjunction with the prospectus for the Trust in which an investor is
considering investing ("Prospectus"). Copies of the Prospectus can be
obtained by calling or writing the Trustee at the telephone number and
address indicated in Part II of the Prospectus. The Information
Supplement has been created to supplement information contained in the
Prospectus.
This Information Supplement is dated July 17, 1997. Capitalized terms
have been defined in the Prospectus.
Table of Contents
Risk Factors
Equity Securities 1
Concentrations
Banks and Thrifts 2
Petroleum Refining Companies 3
Portfolios
Equity Securities Selected for Target 5 Advisory Trust 4
Equity Securities Selected for Target 10 Advisory Trust 5
Risk Factors
Equity Securities. An investment in Units should be made with an
understanding of the risks which an investment in common stocks entails,
including the risk that the financial condition of the issuers of the
Equity Securities or the general condition of the relevant stock market
may worsen, and the value of the Equity Securities and therefore the
value of the Units may decline. Common stocks are especially susceptible
to general stock market movements and to volatile increases and
decreases of value, as market confidence in and perceptions of the
issuers change. These perceptions are based on unpredictable factors,
including expectations regarding government, economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global or regional political, economic or banking
crises. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Shareholders of common stocks of the type held
by the Trusts have a right to receive dividends only when and if, and in
the amounts, declared by the issuer's board of directors and have a
right to participate in amounts available for distribution by the issuer
only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy.
Cumulative preferred stock dividends must be paid before common stock
dividends, and any cumulative preferred stock dividend omitted is added
to future dividends payable to the holders of cumulative preferred
stock. Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
Page 1
Concentrations
Banks and Thrifts. Certain Trusts may be considered to be concentrated
in common stocks of financial institutions. See "Risk Factors" in Part I
of this Prospectus which will indicate, if applicable, a Trust's
concentration in this industry. 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
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.
In late 1993 the United States Treasury Department proposed a
restructuring of the banks regulatory agencies which, if implemented,
may adversely affect certain of the Equity Securities in the Trust's
portfolio. 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
Page 2
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.
Petroleum Refining Companies. Certain Trusts may be considered to be
concentrated in common stocks of companies engaged in refining and
marketing oil and related products. See "Risk Factors" in Part I of this
Prospectus which will indicate, if applicable, the Trust's concentration
in the petroleum industry. According to the U.S. Department of Commerce,
the factors which will most likely shape the industry include the price
and availability of oil from the Middle East, changes in United States
environmental policies and the continued decline in U.S. production of
crude oil. Possible effects of these factors may be increased U.S. and
world dependence on oil from the Organization of Petroleum Exporting
Countries ("OPEC") and highly uncertain and potentially more volatile
oil prices. Factors which the Sponsor believes may increase the
profitability of oil and petroleum operations include increasing demand
for oil and petroleum products as a result of the continued increases in
annual miles driven and the improvement in refinery operating margins
caused by increases in average domestic refinery utilization rates. The
existence of surplus crude oil production capacity and the willingness
to adjust production levels are the two principal requirements for
stable crude oil markets. Without excess capacity, supply disruptions in
some countries cannot be compensated for by others. Surplus capacity in
Saudi Arabia and a few other countries and the utilization of that
capacity prevented during the Persian Gulf crisis, and continues to
prevent, severe market disruption. Although unused capacity contributed
to market stability in 1990 and 1991, it ordinarily creates pressure to
overproduce and contributes to market uncertainty. The likely
Page 3
restoration of a large portion of Kuwait and Iraq's production and
export capacity over the next few years could lead to such a development
in the absence of substantial growth in world oil demand. Formerly, OPEC
members attempted to exercise control over production levels in each
country through a system of mandatory production quotas. Because of the
crisis in the Middle East, the mandatory system has since been replaced
with a voluntary system. Production under the new system has had to be
curtailed on at least one occasion as a result of weak prices, even in
the absence of supplies from Kuwait and Iraq. The pressure to deviate
from mandatory quotas, if they are reimposed, is likely to be
substantial and could lead to a weakening of prices. In the longer term,
additional capacity and production will be required to accommodate the
expected large increases in world oil demand and to compensate for
expected sharp drops in U.S. crude oil production and exports from the
Soviet Union. Only a few OPEC countries, particularly Saudi Arabia, have
the petroleum reserves that will allow the required increase in
production capacity to be attained. Given the large-scale financing that
is required, the prospect that such expansion will occur soon enough to
meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the industry
over the coming decade. Refiners are likely to be required to make heavy
capital investments and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as
the 1990 amendments to the Clean Air Act. If the cost of these changes
is substantial enough to cut deeply into profits, smaller refiners may
be forced out of the industry entirely. Moreover, lower consumer demand
due to increases in energy efficiency and conservation, gasoline
reformulations that call for less crude oil, warmer winters or a general
slowdown in economic growth in this country and abroad, could negatively
affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will
increase or that any increases will not be marked by great volatility.
Some oil companies may incur large cleanup and litigation costs relating
to oil spills and other environmental damage. Oil production and
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the
disposal of hazardous materials. Increasingly stringent environmental
laws and regulations are expected to require companies with oil
production and refining operations to devote significant financial and
managerial resources to pollution control. General problems of the oil
and petroleum products industry include the ability of a few influential
producers significantly to affect production, the concomitant volatility
of crude oil prices and increasing public and governmental concern over
air emissions, waste product disposal, fuel quality and the
environmental effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry
or the environment could have a negative impact on the petroleum
products industry. While legislation has been enacted to deregulate
certain aspects of the oil industry, no assurances can be given that new
or additional regulations will not be adopted. Each of the problems
referred to could adversely affect the financial stability of the
issuers of any petroleum industry stocks in the Trusts.
Portfolios
Equity Securities Selected for Target 5 Advisory Trust
AT&T Corporation, headquartered in New York, New York, provides
products, services and systems for the movement and management of
information. The company also provides voice, data and image
telecommunications services, including domestic and international long
distance telecommunications services. In addition, the company markets
AT&T products, systems and services in the United States and abroad.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
Exxon Corporation, headquartered in Irving, Texas, is principally
involved in the energy industry. The company explores for and produces
Page 4
crude oil and natural gas, manufactures petroleum products, explores for
and mines coal and minerals, and transports and sells crude oil, natural
gas and petroleum products.
General Motors Corporation, which is headquartered in Detroit,
Michigan, manufactures and sells cars and trucks worldwide under the
trademarks "Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn,"
"Cadillac" and "GMC Trucks."
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
Equity Securities Selected for Target 10 Advisory Trust
AT&T Corporation, headquartered in New York, New York, provides
products, services and systems for the movement and management of
information. The company also provides voice, data and image
telecommunications services, including domestic and international long
distance telecommunications services. In addition, the company markets
AT&T products, systems and services in the United States and abroad.
Chevron Corporation, headquartered in San Francisco, California, is an
international oil company with activities in the United States and
abroad. The company is involved in worldwide, integrated petroleum
operations which explore for, develop and produce petroleum liquids and
natural gas as well as transporting the products. The company is also
involved in the mineral and chemical industry.
E.I. du Pont de Nemours & Company, headquartered in Wilmington,
Delaware, explores for, develops and produces crude oil and natural gas;
makes polymers, elastomers, finishes and performance films; makes
specialty fibers and chemicals; produces agricultural products; and
makes electronic materials and medical products. The company
participates in five principal business segments-Petroleum Operations;
Polymers; Fibers; Chemicals; and Diversified Businesses.
Eastman Kodak Company, headquartered in Rochester, New York, develops,
makes and sells consumer and commercial photographic imaging products.
The company's products include films, photographic papers and chemicals,
cameras, projectors, processing equipment, audiovisual equipment,
copiers, microfilm products, applications software and printers and
other equipment.
Exxon Corporation, headquartered in Irving, Texas, is principally
involved in the energy industry. The company explores for and produces
crude oil and natural gas, manufactures petroleum products, explores for
and mines coal and minerals, and transports and sells crude oil, natural
gas and petroleum products.
General Motors Corporation, which is headquartered in Detroit, Michigan,
manufactures and sells cars and trucks worldwide under the trademarks
"Chevrolet," "Oldsmobile," "Pontiac," "Buick," "Saturn," "Cadillac" and
"GMC Trucks."
Goodyear Tire & Rubber Company, headquartered in Akron, Ohio,
manufactures tires and rubber automotive parts. The company produces new
and retread tires, inner tubes, automotive belts and hoses, molded parts
and foam cushioning. Goodyear sells its tires to automobile
manufacturers and through retail stores to the replacement market.
Minnesota Mining & Manufacturing Company, headquartered in St. Paul,
Minnesota, manufactures industrial, electronic, health, consumer and
information-imaging products for distribution worldwide. The company's
products include adhesives, abrasives, laser imagers and "Scotch" brand
products.
J.P. Morgan & Company, Inc., headquartered in New York, New York, is a
global investment banking firm that serves clients with complex needs
through an integrated range of advisory, financing, trading, investment
and related capabilities.
Philip Morris Companies, Inc., headquartered in New York, New York, is
the world's largest producer and marketer of consumer packaged goods.
Its five principal operating companies are Kraft Foods, Inc., Miller
Brewing Company, Philip Morris International Inc., Philip Morris U.S.A.
and Philip Morris Capital Corporation.
Page 5
-APPENDIX-
The graph which appears on page 11 of Part II of the Prospectus
represents a comparison between a $10,000 investment made on January 1,
1972 in those stocks which comprise the Dow Jones Industrial Average,
the Standard & Poor's 500 Composite Stock Price Index and the five
lowest priced stocks of the ten common stocks in the Dow Jones Industrial
Average having the highest dividend yield as of December 31 of each
respective year. The chart indicates that $10,000 invested on
January 1, 1972 in the stocks which comprise the Dow Jones Industrial
Average would on June 30, 1997 be worth $241,821, as opposed to
$1,390,387 had the $10,000 been invested in the five lowest priced
stocks of the ten common stocks in the Dow Jones Industrial Average
having the highest dividend yield as of December 31 of each respective
year and $221,345 had the $10,000 been invested in the Standard & Poor's
500 Composite Stock Price Index. Each figure assumes that dividends
received during each year will be reinvested at year end and sales
charges, commissions, expenses and taxes were not considered in
determining total returns.
The graph which appears on page 13 of Part II of the Prospectus
represents a comparison between a $10,000 investment made on January 1,
1972 in those stocks which comprise the Dow Jones Industrial Average,
the Standard & Poor's 500 Composite Stock Price Index and the ten common
stocks in the Dow Jones Industrial Average having the highest dividend
yield as of December 31 of each respective year. The chart indicates
that $10,000 invested on January 1, 1972 in the stocks which comprise
the Dow Jones Industrial Average would on June 30, 1997 be worth
$241,821 as opposed to $221,345 had the $10,000 been invested in the
Standard & Poor's 500 Composite Stock Price Index and $771,540 had the
$10,000 been invested in the ten common stocks in the Dow Jones
Industrial Average having the highest dividend yield as of December 31
of each respective year. Each figure assumes that dividends received
during each year will be reinvested at year end and sales charges,
commissions, expenses and taxes were not considered in determining total
returns.
MEMORANDUM
Re: The First Trust Special Situations Trust, Series 212
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 207, which is the
current fund, and The First Trust Special Situations Trust,
Series 212, the filing of which this memorandum accompanies, is
the change in the series number. The list of bonds comprising
the Fund, the evaluation, record and distribution dates and other
changes pertaining specifically to the new series, such as size
and number of Units in the Fund and the statement of condition of
the new Fund, will be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 207 Prospectus relate to the series number and size and
the date and various items of information which will be derived
from and apply specifically to the bonds deposited in the Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
212 has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
Village of Lisle and State of Illinois on August 6, 1997.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 212
(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 August 6, 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 212 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee and First Trust Advisors L.P., as Evaluator
and Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership Agreement
of Nike Securities L.P. (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporaiton, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5
