Registration No. 333-33701
1940 Act No. 811-05903
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust:
The First Trust Special Situations Trust, Series 214
B. Name of depositor:
NIKE SECURITIES L.P.
C. Complete address of depositor's principal executive offices:
1001 Warrenville Road
Lisle, Illinois 60532
D. Name and complete address of agents for service:
Copy to:
JAMES A. BOWEN ERIC F. FESS
c/o Nike Securities L.P. c/o Chapman and Cutler
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 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 Aggregate 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 public:
As soon as practicable after the effective date of the
Registration Statement.
|XXX|Check box if it is proposed that this filing will become
effective on August 18, 1997 at 2:00 p.m. pursuant to Rule
487.
________________________________
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 214
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
Form N-8B-2 Item Number Form S-6 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 depositor Information as to
Sponsor, Trustee and
Evaluator
3. Name and address of trustee Information as to
Sponsor, Trustee and
Evaluator
4. Name and address of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
5. State of organization of trust The First Trust
Special Situations
Trust
6. Execution and termination of Other Information
trust agreement
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 Public Offering
securities
(b) Cumulative or distributive The First Trust
securities Special Situations
Trust
(c) Redemption Rights of Unitholders
(d) Conversion, transfer, etc. Rights of Unitholders
(e) Periodic payment plan *
(f) Voting rights Rights of Unitholders
(g) Notice of certificateholders Other Information
(h) Consents required Rights of Unitholders;
Other Information
(i) Other provisions The First Trust
Special Situations
Trust
11. Types of securities comprising The First Trust
units Special
Situations Trust
Schedule of
Investments
12. Certain information regarding
periodic payment 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 certificates *
(c) Certain percentages Summary of Essential
Information; The
First Trust Special
Situations Trust;
Public Offering
(d) Certain other fees, etc.
payable by holders Rights of Units
Holders
(e) Certain profits receivable
by depositor, principal,
underwriters, trustee or The First Trust
affiliated persons Special
Situations Trust
(f) Ratio of annual charges *
to income
14. Issuance of trust's securities Rights of Unit Holders
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 Rights of Unit Holders
disposition of income
(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 Information as
and successor to Sponsor, Trustee
and Evaluator
(e) and (f) Depositor, removal Information as
and successor to 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 employees of
depositor 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 Public Offering
securities by states
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
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as
underwriters to Sponsor, Trustee
and Evaluator
(b) N.A.S.D. membership of
principal underwriters Information as to
Sponsor, Trustee and
Evaluator
40. Certain fees received by See Items 13(a) and
principal underwriters 13(e)
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 in Public Offering;
underlying securities Rights
of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Information as
trustee to 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 OF
SECURITIES
51. Insurance of holders of
trust's securities *
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The First Trust
agreement with respect to Special
selection or elimination of Situations Trust;
underlying securities Rights of Unit Holders
(b) Transactions involving
elimination of underlying *
securities
(c) Policy regarding substitution The First Trust
or elimination of underlying Special
securities Situations Trust;
Rights 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.
56.
57. Certain information regarding
periodic payment certificates *
58.
59. Financial statements Report of Independent
(Instruction 1(c) to Form S-6) Auditors
Statement of Net
Assets
* Inapplicable, answer negative or not required.
Part I of II
First Trust (registered trademark)
Target 5 Trust, August 1997 B Series
Target 10 Trust, August 1997 B Series
Target 5 Premier Trust, August 1997 Series
Target 10 Premier Trust, August 1997 Series
(The First Trust Special Situations Trust, Series 214)
THIS PART I OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY THE PART II OF THE PROSPECTUS DATED AUGUST 18, 1997. BOTH PARTS I AND
II OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
The Trusts. The First Trust Special Situations Trust, Series 214
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, August 1997 B Series (the "Target 5 Trust") and Target 5
Premier Trust, August 1997 Series (the "Target 5 Premier Trust")
(together, the "Target 5 Trusts") consist 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 "Domestic Stock Selection Date"). Target 10 Trust,
August 1997 B Series (the "Target 10 Trust") and Target 10 Premier
Trust, August 1997 Series (the "Target 10 Premier Trust") (together, the
"Target 10 Trusts") consist of common stock of the ten companies in the
DJIA that have the highest dividend yield as of the Domestic 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 capital appreciation and dividend income. Units
of both the Target 5 Trusts and the Target 10 Trusts 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. Target
5 Trust, August 1997 B Series and Target 10 Trust, August 1997 B Series
each have a mandatory termination date (the "Mandatory Termination
Date") of approximately 13 months from the date of this Prospectus as
set forth under "Summary of Essential Information" and may be referred
to herein as the "B Series." Target 5 Premier Trust, August 1997 Series
and Target 10 Premier Trust, August 1997 Series each have a mandatory
termination date (the "Mandatory Termination Date") of approximately 19
months from the date of this Prospectus as set forth under "Summary of
Essential Information" and may be referred to herein as the "Premier
Series." There is, of course, no guarantee that a Trust's objective will
be achieved.
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 August 18, 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 B
Series 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 Trusts, plus an initial sales charge for
each Trust equal to the difference between the maximum sales charge for
each Trust (2.75% of the Public Offering Price) and the maximum
remaining deferred sales charge (initially $.175 per Unit for each B
Series Trust). The Public Offering Price per Unit of each Premier Series
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 for such Trusts, plus an initial sales charge for
each Trust equal to the difference between the maximum sales charge for
each Trust (3.50% of the Public Offering Price) and the maximum
remaining deferred sales charge (initially $.250 per Unit for each
Premier Series Trust). Subsequent to the Initial Date of Deposit, the
amount of the initial sales charge will vary with changes in the
aggregate value of the Equity Securities. Commencing September 30, 1997,
and on the last business day of each month thereafter, through June 30,
1998, a deferred sales charge of $.0175 for each B Series Trust and
$.0250 for each Premier Series Trust will also be assessed per Unit.
Units purchased subsequent to the initial deferred sales charge payment
will be subject to the initial sales charge and the remaining deferred
sales charge payments. The deferred sales charge will be paid from funds
in the Capital Account, if sufficient, or from the periodic sale of
Equity Securities. The total maximum sales charge assessed to B Series
Unit holders on a per Unit basis will be 2.75% of the Public Offering
Price (equivalent to 2.778% of the net amount invested, exclusive of the
deferred sales charge). The total maximum sales charge assessed to
Premier Series Unit holders on a per Unit basis will be 3.50% of the
Public Offering Price (equivalent to 3.535% 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. The sales
charge for each Trust is reduced on a graduated scale for sales
involving at least $50,000. See "How is the Public Offering Price
Determined?" in Part II of this Prospectus.
Estimated Net Annual Distributions. The estimated net annual dividend
distributions to Unit holders (based on the most recent quarterly or
semi-annual ordinary dividend declared with respect to the Equity
Securities were $.2709, $.2593, $.2739 and $.2593 for the Target 5
Trust, Target 10 Trust, Target 5 Premier Trust and the Target 10
Premier 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 each December 31 and June 30 to Unit holders of record
on December 15 and June 15, respectively, and again as part of the final
liquidation distribution in the case of "Rollover Unit holders" and
others. Distributions of funds in the Capital Account, if any, will be
made to Rollover Unit holders and others 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
Page 2
minus cash, if any, in the Capital and Income Accounts of such Trust. If
a secondary market is not maintained, a Unit holder may still redeem his
Units through the Trustee. A Unit holder tendering 2,500 Units or more
of a Trust 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 series of trusts (the "New Trusts")
in conjunction with the termination of each Trust. For each B Series
Trust, the Mandatory Termination Date will be approximately 13 months
after the Initial Date of Deposit, and for each Premier Series Trust,
the Mandatory Termination Date will be approximately 19 months after the
Initial Date of Deposit. The portfolio of the New Trusts will contain
equity securities of the companies which satisfy each such Trust's
investment strategy at the time such Trust is established. Unit holders
may elect to have their proceeds reinvested into a New Trust by
notifying the Trustee of this election by the Rollover Notification
Date. Such a Unit holder's Units will be 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. See "Summary of
Essential Information" for each Trust. Investors should note that on
August 5, 1997, legislation was enacted that reduces the maximum stated
marginal tax rate for certain capital gains for investments held for
more than 18 months to 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Premier Series Rollover Unit holders would qualify
for such treatment. B Series Rollover Unit holders would be subject to a
maximum stated marginal tax rate of 28%. See "What is the Federal Tax
Status of Unit holders? in Part II of this Prospectus. This exchange
option may be modified, terminated or suspended. See "Special
Redemption, Liquidation and Investment in a New Trust" in Part II of
this Prospectus.
Termination. Commencing on the Mandatory Termination Date, the Equity
Securities will begin to be sold as prescribed by the Sponsor. The
Trustee will provide written notice of the termination to Unit holders
which will specify when certificates may be surrendered and include a
form to enable a Unit holder to elect an In-Kind Distribution, if such
Unit holder owns at least 2,500 Units of a Trust. Unit holders not
electing the "Rollover Option" or 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 (which
currently is at historically high levels), volatile interest rates and
economic recession.
An investment in the Target 5 Trust or the Target 5 Premier Trust may
subject a Unit holder to additional risk due to the relative lack of
diversity in its portfolio since each portfolio contains only five
stocks. Therefore, Units of such Trusts 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-August 18, 1997
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Target 5 Target 10
Trust Trust
August 1997 August 1997
B Series B 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) $ 148,504 $ 148,502
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.900 $ 9.900
Maximum Sales Charge 2.75% of the Public Offering Price per Unit
(2.778% of the net amount invested, exclusive of the deferred sales charge) (3) $ .275 $ .275
Less Deferred Sales Charge per Unit $ (.175) $ (.175)
Public Offering Price per Unit (3) $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.725 $ 9.725
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.725 $ 9.725
Cash CUSIP Number 337183 248 337183 263
Reinvestment CUSIP Number 337183 255 337183 271
Trustee's Annual Fee, including administrative fees,
and out-of-pocket expenses per Unit outstanding $ .0084 $ .0084
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 $ .0090
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date August 21, 1997
Rollover Notification Date August 1, 1998
Special Redemption and Liquidation Period August 15, 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 last closing sale price
on the New York Stock Exchange on the business day prior to the Initial
Date of Deposit.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" contained herein and "Public
Offering" in Part II of this Prospectus for additional information
regarding these charges. On the 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 on the business day prior to the Initial Date of
Deposit and establishes the original proportionate relationship amongst
the individual securities. No sales to investors will be executed at
this price. Additional Equity Securities will be deposited during the
day of the Initial Date of Deposit which will be valued 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.
(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 12 months from the Initial Date of
Deposit. 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
Summary of Essential Information
At the Opening of Business on the Initial Date of Deposit
of the Equity Securities-August 18, 1997
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Target 5 Target 10
Premier Premier
Trust Trust
August 1997 August 1997
General Information Series Series
___________ ___________
<S> <C> <C>
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) $ 148,504 $ 148,502
Aggregate Offering Price Evaluation of Equity Securities per Unit $ 9.900 $ 9.900
Maximum Sales Charge 3.50% of the Public Offering Price per Unit
(3.535% of the net amount invested, exclusive of the deferred sales charge) (3) $ .350 $ .350
Less Deferred Sales Charge per Unit $ (.250) $ (.250)
Public Offering Price per Unit (3) $ 10.000 $ 10.000
Sponsor's Initial Repurchase Price per Unit $ 9.650 $ 9.650
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (4) $ 9.650 $ 9.650
Cash CUSIP Number 337183 206 337183 222
Reinvestment CUSIP Number 337183 214 337183 230
Trustee's Annual Fee, including administrative fees,
and out-of-pocket expenses per Unit outstanding $ .0084 $ .0084
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) $ .0120 $ .0090
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date August 21, 1997
Rollover Notification Date February 1, 1999
Special Redemption and Liquidation Period February 15, 1999 to March 1, 1999
Mandatory Termination Date March 1, 1999
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 last closing sale price
on the New York Stock Exchange on the business day prior to the Initial
Date of Deposit.
(3) The maximum sales charge consists of an initial sales charge and a
deferred sales charge. See "Fee Table" contained herein and "Public
Offering" in Part II of this Prospectus for additional information
regarding these charges. On the 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 on the business day prior to the Initial Date of
Deposit and establishes the original proportionate relationship amongst
the individual securities. No sales to investors will be executed at
this price. Additional Equity Securities will be deposited during the
day of the Initial Date of Deposit which will be valued 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.
(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 18 months from the Initial Date of
Deposit. 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 5
FEE TABLES
These Fee Tables are intended to help you to understand the costs and
expenses that you will bear directly or indirectly. See "Public
Offering" and "What are the Expenses and Charges?" in Part II of this
Prospectus. Although the Trusts have a term of approximately 13 months
for the B Series and 19 months for the Premier Series and are unit
investment trusts rather than mutual funds, this information is
presented to permit a comparison of fees, assuming, upon the termination
of each Trust, the principal amount and distributions are rolled over
into a New Trust subject only to the deferred sales charge.
<TABLE>
<CAPTION>
TARGET 5 TRUST, AUGUST 1997 B SERIES
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 1.75%(b) .175
________ ________
2.75% $ .275
======== ========
Maximum Sales Charge imposed on Reinvested Dividends 1.75%(d) .175
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
.276% $.0275
Other operating expenses .009% .0009
________ ________
Total .285% $.0284
======== ========
</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, August 1997 B Series
estimated operating expense ratio of .285% and a 5% annual
return on the investment throughout the periods $ 30 $ 72 $117 $241
</TABLE>
<TABLE>
<CAPTION>
TARGET 10 TRUST, AUGUST 1997 B SERIES
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 1.75%(b) .175
________ ________
2.75% $ .275
======== ========
Maximum Sales Charge imposed on Reinvested Dividends 1.75%(d) .175
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
.216% $.0215
Other operating expenses .009% .0009
________ ________
Total .225% $.0224
======== ========
</TABLE>
Page 6
<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, August 1997 B Series
estimated operating expense ratio of .225% and a 5% annual
return on the investment throughout the periods $ 30 $ 71 $114 $235
</TABLE>
<TABLE>
<CAPTION>
TARGET 5 PREMIER TRUST, AUGUST 1997 SERIES
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 2.50%(c) .250
________ ________
3.50% $ .350
======== ========
Maximum Sales Charge imposed on Reinvested Dividends 2.50%(d) .250
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
.248% $.0245
Other operating expenses .009% .0009
________ ________
Total .257% $.0254
======== ========
</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 Premier Trust, August 1997
Series estimated operating expense ratio of .257% and a 5%
annual return on the investment throughout the periods $ 38 $ 69 $110 $230
</TABLE>
<TABLE>
<CAPTION>
TARGET 10 PREMIER TRUST, AUGUST 1997 SERIES
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 1.00%(a) $ .100
Deferred sales charge
(as a percentage of public offering price) 2.50%(c) .250
________ ________
3.50% $ .350
======== ========
Maximum Sales Charge imposed on Reinvested Dividends 2.50%(d) .250
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
.215% $.0215
Other operating expenses .009% .0009
________ ________
Total .224% $.0224
======== ========
</TABLE>
Page 7
<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 Premier Trust, August 1997
Series estimated operating expense ratio of .224% and a 5%
annual return on the investment throughout the periods $ 37 $ 68 $108 $226
</TABLE>
The above examples assume 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) The Initial Sales Charge would exceed 1.00% if the Public Offering
Price exceeds $10.00 per Unit.
(b) The actual fee is $.0175 per month per Unit, irrespective of purchase
or redemption price deducted over a ten-month period for each B Series
Trust. If the Unit price exceeds $10.00 per Unit, the deferred sales
charge will be less than 1.75% for the Trust. If the Unit price is less
than $10.00 per Unit, the deferred sales charge will exceed 1.75% for
the Trust. Units purchased subsequent to the initial deferred sales
charge payment will be subject to the Initial Sales Charge and to the
remaining deferred sales charge payments.
(c) The actual fee is $.0250 per month per Unit, irrespective of purchase
or redemption price deducted over a ten- month period for each Premier
Series Trust. If the Unit price exceeds $10.00 per Unit, the deferred
sales charge will be less than 2.50% for the Trust. If the Unit price is
less than $10.00 per Unit, the deferred sales charge will exceed 2.50%
for the Trust. Units purchased subsequent to the initial deferred sales
charge payment will be subject to the Initial Sales Charge and to the
remaining deferred sales charge payments.
(d) 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.
HYPOTHETICAL PERFORMANCE INFORMATION
The following tables and charts show hypothetical performance and
information for the strategies employed by each Trust and the actual
performance of the DJIA. 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 in certain years.
Accordingly, there can be no assurance that a Trust's Portfolio will
outperform the DJIA 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, among others: the Total
Return figures shown do not reflect sales charges, commissions, Trust
expenses or taxes; the Trusts' maturities vary slightly from those
presented in compiling the Total Returns; 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.
Annualized Performance Information
The following table, which has been designed for use by investors
investing in B Series Trusts, compares the hypothetical performance of
the Ten Highest Dividend Yielding Stocks Strategy for the DJIA, the Five
Lowest Priced Stocks of the Ten Highest Dividend Yielding Stocks
Strategy for the DJIA and the DJIA in each of the 30 years listed below,
as of July 31 in each of those years. The table shows the actual
performance of the DJIA from August 1 through the following July 31 of
the common stocks which comprise the DJIA and assumes that each strategy
is applied on August 1 of a year and held for a period of one year at
which time the strategy is reapplied.
Page 8
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN(2)
Hypothetical Strategy Total Returns Index Total Returns
___________________________________ ___________________
5 Lowest Priced of the 10
Highest Dividend Yielding 10 Highest Dividend
Stocks(1) Yielding Stocks(1)
_________________________ ___________________
Year ending
7/31 Target 5 Strategy Target 10 Strategy DJIA
___________ _________________ ___________________ _______
<S> <C> <C> <C>
1968 - 2.76% 1.86% -0.81%
1969 - 0.56% -1.94% -4.35%
1970 -14.81% -12.78% -6.05%
1971 19.28% 17.01% 21.23%
1972 19.81% 11.66% 11.42%
1973 3.16% 9.08% 3.62%
1974 -7.86% -7.99% -14.47%
1975 47.21% 35.89% 15.44%
1976 29.93% 27.97% 23.13%
1977 10.69% 13.94% -5.29%
1978 -1.08% -0.15% 2.57%
1979 10.90% 12.15% 4.09%
1980 12.96% 10.69% 17.16%
1981 -1.60% 9.07% 7.90%
1982 -10.32% -9.84% -9.39%
1983 61.14% 54.61% 55.58%
1984 4.13% 4.37% -2.31%
1985 36.98% 31.23% 26.59%
1986 25.63% 28.70% 37.08%
1987 87.35% 69.34% 49.25%
1988 -19.83% -14.31% -14.22%
1989 26.45% 23.39% 29.80%
1990 0.58% 8.69% 13.36%
1991 18.98% 12.24% 7.75%
1992 17.83% 10.96% 15.52%
1993 26.05% 14.80% 7.40%
1994 22.62% 15.08% 9.15%
1995 36.68% 28.90% 28.41%
1996 29.43% 29.43% 19.90%
1997 28.99% 39.07% 51.45%
</TABLE>
[FN]
______________
(1) The Ten Highest Dividend Yielding Stocks and the Five Lowest Priced
Stocks of the Ten Highest Dividend Yielding Stocks in the DJIA,
respectively, 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, and dividing by that stock's market value on the first trading
day on the exchange where that stock principally trades in the given
period.
(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first trading day of a period
and the total dividends paid on each group of stocks during the period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return does not take into
consideration any sales charges, commissions, expenses or taxes. Total
Return takes into consideration semi-annual reinvestment of dividend
income. Based on the year-by-year returns contained in the table, over
the 30 years listed above, the Ten Highest Dividend Yielding Stocks in
the DJIA achieved an average annual total return of 14.35%, and the Five
Lowest Priced Stocks of the Ten Highest Dividend Yielding Stocks in the
DJIA achieved an average annual total return of 15.25%. Over this
period, each individual strategy achieved a greater average annual total
return than that of the DJIA, which was 11.97%. Although each Trust
seeks to achieve a better performance than the DJIA as a whole, there
can be no assurance that a Trust will achieve a better performance over
its life or over consecutive rollover periods, if available.
Page 9
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the Ten Highest
Dividend Yielding DJIA Stocks (the "Target 10 Strategy") and the Five
Lowest Priced Stocks of the Ten Highest Dividend Yielding DJIA Stocks
(the "Target 5 Strategy") (but not the Target 10 Trust or the Target 5
Trust) from August 1, 1967 through July 31, 1997 and should not be
considered indicative of future results. The chart assumes that each
strategy is applied on August 1 of a given period and reapplied on the
following August 1 and also shows the performance of the DJIA from August 1
through July 31 of each period.
Page 10
The following table, which has been designed for use by investors investing
in Premier Series Trusts, compares the hypothetical performance of the Ten
Highest Dividend Yielding Stocks Strategy for the DJIA (the "Target 10
Premier Strategy"), the Five Lowest Priced Stocks of the Ten Highest Dividend
Yielding Stocks Strategy for the DJIA (the "Target 5 Premier Strategy") and
the DJIA over the 30-year period listed below. The table shows performance,
in 18-month increments, of the DJIA and each strategy and assumes that each
strategy was originally applied on August 1, 1967 and reapplied every 18
months.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN(2)
Hypothetical Strategy Total Returns Index Total Returns
___________________________________ ___________________
5 Lowest Priced of the 10
Highest Dividend Yielding 10 Highest Dividend
Stocks(1) Yielding Stocks(1)
_________________________ ___________________
18-month period Target 5 Target 10
ending Premier Strategy Premier Strategy DJIA
_______ ________________ ________________ ____
<S> <C> <C> <C>
1/31/69 12.74% 17.17% 7.92%
7/31/70 -18.34% -19.53% -17.41%
1/31/72 36.95% 31.11% 29.61%
7/31/73 -1.78% 6.55% 7.99%
1/31/75 -0.65% 7.40% -18.25%
7/31/76 74.64% 55.61% 48.72%
1/31/78 -0.23% 4.29% -15.49%
7/31/79 23.60% 21.22% 19.65%
1/31/81 19.42% 16.60% 22.14%
7/31/82 6.07% 4.46% -6.22%
1/31/84 79.89% 73.74% 62.10%
7/31/85 27.31% 11.88% 18.69%
1/31/87 62.75% 62.11% 69.30%
7/31/88 14.77% 9.50% 3.66%
1/31/90 16.49% 24.27% 28.91%
7/31/91 13.21% 15.69% 22.99%
1/31/93 23.14% 11.78% 14.43%
7/31/94 32.47% 24.56% 18.35%
1/31/96 61.09% 53.11% 48.60%
7/31/97 60.39% 61.27% 56.92%
</TABLE>
[FN]
_____________
(1) The Ten Highest Dividend Yielding Stocks and the Five Lowest Priced
Stocks of the Ten Highest Dividend Yielding Stocks in the DJIA,
respectively, 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, and dividing by that stock's market value on the first trading
day on the exchange where that stock principally trades in the given
period.
(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first trading day of a period
and the total dividends paid on each group of stocks during the period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return does not take into
consideration any sales charges, commissions, expenses or taxes. Total
Return takes into consideration semi-annual reinvestment of dividend
income. Based on the consecutive 18-month returns contained in the
table, over the 30 years listed above, the Ten Highest Dividend Yielding
Stocks in the DJIA achieved an average annual total return of 14.48%,
and the Five Lowest Priced Stocks of the Ten Highest Dividend Yielding
Stocks in the DJIA achieved an average annual total return of 15.72%.
Over this period, each individual strategy achieved a greater average
annual total return than that of the DJIA, which was 11.97%. Although
each Trust seeks to achieve a better performance than its respective
index as a whole, there can be no assurance that a Trust will achieve a
better performance over its life or over consecutive rollover periods,
if available.
Page 11
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the Target 10
Premier Strategy and the Target 5 Premier Strategy (but not the Premier
Series of the Target 10 Trust or the Premier Series of the Target 5
Trust) from August 1, 1967 through July 31, 1997 and should not be
considered indicative of future results. The chart assumes that each
strategy was originally applied on August 1, 1967 and the securities
selected held for a period of 18 months at which point the strategy was
reapplied each 18 months. The chart also shows the performance of the DJIA
over each respective period. Further, these results are hypothetical. The
chart assumes that all dividends during a year are reinvested semi-
annually and does not reflect sales charges, commissions, expenses or
taxes. There can be no assurance that either the Premier Series of the
Target 10 Trust or the Premier Series of the Target 5 Trust will
outperform the DJIA over the life of the Trusts or over consecutive
rollover periods, if available.
Page 12
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 214
We have audited the accompanying statements of net assets, including the
schedules of investments, of The First Trust Special Situations Trust,
Series 214, comprised of the Target 5 Trust, August 1997 B Series;
Target 10 Trust, August 1997 B Series; Target 5 Premier Trust, August
1997 Series and Target 10 Premier Trust, August 1997 Series as of the
opening of business on August 18, 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
August 18, 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 214, comprised of the Target 5
Trust, August 1997 B Series; Target 10 Trust, August 1997 B Series;
Target 5 Premier Trust, August 1997 Series and Target 10 Premier Trust,
August 1997 Series at the opening of business on August 18, 1997 in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
August 18, 1997
Page 13
Statements of Net Assets
The First Trust Special Situations Trust, Series 214
At the Opening of Business on the Initial Date of Deposit
August 18, 1997
<TABLE>
<CAPTION>
Target 5 Trust Target 10 Trust
August 1997 August 1997
B Series B Series
_____________ _______________
<S> <C> <C>
NET ASSETS
Investment in Equity Securities represented by
purchase contracts (1) (2) $ 148,504 $ 148,502
Organizational and offering costs (3) 37,500 22,500
_________ _________
186,004 171,002
Less accrued organizational and offering costs (3) (37,500) (22,500)
Less liability for deferred sales charge (4) (2,625) (2,625)
_________ ________
Net assets $ 145,879 $ 145,877
========= =========
Units outstanding 15,000 15,000
ANALYSIS OF NET ASSETS
Cost to investors (5) $ 150,004 $ 150,002
Less sales charge (5) (4,125) (4,125)
_________ _________
Net assets $ 145,879 $ 145,877
========= =========
</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 totaling $200,000 each for the
Target 5 Trust and the Target 10 Trust, issued by The Chase Manhattan
Bank, have been deposited with the Trustee as collateral, covering the
monies necessary for the purchase of the Equity Securities pursuant to
purchase contracts for such Equity Securities.
(3) Each Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed 12 months from the Initial Date of Deposit. The estimated
organizational and offering costs are based on 2,500,000 Units each of
the Target 5 Trust and Target 10 Trust expected to be issued. To the
extent the number of Units issued is larger or smaller, the estimate
will vary.
(4) Represents the amount of mandatory distributions from a Trust ($.175
per Unit), payable to the Sponsor in ten equal monthly installments
beginning on September 30, 1997 and on the last business day of each
month thereafter through June 30, 1998. If Units are redeemed prior to
June 30, 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 2.75% of the Public Offering Price
(equivalent to 2.778% of the net amount invested, exclusive of the
deferred sales charge), assuming no reduction of sales charge for
quantity purchases or for Rollover Unit holders of prior series of each
Trust, if any.
Page 14
Statements of Net Assets
The First Trust Special Situations Trust, Series 214
At the Opening of Business on the Initial Date of Deposit
August 18, 1997
<TABLE>
<CAPTION>
Target 5 Premier Target 10 Premier
Trust August Trust August
1997 Series 1997 Series
________________ _________________
<S> <C> <C>
NET ASSETS
Investment in Equity Securities represented by
purchase contracts (1) (2) $ 148,504 $ 148,502
Organizational and offering costs (3) 45,000 33,750
_________ _________
193,504 182,252
Less accrued organizational and offering costs (3) (45,000) (33,750)
Less liability for deferred sales charge (4) (3,750) (3,750)
________ _________
Net assets $ 144,754 $ 144,752
======== =========
Units outstanding 15,000 15,000
ANALYSIS OF NET ASSETS
Cost to investors (5) $ 150,004 $ 150,002
Less sales charge (5) (5,250) (5,250)
_________ _________
Net assets $ 144,754 $ 144,752
========= =========
</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 totaling $200,000 each for the
Target 5 Premier Trust and the Target 10 Premier Trust, issued by The
Chase Manhattan Bank, have been deposited with the Trustee as
collateral, covering the monies necessary for the purchase of the Equity
Securities pursuant to purchase contracts for such Equity Securities.
(3) Each Trust will bear all or a portion of its estimated organizational
and offering costs which will be deferred and charged off over a period
not to exceed 18 months from the Initial Date of Deposit. The estimated
organizational and offering costs are based on 2,500,000 Units each of
the Target 5 Premier Trust and Target 10 Premier Trust expected to be
issued. To the extent the number of Units issued is larger or smaller,
the estimate will vary.
(4) Represents the amount of mandatory distributions from a Trust ($.250
per Unit), payable to the Sponsor in ten equal monthly installments
beginning on September 30, 1997 and on the last business day of each
month thereafter through June 30, 1998. If Units are redeemed prior to
June 30, 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 3.50% of the Public Offering Price
(equivalent to 3.535% of the net amount invested, exclusive of the
deferred sales charge), assuming no reduction of sales charge for
quantity purchases or for Rollover Unit holders of prior series of each
Trust, if any.
Page 15
Schedule of Investments
TARGET 5 TRUST, AUGUST 1997 B SERIES
The First Trust Special Situations Trust, Series 214
At the Opening of Business on the Initial Date of Deposit
August 18, 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>
763 T AT&T Corporation 20% $38.938 $ 29,710 3.39%
480 DD E.I. du Pont de Nemours & Company 20% 61.688 29,610 2.04%
503 XON Exxon Corporation 20% 59.000 29,677 2.78%
498 GM General Motors Corporation 20% 59.688 29,725 3.35%
660 MO Philip Morris Companies, Inc. 20% 45.125 29,782 3.55%
_______ _________
Total Investments 100% $148,504
======= =========
</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 August 18, 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 August 15, 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 $148,504. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,988 and $484, 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 16
Schedule of Investments
TARGET 10 TRUST, AUGUST 1997 B SERIES
The First Trust Special Situations Trust, Series 214
At the Opening of Business on the Initial Date of Deposit
August 18, 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>
381 T AT&T Corporation 10% $ 38.938 $ 14,836 3.39%
192 CHV Chevron Corporation 10% 77.188 14,820 3.01%
241 DD E.I. du Pont de Nemours & Company 10% 61.688 14,867 2.04%
235 EK Eastman Kodak Company 10% 63.250 14,864 2.78%
252 XON Exxon Corporation 10% 59.000 14,868 2.78%
249 GM General Motors Corporation 10% 59.688 14,862 3.35%
165 MRK Merck & Company, Inc. 10% 90.813 14,984 1.98%
163 MMM Minnesota Mining & Manufacturing
Company 10% 91.000 14,833 2.33%
136 JPM J.P. Morgan & Company, Inc. 10% 108.250 14,722 3.25%
329 MO Philip Morris Companies, Inc. 10% 45.125 14,846 3.55%
_______ ________
Total Investments 100% $148,502
======= ========
</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 August 18, 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 August 15, 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 $148,502. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,782 and $280, respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
on that Equity Security and dividing the result by that Equity
Security's closing sale price on the business day prior to the Initial
Date of Deposit.
Page 17
Schedule of Investments
TARGET 5 PREMIER TRUST, AUGUST 1997 SERIES
The First Trust Special Situations Trust, Series 214
At the Opening of Business on the Initial Date of Deposit
August 18, 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>
763 T AT&T Corporation 20% $38.938 $ 29,710 3.39%
480 DD E.I. du Pont de Nemours & Company 20% 61.688 29,610 2.04%
503 XON Exxon Corporation 20% 59.000 29,677 2.78%
498 GM General Motors Corporation 20% 59.688 29,725 3.35%
660 MO Philip Morris Companies, Inc. 20% 45.125 29,782 3.55%
_______ _________
Total Investments 100% $148,504
======= =========
</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 August 18, 1997. The Trust has a mandatory termination date
of March 1, 1999.
(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 August 15, 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 $148,504. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,988 and $484, respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared
on that Equity Security and dividing the result by that Equity
Security's closing sale price on the business day prior to the Initial
Date of Deposit.
Page 18
Schedule of Investments
TARGET 10 PREMIER TRUST, AUGUST 1997 SERIES
The First Trust Special Situations Trust, Series 214
At the Opening of Business on the Initial Date of Deposit
August 18, 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>
381 T AT&T Corporation 10% $ 38.938 $ 14,836 3.39%
192 CHV Chevron Corporation 10% 77.188 14,820 3.01%
241 DD E.I. du Pont de Nemours & Company 10% 61.688 14,867 2.04%
235 EK Eastman Kodak Company 10% 63.250 14,864 2.78%
252 XON Exxon Corporation 10% 59.000 14,868 2.78%
249 GM General Motors Corporation 10% 59.688 14,862 3.35%
165 MRK Merck & Company, Inc. 10% 90.813 14,984 1.98%
163 MMM Minnesota Mining & Manufacturing
Company 10% 91.000 14,833 2.33%
136 JPM J.P. Morgan & Company, Inc. 10% 108.250 14,722 3.25%
329 MO Philip Morris Companies, Inc. 10% 45.125 14,846 3.55%
_______ ________
Total Investments 100% $148,502
======= ========
</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 August 18, 1997. The Trust has a mandatory termination date
of March 1, 1999.
(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 August 15, 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 $148,502. Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $148,782 and $280, 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 19
FIRST TRUST (registered trademark)
TARGET 5 TRUST, AUGUST 1997 B SERIES
TARGET 10 TRUST, AUGUST 1997 B SERIES
TARGET 5 PREMIER TRUST, AUGUST 1997 SERIES
TARGET 10 PREMIER TRUST, AUGUST 1997 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
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.
August 18, 1997
THIS PART ONE MUST BE
ACCOMPANIED BY PART TWO.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 20
Part II of II
First Trust (registered trademark)
TARGET TRUST SERIES
The First Trust Special Situations Trust Series
Prospectus Part II
Dated August 18, 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 Trust," "Target
10 Trust," "Target 25 Trust," "International Target 5 Trusts-United
Kingdom Trust," "International Target 5 Trusts-Hong Kong Trust," "Global
Target 15 Trust" and "Global Target 30 Trust" and may sometimes be
referred to individually as a "Trust" and collectively as the "Trusts."
Unless a Trust set forth in Part I contains the word "Premier" in its
title the Trust will have a maturity of approximately 13 months from the
date of Part I of this Prospectus. Trusts which contain the word
"Premier" in their title will have a maturity of approximately 19 months
from the date of Part I of this Prospectus and may be referred to herein
as the "Premier Series" of the Trusts. The Target 5 Trust, Target 10
Trust and the Target 25 Trust may sometimes be referred to individually
as a "Domestic Trust" and collectively as the "Domestic Trusts" while
the International Target 5 Trusts-Hong Kong Trust, International Target
5 Trusts-United Kingdom Trust, Global Target 15 Trust and Global Target
30 Trust may sometimes be referred to individually as an "International
Trust" and collectively as the "International Trusts." Each Trust was
created under the laws of the State of New York pursuant to a Trust
Agreement (the "Indenture"), dated the Initial Date of Deposit, with
Nike Securities L.P., as Sponsor, The Chase Manhattan Bank, as Trustee
and First Trust Advisors L.P., as Portfolio Supervisor and Evaluator.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
confirmations of contracts for the purchase of common stocks issued by
companies which provide income and are considered to have the potential
for capital appreciation (the "Equity Securities"), together with an
irrevocable letter or letters of credit of a financial institution in an
amount at least equal to the purchase price of such Equity Securities.
In exchange for the deposit of securities or contracts to purchase
securities in a Trust, the Trustee delivered to the Sponsor documents
evidencing the entire ownership of such Trust.
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
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 proportionate relationship on the
subsequent date of deposit, since the two may differ due to the sale,
redemption or liquidation of any of the Equity Securities deposited in a
Trust on the Initial, or any subsequent, Date of Deposit. See "How May
Equity Securities be Removed from a Trust?" 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, 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, including administrative fees, as
indicated in the "Summary of Essential Information" in Part I. The fee
is computed per Unit in such
Page 2
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
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.
The following additional charges are or may be incurred by a Trust: all
legal expenses of the Trustee incurred by or in connection with its
responsibilities under the Indenture; the expenses and costs of any
action undertaken by the Trustee to protect a Trust and the rights and
interests of the Unit holders; fees of the Trustee for any extraordinary
services performed under the Indenture; indemnification of the Trustee
for any loss, liability or expense incurred by it without negligence,
bad faith or willful misconduct on its part, arising out of or in
connection with its acceptance or administration of a Trust;
indemnification of the Sponsor for any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct in
acting as Depositor of a Trust; foreign custodial and transaction fees,
if any, in the case of the International Trusts; all taxes and other
government charges imposed upon the Equity Securities or any part of a
Trust (no such taxes or charges are being levied or made or, to the
knowledge of the Sponsor, contemplated). The above expenses and the
Trustee's annual fee, when paid or owing to the Trustee, are secured by
a lien on a Trust. In addition, the Trustee is empowered to sell Equity
Securities in a Trust in order to make funds available to pay all these
amounts if funds are not otherwise available in the Income and Capital
Accounts of a Trust. Since the Equity Securities are all common stocks
and the income stream produced by dividend payments is unpredictable,
the Sponsor cannot provide any assurance that dividends will be
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. Trusts
which contain FT Index stocks will report as gross income earned by U.S.
Unit holders their pro rata share of dividends received by such Trust as
well as their pro rata share of the associated Tax Credit Amount (as
defined in "United Kingdom Taxation" below), notwithstanding that it is
not certain that U.S. Unit holders will receive any refund of U.K. taxes.
The Sponsor has been advised by the Trustee that a U.S. Unit holder may
not be able to obtain directly any Treaty Payments (as described in
Page 3
"United Kingdom Taxation" below) to which he or she is entitled under
the U.S.-U.K. Treaty, but that the U.K. Inland Revenue has approved a
special procedure whereby the trustees of funds such as the United
Kingdom Trust, Global Target 15 Trust and Global Target 30 Trust may be
entitled to claim Treaty Payments on behalf of U.S. investors. To the
extent the Trustee obtains Treaty Payments, U.S. Unit holders will
report as gross income earned their pro rata portion of dividends
received by such Trusts as well as the amount of the associated tax
credit. Because, under the grantor trust rules, an investor is deemed to
have paid directly his share of foreign tax credits that have been paid
or accrued, if any, an investor may be entitled to a foreign tax credit
or deduction for United States tax purposes with respect to such taxes.
Investors should consult their tax advisers with respect to foreign
withholding taxes and foreign tax credits. In addition, IRAs and other
plans addressed below under "Why are Investments in the Trusts Suitable
for Retirement Plans?" should note that they are not eligible to claim
any Treaty Payment (as defined below under United Kingdom Taxation). 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. A Unit holder will be considered to have received all of the
dividends paid on his or her pro rata portion of each Equity Security
when such dividends are received by a Trust regardless of whether such
dividends are used to pay a portion of the deferred sales charge. Unit
holders will be taxed in this manner regardless of whether distributions
from a Trust are actually received by the Unit holder or are
automatically reinvested. See "How are Income and Capital Distributed?-
Distribution Reinvestment Option."
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 nearest 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, the holding period for such
capital gain will be determined by the period of time a Unit holder has
held his or her Units.
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). 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). Unit
holders should consult their tax advisers regarding the recognition of
gains and losses for Federal income tax purposes. In particular, a
Rollover Unit holder should be aware that a Rollover Unit holder's loss,
if any, incurred in connection with the exchange of Units for Units in
Page 4
the next new series of a Trust (the "New Trusts"), (the Sponsor intends
to create a separate New Trust approximately 13 months after each
Trust's Initial Date of Deposit and also 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 for the Trust is deferred. It is possible that for
federal income tax purposes, a portion of the deferred sales charge may
be treated as interest which would be deductible by a Unit holder
subject to limitations on the deduction of investment interest. In such
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 246A of the Code which would result in a
small reduction of the dividends-received deduction. In any case, the
income (or proceeds from redemption) a Unit holder must take into
account for federal income tax purposes is not reduced by amounts
deducted to pay the deferred sales charge. Unit holders should consult
their own tax advisers as to the income tax consequences of the deferred
sales charge.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with respect
to such Unit holder's pro rata portion of dividends received by a Trust
(to the extent such dividends are taxable as ordinary income, as
discussed above, and are attributable to domestic corporations) in the
same manner as if such corporation directly owned the Equity Securities
paying such dividends (other than corporate Unit holders, such as "S"
corporations which are not eligible for the deduction because of their
special characteristics and other than for purposes of special taxes
such as the accumulated earnings tax and the personal holding
corporation tax). However, a corporation owning Units should be aware
that Sections 246 and 246A of the Code impose additional limitations on
the eligibility of dividends for the 70% dividends received deduction.
These limitations include a requirement that stock (and therefore Units)
must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been issued which address
special rules that must be considered in determining whether the 46-day
holding period requirement is met. Moreover, the allowable percentage of
the deduction will be reduced from 70% if a corporate Unit holder owns
certain stock (or Units) the financing of which is directly attributable
to indebtedness incurred by such corporation. It should be noted that
various legislative proposals that would affect the dividends received
deduction have been introduced. Unit holders should consult with their
tax advisers with respect to the limitations on and possible
modifications to the dividends received deduction.
To the extent dividends received by a Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of
such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unit Holders. Each
Unit holder's pro rata share of each expense paid by 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
Page 5
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 gain over net short-
term capital loss for the taxable year) are subject to a maximum
marginal stated tax rate of either 28% or 20%, depending upon the
holding period of the capital assets. In particular, net capital gain,
excluding net gain from property held more than one year but not more
than 18 months and gain on certain other assets, is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in
the lowest tax bracket). Net capital gain that is not taxed at the
maximum marginal stated tax rate of 20% (or 10%) as described in the
preceding sentence, is generally subject to a maximum marginal stated
tax rate of 28%. The date on which a Unit is acquired (i.e., the "trade
date") is excluded for purposes of determining the holding period of the
Unit. 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.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "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. The Taxpayer Relief Act of
1997 (the "1997 Tax Act") includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss)
and for purposes of determining the holding period. 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 Domestic Trust may request an In-Kind
Distribution upon the redemption of Units or the termination of such
Trust. The Unit holder requesting an In-Kind Distribution will be liable
for expenses related thereto (the "Distribution Expenses") and the
amount of such In-Kind Distribution will be reduced by the amount of the
Distribution Expenses. See "Rights of Unit Holders-How are Income and
Capital Distributed?" As previously discussed, prior to the redemption
of Units or the termination of a Trust, a Unit holder is considered as
owning a pro rata portion of each of such Trust's assets for Federal
income tax purposes. The receipt of an In-Kind Distribution 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 with respect to each Equity Security owned by a Trust will
depend on whether or not a Unit holder receives cash in addition to
Equity Securities. An "Equity Security" for this purpose is a particular
class of stock issued by a particular corporation. A Unit holder will
not recognize gain or loss if a Unit holder only receives Equity
Securities in exchange for his or her pro rata portion in the Equity
Securities held by a Trust. However, if a Unit holder also receives cash
in exchange for a fractional share of an Equity Security held by a
Domestic Trust, such Unit holder will generally recognize gain or loss
based upon the difference between the amount of cash received by the
Unit holder and his or her tax basis in such fractional share of an
Equity Security held by such Trust.
Because a Domestic Trust will own many Equity Securities, a Unit holder
who requests an In-Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by such Domestic
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
Page 6
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.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unit holders and derived from dividends of foreign corporations will not
be subject to U.S. withholding tax provided that less than 25 percent of
the gross income of the foreign corporation for a three-year period
ending with the close of its taxable year preceding payment was not
effectively connected to the conduct of a trade or business within the
United States. In addition, such earnings may be exempt from U.S.
withholding pursuant to a specific treaty between the United States and
a foreign country. Non-U.S. Unit holders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions
from the Trusts.
It should be noted that payments to the Trusts of dividends on Equity
Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes and Unit holders should consult their tax
advisers regarding the potential tax consequences relating to the
payment of any such withholding taxes by the Trusts. Any dividends
withheld as a result thereof will nevertheless be treated as income to
the Unit holders. Because, under the grantor trust rules, an investor is
deemed to have paid directly his share of foreign taxes that have been
paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States purposes with respect to such
taxes. The 1997 Tax Act imposes a required holding period for such
credits. Investors should consult their tax advisers with respect to
foreign withholding taxes and foreign tax credits.
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.
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?"
Page 7
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.
UNITED KINGDOM TAXATION
Tax Consequences of Ownership of Ordinary Shares. In the opinion of
Linklaters & Paines, United Kingdom special counsel to the Sponsor,
based on the terms of the United Kingdom Trust, Global Target 15 Trust
and Global Target 30 Trust as described herein and on certain
representations made by special U.S. counsel to the Sponsor, the
following summary accurately describes the U.K. tax consequences to
certain U.S. Unit holders who beneficially hold Units in the United
Kingdom Trust, Global Target 15 Trust or Global Target 30 Trust as
capital assets. This summary is based upon current U.S. law, U.K.
taxation law and Inland Revenue practice in the U.K., the U.S./U.K.
convention relating to income and capital gains (the "Treaty") and the
U.S./U.K. convention relating to estate and gift taxes (the "Estate Tax
Treaty"). The summary is a general guide only and is subject to any
changes in U.K. or U.S. law or the practice relating thereto, and in the
Treaty or Estate Tax Treaty occurring after the date of this Prospectus
which may affect (including possibly on a retroactive basis) the tax
consequences described herein. Accordingly, Unit holders should consult
their own tax advisers as to the U.K. tax consequences applicable to
their particular circumstances of ownership of the Units in the United
Kingdom Trust, Global Target 15 Trust or Global Target 30 Trust.
Taxation of Dividends. Where a U.K. resident individual receives a
dividend from a U.K. company (other than a foreign income dividend (see
below)), such individual is generally entitled to a tax credit, which
may be offset against such individual's U.K. taxes or, in certain
circumstances, repaid. Under the Treaty, a U.S. Unit holder who is
resident in the U.S. for the purposes of the Treaty may, in appropriate
circumstances, be entitled to a repayment of that tax credit, but any
such repayment is subject to U.K. withholding tax at the rate of 15% of
the sum of the dividend and the credit. The tax credit, before such
withholding, is equal to one quarter of the dividend (the "Tax Credit
Amount"). Although such a U.S. Unit holder who held shares directly in a
company resident in the U.K. for the purposes of the Treaty could
generally claim a refund of a portion of the Tax Credit Amount
attributable to the dividend (a "Treaty Payment") pursuant to the terms
of the Treaty, the ability of such a U.S. Unit holder who holds Units in
the United Kingdom Trust, Global Target 15 Trust or Global Target 30
Trust to claim such a Treaty Payment relating to the dividends received
on the Equity Securities listed in the FT Index is unclear where
dividend payments are made directly to an entity such as the United
Kingdom Trust, Global Target 15 Trust or Global Target 30 Trust. Any
claim for such a Treaty Payment would have to be supported by evidence
of such U.S. Unit holder's entitlement to the relevant dividend. There
is no established procedure for proving such entitlement where the U.K.
company pays the dividend to an entity such as the United Kingdom Trust,
Global Target 15 Trust or Global Target 30 Trust unless a specific
procedure is negotiated in advance with the U.K. Inland Revenue (see
"What is the Federal Tax Status of Unit Holders?"). In the absence of
agreeing to such a special procedure, U.S. Unit holders should note that
they may not in practice be able to claim a Treaty Payment relating to
the dividends received on the Equity Securities listed in the FT Index
held in the United Kingdom Trust, Global Target 15 Trust or Global
Target 30 Trust from the U.K. Inland Revenue.
A U.K. company may elect to pay a dividend as a foreign income dividend
rather than as an ordinary dividend. If a company, the shares of which
are held in the United Kingdom Trust, Global Target 15 Trust or Global
Target 30 Trust, pays a foreign income dividend, no tax credit will be
attributable to such dividend. Accordingly, a U.S. Unit holder would not
Page 8
be entitled to any repayment of a tax credit under the Treaty.
Taxation of Capital Gains. U.S. Unit holders who are not resident nor
ordinarily resident for tax purposes in the U.K. will not be liable for
U.K. tax on capital gains realized on the disposal of their Units unless
such Units are used, held or acquired for the purposes of a trade,
profession or vocation carried on in the U.K. through a branch or agency
or for use by such branch or agency.
U.K. Inheritance Tax. An individual Unit holder who is domiciled in the
U.S. for the purposes of the Estate Tax Treaty and who is not a national
of the U.K. for the purposes of the Estate Tax Treaty will generally not
be subject to U.K. inheritance tax in respect of Units in the United
Kingdom Trust, Global Target 15 Trust or Global Target 30 Trust on the
individual's death or on a gift or other non-arm's length transfer of
such Units during the individual's lifetime provided that any applicable
U.S. federal gift or estate tax liability is paid, unless the Units are
part of the business property of a permanent establishment of the
individual in the U.K. or pertain to a fixed base in the U.K. used by
the individual for the performance of independent personal services.
Where the Units have been placed in trust by a settlor, the Units will
generally not be subject to U.K. inheritance tax if the settlor, at the
time of settlement, was domiciled in the U.S. for the purposes of the
Estate Tax Treaty and was not a U.K. national, provided that any
applicable U.S. federal gift or estate tax liability is paid. In the
exceptional case where the Units are subject both to U.K. inheritance
tax and to U.S. federal gift or estate tax, the Estate Tax Treaty
generally provides for the tax paid in the U.K. to be credited against
tax paid in the U.S. or for tax paid in the U.S. to be credited against
tax payable in the U.K. based on priority rules set out in that Treaty.
Stamp Tax. In connection with a transfer of Equity Securities listed in
the FT Index and held in the United Kingdom Trust, Global Target 15
Trust or Global Target 30 Trust, there is generally imposed a U.K. stamp
duty or stamp duty reserve tax payable upon transfer, which tax is
usually imposed on the purchaser of such Equity Securities. Upon
acquisition of the Equity Securities in the United Kingdom Trust, Global
Target 15 Trust or Global Target 30 Trust, such Trust paid such tax. It
is anticipated that upon the sale of such Equity Securities such tax
will be paid by the purchaser thereof and not by the United Kingdom
Trust, Global Target 15 Trust or Global Target 30 Trust, respectively.
HONG KONG TAXATION
The following summary describes the Hong Kong tax consequences relating
to those Equity Securities held by the Hong Kong Trust, Global Target 15
Trust or Global Target 30 Trust and listed on the Hang Seng Index under
existing law to U.S. Unit holders of Units of the Hong Kong Trust,
Global Target 15 Trust or Global Target 30 Trust. This discussion is for
general purposes only and assumes that such Unit holder is not carrying
on a trade, profession or business in Hong Kong and has no profits
sourced in Hong Kong arising from the carrying on of such trade,
profession or business. Unit holders should consult their tax advisers
as to the Hong Kong tax consequences of ownership of the Units of the
Hong Kong Trust, Global Target 15 Trust or Global Target 30 Trust
applicable to their particular circumstances.
Taxation of Dividends. Amounts in respect of dividends paid to Unit
holders of the Hong Kong Trust, Global Target 15 Trust or Global Target
30 Trust relating to those Equity Securities listed on the Hang Seng
Index are not taxable and therefore will not be subject to the deduction
of any withholding tax.
Profits Tax. A Unit holder of the Hong Kong Trust, Global Target 15
Trust or Global Target 30 Trust (other than a person carrying on a
trade, profession or business in Hong Kong) will not be subject to
profits tax imposed by Hong Kong on any gain or profits made on the
realization or other disposal of his or her Units.
Hong Kong Estate Duty. Units of the Hong Kong Trust, Global Target 15
Trust or Global Target 30 Trust will not give rise to a liability to
Hong Kong estate duty.
Why are Investments in the Trusts Suitable for Retirement Plans?
Units of the Trusts may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, the Federal income tax relating to capital
gains and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible
for special averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers
Page 9
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 capital appreciation and dividend
income. 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.
Domestic Trusts
The Target 5 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 "Domestic Stock Selection Date").
The Target 10 Trust consists of the ten common stocks in the DJIA that
have the highest dividend yield as of the Domestic Stock Selection Date.
The Target 25 Trust consists of a portfolio of 25 common stocks selected
through the following four-step process (the "Target 25 Strategy") from
a pre-screened subset of the stocks listed on the New York Stock
Exchange as of the close of business two business days prior to the date
of Part I of this Prospectus (the "Target 25 Trust Stock Selection
Date"). The first step begins by selecting all the dividend-paying
stocks listed on the New York Stock Exchange (excluding financial,
transportation and utility stocks, American Depositary Receipts, limited
partnerships and any stock included in the Dow Jones Industrial
Average). The second step ranks the stocks from highest to lowest market
capitalization, and the 400 highest market cap stocks are selected. The
third step then ranks the 400 stocks from highest to lowest dividend
yield, and the 75 highest dividend-yielding stocks are chosen. Step four
takes these remaining 75 stocks, discards the 50 highest dividend-
yielding stocks and the remaining 25 stocks are selected for the
portfolio. As a policy matter, the Sponsor has excluded companies which,
based on publicly available information as of the Target 25 Trust Stock
Selection Date, are acquisition targets.
International Trusts
The United Kingdom Trust consists of the five companies with the lowest
per share stock price of the ten companies in the Financial Times
Ordinary Share Index ("FT Index") that have the highest dividend yield
as of the close of business two business days prior to the date of Part
I of this Prospectus (the "Foreign Stock Selection Date").
The Hong Kong Trust consists of the five companies with the lowest per
share stock price of the ten companies in the Hang Seng Index that have
the highest dividend yield as of the Foreign Stock Selection Date.
The Portfolios of both the Global Target 15 Trust and the Global Target
30 Trust consist of 15 and 30 common stocks, respectively, of companies
which are components of the DJIA, the FT Index or the Hang Seng Index,
respectively. Specifically, the portfolio of the Global Target 15 Trust
consists of common stocks of the five companies with the lowest per
share stock price of the ten companies in each of the DJIA, FT Index and
the Hang Seng Index, respectively, that have the highest dividend yield
in the respective index as of the Domestic Stock Selection Date in the
case of the DJIA stocks and the Foreign Stock Selection Date in the case
of the FT Index stocks and Hang Seng Index stocks. The portfolio of the
Global Target 30 Trust consists of common stocks of the ten companies in
each of the DJIA, FT Index and the Hang Seng Index, respectively, that
have the highest dividend yield in the respective index as of the same
business days as those used to establish the Global Target 15 Trust.
Unless a Trust set forth in Part I contains the word "Premier" in its
title the Trust will have a maturity of approximately 13 months from the
date of Part I of this Prospectus. Trusts which contain the word
"Premier" in their title will have a maturity of approximately 19 months
from the date of Part I of this Prospectus and may be referred to herein
as the "Premier Series" of the Trusts.
The yield for each Equity Security contained in a Domestic Trust or
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
Page 10
Domestic Stock Selection Date (the Target 25 Trust Stock Selection Date
in the case of the Target 25 Trust). The yield for each Equity Security
listed on the FT Index or the Hang Seng Index was calculated by adding
together the most recent interim and final dividend declared and
dividing the result by the market value of such Equity Security as of
the close of business on the Foreign Stock Selection Date. An investment
in a Trust involves the purchase of a quality portfolio of attractive
equities with high dividend yields in one convenient purchase. Investing
in the stocks with high 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 comparative 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 publishers of the DJIA, FT Index and the Hang Seng Index are not
affiliated with the Sponsor and have not participated in the creation of
the Trusts or the selection of the Equity Securities included therein.
There is, of course, no guarantee that the objective of the Trusts will
be achieved.
In selecting Equity Securities for deposit in the Trusts based upon the
criteria set forth above, if, as of the respective Stock Selection Date,
changes in the components of an index or the composition of stocks
listed on the New York Stock Exchange have been announced, only those
companies which will be included in the revised index or New York Stock
Exchange will be among those eligible for deposit in the respective
Trusts even though certain of such companies may not be included in the
index or New York Stock Exchange as of the respective Stock Selection
Date. Any changes in the components of any of the respective indices or
New York Stock Exchange made after the respective 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
respective Stock Selection Date. Since the Sponsor may deposit
additional Equity Securities which were originally selected through this
process, the Sponsor may continue to sell Units of the Trusts even
though the yields on these Equity Securities may have changed subsequent
to the Initial Date of Deposit. These Equity Securities may no longer be
included in the respective index or New York Stock Exchange, 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.
Page 11
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
The Financial Times Industrial Ordinary Share Index
The FT Index began as the Financial News Industrial Ordinary Share Index
in London in 1935 and became the Financial Times Industrial Ordinary
Share Index in 1947. The Financial Times Ordinary Index is calculated by
FTSE International Ltd ("FTSE"). All copyright in the Index Constituent
list vests in FTSE. The FT Index is comprised of 30 common stocks chosen
by the editors of The Financial Times as representative of the British
industry and commerce. This index is an unweighted average of the share
prices of selected companies, which are highly capitalized, major
factors in their industries and their stocks are widely held by
individuals and institutional investors. Changes in the components of
the FT Index are made entirely by the editors of The Financial Times
without consultation with the companies, the stock exchange or any
official agency. For the sake of continuity, changes are made rarely.
Most substitutions have been the result of mergers or because of poor
share performance, but from time to time, changes may be made to achieve
a better representation. The components of the FT Index may be changed
at any time for any reason. The following stocks are currently
represented in the FT Index:
ASDA Group Granada Group Plc
Allied Domecq Plc Grand Metropolitan Plc
BG Plc Guest Keen & Nettlefolds (GKN) Plc
BOC Group Guinness Plc
BTR Plc Imperial Chemical Industries Plc
Blue Circle Industries Lloyds TSB Group Plc
Plc
Boots Company Plc Lucas Varity Plc
British Airways Plc Marks & Spencer Plc
British Petroleum Plc National Westminster Bank
British Peninsular & Oriental Steam
Telecommunications Plc Navigation Company
Cadbury Schweppes Plc Reuters Holdings
Courtaulds Plc Royal & Sun Alliance Insurance Group
EMI Group Plc SmithKline Beecham
General Electric Tate & Lyle Plc
Company Plc
Glaxo Wellcome Plc Vodafone Plc
The Hang Seng Index
The Hang Seng Index was first published in 1969 and presently consists
of 33 of the 358 stocks currently listed on the Stock Exchange of Hong
Kong Ltd. (the "Hong Kong Stock Exchange"), and it includes companies
intended to represent four major market sectors: commerce and industry,
finance, properties and utilities. The Hang Seng Index is a recognized
indicator of stock market performance in Hong Kong. It is computed on an
arithmetic basis, weighted by market capitalization, and is therefore
strongly influenced by stocks with large market capitalizations. The
Hang Seng Index represents approximately 70% of the total market
capitalization of the stocks listed on the Hong Kong Stock Exchange. The
Hang Seng Index is comprised of the following companies:
Page 12
Amoy Properties Ltd. Hong Kong Electric Holdings Ltd.
Bank of East Asia Hong Kong & Shanghai Hotels,
Limited
Cathay Pacific Airways Hong Kong Telecommunications Ltd.
Cheung Kong Hopewell Holdings
Cheung Kong Infrastructure Hutchison Whampoa
Holdings Ltd.
China Light & Power Hysan Development Company Ltd.
China Resources Enterprise Ltd.New World Development Co. Ltd.
Citic Pacific Shangri-La Asia Ltd.
First Pacific Company Ltd. Shun Tak Holdings Ltd.
Great Eagle Holdings Sino Land Co. Ltd.
Guangdong Investment South China Morning Post
(Holdings) Ltd.
HSBC Holdings Plc Sun Hung Kai Properties Ltd.
Hang Lung Development Company Swire Pacific (A)
Hang Seng Bank Television Broadcasts
Henderson Investment Ltd. Wharf Holdings
Henderson Land Development Wheelock & Co.
Co. Ltd.
Hong Kong and China Gas
Neither the publishers of the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index"), DJIA, FT Index nor the Hang Seng
Index have granted the Trusts or the Sponsor a license to use their
respective Index. Units of the Trusts are not designed so that prices
will parallel or correlate with movements in any particular index or a
combination thereof and it is expected that their prices will not
parallel or correlate with such movements. The publishers of the S&P 500
Index, DJIA, FT Index and the Hang Seng Index have not participated in
any way in the creation of the Trusts or in the selection of stocks in
the Trusts and have not approved any information related thereto.
What are Some Additional Considerations for Investors?
The Trusts consist of different issues of Equity Securities, all of
which are listed on a securities exchange. Because Premier Series of the
Trusts have a maturity of approximately 19 months, the Equity Securities
selected by the applicable strategy will be held for a longer period of
time than the other Trusts which have a maturity of approximately 13
months. 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.
Certain or all of the Equity Securities in the Target 25 Trust may be
small-cap company stocks. While historically small-cap company stocks
have outperformed the stocks of large companies, the former have
customarily involved more investment risk as well. Small-cap companies
may have limited product lines, markets or financial resources; may lack
management depth or experience; and may be more vulnerable to adverse
Page 13
general market or economic developments than large companies. Some of
these companies may distribute, sell or produce products which have
recently been brought to market and may be dependent on key personnel.
The prices of small company securities are often more volatile than
prices associated with large company issues, and can display abrupt or
erratic movements at times, due to limited trading volumes and less
publicly available information. Also, because small cap companies
normally have fewer shares outstanding and these shares trade less
frequently than large companies, it may be more difficult for the Trusts
which contain these Equity Securities to buy and sell significant
amounts of such shares without an unfavorable impact on prevailing
market prices.
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 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 relevant 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
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.
In addition, only Unit holders of Premier Series of the Trusts who hold
Page 14
their Units for more than 18 months will benefit from the reduced
capital gains tax rate of 20%. Provided Units are held for at least a
year, other Unit holders will be subject to the maximum capital gains
tax rate of 28%.
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
negatively affect the Equity Securities in the Trusts or the issuers of
the Equity Securities. Changing approaches to regulation, particularly
with respect to the environment or with respect to the petroleum
industry, may have a negative impact on certain companies represented in
the Trusts. There can be no assurance that future legislation,
regulation or deregulation will not have a material adverse effect on
the Trusts or will not impair the ability of the issuers of the Equity
Securities to achieve their business goals.
Foreign Issuers. Since certain or all of the Equity Securities included
in the International Trusts consist of common stocks of foreign issuers,
an investment in such Trusts involves certain investment risks that are
different in some respects from an investment in a trust which invests
entirely in common stocks of domestic issuers. These investment risks
include the possible imposition of future political or governmental
restrictions which might adversely affect the payment or receipt of
dividends on the relevant Equity Securities, the possibility that the
financial condition of the issuers of the Equity Securities may become
impaired or that the general condition of the relevant stock market may
deteriorate, the limited liquidity and relatively small market
capitalization of the relevant securities market, the imposition of
expropriation or confiscatory taxation, economic uncertainties, the lack
of the quantity and quality of publicly available information concerning
Page 15
the foreign issuers as such issuers are generally not subject to the
same reporting and accounting requirements as domestic issuers, and the
effect of foreign currency devaluations and fluctuations on the value of
the common stocks and dividends of foreign issuers in terms of U.S.
dollars. In addition, fixed brokerage commissions and other transaction
costs on foreign securities exchanges are generally higher than in the
United States and there is generally less government supervision and
regulation of exchanges, brokers and issuers in foreign countries than
there is in the United States.
On the basis of the best information available to the Sponsor at the
present time, none of the Equity Securities in the International Trusts
are subject to exchange control restrictions under existing law which
would materially interfere with payment to such Trusts of dividends due
on, or proceeds from the sale of, the foreign Equity Securities. The
adoption of such restrictions or other legal restrictions could
adversely impact the marketability of the foreign Equity Securities and
may impair the ability of such Trusts to satisfy their obligation to
redeem Units or could cause delays or increase the costs associated with
the purchase and sale of the foreign Equity Securities and
correspondingly affect the price of the Units.
The purchase and sale of the foreign Equity Securities will generally be
effected only in foreign securities markets. Although the Sponsor does
not believe that the International Trusts will encounter obstacles in
acquiring or disposing of the foreign Equity Securities, investors
should be aware that in certain situations it may not be possible to
purchase or sell a foreign Equity Security in a timely manner for any
number of reasons, including lack of liquidity in the relevant market,
the unavailability of a seller or purchaser of the foreign Equity
Securities, and restrictions on such purchases or sales by reason of
federal securities laws or otherwise.
The information provided below details certain important factors which
impact the economies of both the United Kingdom and Hong Kong. This
information has been extracted from various governmental and private
publications, but no representation can be made as to its accuracy;
furthermore, no representation is made that any correlation exists
between the economies of the United Kingdom and Hong Kong and the value
of the Equity Securities held by an International Trust.
United Kingdom. The emphasis of the United Kingdom's economy is in the
private services sector, which includes the wholesale and retail sector,
banking, finance, insurance and tourism. Services as a whole account for
a majority of the United Kingdom's gross national product and makes a
significant contribution to the country's balance of payments. The
United Kingdom experienced a recovery of output in 1993-1994 accompanied
by falling rates of inflation despite expectations to the contrary.
Quarterly changes in real gross domestic product ("GDP") in the United
Kingdom grew moderately during 1994 and 1995 with an approximate .5%
increase in the last quarter of 1995 over the previous quarter. The
average quarterly rate of GDP growth in the United Kingdom (as well as
in Europe generally) has been decelerating since 1994. The United
Kingdom is a member of the European Union (the "EU"), formerly known as
the European Economic Community (the "EEC"). The EU was created through
the formation of the Maastricht Treaty on European Union in late 1993.
It is expected that the Treaty will have the effect of eliminating most
remaining trade barriers between the 15 member nations and make Europe
one of the largest common markets in the world. The EU has the potential
to become a powerful trade bloc with a population of over 350 million
people and an annual gross national product of more than $4 trillion.
However, the effective implementation of the Treaty provisions and the
rate at which trade barriers are eliminated is uncertain at this time.
Furthermore, the recent rapid political and social change throughout
Europe make the extent and nature of future economic development in the
United Kingdom and Europe and the impact of such development upon the
value of the Equity Securities in the United Kingdom Trust, Global
Target 15 Trust or Global Target 30 Trust impossible to predict.
Volatility in oil prices could slow economic development throughout
Western Europe. Moreover, it is not possible to accurately predict the
effect of the current political and economic situation upon long-term
inflation and balance of trade cycles and how these changes would affect
the currency exchange rate between the U.S. dollar and the British pound
sterling.
Hong Kong. Hong Kong, established as a British colony in the 1840's,
reverted to Chinese sovereignty effective July 1, 1997. On such date,
Hong Kong became a Special Administrative Region ("SAR") of China. Hong
Kong's new constitution is the Basic Law (promulgated by China in 1990).
Prior to July 1, 1997, the Hong Kong government followed a laissez-faire
policy toward industry. There were no major import, export or foreign
exchange restrictions. Regulation of business was generally minimal with
Page 16
certain exceptions, including regulated entry into certain sectors of
the economy and a fixed exchange rate regime by which the Hong Kong
dollar has been pegged to the U.S. dollar. Over the ten year period
between 1983 and 1993, real gross domestic product increased at an
average annual rate of approximately 6%.
Although China has committed by treaty to preserve for 50 years the
economic and social freedoms enjoyed in Hong Kong prior to the
reversion, the continuation of the economic system in Hong Kong after
the reversion will be dependent on the Chinese government, and there can
be no assurances that the commitment made by China regarding Hong Kong
will be maintained. Prior to the reversion, legislation was enacted in
Hong Kong designed to extend democratic voting procedures for Hong
Kong's legislature. China has expressed disagreement with this
legislation, which it states is in contravention of the principles
evidenced in the Basic Law of the Hong Kong SAR. The National Peoples'
Congress of China has passed a resolution to the effect that the
Legislative Council and certain other councils and boards of the Hong
Kong Government were to be terminated on June 30, 1997. Such bodies have
subsequently been reconstituted in accordance with China's
interpretation of the Basic Law. Any increase in uncertainty as to the
future economic and political status of Hong Kong could have a
materially adverse effect on the value of the Hong Kong Trust, Global
Target 15 Trust or Global Target 30 Trust. The Sponsor is unable to
predict the level of market liquidity or volatility which may occur as a
result of the reversion to sovereignty, both of which may negatively
impact such Trusts and the value of the Units.
China currently enjoys a most favored nation status ("MFN Status") with
the United States. MFN Status is subject to annual review by the
President of the United States and approval by Congress. As a result of
Hong Kong's reversion to Chinese control, U.S. lawmakers have suggested
that they may review China's MFN status on a more frequent basis.
Revocation of the MFN Status would have a severe effect on China's trade
and thus could have a materially adverse effect on the value of the Hong
Kong Trust, Global Target 15 Trust and Global Target 30 Trust. The
performance of certain companies listed on the Hong Kong Stock Exchange
is linked to the economic climate of China. For example, between 1985
and 1990, Hong Kong businesses invested $20 billion in the nearby
Chinese province of Guangdong to take advantage of the lower property
and labor costs than were available in Hong Kong. Recently, however,
high economic growth in this area (industrial production grew at an
annual rate of about 20% in 1991, 24% in 1992, and 36.5% in 1993) has
been associated with rising inflation and concerns about the devaluation
of the Chinese currency. Any downturn in economic growth or increase in
the rate of inflation in China could have a materially adverse effect on
the value of the Hong Kong Trust, Global Target 15 Trust or Global
Target 30 Trust.
Securities prices on the Hong Kong Stock Exchange, and specifically the
Hang Seng Index, can be highly volatile and are sensitive to
developments in Hong Kong and China, as well as other world markets. For
example, in 1989, the Hang Seng Index dropped 1,216 points
(approximately 58%) in early June following the events at Tiananmen
Square. The Hang Seng Index gradually climbed in subsequent months but
fell by 181 points on October 13, 1989 (approximately 6.5%) following a
substantial fall in the U.S. stock markets. During 1994, the Hang Seng
Index lost approximately 31% of its value. The Hang Seng Index is
subject to change, and delisting of any issues may have an adverse
impact on the performance of the Hong Kong Trust, Global Target 15 Trust
or Global Target 30 Trust, although delisting would not necessarily
result in the disposal of the stock of these companies, nor would it
prevent such Trusts from purchasing additional Equity Securities. In
recent years, a number of companies, comprising approximately 10% of the
total capitalization of the Hang Seng Index, have delisted. In addition,
as a result of Hong Kong's reversion to Chinese sovereignty, an
increased number of Chinese companies could become listed on the Hong
Kong Stock Exchange, thereby changing the composition of the stock
market and, potentially, the composition of the Hang Seng Index.
Exchange Rate. The International Trusts are comprised either totally or
substantially of Equity Securities that are principally traded in
foreign currencies and as such, involve investment risks that are
substantially different from an investment in a fund which invests in
securities that are principally traded in United States dollars. The
United States dollar value of the portfolios (and hence of the Units)
and of the distributions from the portfolios will vary with fluctuations
in the United States dollar foreign exchange rates for the relevant
currencies. Most foreign currencies have fluctuated widely in value
against the United States dollar for many reasons, including supply and
demand of the respective currency, the rate of inflation in the
Page 17
respective economies compared to the United States, the impact of
interest rate differentials between different currencies on the movement
of foreign currency rates, the balance of imports and exports goods and
services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and
other countries.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well-particularly with respect to
transfers of capital). Investor psychology may also be an important
determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.
The following table sets forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and
end of month equivalent U.S. dollar rates of exchange for the United
Kingdom pound sterling and the Hong Kong dollar:
<TABLE>
<CAPTION>
Foreign Exchange Rates
Range of Fluctuations in Foreign Currencies
United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar U.S. Dollar
______ ______________ ___________
<S> <C> <C>
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
1996 0.614-0.665 7.732-7.742
</TABLE>
Source: Bloomberg L.P.
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing,
depending on the activity at any particular time of the large
international commercial banks, various central banks, large multi-
national corporations, speculators and other buyers and sellers of
foreign currencies, and since actual foreign currency transactions may
not be instantly reported, the exchange rates estimated by the Evaluator
may not be indicative of the amount in United States dollars the
International Trusts would receive had the Trustee sold any particular
currency in the market. The foreign exchange transactions of the
International Trusts will be conducted by the Trustee with foreign
exchange dealers acting as principals on a spot (i.e., cash) buying
basis. Although foreign exchange dealers trade on a net basis, they do
realize a profit based upon the difference between the price at which
they are willing to buy a particular currency (bid price) and the price
at which they are willing to sell the currency (offer price).
Page 18
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price, which is based on the
aggregate underlying U.S. dollar value of the Equity Securities in a
Trust, plus or minus cash, if any, in the Income and Capital Accounts of
such Trust, plus an initial sales charge with respect to each Trust
equal to the difference between the maximum sales charge for each Trust
(as set forth in Part I of this Prospectus) and the maximum remaining
deferred sales charge (initially $.1750 per Unit for each Trust with a
maturity of approximately 13 months and $.2500 per Unit for Premier
Series of the Trusts) divided by the amount of Units of such Trust
outstanding. A deferred sales charge of $.0175 ($.0250 for Premier
Series of the Trusts) will also be assessed per Unit per month on the
dates set forth under "Public Offering Price" in Part I. Units purchased
subsequent to the initial deferred sales charge payment will be subject
to the initial sales charge and the remaining deferred sales charge
payments. For each Trust, the deferred sales charge will be paid from
funds in the Capital Account, if sufficient, or from the periodic sale
of Equity Securities.
During the initial offering period, the Sponsor's Repurchase Price is
based on the aggregate underlying U.S. dollar value of the Equity
Securities in a Trust, plus or minus cash, if any, in the Income and
Capital Accounts of such Trust divided by the number of Units of such
Trust outstanding.
The minimum purchase of each Trust is $1,000, except for Rollover Unit
holders who are not subject to a minimum purchase amount. The applicable
sales charge for each Trust with a maturity of approximately 13 months
for primary market sales is reduced by a discount as indicated below for
volume purchases as a percentage of the Public Offering Price (except
for sales made pursuant to a "wrap fee account" or similar arrangements
as set forth below):
<TABLE>
<CAPTION>
Dollar Amount of Maximum
Transaction at Sales Net Dealer
Public Offering Price* Discount Charge Concession
_____________________ ________ _______ __________
<S> <C> <C> <C>
$50,000 but less than $100,000 0.25% 2.50% 1.90%
$100,000 but less than $150,000 0.50% 2.25% 1.65%
$150,000 but less than $500,000 0.85% 1.90% 1.30%
$500,000 but less than $1,000,000 1.00% 1.75% 1.15%
$1,000,000 or more 1.75% 1.00% 0.50%
</TABLE>
[FN]
*The breakpoint sales charges are also applied on a Unit basis utilizing
a breakpoint equivalent in the above table of $10 per Unit and will be
applied on whichever basis is more favorable to the investor. The
breakpoints will be adjusted to take into consideration purchase orders
stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
The applicable sales charge for each Premier Series of the Trusts for
primary market sales is reduced by a discount as indicated below for
volume purchase as a percentage of the Public Offering Price (except for
sales made pursuant to a "wrap fee account" or similar arrangements as
set forth below):
<TABLE>
<CAPTION>
Dollar Amount of Maximum
Transaction at Sales Net Dealer
Public Offering Price* Discount Charge Concession
_____________________ ________ _______ __________
<S> <C> <C> <C>
$50,000 but less than $100,000 0.25% 3.25% 2.45%
$100,000 but less than $150,000 0.50% 3.00% 2.20%
$150,000 but less than $500,000 0.85% 2.65% 1.85%
$500,000 but less than $1,000,000 1.00% 2.50% 1.70%
$1,000,000 or more 2.00% 1.50% 0.80%
</TABLE>
*The breakpoint sales charges are also applied on a Unit basis utilizing
a breakpoint equivalent in the above table of $10 per Unit and will be
applied on whichever basis is more favorable to the investor. The
breakpoints will be adjusted to take into consideration purchase orders
stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
Any such reduced sales charge shall be the responsibility of the selling
dealer. An investor may aggregate purchases of Units of the Trusts
contained in this Prospectus and other trusts sponsored by Nike
Page 19
Securities L.P. which are currently in the initial offering period and
which have substantially the same sales load and years to maturity as
the Trusts for purposes of qualifying for volume purchase discounts
listed above. The sales charge reduction for quantity purchases will not
apply to Rollover Unit holders. Rollover Unit holders of prior series of
the Trusts may purchase Units of the Trusts subject to the maximum
deferred sales charge on such Units (1.00% (1.50% for Premier Series of
the Trusts) for rollover purchases of $1,000,000 or more), deferred as
set forth above. All Units of the Trusts will be subject to the
applicable deferred sales charge per Unit (depending on the length of
maturity of the Trust) regardless of volume purchase discounts.
Investors who, as a result of volume purchase discounts, are eligible to
purchase Units subject to a Maximum Sales Charge of less than the
applicable maximum deferred sales charge amount will be credited the
difference between this Maximum Sales Charge and the deferred sales
charge at the time of purchase. The reduced sales charge structure will
apply on all purchases of Units in a Trust by the same person on any one
day from any one dealer. Additionally, Units purchased in the name of
the spouse of a purchaser or in the name of a child of such purchaser
under 21 years of age will be deemed, for the purposes of calculating
the applicable sales charge, to be additional purchases by the
purchaser. The reduced sales charges will also be applicable to a
trustee or other fiduciary purchasing securities for a single trust
estate or single fiduciary account. The purchaser must inform the dealer
of any such combined purchase prior to the sale in order to obtain the
indicated discount. In addition, Unit holders of other unit investment
trusts having a similar strategy as the Trusts may utilize their
termination proceeds to purchase Units of the Trusts, subject to a
deferred sales charge of $.0175 per Unit per month ($.0250 Per Unit per
month in the case of Premier Series of the Trusts) to be collected on
each of the remaining deferred sales charge payment dates as provided
herein. Employees, officers and directors (including their immediate
family members, defined as spouses, children, grandchildren, parents,
grandparents, siblings, mothers-in-law, fathers-in-law, sons-in-law and
daughters-in-law, and trustees, custodians or fiduciaries for the
benefit of such persons) of the Sponsor, related companies 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,
less the applicable dealer concession.
Investors who purchase Units through registered broker/dealers who
charge periodic fees for financial planning, investment advisory or
asset management services or provide such services in connection with
the establishment of an investment account for which a comprehensive
"wrap fee" charge is imposed may purchase Units in the primary or
secondary market at the Public Offering Price, less the concession the
Sponsor typically would allow such broker/dealer. See "Public Offering-
How are Units Distributed?"
Had the Units of the Trusts been available for sale on the business day
prior to the Initial Date of Deposit, the Public Offering Price would
have been as indicated in "Summary of Essential Information" appearing
in Part I of this Prospectus. The Public Offering Price of Units on the
date of the prospectus or during the initial offering period may vary
from the amount stated under "Summary of Essential Information" in
accordance with fluctuations in the local currency prices of the
underlying Equity Securities, changes in relevant currency exchange
rates and changes in applicable commissions, stamp taxes, custodial fees
and other costs associated with foreign trading. During the initial
offering period, the aggregate value of the Units of a Trust shall be
determined on the basis of the aggregate underlying U.S. dollar value of
the Equity Securities therein plus or minus cash, if any, in the Income
and Capital Accounts of such Trust. The aggregate underlying value of
the Equity Securities will be determined in the following manner: if the
Equity Securities are listed on a securities exchange or The Nasdaq
Stock Market, this evaluation is generally based on the closing sale
prices on that exchange or that system (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if there is
no closing sale price on that exchange or system, at the closing ask
prices. If the Equity Securities are not so listed or, if so listed and
the principal market therefor is other than on the exchange, the
evaluation shall generally be based on the current ask prices on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the U.S.
dollar value of the Equity Securities on the ask side of the market or
(c) by any combination of the above. The aggregate U.S. dollar value of
the Equity Securities during the initial offering period is computed on
the basis of the offering side value of the relevant currency exchange
rate expressed in U.S. dollars as of the Evaluation Time.
Page 20
The Evaluator on each business day will appraise or cause to be
appraised the value of the underlying Equity Securities in a Trust as of
the Evaluation Time and will adjust the Public Offering Price of the
Units commensurate with such valuation. Such Public Offering Price will
be effective for all orders received prior to the Evaluation Time on
each such day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a
business day, will be held until the next determination of price. The
term "business day," as used herein and under "How May Units be
Redeemed?", shall exclude Saturdays, Sundays and the following holidays
as observed by the New York Stock Exchange, Inc.: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day.
After the completion of the initial offering period, the secondary
market Public Offering Price will be equal to the aggregate underlying
U.S. dollar value of the Equity Securities therein, plus or minus cash,
if any, in the Income and Capital Accounts of a Trust plus the
applicable sales charge.
Although payment is normally made three business days following the
order for purchase (the "date of settlement"), payment may be made prior
thereto. A person will become owner of Units on the date of settlement
provided payment has been received. Cash, if any, made available to the
Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the
Sponsor, subject to the limitations of the Securities Exchange Act of
1934. Delivery of Certificates representing Units so ordered will be
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. Sales will be made to dealers and others at
prices which represent a concession or agency commission of 2.10% (2.65%
in the case of Premier Series of the Trusts) of the Public Offering
Price for primary and secondary market sales. Dealers and others will
receive a concession or agency commission of $0.11 per Unit ($0.165 per
Unit for Premier Series of the Trust) on purchases by Rollover Unit
holders. In addition, dealers and others will receive a maximum
concession of up to $0.10 per Unit ($0.155 per Unit for Premier Series
of the Trusts) on purchases of Units resulting from the automatic
reinvestment of income or capital distributions into additional Units.
Such concession will vary based upon the month of a Trust's Initial Date
of Deposit. Notwithstanding the foregoing, 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
additional sales concessions as a percentage of the Public Offering Price:
<TABLE>
<CAPTION>
Total Sales per Trust Additional 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>
[FN]
*Additional Concession does not include volume discount purchases.
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
Page 21
prospectus. The dealer concessions set forth above are not available for
sales of Units at a discount as described in "How is the Public Offering
Price Determined?"; for such sales, the dealer concessions are those
described in the applicable table under the caption "Net Dealer
Concession." In determining the Total Sales per Trust set forth in the
above table, any Target 5 Trust Units sold will be aggregated with sales
of the currently available Target 5 Advisory Trust and any Target 10
Trust Units sold will be aggregated with sales of the currently
available Target 10 Advisory Trust. The Sponsor reserves the right to
change the amount of the concession or agency commission from time to
time. In the event the Sponsor reacquires, or the Trustee redeems, Units
from brokers, dealers and others while a market is being maintained for
such Units, such entities agree to repay immediately to the Sponsor any
such concession or agency commission relating to such reacquired Units.
Certain commercial banks may be making Units of the Trusts available to
their customers on an agency basis. A portion of the sales charge paid
by these customers is retained by or remitted to the banks in the
amounts indicated above. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units; however, the Glass-Steagall
Act does permit certain agency transactions and the banking regulators
have not indicated that these particular agency transactions are not
permitted under such Act. In Texas and in certain other states, any
banks making Units available must be registered as broker/dealers under
state law. The Sponsor expects to recoup the foregoing payments from the
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, the S&P Industrial Index, 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
Page 22
representative of a Trust's relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trusts will receive a gross sales commission equal to
the maximum sales charge per Unit for each Trust as set forth in Part I
of this Prospectus, less any reduced sales charge for quantity purchases
as described under "Public Offering-How is the Public Offering Price
Determined?" In addition, the Sponsor may be considered to have realized
a profit or to have sustained a loss, as the case may be, in the amount
of any difference between the cost of the Equity Securities to a Trust
(which is based on the Evaluator's determination of the aggregate
offering price of the underlying Equity Securities of such Trust on the
Initial Date of Deposit as well as on subsequent deposits) and the cost
of such Equity Securities to the Sponsor. See Note (2) of "Schedule of
Investments" appearing in Part I of this Prospectus. During the initial
offering period, the dealers and others also may realize profits or
sustain losses as a result of fluctuations after the Date of Deposit in
the Public Offering Price received by such dealers and others upon the
sale of Units.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are
resold (which price includes a maximum sales charge for each Trust as
set forth in Part I of this Prospectus) or redeemed. The secondary
market public offering price of Units may be greater or less than the
cost of such Units to the Sponsor. The Sponsor may also realize profits
or sustain losses in connection with the creation of additional Units
for the Distribution Reinvestment Option.
Will There be a Secondary Market?
After the initial offering period, although it is not obligated to do
so, the Sponsor intends to maintain a market for the Units and
continuously offer to purchase Units at prices, subject to change at any
time, based upon the aggregate underlying value of the Equity Securities
in a Trust plus or minus cash, if any, in the Income and Capital
Accounts of such Trust. The aggregate underlying value of the Equity
Securities is computed on the basis of the bid side value of the
relevant currency exchange rate (offer side during the initial offering
period) expressed in U.S. dollars. All expenses incurred in maintaining
a secondary market, other than the fees of the Evaluator and the costs
of the Trustee in transferring and recording the ownership of Units,
will be borne by the Sponsor. If the supply of Units exceeds demand, or
for some other business reason, the Sponsor may discontinue purchases of
Units at such prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS UNITS,
HE SHOULD INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO
MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. Units subject to a
deferred sales charge which are sold or tendered for redemption prior to
such time as the entire deferred sales charge on such Units has been
collected will be assessed the amount of the remaining deferred sales
charge at the time of sale or redemption.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee.
Ownership of Units may be evidenced by registered certificates executed
by the Trustee and the Sponsor. Delivery of certificates representing
Units ordered for purchase is normally made three business days
following such order or shortly thereafter. Certificates are
transferable or may be redeemed by presentation and surrender to the
Trustee properly endorsed or accompanied by a written instrument or
instruments of transfer. A Unit holder must sign exactly as his name
appears on the face of the certificate with signature guaranteed by a
participant in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority. Record
ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable only
on the books of the Trustee in denominations of one Unit or any multiple
thereof, numbered serially for purposes of identification.
Page 23
Unit holders may elect to hold their Units in uncertificated form. The
Trustee will maintain an account for each such Unit holder and will
credit each such account with the number of Units purchased by that Unit
holder. Within two business days of the issuance or transfer of Units
held in uncertificated form, the Trustee will send to the registered
owner of Units a written initial transaction statement containing a
description of their respective Trust; the number of Units issued or
transferred; the name, address and taxpayer identification number, if
any, of the new registered owner; a notation of any liens and
restrictions of the issuer and any adverse claims to which such Units
are or may be subject or a statement that there are no such liens,
restrictions or adverse claims; and the date the transfer was
registered. Uncertificated Units are transferable through the same
procedures applicable to Units evidenced by certificates (described
above), except that no certificate need be presented to the Trustee and
no certificate will be issued upon the transfer unless requested by the
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, in the case of a Domestic
Page 24
Trust, 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.
Dividends received with respect to the foreign Equity Securities, if
any, are converted into U.S. dollars at the applicable exchange rate.
The Trustee may establish reserves (the "Reserve Account") within a
Trust for state and local taxes, if any, and any governmental charges
payable out of such Trust.
Distribution Reinvestment Option. Any Unit holder may elect to have each
distribution of income or capital on his Units, other than the final
liquidating distribution in connection with the termination of a Trust,
automatically reinvested in additional Units of such Trust. Each person
who purchases Units of a Trust may elect to become a participant in the
Distribution Reinvestment Option by notifying the Trustee of their
election. The Distribution Reinvestment Option may not be available in
all states. In order to enable a Unit holder to participate in the
Distribution Reinvestment Option with respect to a particular
distribution on his Units, the card must be received by the Trustee
within 10 days prior to the Record Date for such distribution. Each
subsequent distribution of income or capital on the participant's Units
will be automatically applied by the Trustee to purchase additional
Units of a Trust. The remaining deferred sales charge payments will be
assessed on Units acquired pursuant to the Distributions Reinvestment
Option. IT SHOULD BE REMEMBERED THAT EVEN IF DISTRIBUTIONS ARE
REINVESTED, THEY ARE STILL TREATED AS DISTRIBUTIONS FOR INCOME TAX
PURPOSES.
What Reports will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and the amount
of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable period of
time after the end of each calendar year, the Trustee shall furnish to
each person who at any time during the calendar year was a Unit holder
of a Trust the following information in reasonable detail: (1) a summary
of transactions in such Trust for such year; (2) any Equity Securities
sold during the year and the Equity Securities held at the end of such
year by such Trust; (3) the redemption price per Unit based upon a
computation thereof on the 31st day of December of such year (or the
last business day prior thereto); and (4) amounts of income and capital
distributed during such year.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities in a Trust furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender to the
Trustee at its 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 Domestic Trust for
Page 25
redemption may request by written notice submitted at the time of tender
from the Trustee, in lieu of a cash redemption, a distribution of shares
of Equity Securities in an amount and value of Equity Securities per
Unit equal to the Redemption Price Per Unit, as determined as of the
evaluation next following tender. To the extent possible, in-kind
distributions ("In-Kind Distributions") shall be made by the Trustee
through the distribution of each of the Equity Securities in book-entry
form to the account of the Unit holder's bank or broker/dealer at the
Depository Trust Company. An In-Kind Distribution will be reduced by
customary transfer and registration charges. The tendering Unit holder
will receive his pro rata number of whole shares of each of the Equity
Securities comprising a portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Unit holder is
entitled. The Trustee may adjust the number of shares of any issue of
Equity Securities included in a Unit holder's In-Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made
on the basis of the value of Equity Securities on the date of tender. If
funds in the Capital Account are insufficient to cover the required cash
distribution to the tendering Unit holder, the Trustee may sell Equity
Securities in the manner described above.
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 (net of applicable liquidation costs for
foreign Equity Securities, if any). The Redemption Price per Unit is the
pro rata share of each Unit determined by the Trustee by adding: (1) the
cash on hand in a Trust other than cash deposited in the Trust to
purchase Equity Securities not applied to the purchase of such Equity
Securities; (2) the aggregate value of the Equity Securities (including
"when issued" contracts, if any) held in such Trust, as determined by
the Evaluator on the basis of the aggregate underlying value of the
Equity Securities in such Trust next computed; and (3) dividends
receivable on the Equity Securities trading ex-dividend as of the date
of computation; and deducting therefrom: (1) amounts representing any
applicable taxes or governmental charges payable out of such Trust; (2)
any amounts owing to the Trustee for its advances; (3) an amount
representing estimated accrued expenses of such Trust, including but not
limited to fees and expenses of the Trustee (including legal fees), the
Evaluator and supervisory fees, if any; (4) cash held for distribution
to Unit holders of record of such Trust as of the business day prior to
the evaluation being made; and (5) other liabilities incurred by such
Trust; and finally dividing the results of such computation by the
number of Units of such Trust outstanding as of the date thereof. The
redemption price per Unit will be assessed the amount, if any, of the
remaining deferred sales charge at the time of redemption.
The aggregate value of the Equity Securities for purposes of the
Redemption Price during the secondary market and the Secondary Market
Public Offering Price will be determined in the following manner: if the
Equity Securities are listed on a securities exchange or The Nasdaq
Stock Market, this evaluation is generally based on the closing sale
prices on that exchange or that system (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if there is
no closing sale price on that exchange or system, at the closing bid
prices. If the Equity Securities are not so listed or, if so listed and
the principal market therefore is other than on a securities exchange,
Page 26
the evaluation shall generally be based on the current bid prices on the
over-the-counter market (unless these prices are inappropriate as a
basis for evaluation). If current bid prices are unavailable, the
evaluation is generally determined (a) on the basis of current bid
prices for comparable securities, (b) by appraising the value of the
Equity Securities on the bid side of the market or (c) by any
combination of the above. The value of the Equity Securities is
converted to their U.S. dollar equivalent by computing the aggregate
value on the basis of the bid side value of the relevant currency
exchange as of the Evaluation Time and when determining the Redemption
Price during the secondary market includes the applicable liquidation
costs associated with the sale of foreign Equity Securities.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than
for customary weekend and holiday closings, or during which the
Securities and Exchange Commission determines that trading on the New
York Stock Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances, the
Sponsor may apply to the Securities and Exchange Commission for an order
permitting a full or partial suspension of the right of Unit holders to
redeem their Units. The Trustee is not liable to any person in any way
for any loss or damage which may result from any such suspension or
postponement.
Special Redemption, Liquidation and Investment in a New Trust
It is expected that a special redemption and liquidation will be made of
all Units of the 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 appropriate
Rollover Notification Date specified in the "Summary of Essential
Information" appearing in Part I of this Prospectus. The Sponsor intends
to create a separate series of trusts (the "New Trusts") in conjunction
with the termination of the Trusts. Premier Series of the Trusts will
terminate approximately 19 months after the date of Part I of this
Prospectus. All other Trusts will terminate approximately 13 months
after the date of Part I of this Prospectus.
All Units of Rollover Unit holders will be redeemed In-Kind during the
appropriate 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 appropriate 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 appropriate 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, with the exception of the Target 25 Trust, each terminating
Trust (and the Distribution Agent on behalf of Final 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 $.175 per unit for the New Series of
a Trust ($.250 per Unit for Premier Series of a Trust), all of which
will be deferred as provided herein).
Page 27
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 limited time period, at which point a new portfolio is chosen. It is
contemplated that a similar process of redemption, liquidation and
investment in a New Trust will be available as each Trust terminates.
It should also be noted that Rollover Unit holders may realize taxable
capital gains on the Special Redemption and Liquidation but, in certain
unlikely circumstances, will not be entitled to a deduction for certain
capital losses and, due to the procedures for investing in a New Trust,
no cash would be distributed at that time to pay any taxes. Included in
the cash for the Special Redemption and Liquidation will be an amount of
cash attributable to a semi-annual distribution of dividend income;
accordingly, Rollover Unit holders also will not have cash from this
source distributed to pay any taxes. Investors should also note that on
August 5, 1997, legislation was enacted that reduces the maximum stated
marginal tax rate for certain capital gains for investments held for
more than 18 months to 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Rollover Unit holders holding Units of the Premier
Series of the Trusts would qualify for such treatment. Rollover Unit
holders holding Units of Trusts with a maturity of approximately 13
months would be subject to a maximum stated marginal tax rate of 28%.
See "Summary of Essential Information" in Part One of this Prospectus
for information regarding the Trust's mandatory termination date. 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 a 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 a 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
Page 28
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
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
Page 29
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
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.
Page 30
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor and the Trustee,
in which event the Sponsor and the Trustee are to use their best efforts
to appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment is
(1) to cure any ambiguity or to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision contained therein, or (2) to make such other provisions as
shall not adversely affect the interest of the Unit holders (as
determined in good faith by the Sponsor and the Trustee).
The Indenture provides that 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 Domestic Trusts the Trustee will provide written
notice thereof to all Unit holders and will include with such notice a
form to enable Unit holders to elect a distribution of shares of Equity
Securities (reduced by customary transfer and registration charges), if
such Unit holder owns at least 2,500 Units of a Domestic Trust, rather
than to receive payment in cash for such Unit holder's pro rata share of
the amounts realized upon the disposition by the Trustee of Equity
Securities. To be effective, the election form, together with
Page 31
surrendered certificates and other documentation required by the
Trustee, must be returned to the Trustee at least five business days
prior to the Mandatory Termination Date of a Domestic Trust. A Unit
holder may, of course, at any time after the Equity Securities are
distributed, sell all or a portion of the shares. Unit holders not
electing a distribution of shares of Equity Securities and who do not
elect the Rollover Option will receive a cash distribution from the sale
of the remaining Equity Securities within a reasonable time after a
Trust is terminated. Regardless of the distribution involved, the
Trustee will deduct from the funds of a Trust any accrued costs,
expenses, advances or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee and costs of liquidation
and any amounts required as a reserve to provide for payment of any
applicable taxes or other governmental charges. Any sale of Equity
Securities in a Trust upon termination may result in a lower amount than
might otherwise be realized if such sale were not required at such time.
The Trustee will then distribute to each Unit holder his pro rata share
of the balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Experts
The statements of net assets, including the schedules of investments, of
the Trusts at the opening of business on the Initial Date of Deposit
appearing in Part I of this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing in Part I of this Prospectus and in the
Registration Statement, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and
auditing.
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.
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CONTENTS:
The First Trust Special Situations Trust Series:
What is The First Trust Special Situations Trust? 1
What are the Expenses and Charges? 2
What is the Federal Tax Status of Unit Holders? 3
United Kingdom Taxation 8
Hong Kong Taxation 9
Why are Investments in the Trusts Suitable for
Retirement Plans? 9
Portfolio:
What are Equity Securities? 10
Domestic Trusts 10
International Trusts 10
The Dow Jones Industrial Average 11
The Financial Times Industrial Ordinary Share
Index 12
The Hang Seng Index 12
What are Some Additional Considerations
for Investors? 13
Risk Factors 13
Legislation 15
Foreign Issuers 15
United Kingdom 16
Hong Kong 16
Exchange Rate 17
Public Offering:
How is the Public Offering Price Determined? 19
How are Units Distributed? 21
What are the Sponsor's Profits? 23
Will There be a Secondary Market? 23
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 23
How are Income and Capital Distributed? 24
What Reports will Unit Holders Receive? 25
How May Units be Redeemed? 25
Special Redemption, Liquidation and
Investment in a New Trust 27
How May Units be Purchased by the Sponsor? 28
How May Equity Securities be Removed
from a Trust? 29
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 29
Who is the Trustee? 30
Limitations on Liabilities of Sponsor and Trustee 30
Who is the Evaluator? 31
Other Information:
How May the Indenture be Amended
or Terminated? 31
Legal Opinions 32
Experts 32
Supplemental Information 32
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION
OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO, WHICH THE FUND
HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C.
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940,
AND TO WHICH REFERENCE IS HEREBY MADE.
FIRST TRUST (registered trademark)
TARGET TRUST SERIES
Prospectus
Part II
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
The Chase Manhattan Bank
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 36
First Trust (registered trademark)
TARGET 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 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 August 18, 1997. Capitalized terms
have been defined in the Prospectus.
Table of Contents
Risk Factors
Equity Securities 1
Foreign Issuers 2
Exchange Rate 2
Concentrations
Banks and Thrifts 6
Petroleum Refining Companies 7
Real Estate Companies 8
Small-Cap Companies 10
Portfolios
Equity Securities Selected for Target 5 Trusts 10
Equity Securities Selected for Target 10 Trusts 11
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
Page 1
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.
Foreign Issuers. Since certain or all of the Equity Securities included
in the International Trusts consist of securities of foreign issuers, an
investment in such Trusts involves certain investment risks that are
different in some respects from an investment in a trust which invests
entirely in the securities of domestic issuers. These investment risks
include future political or governmental restrictions which might
adversely affect the payment or receipt of payment of dividends on the
relevant Equity Securities, the possibility that the financial condition
of the issuers of the Equity Securities may become impaired or that the
general condition of the relevant stock market may worsen (both of which
would contribute directly to a decrease in the value of the Equity
Securities and thus in the value of the Units), the limited liquidity
and relatively small market capitalization of the relevant securities
market, expropriation or confiscatory taxation, economic uncertainties
and foreign currency devaluations and fluctuations. In addition, for
foreign issuers that are not subject to the reporting requirements of
the Securities Exchange Act of 1934, there may be less publicly
available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. The securities of
many foreign issuers are less liquid and their prices more volatile than
securities of comparable domestic issuers. In addition, fixed brokerage
commissions and other transaction costs on foreign securities exchanges
are generally higher than in the United States and there is generally
less government supervision and regulation of exchanges, brokers and
issuers in foreign countries than there is in the United States.
However, due to the nature of the issuers of the Equity Securities
selected for the International Trusts, the Sponsor believes that
adequate information will be available to allow the Supervisor to
provide portfolio surveillance for such Trusts.
Equity securities issued by non-U.S. issuers generally pay dividends in
foreign currencies and are principally traded in foreign currencies.
Therefore, there is a risk that the United States dollar value of these
securities will vary with fluctuations in the U.S. dollar foreign
exchange rates for the various Equity Securities. See "Exchange Rate"
below.
On the basis of the best information available to the Sponsor at the
present time, none of the Equity Securities in the International Trusts
are subject to exchange control restrictions under existing law which
would materially interfere with payment to such Trusts of dividends due
on, or proceeds from the sale of, the Equity Securities. However, there
can be no assurance that exchange control regulations might not be
adopted in the future which might adversely affect payment to such a
Trust. The adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of
international securities in the International Trusts and on the ability
of such Trusts to satisfy their obligation to redeem Units tendered to
the Trustee for redemption. In addition, restrictions on the settlement
of transactions on either the purchase or sale side, or both, could
cause delays or increase the costs associated with the purchase and sale
of the foreign Equity Securities and correspondingly could affect the
price of the Units.
Investors should be aware that it may not be possible to buy all Equity
Securities at the same time because of the unavailability of any Equity
Security, and restrictions applicable to a Trust relating to the
purchase of an Equity Security by reason of the federal securities laws
or otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Equity Securities by a
Trust in the United States securities markets are subject to severe
restrictions and may not be practicable. Accordingly, sales of these
Equity Securities by a Trust will generally be effected only in foreign
securities markets. Although the Sponsor does not believe that the
International Trusts will encounter obstacles in disposing of the Equity
Securities, investors should realize that the Equity Securities may be
traded in foreign countries where the securities markets are not as
developed or efficient and may not be as liquid as those in the United
States. The value of the Equity Securities will be adversely affected if
trading markets for the Equity Securities are limited or absent.
Exchange Rate. The International Trusts are comprised either totally or
substantially of Equity Securities that are principally traded in
foreign currencies and as such, involve investment risks that are
substantially different from an investment in a fund which invests in
securities that are principally traded in United States dollars. The
Page 2
United States dollar value of the portfolios (and hence of the Units)
and of the distributions from the portfolios will vary with fluctuations
in the United States dollar foreign exchange rates for the relevant
currencies. Most foreign currencies have fluctuated widely in value
against the United States dollar for many reasons, including supply and
demand of the respective currency, the rate of inflation in the
respective economies compared to the United States, the impact of
interest rate differentials between different currencies on the movement
of foreign currency rates, the balance of imports and exports goods and
services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and
other countries.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty which established a system of
fixed exchange rates and the convertibility of the United States dollar
into gold through foreign central banks. Starting in 1971, growing
volatility in the foreign exchange markets caused the United States to
abandon gold convertibility and to effect a small devaluation of the
United States dollar. In 1973, the system of fixed exchange rates
between a number of the most important industrial countries of the
world, among them the United States and most Western European countries,
was completely abandoned. Subsequently, major industrialized countries
have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have
continued to "peg" their currencies to the United States dollar although
there has been some interest in recent years in "pegging" currencies to
"baskets" of other currencies or to a Special Drawing Right administered
by the International Monetary Fund. Since 1983, the Hong Kong dollar has
been pegged to the U.S. dollar. In Europe, a European Currency Unit
("ECU") has been developed. Currencies are generally traded by leading
international commercial banks and institutional investors (including
corporate treasurers, money managers, pension funds and insurance
companies). From time to time, central banks in a number of countries
also are major buyers and sellers of foreign currencies, mostly for the
purpose of preventing or reducing substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well-particularly with respect to
transfers of capital). Investor psychology may also be an important
determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.
The following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and
end of month equivalent U.S. dollar rates of exchange for the United
Kingdom pound sterling and the Hong Kong dollar:
Page 3
<TABLE>
<CAPTION>
Foreign Exchange Rates
Range of Fluctuations in Foreign Currencies
United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar U.S. Dollar
______ ______________ ___________
<S> <C> <C>
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
1996 0.614-0.665 7.732-7.742
</TABLE>
Source: Bloomberg L.P.
Page 4
<TABLE>
<CAPTION>
End of Month Exchange Rates
for Foreign Currencies
_____________________________________________________
United Kingdom Hong
Pound Sterling/ Kong/U.S.
Monthly Period U.S. Dollar Dollar
______________ _______________ _________
<S> <C> <C>
1992:
January .559 7.762
February .569 7.761
March .576 7.740
April .563 7.757
May .546 7.749
June .525 7.731
July .519 7.732
August .503 7.729
September .563 7.724
October .641 7.736
November .659 7.742
December .662 7.744
1993:
January .673 7.734
February .701 7.734
March .660 7.731
April .635 7.730
May .640 7.724
June .671 7.743
July .674 7.761
August .670 7.755
September .668 7.734
October .676 7.733
November .673 7.725
December .677 7.723
1994:
January .664 7.724
February .673 7.727
March .674 7.737
April .659 7.725
May .662 7.726
July .648 7.725
August .652 7.728
September .634 7.727
October .611 7.724
November .639 7.731
December .639 7.738
1995:
January .633 7.732
February .631 7.730
March .617 7.733
April .620 7.742
May .630 7.735
June .627 7.736
July .626 7.738
August .645 7.741
September .631 7.732
October .633 7.727
November .652 7.731
December .645 7.733
1996:
January .661 7.728
February .653 7.731
March .655 7.734
April .664 7.735
May .645 7.736
June .644 7.741
July .642 7.735
August .639 7.733
September .639 7.733
October .615 7.732
November .595 7.732
December .583 7.735
1997:
January .624 7.750
February .614 7.744
March .611 7.749
April .616 7.746
May .610 7.748
June .600 7.747
July .609 7.742
</TABLE>
Source: Bloomberg L.P.
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing,
depending on the activity at any particular time of the large
international commercial banks, various central banks, large multi-
national corporations, speculators and other buyers and sellers of
foreign currencies, and since actual foreign currency transactions may
not be instantly reported, the exchange rates estimated by the Evaluator
may not be indicative of the amount in United States dollars the
International Trusts would receive had the Trustee sold any particular
currency in the market. The foreign exchange transactions of the
International Trusts will be conducted by the Trustee with foreign
exchange dealers acting as principals on a spot (i.e., cash) buying
basis. Although foreign exchange dealers trade on a net basis, they do
realize a profit based upon the difference between the price at which
they are willing to buy a particular currency (bid price) and the price
at which they are willing to sell the currency (offer price).
Page 5
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
Page 6
forthcoming. For example, the bank regulatory authorities have proposed
substantial changes to the Community Reinvestment Act and fair lending
laws, rules and regulations, and there can be no certainty as to the
effect, if any, that such changes would have on the Equity Securities in
the Trust's portfolio. In addition, from time to time the deposit
insurance system is reviewed by Congress and federal regulators, and
proposed reforms of that system could, among other things, further
restrict the ways in which deposited moneys can be used by banks or
reduce the dollar amount or number of deposits insured for any
depositor. Such reforms could reduce profitability as investment
opportunities available to bank institutions become more limited and as
consumers look for savings vehicles other than bank deposits. Banks and
thrifts face significant competition from other financial institutions
such as mutual funds, credit unions, mortgage banking companies and
insurance companies, and increased competition may result from
legislative broadening of regional and national interstate banking
powers as has been recently enacted. Among other benefits, the
legislation allows banks and bank holding companies to acquire across
previously prohibited state lines and to consolidate their various bank
subsidiaries into one unit. The Sponsor makes no prediction as to what,
if any, manner of bank and thrift regulatory actions might ultimately be
adopted or what ultimate effect such actions might have on the Trust's
portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Equity Securities or whether such approvals, if necessary,
will be obtained.
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 7
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.
Real Estate Companies. Certain Portfolios are considered to be
concentrated in common stocks of companies engaged in real estate asset
management, development, leasing, property sales and other related
activities. See "Risk Factors" in Part I of this Prospectus which will
indicate, if applicable, a Trust's concentration in this industry.
Investment in securities issued by these real estate companies should be
made with an understanding of the many factors which may have an adverse
impact on the credit quality of the particular company or industry.
Generally, these include economic recession, the cyclical nature of real
estate markets, competitive overbuilding, unusually adverse weather
conditions, changing demographics, changes in governmental regulations
(including tax laws and environmental, building, zoning and sales
regulations), increases in real estate taxes or costs of material and
labor, the inability to secure performance guarantees or insurance as
required, the unavailability of investment capital and the inability to
obtain construction financing or mortgage loans at rates acceptable to
builders and purchasers of real estate. Additional risks include an
inability to reduce expenditures associated with a property (such as
mortgage payments and property taxes) when rental revenue declines, and
possible loss upon foreclosure of mortgaged properties if mortgage
payments are not paid when due.
Page 8
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
REITs are differentiated by the types of real estate properties held and
the actual geographic location of properties and fall into two major
categories: equity REITs emphasize direct property investment, holding
their invested assets primarily in the ownership of real estate or other
equity interests, while mortgage REITs concentrate on real estate
financing, holding their assets primarily in mortgages secured by real
estate. As of the Initial Date of Deposit, the Trust contains only
equity REITs. REITs obtain capital funds for investment in underlying
real estate assets by selling debt or equity securities in the public or
institutional capital markets or by bank borrowing. Thus, the returns on
common equities of the REITs in which the Trust invests will be
significantly affected by changes in costs of capital and, particularly
in the case of highly "leveraged" REITs (i.e., those with large amounts
of borrowings outstanding), by changes in the level of interest rates.
The objective of an equity REIT is to purchase income-producing real
estate properties in order to generate high levels of cash flow from
rental income and a gradual asset appreciation, and they typically
invest in properties such as office, retail, industrial, hotel and
apartment buildings and healthcare facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distributed at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail
to qualify for such tax status, the related shareholders (including the
Trust) could be adversely affected by the resulting tax consequences.
The underlying value of the Securities and the Trust's ability to make
distributions to Unit holders may be adversely affected by changes in
national economic conditions, changes in local market conditions due to
changes in general or local economic conditions and neighborhood
characteristics, increased competition from other properties,
obsolescence of property, changes in the availability, cost and terms of
mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
impediments to raising rents, adverse changes in governmental rules and
fiscal policies, dependency on management skill, civil unrest, acts of
God, including earthquakes and other natural disasters (which may result
in uninsured losses), acts of war, adverse changes in zoning laws, and
other factors which are beyond the control of the issuers of the REITs
in the Trust.
The value of the REITs may at times be particularly sensitive to
devaluation in the event of rising interest rates. Equity REITs are less
likely to be affected by interest rate fluctuations than mortgage REITs
and the nature of the underlying assets of an equity REIT may be
considered more tangible than that of a mortgage REIT. Equity REITs are
more likely to be adversely affected by changes in the value of the
underlying property it owns than mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in the Trust may
be adversely affected by increases or decreases in property tax rates
and assessments or reassessments of the properties underlying the REITs
by taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
Page 9
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary. In an effort to reduce the impact of the
risks discussed above, the Underwriter has selected REITs that are
diversified among various real estate sectors and geographic locations.
The issuer of REITs generally maintains comprehensive insurance on
presently owned and subsequently acquired real property assets,
including liability, fire and extended coverage. However, certain types
of losses may be uninsurable or not be economically insurable as to
which the underlying properties are at risk in their particular locales.
There can be no assurance that insurance coverage will be sufficient to
pay the full current market value or current replacement cost of any
lost investment. Various factors might make it impracticable to use
insurance proceeds to replace a facility after it has been damaged or
destroyed. Under such circumstances, the insurance proceeds received by
a REIT might not be adequate to restore its economic position with
respect to such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of
the REITs in the Trust may not be presently liable or potentially liable
for any such costs in connection with real estate assets they presently
own or subsequently acquire while such REITs are held in the Trust.
Hong Kong. Recently, in the wake of Chinese economic development and
reform, certain Hong Kong real estate companies and other investors
began purchasing and developing real estate in southern China, including
Beijing, the Chinese capital. By 1992, however, southern China began to
experience a rise in real estate prices, increases in construction costs
and a tightening of credit markets. Any worsening of these conditions
could affect the profitability and financial condition of Hong Kong real
estate companies and could have a materially adverse effect on the value
of a Hong Kong Portfolio.
Small-Cap Companies. While historically small-cap company stocks have
outperformed the stocks of large companies, the former have customarily
involved more investment risk as well. Small-cap companies may have
limited product lines, markets or financial resources; may lack
management depth or experience; and may be more vulnerable to adverse
general market or economic developments than large companies. Some of
these companies may distribute, sell or produce products which have
recently been brought to market and may be dependent on key personnel.
The prices of small company securities are often more volatile than
prices associated with large company issues, and can display abrupt or
erratic movements at times, due to limited trading volumes and less
publicly available information. Also, because small cap companies
normally have fewer shares outstanding and these shares trade less
frequently than large companies, it may be more difficult for the Trusts
which contain these Equity Securities to buy and sell significant
amounts of such shares without an unfavorable impact on prevailing
market prices.
Portfolios
Equity Securities Selected for Target 5 Trusts
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 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
Page 10
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 Trusts
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."
Merck & Company, Inc., headquartered in White House Station, New Jersey,
discovers, develops, makes and markets a broad range of human and animal
health products and services. The company also administers managed
prescription drug programs.
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 11
-APPENDIX-
The graph which appears on page 10 of Part I of the Prospectus
represents a comparison between a $10,000 investment made on August 1,
1967 in those stocks which comprise the Dow Jones Industrial Average,
the ten common stocks in the Dow Jones Industrial Average having the
highest dividend yield and the five lowest priced stocks of the ten
common stocks in the Dow Jones Industrial Average having the highest
dividend yield as of July 31 of each respective year. The chart
indicates that $10,000 invested on August 1, 1967 in the stocks which
comprise the Dow Jones Industrial Average would on July 31, 1997 be
worth $297,006, as opposed to $558,623 had the $10,000 been invested in
the ten common stocks in the Dow Jones Industrial Average having the
highest dividend yield and $706,546 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 July 31 of
each respective year. Each figure assumes that dividends received during
each year will be reinvested semi-annually and sales charges,
commissions, expenses and taxes were not considered in determining total
returns.
The graph which appears on page 12 of Part I of the Prospectus
represents a comparison between a $10,000 investment made on August 1,
1967 in those stocks which comprise the Dow Jones Industrial Average,
the ten common stocks in the Dow Jones Industrial Average having the
highest dividend yield and the five lowest priced stocks of the ten
common stocks in the Dow Jones Industrial Average having the highest
dividend yield and re-weighted every 18 months. The chart indicates that
$10,000 invested on August 1, 1967 in the stocks which comprise the Dow
Jones Industrial Average would on July 31, 1997 be worth $297,006, as
opposed to $578,126 had the $10,000 been invested in the ten common
stocks in the Dow Jones Industrial Average having the highest dividend
yield and $797,983 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. Each figure assumes that
dividends received during each year will be reinvested semi-annually and
sales charges, commissions, expenses and taxes were not considered in
determining total returns.
CONTENTS OF REGISTRATION STATEMENT
A. Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Brokers' Fidelity Bond,
in the total amount of $1,000,000, the insurer being
National Union Fire Insurance Company of Pittsburgh.
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
The Registrant, The First Trust Special Situations Trust,
Series 214, hereby identifies The First Trust Special Situations
Trust, Series 4 Great Lakes Growth and Treasury Trust, Series 1;
The First Trust Special Situations Trust, Series 18 Wisconsin
Growth and Treasury Securities Trust, Series 1; The First Trust
Special Situations Trust, Series 69 Target Equity Trust Value Ten
Series; The First Trust Special Situations Trust, Series 108; The
First Trust Special Situations Trust, Series 119 Target 5 Trust,
Series 2 and Target 10 Trust, Series 8; and The First Trust
Special Situations Trust, Series 190 Biotechnology Growth Trust,
Series 3 for purposes of the representations required by Rule 487
and represents the following:
(1) that the portfolio securities deposited in the series
as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from
those deposited in such previous series;
(2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide
essential financial information for, the series with respect to
the securities of which this Registration Statement is being
filed, this Registration Statement does not contain disclosures
that differ in any material respect from those contained in the
registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities
Act of 1933.
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The First Trust Special Situations Trust, Series
214, has duly caused this Amendment to 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 18, 1997.
THE FIRST TRUST SPECIAL SITUATIONS
TRUST, SERIES 214
By NIKE SECURITIES L.P.
Depositor
By Robert M. Porcellino
Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the 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 )
Corporation, the ) August 18, 1997
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.,
Depositor.
** An executed copy of the related power of attorney was
filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of The
First Trust Combined Series 258 (File No. 33-63483) and
the same is hereby incorporated herein by this reference.
S-3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated August 18, 1997 in
Amendment No. 1 to the Registration Statement (Form S-6) (File
No. 333-33701) and related Prospectus of The First Trust Special
Situations Trust, Series 214.
ERNST & YOUNG LLP
Chicago, Illinois
August 18, 1997
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 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
will be filed as Exhibit 4.1 to the Registration Statement.
S-4
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 First Trust
Advisors 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 214 among Nike
Securities L.P., as Depositor, The Chase Manhattan Bank,
as Trustee, First Trust Advisors L.P., as Evaluator, and
First Trust Advisors L.P., as Portfolio Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No. 33-
42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities
L.P., Depositor (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-
6 [File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
1.6 Underwriter Agreement (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42755] filed on
behalf of The First Trust Special Situations Trust,
Series 19).
2.1 Copy of Certificate of Ownership (included in Exhibit
1.1 filed herewith on page 2 and incorporated herein by
reference).
S-5
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.
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).
S-6
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 214
TRUST AGREEMENT
Dated: August 18, 1997
The Trust Agreement among Nike Securities L.P., as
Depositor, The Chase Manhattan Bank, as Trustee and First Trust
Advisors L.P., as Evaluator and Portfolio Supervisor, sets forth
certain provisions in full and incorporates other provisions by
reference to the document entitled "Standard Terms and Conditions
of Trust for The First Trust Special Situations Trust, Series 22
and certain subsequent Series, Effective November 20, 1991"
(herein called the "Standard Terms and Conditions of Trust"), and
such provisions as are incorporated by reference constitute a
single instrument. All references herein to Articles and
Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the
Evaluator and the Portfolio Supervisor agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II and Part III hereof,
all the provisions contained in the Standard Terms and Conditions
of Trust are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth
in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR TARGET 5 TRUST, AUGUST 1997 B SERIES("TARGET 5 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 15,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/15,000.
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
20% AT&T Corporation, 20% E.I. du Pont de Nemours & Company,
20% Exxon Corporation, 20% General Motors Corporation,
20% Philip Morris Companies, Inc.
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0025 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05, payable on a
Distribution Date. Such fee may exceed the actual cost of
providing such evaluation services for the Trust, but at no time
will the total amount received for evaluation services rendered
to unit investment trusts of which Nike Securities L.P. is the
sponsor in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year.
H. The Trustee's Compensation, including administrative fees,
Rate pursuant to Section 6.04 of the Standard Terms and Conditions of
Trust shall be an annual fee of $.0075 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. However, in
no event, except as may otherwise be provided in the Standard
Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is August 18,
1997.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR TARGET 10 TRUST, AUGUST 1997 B SERIES ("TARGET 10 TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 15,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/15,000.
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
10% AT&T Corporation, 10% Chevron Corporation, 10%
E.I. du Pont de Nemours & Company, 10% Eastman
Kodak Company, 10% Exxon Corporation, 10% General
Motors Corporation, 10% Merck & Company, Inc.,
10% Minnesota Mining & Manufacturing Company,
10% J.P. Morgan & Company, Inc., 10% Philip
Morris Companies, Inc.
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0025 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05, payable on a
Distribution Date. Such fee may exceed the actual cost of
providing such evaluation services for the Trust, but at no time
will the total amount received for evaluation services rendered
to unit investment trusts of which Nike Securities L.P. is the
sponsor in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year.
H. The Trustee's Compensation, including administrative fees,
Rate pursuant to Section 6.04 of the Standard Terms and Conditions of
Trust shall be an annual fee of $.0075 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. However, in
no event, except as may otherwise be provided in the Standard
Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is August 18,
1997.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR TARGET 5 PREMIER TRUST, AUGUST 1997 SERIES
("TARGET 5 PREMIER TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is 15,000 Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/15,000.
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
20% AT&T Corporation, 20% E.I. du Pont de Nemours & Company,
20% Exxon Corporation, 20% General Motors Corporation,
20% Philip Morris Companies, Inc.
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $.0025 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05, payable on a
Distribution Date. Such fee may exceed the actual cost of
providing such evaluation services for the Trust, but at no time
will the total amount received for evaluation services rendered
to unit investment trusts of which Nike Securities L.P. is the
sponsor in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year.
H. The Trustee's Compensation, including administrative fees,
Rate pursuant to Section 6.04 of the Standard Terms and Conditions of
Trust shall be an annual fee of $.0075 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. However, in
no event, except as may otherwise be provided in the Standard
Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is August 18,
1997.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
FOR TARGET 10 PREMIER TRUST, AUGUST 1997 SERIES
("TARGET 10 PREMIER TRUST")
The following special terms and conditions are hereby agreed
to:
A. The Securities initially deposited in the Trust
pursuant to Section 2.01 of the Standard Terms and Conditions of
Trust are set forth in the Schedules hereto.
B. (1) The aggregate number of Units outstanding for the
Trust on the Initial Date of Deposit is Units.
(2) The initial fractional undivided interest in and
ownership of the Trust represented by each Unit thereof shall be
1/ .
Documents representing this number of Units for the Trust
are being delivered by the Trustee to the Depositor pursuant to
Section 2.03 of the Standard Terms and Conditions of Trust.
C. The Percentage Ratio is as follows on the Initial Date
of Deposit:
10% AT&T Corporation, 10% Chevron Corporation, 10%
E.I. du Pont de Nemours & Company, 10% Eastman
Kodak Company, 10% Exxon Corporation, 10% General
Motors Corporation, 10% Merck & Company, Inc.,
10% Minnesota Mining & Manufacturing Company,
10% J.P. Morgan & Company, Inc., 10% Philip
Morris Companies, Inc.
D. The Record Date shall be as set forth in the prospectus
for the sale of Units dated the date hereof (the "Prospectus")
under "Summary of Essential Information."
E. The Distribution Date shall be as set forth in the
Prospectus under "Summary of Essential Information."
F. The Mandatory Termination Date for the Trust shall be
as set forth in the Prospectus under "Summary of Essential
Information."
G. The Evaluator's compensation as referred to in
Section 4.03 of the Standard Terms and Conditions of Trust shall
be an annual fee of $ per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05, payable on a
Distribution Date. Such fee may exceed the actual cost of
providing such evaluation services for the Trust, but at no time
will the total amount received for evaluation services rendered
to unit investment trusts of which Nike Securities L.P. is the
sponsor in any calendar year exceed the aggregate cost to the
Evaluator of supplying such services in such year.
H. The Trustee's Compensation, including administrative fees,
Rate pursuant to Section 6.04 of the Standard Terms and Conditions of
Trust shall be an annual fee of $.0075 per Unit, calculated based on the
largest number of Units outstanding during each period in respect
of which a payment is made pursuant to Section 3.05. However, in
no event, except as may otherwise be provided in the Standard
Terms and Conditions of Trust, shall the Trustee receive
compensation in any one year from any Trust of less than $2,000
for such annual compensation.
I. The Initial Date of Deposit for the Trust is August 18,
1997.
J. The minimum amount of Equity Securities to be sold by
the Trustee pursuant to Section 5.02 of the Indenture for the
redemption of Units shall be 100 shares.
PART III
A. Section 1.01(2) shall be amended to read as follows:
"(2) "Trustee" shall mean The Chase Manhattan Bank, or
any successor trustee appointed as hereinafter provided."
All references to United States Trust Company of New York in
the Standard Terms and Conditions of Trust shall be amended to
refer to The Chase Manhattan Bank.
B. Section 1.01(26) shall be added to read as follows:
"(26) The term "Rollover Unit holder" shall be defined
as set forth in Section 5.05, herein."
C. Section 1.01(27) shall be added to read as follows:
"(27) The "Rollover Notification Date" shall be
defined as set forth in the Prospectus under "Summary of
Essential Information."
D. Section 1.01(28) shall be added to read as follows:
"(28) The term "Rollover Distribution" shall be
defined as set forth in Section 5.05, herein."
E. Section 1.01(29) shall be added to read as follows:
"(29) The term "Distribution Agent" shall refer to the
Trustee acting in its capacity as distribution agent
pursuant to Section 5.02 herein."
F. Section 1.01(30) shall be added to read as follows:
"(30) The term "Special Redemption and Liquidation
Period" shall be as set forth in the Prospectus under
"Summary of Essential Information."
G. The term "Capital Account" as set forth in the
Prospectus shall be deemed to refer to the "Principal Account."
H. Paragraph (b) of Section 2.01 shall be restated in its
entirety as follows:
(b)(1)From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its
discretion, to assign, convey to and deposit with the
Trustee (i) additional Securities, duly endorsed in blank or
accompanied by all necessary instruments of assignment and
transfer in proper form, (ii) Contract Obligations relating
to such additional Securities, accompanied by cash and/or
Letter(s) of Credit as specified in paragraph (c) of this
Section 2.01, or (iii) cash (or a Letter of Credit in lieu
of cash) with instructions to purchase additional
Securities, in an amount equal to the portion of the Unit
Value of the Units created by such deposit attributable to
the Securities to be purchased pursuant to such
instructions. Except as provided in the following
subparagraphs (2), (3) and (4) the Depositor, in each case,
shall ensure that each deposit of additional Securities
pursuant to this Section shall maintain, as nearly as
practicable, the Percentage Ratio. Each such deposit of
additional Securities shall be made pursuant to a Notice of
Deposit of Additional Securities delivered by the Depositor
to the Trustee. Instructions to purchase additional
Securities shall be in writing, and shall specify the name
of the Security, CUSIP number, if any, aggregate amount,
price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker
to execute purchases in accordance with such instructions;
the Depositor shall be entitled to compensation therefor in
accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's
instructions or made by the Depositor as broker.
(2) Additional Securities (or Contract Obligations
therefor) may, at the Depositor's discretion, be deposited
or purchased in round lots. If the amount of the deposit is
insufficient to acquire round lots of each Security to be
acquired, the additional Securities shall be deposited or
purchased in the order of the Security in the Trust most
under-represented immediately before the deposit with
respect to the Percentage Ratio.
(3) If at the time of a deposit of additional
Securities, Securities of an issue deposited on the Initial
Date of Deposit (or of an issue of Replacement Securities
acquired to replace an issue deposited on the Initial Date
of Deposit) are unavailable, cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, the
Depositor may (i) deposit, or instruct the Trustee to
purchase, in lieu thereof, another issue of Securities or
Replacement Securities or (ii) deposit cash or a letter of
credit in an amount equal to the valuation of the issue of
Securities whose acquisition is not feasible with
instructions to acquire such Securities of such issue when
they become available.
(4) Any contrary authorization in the preceding
subparagraphs (1) through (3) notwithstanding, deposits of
additional Securities made after the 90-day period
immediately following the Initial Date of Deposit (except
for deposits made to replace Failed Contract Obligations if
such deposits occur with 20 days from the date of a failure
occurring within such initial 90-day period) shall maintain
exactly the Percentage Ratio existing immediately prior to
such deposit.
(5) In connection with and at the time of any deposit
of additional Securities pursuant to this Section 2.01(b),
the Depositor shall exactly replicate Cash (as defined
below) received or receivable by the Trust as of the date of
such deposit. For purposes of this paragraph, "Cash" means,
as to the Capital Account, cash or other property (other
than Securities) on hand in the Capital Account or
receivable and to be credited to the Capital Account as of
the date of the deposit (other than amounts to be
distributed solely to persons other than holders of Units
created by the deposit) and, as to the Income Account, cash
or other property (other than Securities) received by the
Trust as of the date of the deposit or receivable by the
Trust in respect of a record date for a payment on a
Security which has occurred or will occur before the Trust
will be the holder of record of a Security, reduced by the
amount of any cash or other property received or receivable
on any Security allocable (in accordance with the Trustee's
calculations of distributions from the Income Account
pursuant to Section 3.05) to a distribution made or to be
made in respect of a Record Date occurring prior to the
deposit. Such replication will be made on the basis of a
fraction, the numerator of which is the number of Units
created by the deposit and the denominator of which is the
number of Units which are outstanding immediately prior to
the deposit".
I. The second paragraph of Section 3.02 of the Standard
Terms and Conditions is hereby deleted and replaced with the
following sentence:
"Any non-cash distributions (other than a non-taxable
distribution of the shares of the distributing corporation
which shall be retained by a Trust) received by a Trust
shall be dealt with in the manner described at Section 3.11,
herein, and shall be retained or disposed of by such Trust
according to those provisions. The proceeds of any
disposition shall be credited to the Income Account of a
Trust. Neither the Trustee nor the Depositor shall be
liable or responsible in any way for depreciation or loss
incurred by reason of any such sale."
J. Paragraph (c) of Subsection II of Section 3.05 of the
Standard Terms and Conditions of Trust is hereby amended to read
as follows:
"On each Distribution Date the Trustee shall distribute
to each Unit holder of record at the close of business on
the Record Date immediately preceding such Distribution Date
an amount per Unit equal to such Unit holder's pro rata
share of the balance of the Capital Account (except for
monies on deposit therein required to purchase Contract
Obligations) computed as of the close of business on such
Record Date after deduction of any amounts provided in
Subsection I."
K. Section 3.05.II(a) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (a) On each Distribution Date, the Trustee shall
distribute to each Unit holder of record at the close of
business on the Record Date immediately preceding such
Distribution Date an amount per Unit equal to such Unit
holder's Income Distribution (as defined below), plus such
Unit holder's pro rata share of the balance of the Capital
Account (except for monies on deposit therein required to
purchase Contract Obligations) computed as of the close of
business on such Record Date after deduction of any amounts
provided in Subsection I, provided, however, that the
Trustee shall not be required to make a distribution from
the Capital Account unless the amount available for
distribution shall equal $1.00 per 100 Units.
Each Trust shall provide the following distribution
elections: (1) distributions to be made by check mailed to
the post office address of the Unit holder as it appears on
the registration books of the Trustee, or (2) the following
reinvestment option:
The Trustee will, for any Unit holder who provides
the Trustee written instruction, properly executed and
in form satisfactory to the Trustee, received by the
Trustee no later than its close of business 10 business
days prior to a Record Date (the "Reinvestment Notice
Date"), reinvest such Unit holder's distribution from
the Income and Capital Accounts in Units of the Trust,
purchased from the Depositor, to the extent the
Depositor shall make Units available for such purchase,
at the Depositor's offering price as of the fifth
business day prior to the following Distribution Date,
and at such reduced sales charge as may be described in
the prospectus for the Trusts. If, for any reason, the
Depositor does not have Units of the Trust available
for purchase, the Trustee shall distribute such Unit
holder's distribution from the Income and Capital
Accounts in the manner provided in clause (1) of the
preceding paragraph. The Trustee shall be entitled to
rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by
any subsequent notice to the contrary. The Trustee
shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in
accordance with this paragraph, or for any failure to
make such reinvestment in the event the Depositor does
not make Units available for purchase.
Any Unit holder who does not effectively elect
reinvestment in Units of their respective Trust pursuant to
the preceding paragraph shall receive a cash distribution in
the manner provided in clause (1) of the second preceding
paragraph."
L. Section 3.05.II(b) of the Standard Terms and Conditions
of Trust is hereby amended to read in its entirety as follows:
"II. (b) For purposes of this Section 3.05, the Unit
holder's Income Distribution shall be equal to such Unit
holder's pro rata share of the cash balance in the Income
Account computed as of the close of business on the Record
Date immediately preceding such Income Distribution after
deduction of (i) the fees and expenses then deductible
pursuant to Section 3.05.I. and (ii) the Trustee's estimate
of other expenses properly chargeable to the Income Account
pursuant to the Indenture which have accrued, as of such
Record Date, or are otherwise properly attributable to the
period to which such Income Distribution relates."
M. Section 3.11 of the Standard Terms and Conditions of
Trust is hereby deleted in its entirety and replaced with the
following language:
"Section 3.11. Notice to Depositor.
In the event that the Trustee shall have been notified
at any time of any action to be taken or proposed to be
taken by at least a legally required number of holders of
any Securities deposited in a Trust, the Trustee shall take
such action or omit from taking any action, as appropriate,
so as to insure that the Securities are voted as closely as
possible in the same manner and the same general proportion
as are the Securities held by owners other than such Trust.
In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
securities, or to exchange securities, for Trust Securities,
the Trustee shall reject such offer. However, should any
issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer,
any securities, cash and/or property received shall be
deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the
Depositor's direction, unless the Depositor advises the
Trustee to keep such securities or property. The Depositor
may rely on the Portfolio Supervisor in so advising the
Trustee. The cash received in such exchange and cash
proceeds of any such sales shall be distributed to Unit
holders on the next distribution date in the manner set
forth in Section 3.05 regarding distributions from the
Capital Account. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by
reason of any such sale.
Neither the Depositor nor the Trustee shall be liable
to any person for any action or failure to take action
pursuant to the terms of this Section 3.11.
Whenever new securities or property is received and
retained by a Trust pursuant to this Section 3.11, the
Trustee shall, within five days thereafter, mail to all Unit
holders of such Trust notices of such acquisition unless
legal counsel for such Trust determines that such notice is
not required by The Investment Company Act of 1940, as
amended."
N. Section 3.05 of Article III of the Standard Terms and
Conditions of Trust is hereby amended to include the following
subsection:
"Section 3.05.I.(e) deduct from the Income Account or,
to the extent funds are not available in such Account, from
the Capital Account and pay to the Depositor the amount that
it is entitled to receive pursuant to Section 3.14.
O. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraphs
which shall be entitled Section 3.14.:
"Section 3.14. Bookkeeping and Administrative Expenses.
As compensation for providing bookkeeping and other
administrative services of a character described in
Section 26(a)(2)(C) of the Investment Company Act of 1940 to the
extent such services are in addition to, and do not
duplicate, the services to be provided hereunder by the
Trustee or the Portfolio Supervisor, the Depositor shall
receive against a statement or statements therefor submitted
to the Trustee monthly or annually an aggregate annual fee
in an amount which shall not exceed that amount set forth in
the Prospectus times the number of Units outstanding as of
January 1 of such year except for a year or years in which
an initial offering period as determined by Section 4.01 of
this Indenture occurs, in which case the fee for a month is
based on the number of Units outstanding at the end of such
month (such annual fee to be pro rated for any calendar year
in which the Depositor provides service during less than the
whole of such year), but in no event shall such compensation
when combined with all compensation received from other unit
investment trusts for which the Depositor hereunder is
acting as Depositor for providing such bookkeeping and
administrative services in any calendar year exceed the
aggregate cost to the Depositor providing services to such
unit investment trusts. Such compensation may, from time to
time, be adjusted provided that the total adjustment upward
does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in
consumer prices for services as measured by the United
States Department of Labor Consumer Price Index entitled
"All Services Less Rent of Shelter" or similar index, if
such index should no longer be published. The consent or
concurrence of any Unit holder hereunder shall not be
required for any such adjustment or increase. Such
compensation shall be paid by the Trustee, upon receipt of
invoice therefor from the Depositor, upon which, as to the
cost incurred by the Depositor of providing services
hereunder the Trustee may rely, and shall be charged against
the Income and Capital Accounts on or before the
Distribution Date following the Monthly Record Date on which
such period terminates. The Trustee shall have no liability
to any Certificateholder or other person for any payment
made in good faith pursuant to this Section.
If the cash balance in the Income and Capital Accounts
shall be insufficient to provide for amounts payable
pursuant to this Section 3.14, the Trustee shall have the
power to sell (i) Securities from the current list of
Securities designated to be sold pursuant to Section 5.02
hereof, or (ii) if no such Securities have been so
designated, such Securities as the Trustee may see fit to
sell in its own discretion, and to apply the proceeds of any
such sale in payment of the amounts payable pursuant to this
Section 3.14.
Any moneys payable to the Depositor pursuant to this
Section 3.14 shall be secured by a prior lien on the Trust
Fund except that no such lien shall be prior to any lien in
favor of the Trustee under the provisions of Section 6.04
herein.
P. Article III of the Standard Terms and Conditions of
Trust is hereby amended by inserting the following paragraph
which shall be entitled Section 3.15:
"Section 3.15. Deferred Sales Charge. If the
prospectus related to the Trust specifies a deferred sales
charge, the Trustee shall, on the dates specified in and as
permitted by such Prospectus (the "Deferred Sales Charge
Payment Dates"), withdraw from the Capital Account, an
amount per Unit specified in such Prospectus and credit such
amount to a special non-Trust account designated by the
Depositor out of which the deferred sales charge will be
distributed to or on the order of the Depositor on such
Deferred Sales Charge Payment Dates (the "Deferred Sales
Charge Account"). If the balance in the Capital Account is
insufficient to make such withdrawal, the Trustee shall, as
directed by the Depositor, advance funds in an amount
required to fund the proposed withdrawal and be entitled to
reimbursement of such advance upon the deposit of additional
monies in the Capital Account, and/or sell Securities and
credit the proceeds thereof to the Deferred Sales Charge
Account, provided, however, that the aggregate amount
advanced by the Trustee at any time for payment of the
deferred sales charge shall not exceed $15,000. Such
direction shall, if the Trustee is directed to sell a
Security, identify the Security to be sold and include
instructions as to the execution of such sale. In the
absence of such direction by the Depositor, the Trustee
shall sell Securities sufficient to pay the deferred sales
charge (and any unreimbursed advance then outstanding) in
full, and shall select Securities to be sold in such manner
as will maintain (to the extent practicable) the relative
proportion of number of shares of each Security then held.
The proceeds of such sales, less any amounts paid to the
Trustee in reimbursement of its advances, shall be credited
to the Deferred Sales Charge Account. If a Unit holder
redeems Units prior to full payment of the deferred sales
charge, the Trustee shall, if so provided in the related
Prospectus, on the Redemption Date, withhold from the
Redemption Price payable to such Unit holder an amount equal
to the unpaid portion of the deferred sales charge and
distribute such amount to the Deferred Sales Charge Account.
If the Trust is terminated for reasons other than that set
forth in Section 6.01(g)(ii), the Trustee shall, if so
provided in the related Prospectus, on the termination of
the Trust, withhold from the proceeds payable to Unit
holders an amount equal to the unpaid portion of the
deferred sales charge and distribute such amount to the
Deferred Sales Charge Account. If the Trust is terminated
pursuant to Section 6.01(g)(ii), the Trustee shall not
withhold from the proceeds payable to Unit holders any
amounts of unpaid deferred sales charges. If pursuant to
Section 5.02 hereof, the Depositor shall purchase a Unit
tendered for redemption prior to the payment in full of the
deferred sales charge due on the tendered Unit, the
Depositor shall pay to the Unit holder the amount specified
under Section 5.02 less the unpaid portion of the deferred
sales charge. All advances made by the Trustee pursuant to
this Section shall be secured by a lien on the Trust prior
to the interest of the Unit holders."
Q. Article IV, Section 4.01 of the Standard Terms and
Conditions of Trust is hereby amended in the following manner:
1. Section 4.01(b) is hereby amended by deleting that
portion of the first sentence appearing after the colon and
the entire second sentence and replacing them in their
entirety with the following:
"if the Securities are listed on a national
securities exchange or the NASDAQ National Market
System, such Evaluation shall generally be based
on the closing sale price on the exchange or
system which is the principal market therefor,
which shall be deemed to be the New York Stock
Exchange if the Securities are listed thereon
(unless the Evaluator deems such price
inappropriate as a basis for evaluation), or if
there is no closing sale price on such exchange or
system, at the closing ask prices. If the
Securities are not so listed or, if so listed and
the principal market therefor is other than on an
exchange, the evaluation shall generally be based
on the current ask price 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 Securities on the
ask side of the market or (c) any combination of
the above. As used herein, the closing sale price
is deemed to mean the most recent closing sale
price on the relevant securities exchange
immediately prior to the Evaluation time."
2. Section 4.01(c) is hereby deleted and
replaced in its entirety with the following:
"(c) After the initial offering period and
both during and after the initial offering period,
for purposes of the Trust Fund Evaluations
required by Section 5.01 in determining Redemption
Value and Unit Value, Evaluation of the Securities
shall be made in the manner described in Section
4.01(b), on the basis of current bid prices for
Zero Coupon Obligations (if any),the bid side
value of the relevant currency exchange rate
expressed in U.S. dollars and, except in those
cases in which the Equity Securities are listed on
a national or foreign securities exchange or the
NASDAQ National Market System and the closing sale
prices are utilized, on the basis of the current
bid prices of the Equity Securities. In addition,
the Evaluator shall reduce the Evaluation of each
Security by the amount of any liquidation costs
(other than brokerage costs incurred on any
national securities exchange) and any capital
gains or other taxes which would be incurred by
the Trust upon the sale of such Security, such
taxes being computed as if the Security were sold
on the date of the Evaluation."
R. Section 5.02 of the Standard Terms and Conditions of
Trust is amended by adding the following after the second
paragraph of such section:
"Notwithstanding anything herein to the contrary, in
the event that any tender of Units pursuant to this Section
5.02 would result in the disposition by the Trustee of less
than a whole Security, the Trustee shall distribute cash in
lieu thereof and sell such Securities as directed by the
Sponsors as required to make such cash available.
Unit holders of the Target 5 Trusts or the Target 10
Trusts may redeem 2,500 Units or more of either Trust and
request a distribution in kind of (i) such Unit holder's
pro rata portion of each of the Securities in such Trust, in
whole shares, and (ii) cash equal to such Unit holder's
pro rata portion of the Income and Capital Accounts as
follows: (x) a pro rata portion of the net proceeds of sale
of the Securities representing any fractional shares
included in such Unit holder's pro rata share of the
Securities and (y) such other cash as may properly be
included in such Unit holder's pro rata share of the sum of
the cash balances of the Income and Principal Accounts in an
amount equal to the Unit Value determined on the basis of a
Trust Fund Evaluation made in accordance with Section 5.01
determined by the Trustee on the date of tender less amounts
determined in clauses (i) and (ii)(x) of this Section.
Subject to Section 5.05 with respect to Rollover Unit
holders, to the extent possible, distributions of Securities
pursuant to an in kind redemption of Units shall be made by
the Trustee through the distribution of each of the
Securities in book-entry form to the account of the Unit
holder's bank or broker-dealer at the Depository Trust
Company. Any distribution in kind will be reduced by
customary transfer and registration charges."
S. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the
Depositor shall offer a subsequent series of the Target 5
Trusts or the Target 10 Trusts (the "New Series"), the
Trustee shall, at the Depositor's sole cost and expense,
include in the notice sent to Unit holders specified in
Section 8.02 a form of election whereby Unit holders, whose
redemption distribution would be in an amount sufficient to
purchase at least one Unit of the New Series, may elect to
have their Units(s) redeemed in kind in the manner provided
in Section 5.02, the Securities included in the redemption
distribution sold, and the cash proceeds applied by the
Distribution Agent to purchase Units of a New Series, all as
hereinafter provided. The Trustee shall honor properly
completed election forms returned to the Trustee,
accompanied by any Certificate evidencing Units tendered for
redemption or a properly completed redemption request with
respect to uncertificated Units, by its close of business on
the Rollover Notification Date.
All Units so tendered by a Unit holder (a "Rollover
Unit holder") shall be redeemed and cancelled on the
Rollover Notification Date. Subject to payment by such
Rollover Unit holder of any tax or other governmental
charges which may be imposed thereon, such redemption is to
be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the
Rollover Notification Date of the net asset value
(determined on the basis of the Trust Fund Evaluation as of
the Rollover Notification Date in accordance with
Section 4.01) multiplied by the number of Units being
redeemed (herein called the "Rollover Distribution"). Any
Securities that are made part of the Rollover Distribution
shall be valued for purposes of the redemption distribution
as of the Rollover Notification Date.
All Securities included in a Unit holder's Rollover
Distribution shall be sold by the Distribution Agent on the
Special Redemption and Liquidation Date specified in the
Prospectus pursuant to the Depositor's direction, and the
Distribution Agent shall employ the Depositor as broker in
connection with such sales. For such brokerage services,
the Depositor shall be entitled to compensation at its
customary rates, provided however, that its compensation
shall not exceed the amount authorized by applicable
Securities laws and regulations. The Depositor shall direct
that sales be made in accordance with the guidelines set
forth in the Prospectus under the heading "Special
Redemption, Liquidation and Investment in New Trusts."
Should the Depositor fail to provide direction, the
Distribution Agent shall sell the Securities in the manner
provided in the prospectus for " less liquid Equity
Securities." The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by
reason of any sale made pursuant to this Section.
Upon each trade date for sales of Securities included
in the Rollover Unit holder's Rollover Distribution, the
Distribution Agent shall, as agent for such Rollover Unit
holder, enter into a contract with the Depositor to purchase
from the Depositor Units of a New Series (if any), at the
Depositor's public offering price for such Units on such
day, and at such reduced sales charge as shall be described
in the prospectus for such Trust. Such contract shall
provide for purchase of the maximum number of Units of a New
Series whose purchase price is equal to or less than the
cash proceeds held by the Distribution Agent for the Unit
holder on such day (including therein the proceeds
anticipated to be received in respect of Securities traded
on such day net of all brokerage fees, governmental charges
and any other expenses incurred in connection with such
sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included
in the Rollover Unit holder's redemption distribution shall
not be consummated in accordance with its terms, the
Distribution Agent shall apply the cash proceeds held for
such Unit holder as of the settlement date for the purchase
of Units of a New Series to purchase the maximum number of
units which such cash balance will permit, and the Depositor
agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be
extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such
purchase. If the Unit holder's Rollover Distribution will
produce insufficient cash proceeds to purchase all of the
Units of a New Series contracted for, the Depositor agrees
that the contract shall be rescinded with respect to the
Units as to which there was a cash shortfall without any
liability to the Rollover Unit holder or the Distribution
Agent. Any cash balance remaining after such purchase shall
be distributed within a reasonable time to the Rollover Unit
holder by check mailed to the address of such Unit holder on
the registration books of the Trustee. Units of a New Series
will be uncertificated unless and until the Rollover Unit
holder requests a certificate. Any cash held by the
Distribution Agent shall be held in a non-interest bearing
account which will be of benefit to the Distribution Agent
in accordance with normal banking procedures. Neither the
Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation
resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in
the event the Depositor does not make Units available for
purchase.
(b) Notwithstanding the foregoing, the Depositor may,
in their discretion at any time, decide not to offer Trust
Series in the future, and if so, this Section 5.05
concerning the Rollover of Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent
shall, however, be entitled to receive indemnification and
reimbursement from the Trust for any and all expenses and
disbursements to the same extent as the Trustee is permitted
reimbursement hereunder."
T. Paragraph (g) of Section 6.01 of the Standard Terms and
Conditions of Trust is hereby amended by inserting the following
after the first word thereof:
"(i) the value of any Trust as shown by an evaluation
by the Trustee pursuant to Section 5.01 hereof shall be less
than the lower of $2,000,000 or 20% of the total principal
amount of Securities deposited in such Trust, or (ii)"
U. Section 1.01(4) shall be amended to read as follows:
"(4) "Portfolio Supervisor" shall mean First Trust
Advisors L.P. and its successors in interest, or any
successor portfolio supervisor appointed as hereinafter
provided."
V. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean First Trust Advisors L.P.
and its successors in interest, or any successor evaluator
appointed as hereinafter provided."
W. The first sentence of Section 3.13. shall be amended to
read as follows:
"As compensation for providing supervisory portfolio
services under this Indenture, the Portfolio Supervisor
shall receive, in arrears, against a statement or statements
therefor submitted to the Trustee monthly or annually an
aggregate annual fee in an amount which shall not exceed
that amount as set forth in the Prospectus per Unit
outstanding as of January 1 of such year except for a Trust
during the year or years in which an initial offering period
as determined in Section 4.01 of this Indenture occurs, in
which case the fee for a month is based on the number of
Units outstanding at the end of such month (such annual fee
to be pro rated for any calendar year in which the Portfolio
Supervisor provides services during less than the whole of
such year), but in no event shall such compensation when
combined with all compensation received from other series of
the Trust for providing such supervisory services in any
calendar year exceed the aggregate cost to the Portfolio
Supervisor for the cost of providing such services."
X. Section 2.03(a) of the Standard Terms and Conditions of
Trust shall be amended by adding the following sentence after the
first sentence of such section:
"The number of Units may be increased through a split
of the Units or decreased through a reverse split thereof,
as directed in writing by the Depositor, at any time when
the Depositor is the only beneficial holder of Units, which
revised number of Units shall be recorded by the Trustee on
its books. The Trustee shall be entitled to rely on the
Depositor's direction as certification that no person other
than the Depositor has a beneficial interest in the Units
and the Trustee shall have no liability to any person for
action taken pursuant to such direction."
Y. The following shall be added immediately following the
first sentence of paragraph (c) of Section 2.01:
"The Trustee may allow the Depositor to substitute any
Letter(s) of Credit deposited with the Trustee in connection
with the deposits described in Section 2.01(a) and (b) with
cash in an amount sufficient to satisfy the obligations to
which the Letter(s) of Credit relates. Any substituted
Letter(s) of Credit shall be released by the Trustee."
Z. Section 3.01 of the Standard Terms and Conditions of
Trust shall be replaced in its entirety with the following:
"Section 3.01. Initial Cost. The expenses incurred in
establishing a Trust, including the cost of the preparation
and typesetting of the registration statement, prospectuses
(including preliminary prospectuses), the indenture and
other documents relating to the Trust, printing of
Certificates, Securities and Exchange Commission and state
blue sky registration fees, the costs of the initial
valuation of the portfolio and audit of the Trust, the
initial fees and expenses of the Trustee, and legal and
other out-of-pocket expenses related thereto, but not
including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses incurred
in the preparation and printing of brochures and other
advertising materials and any other selling expenses, to the
extent not borne by the Depositor, shall be borne by the
Trust. To the extent the funds in the Income and Capital
Accounts of the Trust shall be insufficient to pay the
expenses borne by the Trust specified in this Section 3.01,
the Trustee shall advance out of its own funds and cause to
be deposited and credited to the Income Account such amount
as may be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each Record
Date from funds on hand in the Income Account or, to the
extent funds are not available in such Account, from the
Capital Account, in the amount deemed to have accrued as of
such Record Date as provided in the following sentence (less
prior payments on account of such advances, if any), and the
provisions of Section 6.04 with respect to the reimbursement
of disbursements for Trust expenses, including, without
limitation, the lien in favor of the Trustee therefor and
the authority to sell Securities as needed to fund such
reimbursement, shall apply to the payment of expenses and
the amounts advanced pursuant to this Section. For the
purposes of the preceding sentence and the addition provided
in clause (4) of the first sentence of Section 5.01, the
expenses borne by the Trust pursuant to this Section shall
be deemed to have been paid on the date of the Trust
Agreement and to accrue at a daily rate over the time period
specified for their amortization provided in the Prospectus;
provided, however, that nothing herein shall be deemed to
prevent, and the Trustee shall be entitled to, full
reimbursement for any advances made pursuant to this Section
no later than the termination of the Trust. For purposes of
calculating the accrual of organizational expenses under
this Section 3.01, the Trustee shall rely on the written
estimates of such expenses provided by the Depositor
pursuant to Section 5.01."
AA. Section 5.01 of the Standard Terms and Conditions of
Trust shall be amended as follows:
(i) The first sentence of the first paragraph of
Section 5.01 shall be amended by deleting the phrase
"together with all other assets of the Trust" at the end of
such sentence and adding the following at the conclusion
thereof: ", plus (4) amounts representing organizational
expenses paid from the Trust less amounts representing
accrued organizational expenses of the Trust, plus (5) all
other assets of the Trust."
(ii) The following shall be added at the end of the
first paragraph of Section 5.01:
Until the Depositor has informed the Trustee that
there will be no further deposits of Additional
Securities pursuant to section 2.01(b), the Depositor
shall provide the Trustee with written estimates of (i)
the total organizational expenses to be borne by the
Trust pursuant to Section 3.01 and (ii) the total
number of Units to be issued in connection with the
initial deposit and all anticipated deposits of
additional Securities. For purposes of calculating the
Trust Fund Evaluation and Unit Value, the Trustee shall
treat all such anticipated expenses as having been paid
and all liabilities therefor as having been incurred,
and all Units as having been issued, in each case on
the date of the Trust Agreement, and, in connection
with each such calculation, shall take into account a
pro rata portion of such expense and liability based on
the actual number of Units issued as of the date of
such calculation. In the event the Trustee is informed
by the Depositor of a revision in its estimate of total
expenses or total Units and upon the conclusion of the
deposit of additional Securities, the Trustee shall
base calculations made thereafter on such revised
estimates or actual expenses, respectively, but such
adjustment shall not affect calculations made prior
thereto and no adjustment shall be made in respect
thereof.
BB. Notwithstanding anything to the contrary in Sections
3.15 and 4.05 of the Standard Terms and Conditions of Trust, so
long as Nike Securities L.P. is acting as Depositor, the Trustee
shall have no power to remove the Portfolio Supervisor.
IN WITNESS WHEREOF, Nike Securities L.P., The Chase
Manhattan Bank and First Trust Advisors L.P. have each caused
this Trust Agreement to be executed and the respective corporate
seal to be hereto affixed and attested (if applicable) by
authorized officers; all as of the day, month and year first
above written.
NIKE SECURITIES L.P.,
Depositor
By Robert M. Porcellino
Vice President
THE CHASE MANHATTAN BANK,
Trustee
By Thomas Porrazzo
Vice President
[SEAL]
ATTEST:
Rosalia A. Raviele
Second Vice President
FIRST TRUST ADVISORS L.P.,
Evaluator
By Robert M. Porcellino
Vice President
FIRST TRUST ADVISORS L.P.,
Portfolio Supervisor
By Robert M. Porcellino
Vice President
SCHEDULE A TO TRUST AGREEMENT
Securities Initially Deposited
The First Trust Special Situations Trust, Series 214
(Note: Incorporated herein and made a part hereof for the
Trust is the "Schedule of Investments" for the Trust as set forth
in the Prospectus.)
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
August 18, 1997
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
Re: The First Trust Special Situations Trust, Series 214
Gentlemen:
We have served as counsel for Nike Securities L.P., as
Sponsor and Depositor of The First Trust Special Situations
Trust, Series 214 in connection with the preparation, execution
and delivery of a Trust Agreement dated August 18, 1997 among
Nike Securities L.P., as Depositor, The Chase Manhattan Bank, as
Trustee and First Trust Advisors L.P. as Evaluator and Portfolio
Supervisor, pursuant to which the Depositor has delivered to and
deposited the Securities listed in Schedule A to the Trust
Agreement with the Trustee and pursuant to which the Trustee has
issued to or on the order of the Depositor a certificate or
certificates representing units of fractional undivided interest
in and ownership of the Fund created under said Trust Agreement.
In connection therewith, we have examined such pertinent
records and documents and matters of law as we have deemed
necessary in order to enable us to express the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. the execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Fund have been duly authorized; and
2. the certificates evidencing the Units in the Fund when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will
constitute valid and binding obligations of the Fund and the
Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-33701)
relating to the Units referred to above, to the use of our name
and to the reference to our firm in said Registration Statement
and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EFF:erg
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
August 18, 1997
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Re: The First Trust Special Situations Trust, Series 214
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of The First Trust Special Situations Trust, Series 214 (the
"Fund"), in connection with the issuance of units of fractional
undivided interests in the Trusts of said Fund (the "Trust"),
under a Trust Agreement, dated August 18, 1997 (the "Indenture"),
among Nike Securities L.P., as Depositor, The Chase Manhattan
Bank, as Trustee and First Trust Advisors L.P., as Evaluator and
Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trusts will be administered, and
investments by the Trusts from proceeds of subsequent deposits,
if any, will be made, in accordance with the terms of the
Indenture. Each Trust holds Equity Securities as such term is
defined in the Prospectus. The assets of each Trust will consist
of a portfolio of equity securities (the "Equity Securities") as
set forth in the Prospectus. For purposes of this opinion, it is
assumed that each Equity Security is equity for United States
Federal income tax purposes.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing federal income tax law:
I. Each Trust is not an association taxable as a
corporation for Federal income tax purposes but will be governed
by the provisions of subchapter J (relating to Trusts) of Chapter
1, Internal Revenue Code of 1986 (the "Code"); each Unit holder
will be considered the owner of a pro rata portion of each of the
assets of the Trust, in the proportion that the number of Units
held by him bears to the total number of Units outstanding; under
Subpart E, Subchapter J of Chapter 1 of the Code, income of the
Trust will be treated as income of the Unit holders in the
proportion described above; and an item of Trust income will have
the same character in the hands of a Unit holder as it would have
in the hands of the Trustee. Each Unit holder will be considered
to have received his pro rata share of income derived from each
Trust asset when such income is considered to be received by the
Trust. A Unit holder's pro rata portion of distributions of cash
or property by a corporation with respect to an Equity Security
("dividends" as defined by Section 316 of the Code) 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 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
be treated as gain from the sale or exchange of property.
II. The price a Unit holder pays for his Units generally
including sales charges, is allocated among his pro rata portion
of each Equity Security held by such Trust (in proportion to the
fair market values thereof on the valuation date nearest the date
the Unit holder purchases his Units), in order to determine his
tax basis for his pro rata portion of each Equity Security held
by such Trust.
III. Gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code)
upon redemption or sale of his Units, except to the extent an in
kind distribution of stock is received by such Unit holder from
the Trust as discussed below. Such gain or loss is measured by
comparing the proceeds of such redemption or sale with the
adjusted basis of his Units. Before adjustment, such basis would
normally be cost if the Unit holder had acquired his Units by
purchase. Such basis will be reduced, but not below zero, by the
Unit holder's pro rata portion of dividends with respect to each
Equity Security which is not taxable as ordinary income.
IV. If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unit holder
(subject to various nonrecognition provisions under the Code) and
the amount thereof will be measured by comparing the Unit
holder's aliquot share of the total proceeds from the transaction
with his basis for his fractional interest in the asset disposed
of. Such basis is ascertained by apportioning the tax basis for
his Units (as of the date on which his Units were acquired) among
each of the Trust assets of such Trust (as of the date on which
his Units were acquired) ratably according to their values as of
the valuation date nearest the date on which he purchased such
Units. A Unit holder's basis in his Units and of his fractional
interest in each Trust asset must be reduced, but not below zero,
by the Unit holder's pro rata portion of dividends with respect
to each Equity Security which are not taxable as ordinary income.
V. Under the Indenture, under certain circumstances, a
Unit holder tendering Units for redemption may request an in kind
distribution of Equity Securities upon the redemption of Units or
upon the termination of the Trust. As previously discussed,
prior to the redemption of Units or the termination of the Trust,
a Unit holder is considered as owning a pro rata portion of each
of the particular Trust's assets. The receipt of an in kind
distribution will result in a Unit holder receiving an undivided
interest in whole shares of stock and possibly cash. The
potential federal income tax consequences which may occur under
an in kind distribution with respect to each Equity Security
owned by the Trust will depend upon whether or not a United
States 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 the Trust. However, if
a Unit holder also receives cash in exchange for a fractional
share of an Equity Security held by the Trust, such Unit holder
will generally recognize gain or loss based upon the difference
between the amount of cash received by the Unit holder and his
tax basis in such fractional share of an Equity Security held by
the Trust. The total amount of taxable gains (or losses)
recognized upon such redemption will generally equal the sum of
the gain (or loss) recognized under the rules described above by
the redeeming Unit holder with respect to each Equity Security
owned by the Trust.
A domestic corporation owning Units in a Trust may be eligible
for the 70% dividends received deduction pursuant to Section 243(a)
of the Code with respect to such Unitholder's pro rata portion of
dividends received by a Trust (to the extent such dividends are
taxable as ordinary income and are attributable to domestic
corporations) subject to the limitations imposed by
Sections 246 and 246A of the Code. It should be noted that
various legislative proposals that would affect the dividend
received deduction have been introduced.
Section 67 of the Code provides that certain itemized
deductions, such as investment expenses, tax return preparation
fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's
adjusted gross income. Unit holders may be required to treat
some or all of the expenses of a Trust as miscellaneous itemized
deductions subject to this limitation.
A Unit holder will recognize taxable gain (or loss) when all
or part of the pro rata interest in an Equity Security is either
sold by the Trust or redeemed or when a Unit holder disposes of
his Units in a taxable transaction, in each case for an amount
greater (or less) than his tax basis therefor, subject to various
nonrecognition provisions of the Code.
It should be noted that payments to a Trust of dividends on
Equity Securities that are attributable to foreign corporations
may be subject to foreign withholding taxes and Unit holders
should consult their tax advisers regarding the potential tax
consequences relating to the payment of any such withholding
taxes by the Trust. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unit holders.
Because under the grantor trust rules, an investor is deemed to
have paid directly his share of foreign taxes that have been paid
or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect
to such taxes.
Any gain recognized on a sale or exchange will, under
current law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including foreign, state or local taxes or collateral tax
consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-33701)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
August 18, 1997
The Chase Manhattan Bank, as Trustee of
The First Trust Special Situations
Trust, Series 214
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 214
Dear Sirs:
We are acting as special counsel with respect to New York
tax matters for The First Trust Special Situations Trust, Series
214 (each, a "Trust"), which will be established under certain
Standard Terms and Conditions of Trust dated November 20, 1991,
and a related Trust Agreement dated as of today (collectively,
the "Indenture") among Nike Securities L.P., as Depositor (the
"Depositor"), First Trust Advisors L.P., as Evaluator, First
Trust Advisors L.P., as Portfolio Supervisor, and The Chase
Manhattan Bank, as Trustee (the "Trustee"). Pursuant to the
terms of the Indenture, units of fractional undivided interest in
the Trust (the "Units") will be issued in the aggregate number
set forth in the Indenture.
We have examined and are familiar with originals or
certified copies, or copies otherwise identified to our
satisfaction, of such documents as we have deemed necessary or
appropriate for the purpose of this opinion. In giving this
opinion, we have relied upon the two opinions, each dated today
and addressed to the Trustee, of Chapman and Cutler, counsel for
the Depositor, with respect to the matters of law set forth
therein.
Based upon the foregoing, we are of the opinion that:
1. The Trust will not constitute an association taxable as
a corporation under New York law, and accordingly will not be
subject to the New York State franchise tax or the New York City
general corporation tax.
2. Under the income tax laws of the State and City of New
York, the income of the Trust will be considered the income of
the holders of the Units.
We consent to the filing of this opinion as an exhibit to
the Registration Statement (No. 333-33701) filed with the
Securities and Exchange Commission with respect to the
registration of the sale of the Units and to the references to
our name under the captions "What is the Federal Tax Status of
Unit-holders?" and "Legal Opinions" in such Registration
Statement and the preliminary prospectus included therein.
Very truly yours,
CARTER, LEDYARD & MILBURN
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, NEW YORK 10005
August 18, 1997
The Chase Manhattan Bank, as Trustee of
The First Trust Special Situations
Trust, Series 214
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Attention: Mr. Paul J. Holland
Vice President
Re: The First Trust Special Situations Trust, Series 214
Dear Sirs:
We are acting as counsel for The Chase Manhattan Bank
("Chase") in connection with the execution and delivery of a
Trust Agreement ("the Trust Agreement") dated today's date (which
Trust Agreement incorporates by reference certain Standard Terms
and Conditions of Trust dated November 20, 1991, and the same are
collectively referred to herein as the "Indenture") among Nike
Securities L.P., as Depositor (the "Depositor"), First Trust
Advisors L.P., as Evaluator; First Trust Advisors L.P., as
Portfolio Supervisor; and Chase, as Trustee (the "Trustee"),
establishing The First Trust Special Situations Trust, Series 214
(each, a "Trust"), and the confirmation by Chase, as Trustee
under the Indenture, that it has registered on the registration
books of the Trust the ownership by the Depositor of a number of
units constituting the entire interest in the Trust (such
aggregate units being herein called "Units"), each of which
represents an undivided interest in the respective Trust which
consists of common stocks (including, confirmations of contracts
for the purchase of certain stocks not delivered and cash, cash
equivalents or an irrevocable letter of credit or a combination
thereof, in the amount required for such purchase upon the
receipt of such stocks), such stocks being defined in the
Indenture as Securities and referenced in the Schedule to the
Indenture.
We have examined the Indenture, a specimen of the
certificates to be issued hereunder (the "Certificates"), the
Closing Memorandum dated today's date, and such other documents
as we have deemed necessary in order to render this opinion.
Based on the foregoing, we are of the opinion that:
1. Chase is a duly organized and existing corporation
having the powers of a Trust Company under the laws of the State
of New York.
2. The Trust Agreement has been duly executed and
delivered by Chase and, assuming due execution and delivery by
the other parties thereto, constitutes the valid and legally
binding obligation of Chase.
3. The Certificates are in proper form for execution and
delivery by Chase, as Trustee.
4. Chase, as Trustee, has registered on the registration
books of the Trust the ownership of the Units by the Depositor.
Upon receipt of confirmation of the effectiveness of the
registration statement for the sale of the Units filed with the
Securities and Exchange Commission under the Securities Act of
1933, the Trustee may deliver Certificates for such Units, in
such names and denominations as the Depositor may request, to or
upon the order of the Depositor as provided in the Closing
Memorandum.
5. Chase, as Trustee, may lawfully advance to the Trust
amounts as may be necessary to provide periodic interest
distributions of approximately equal amounts, and be reimbursed,
without interest, for any such advances from funds in the
interest account, as provided in the Indenture.
In rendering the foregoing opinion, we have not considered,
among other things, whether the Securities have been duly
authorized and delivered.
Very truly yours,
CARTER, LEDYARD & MILBURN
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, Illinois 60532
August 18, 1997
Nike Securities L.P.
1001 Warrenville Road
Lisle, IL 60532
Re: THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 214
Gentlemen:
We have examined the Registration Statement File No.
333-33701 for the above captioned fund. We hereby consent to the
use in the Registration Statement of the references to First
Trust Advisors L.P. as evaluator.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
First Trust Advisors L.P.
Robert M. Porcellino
Vice President
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