SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: FT 254
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60606
E. Title 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. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
FT 254
Cross-Reference Sheet
(Form N-8B-2 Items required by Instructions as
to the Prospectus in Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust Prospectus front cover
(b) Title of securities issued Summary of Essential
Information
2. Name and address of each Information as to
depositor Sponsor, Trustee and
Evaluator
3. Name and address of Information as to
trustee Sponsor, Trustee and
Evaluator
4. Name and address of Underwriting
principal underwriters
5. State of organization The FT Series
of trust
6. Execution and termination The FT Series; Other
of trust agreement Information
7. Changes of name *
8. Fiscal Year *
9. Litigation *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer Rights of Unit Holders
securities
(b) Cumulative or distributive
securities The FT Series
(c) Redemption Rights of Unit Holders
(d) Conversion, transfer, etc. Rights of Unit Holders
(e) Periodic payment plan
certificates *
(f) Voting rights Rights of Unit Holders;
Other Information
(g) Notice of certificate- Rights of Unit Holders;
holders Other Information
(h) Consents required Rights of Unit Holders;
Other Information
(i) Other provisions The FT Series
11. Types of securities comprising The FT Series
12. Certain information
regarding periodic payment
plan certificates *
13. (a) Load, fees, expenses, etc. Summary of Essential
Information; Public
Offering; The FT Series
(b) Certain information
regarding periodic payment
plan certificates *
(c) Certain percentages Summary of Essential
Information; The FT
Series; Public Offering
(d) Difference in price offered Public Offering
for any class of transactions
to any class or group of
individuals
(e) Certain other load fees, Rights of Unit Holders
expenses, etc. payable by
holders
(f) Certain profits receivable The FT Series
by depositor, principal
underwriters, trustee or
affiliated persons
(g) Ratio of annual charges to
income *
14. Issuance of trust's Rights of Unit Holders
securities
15. Receipt and handling of
payments from purchasers *
16. Acquisition and disposition
of underlying securities The FT Series; Rights of
Unit Holders
17. Withdrawal or redemption The FT Series; Public
Offering; Rights of Unit
Holders
18. (a) Receipt, custody and
disposition of income Rights of Unit Holders
(b) Reinvestment of
distributions Rights of Unit Holders
(c) Reserves or special funds Information as to
Sponsor, Trustee and
Evaluator
(d) Schedule of distributions *
19. Records, accounts and
reports Rights of Unit Holders
20. Certain miscellaneous
provisions of trust
agreement
(a) Amendment Other Information
(b) Termination Other Information
(c) and (d) Trustee, removal and
successor Information as to
Sponsor, Trustee and
Evaluator
(e) and (f) Depositor, removal Information as to
and successor Sponsor, Trustee and
Evaluator
21. Loans to security holders *
22. Limitations on liability The FT Series;
Information as to
Sponsor, Trustee and
Evaluator
23. Bonding arrangements Contents of Registration
Statement
24. Other material provisions
of trust agreement *
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor Information as to
Sponsor, Trustee and
Evaluator
26. Fees received by depositor *
27. Business of depositor Information as to
Sponsor, Trustee and
Evaluator
28. Certain information as to *
officials and affiliated
persons of depositor
29. Voting securities of *
depositor
30. Persons controlling *
depositor
31. Payment by depositor for *
certain services rendered
to trust
32. Payment by depositor for *
certain other services
rendered to trust
33. Remuneration of other *
persons for certain
services rendered to trust
34. Remuneration of other *
persons for certain services
rendered to trust
IV. DISTRIBUTION AND REDEMPTION
35. Distribution of trust's
securities by states Public Offering
36. Suspension of sales of
trust's securities *
37. Revocation of authority
to distribute *
38. (a) Method of distribution Public Offering
(b) Underwriting agreements Public Offering;
Underwriting
(c) Selling agreements Public Offering
39. (a) Organization of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) N.A.S.D. membership of Information as to
principal underwriters Sponsor, Trustee and
Evaluator
40. Certain fee received by See Items 13(a) and 13(e)
principal underwriters
41. (a) Business of principal Information as to
underwriters Sponsor, Trustee and
Evaluator
(b) Branch offices of
principal underwriters *
(c) Salesmen of principal
underwriters *
42. Ownership of trust's
securities by certain
persons *
43. Certain brokerage
commissions received
by principal underwriters *
44. (a) Method of valuation Summary of Essential
Information; The FT
Series; Public Offering
(b) Schedule as to offering
price *
(c) Variation in offering Public Offering
price to certain persons
45. Suspension of redemption
rights *
46. (a) Redemption Valuation Rights of Unit Holders
(b) Schedule as to redemption
price *
47. Maintenance of position Public Offering; Rights
in underlying securities of Unit Holders
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation Information as to
of trustee Sponsor, Trustee and
Evaluator
49. Fees and expenses of trustee The FT Series
50. Trustee's lien The FT Series
VI. INFORMATION CONCERNING THE INSURANCE OF HOLDERS OR
SECURITIES
51. Insurance of holders of *
trust's securities
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust The FT Series; Rights
agreement with respect of Unit Holders
to selection or elimination
of underlying securities
(b) Transactions involving
elimination of underlying
securities *
(c) Policy regarding The FT Series; Rights
substitution or elimination of Unit Holders
of underlying securities
(d) Fundamental policy not
otherwise covered *
53. Tax status of Trust The FT Series
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during
last ten years *
55. Certain information regarding
periodic payment plan
certificates
56. Certain information regarding
periodic payment plan
certificates
57. Certain information regarding *
periodic payment plan
certificates
58. Certain information regarding
periodic payment plan
certificates
59. Financial statements Report of Independent
(Instruction 1(b) to Auditors; Statement of
Form S-6) Net Assets
__________________________
* Inapplicable, answer negative or not required.
SUBJECT TO COMPLETION, DATED MAY 11, 1998
Part I OF II
The Dow (sm) 5 Qualified Target Trust, 1998 Series
The Dow (sm) 10 Qualified Target Trust, 1998 Series
Global Target 30 Qualified Trust, 1998 Series
(FT 254)
THIS PART I OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED
BY THE PART II OF THE PROSPECTUS DATED ____________, 1998. BOTH PARTS I
AND II OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
The Trusts. FT 254 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 (the "Equity
Securities") issued by companies which provide income and are considered
to have the potential for capital appreciation. Units of the Trusts are
only available to employee benefit plans established pursuant to
Sections 401(a), 403(b) or 457 of the Internal Revenue Code of 1986, as
amended ("Eligible Plans"). Eligible Plans will invest in Units of the
Trusts in accordance with allocation instructions received from
employees pursuant to the terms of such Eligible Plans. Accordingly, the
interests of an employee in the Units of a Trust is subject to the terms
of their respective Eligible Plan and the terms on which Units are
offered as an investment alternative under such Eligible Plan. As used
herein, Unit holder shall refer to an Eligible Plan.
The Dow 5 Qualified Target Trust, 1998 Series (the "Target 5 Trust")
consists of common stock of the five companies with the lowest per share
stock price of the ten companies in the Dow Jones Industrial Average (sm)
(the "DJIA") that have the highest dividend yield as of the close of
business on ____________ (the "Domestic Stock Selection Date"). The Dow
10 Qualified Target Trust, 1998 Series (the "Target 10 Trust") consists
of common stock of the ten companies in the DJIA that have the highest
dividend yield as of the Domestic Stock Selection Date.
The Global Target 30 Qualified Trust, 1998 Series (the "Global Target 30
Trust") consists of common stocks of companies which are components of
the DJIA, the Financial Times Industrial Ordinary Share Index ("FT
Index") and the Hang Seng Index. Specifically, the Global Target 30
Trust consists of common stock of the ten companies in each of the DJIA,
FT Index and 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 close of business
on ____________ in the case of the FT Index and Hang Seng Index stocks
(the "Foreign 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 the Trusts have not been designed so that their prices will parallel
or correlate with movements in a particular index, indices or
combination of indices against which
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
First Trust(registered trademark)
1-800-621-9533
The date of this Prospectus is ____________, 1998
Page 1
the Trusts are measured, and it is expected that their prices will not
do so. Each Trust has a mandatory termination date ("Mandatory
Termination Date") of approximately six months from the date of this
Prospectus as set forth under "Summary of Essential Information." There
is, of course, no guarantee that a Trust's objective will be achieved.
Unless otherwise indicated, all amounts herein are stated in U.S.
dollars. In the case of the common stocks which are components of the FT
Index or Hang Seng Index (the "Foreign Equity Securities"), amounts are
computed on the basis of the exchange rate for British pounds sterling
or Hong Kong dollars, as applicable, on the business day prior to the
Initial Date of Deposit.
Public Offering Price. The Public Offering Price per Unit of each Trust
is equal to the aggregate underlying value of the Equity Securities in
such Trust (generally determined by the closing sale prices of the
listed Equity Securities) plus or minus a pro rata share of cash, if
any, in the Capital and Income Accounts of such Trust, plus a maximum
total sales charge (which is entirely deferred) initially equal to
$0.___ per Unit. The deferred sales charge ($0.0083 per Unit per month)
will be assessed each month commencing on _______ 20, 1998, and on the
twentieth day of each month thereafter (or if such day is not a business
day, on the preceding business day) through ________ 20, 1999. The total
maximum sales charge assessed to Unit holders on a per Unit basis is
equivalent to ____% of the Public Offering Price for Units purchased on
the Initial Date of Deposit. The total maximum sales charge as a
percentage of the Public Offering Price will vary subsequent to the
Initial Date of Deposit due to various factors but in no case will it
exceed ____% of the Public Offering Price (equivalent to ____% of the
net amount invested, exclusive of the deferred sales charge). The
deferred sales charge will be paid from funds in the Capital Account, if
sufficient, or from the periodic sale of Equity Securities. 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 $500, except for Rollover Unit holders who are not subject to a
minimum purchase amount. See "Public Offering-How is the Public Offering
Price Determined?" in Part II of this Prospectus.
Estimated Net Annual Distributions. The estimated net annual dividend
distributions per Unit (based on the most recent quarterly or semi-
annual ordinary dividend declared with respect to the Equity Securities
which trade on the NYSE (the "Domestic Equity Securities") and the most
recent interim and final ordinary dividend declared with respect to the
Foreign Equity Securities and converted into U.S. dollars, if
applicable, at the offer side of the exchange rate at the Evaluation
Time) at the opening of business on the Initial Date of Deposit was $
, $ and $ for the Target 5 Trust, Target 10 Trust and Global
Target 30 Trust, respectively. This estimate will vary with changes in a
Trust's fees and expenses, in dividends received, in currency exchange
rates, foreign withholding, 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 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. Any distribution
of income and/or capital will be net of expenses of a Trust.
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 or her 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."
Secondary Market for Units. The Sponsor does not intend to maintain a
secondary market. Unit holders may redeem Units through the Trustee. See
"Rights of Unit Holders-How May Units be Redeemed?" in Part II of this
Prospectus.
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. The portfolio of the
New Trusts will contain equity securities of the companies which satisfy
each New Trust's investment strategy at the time such New Trust is
established. If your Eligible Plan assets are invested in Units of a
Trust on the Rollover Notification Date (as set forth under "Summary of
Essential Information"), the plan administrator ("Plan Administrator")
of your Eligible Plan will redeem such Units and reinvest the proceeds
into a New Trust, provided such New Trust is offered and Units are
available. If you no longer wish to have your Eligible Plan assets
invested in a Trust you can change your Eligible Plan allocation
Page 2
instructions at any time as permitted by your Eligible Plan. Cash which
is not invested in a New Trust will be distributed to the Eligible Plan.
That portion of the Eligible Plan assets which are reinvested are
referred to as "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. This exchange option may be modified, terminated or suspended.
See "Rights of Unit Holders-Special Redemption, Liquidation and
Investment in a New Trust" in Part II of this Prospectus.
Termination. Each Trust will terminate on the Mandatory Termination
Date. Unit holders holding Units which are not reinvested as described
in "Special Redemption, Liquidation and Investment in a New Trust" will
receive a cash distribution within a reasonable time after their
respective Trust's termination. See "Rights of Unit Holders-How are
Income and Capital Distributed?" and "Other Information-How May the
Indenture be Amended or Terminated?" 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 applicable stock market
(which, although being at historically high levels, have experienced
substantial volatility and significant declines in recent months),
governmental, political, economic and fiscal policies of the
representative countries (especially Hong Kong following the July 1,
1997 reversion to Chinese control), volatile interest rates, economic
recession, the lack of adequate financial information concerning an
issuer and exchange control restrictions impacting foreign issuers.
Investors in the Global Target 30 Trust should note that an investment
in a portfolio which contains foreign equity securities involves risks
in addition to those normally associated with an investment in a
portfolio consisting solely of domestic equity securities. Also, the
reversion of Hong Kong to Chinese control on July 1, 1997 may adversely
affect the Equity Securities of Hong Kong issuers contained in the
Global Target 30 Trust. In addition, the Global Target 30 Trust will be
subject to the risks of currency fluctuations associated with
investments in foreign Equity Securities trading in non-U.S. currencies.
An investment in the Target 5 Trust may subject a Unit holder to
additional risk due to the relative lack of diversity in their
portfolios since the portfolios contain only five stocks. Therefore,
Units of the Target 5 Trust 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 its
respective index or indices 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-____________, 1998
Sponsor: Nike Securities L.P.
Trustee: The Chase Manhattan Bank
Evaluator: First Trust Advisors L.P.
<TABLE>
<CAPTION>
Dow 5 Qualified Dow 10 Qualified Global Target
Target Trust Trust 30 Trust
1998 Series 1998 Series 1998 Series
_______________ ________________ _____________
<S> <C> <C> <C>
General Information
Initial Number of Units
Fractional Undivided Interest in the Trust per Unit 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Equity Securities in Portfolio $ $ $
(1)
Aggregate Offering Price Evaluation of Equity Securities per Unit $ $ $
Maximum Sales Charge 1.00% of the Public Offering Price per Unit
(1.101% of the net amount invested, exclusive of the deferred
sales charge) (2) $ $ $
Less Deferred Sales Charge per Unit $( ) $( ) $( )
Public Offering Price per Unit (2) $ $ $
Redemption Price per Unit (based on aggregate underlying
value of Equity Securities less the deferred sales charge) (3) $ $ $
CUSIP Number
Security Code
Trustee's Annual Fee and out-of-pocket expenses per Unit outstanding $ $ $
Evaluator's Annual Fee per Unit outstanding (4) $ $ $
Maximum Supervisory Fee per Unit outstanding (5) $ $ $
Estimated Annual Amortization of Organizational
and Offering Costs per Unit outstanding (6) $ $ $
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
First Settlement Date ____________, 1998
Rollover Notification Date ____________, 1999
Special Redemption and Liquidation Period ____________, 1999 to ____________, 1999
Mandatory Termination Date ____________, 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.
______________
<FN>
(1) Each Equity Security is valued at the last closing sale price on the
relevant stock exchange (generally 4:00 p.m. Eastern time on the New
York Stock Exchange, 11:30 a.m. Eastern time on the London Stock
Exchange and 3:30 a.m. Eastern time on the Hong Kong Stock Exchange), on
the business day prior to the Initial Date of Deposit, or if no such
price exists at the closing ask price thereof. The aggregate value of
the Foreign Equity Securities in the Global Target 30 Trust represents
the U.S. dollar value based on the offering side value of the currency
exchange rate for the British pound sterling or the Hong Kong dollar at
the Evaluation Time on the business day prior to the Initial Date of
Deposit.
(2) The maximum sales charge consists entirely of 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 may 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.
(3) See "Rights of Unit Holders-How May Units be Redeemed?" in Part II of
this Prospectus.
(4) 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.
(5) The Supervisory Fee is payable to an affiliate of the Sponsor. In
addition, the Sponsor may be reimbursed by the Trustee for bookkeeping
and other administrative expenses currently at a maximum annual rate of
$ per Unit.
(6) 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 "The FT Series-What are the Expenses and Charges?" in Part
II of this Prospectus and "Statements of Net Assets." Historically, the
sponsors of unit investment trusts have paid all the costs of
establishing such trusts.
</FN>
</TABLE>
Page 4
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 "The FT Series-What are the Expenses and Charges?" in Part
II of this Prospectus. Although the Trusts have a term of approximately
six months 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>
Dow 5 Qualified Target Trust, 1998 Series
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 0.00%(a) $ .000
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee, portfolio supervision, bookkeeping, administrative, amortization of
organizational and offering expenses and evaluation fees
.256% $.0255
Other operating expenses .029% .0029
________ ________
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 Dow 5 Qualified Target Trust, 1998
Series estimated operating expense ratio of .285% and a 5%
annual return on the investment throughout the periods $ $ $ $
</TABLE>
<TABLE>
<CAPTION>
Dow 10 Qualified Target Trust, 1998 Series
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 0.00%(a) $ .000
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee, portfolio supervision, bookkeeping, administrative, amortization of .216% $.0215
organizational and offering expenses and evaluation fees
Other operating expenses .029% .0029
________ ________
Total .245% $.0244
======== ========
</TABLE>
Page 5
<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 Dow 10 Qualified Target Trust, 1998
Series estimated operating expense ratio of .245% and a 5%
annual return on the investment throughout the periods $ $ $ $
</TABLE>
<TABLE>
<CAPTION>
Global Target 30 Qualified Trust, 1998 Series
Amount
per Unit
________
<S> <C> <C>
Unit Holder Transaction Expenses
Initial sales charge imposed on purchase
(as a percentage of public offering price) 0.00%(a) $ .000
Deferred sales charge
(as a percentage of public offering price) %(b)
________ ________
% $
======== ========
Estimated Annual Fund Operating Expenses
(as a percentage of average net assets)
Trustee's fee, portfolio supervision, bookkeeping, administrative, amortization .351% $.0350
of organizational and offering expenses and evaluation fees
Other operating expenses .104% .0104
________ ________
Total .455% $.0454
======== ========
</TABLE>
<TABLE>
<CAPTION>
Example
_________
Cumulative Expenses Paid for Period:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Global Target 30 Qualified Trust,
1998 Series estimated operating expense ratio of .455% and a
5% annual return on the investment throughout the periods $ $ $ $
______________
<FN>
(a) There is no initial sales charge assessed on Trust Units.
(b) The actual fee is $ per month per Unit, irrespective of purchase
or redemption price deducted each month over the life of the Trusts. If
the Unit price exceeds $10.00 per Unit, the deferred sales charge will
be less than ____%. If the Unit price is less than $10.00 per Unit, the
deferred sales charge will exceed ____%. Units purchased subsequent to
the initial deferred sales charge payment will be subject to the
remaining deferred sales charge payments.
</FN>
</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.
Page 6
REPORT OF INDEPENDENT AUDITORS
The Sponsor, Nike Securities L.P., and Unit Holders
FT 254
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 254, comprised of the Dow 5 Qualified
Target Trust, 1998 Series; Dow 10 Qualified Target Trust, 1998 Series;
and Global Target 30 Qualified Trust, 1998 Series as of the opening of
business on ____________, 1998. 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
letter of credit allocated among the Trusts on ____________, 1998. 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 FT 254,
comprised of the Dow 5 Qualified Target Trust, 1998 Series; Dow 10
Qualified Target Trust, 1998 Series; and Global Target 30 Qualified
Trust, 1998 Series at the opening of business on ____________, 1998 in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
____________, 1998
Page 7
Statements of Net Assets
FT 254
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
<TABLE>
<CAPTION>
Dow 5 Qualified Dow 10 Qualified Global Target 30
Target Trust Target Trust Qualified Trust
1998 Series 1998 Series 1998 Series
_______________ _________________ ________________
<S> <C> <C> <C>
NET ASSETS
Investment in Equity Securities represented
by purchase contracts (1) (2) $ $ $
Organizational and offering costs (3)
________ ________ _________
Less accrued organizational
and offering costs (3) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( )
________ ________ ________
Net assets $ $ $
======== ======== ========
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (5) $ $ $
Less sales charge (5) ( ) ( ) ( )
________ ________ ________
Net assets $ $ $
======== ======== ========
<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) An irrevocable letter of credit totaling $ issued by The Chase
Manhattan Bank, which will be allocated among each of the three Trusts
in FT 254, has been deposited with the Trustee as collateral, covering
the monies necessary for the purchase of the Equity Securities pursuant
to purchase contracts for such Equity Securities.
(3) 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 six months from the Initial Date of Deposit. The estimated
organizational and offering costs are based on Units each of the
Target 5 Trust and Target 10 Trust, and Units of the Global Target
30 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 ($____
per Unit), payable to the Sponsor in ______ equal monthly installments
beginning on ____________, 1998 and on the twentieth day of each month
thereafter (or if such date is not a business day, on the preceding
business day) through ____________, 1999.
(5) The aggregate cost to investors in a Trust includes a maximum total
sales charge computed at the rate of 1.00% of the Public Offering Price
(equivalent to 1.101% of the net amount invested, exclusive of the
deferred sales charge).
</FN>
</TABLE>
Page 8
Schedule of Investments
DOW 5 QUALIFIED TARGET TRUST, 1998 SERIES
FT 254
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
<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>
20% $ $ %
20% %
20% %
20% %
20% %
_______ _________
Total Investments 100% $
======= =========
______________
<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 ____________, 1998. The Trust has a mandatory termination
date of ____________, 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 ____________, 1998, 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 $ . Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $ and $ , 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.
</FN>
</TABLE>
Page 9
Schedule of Investments
DOW 10 QUALIFIED TARGET TRUST, 1998 SERIES
FT 254
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
<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>
10% $ $ %
10% %
10% %
10% %
10% %
10% %
10% %
10% %
10% %
10% %
_______ ________
Total Investments 100% $
======= ========
______________
<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 ____________, 1998. The Trust has a mandatory termination
date of ____________, 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 ____________, 1998, 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 $ . Cost and loss to Sponsor relating to the Equity Securities
sold to the Trust were $ and $ , 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.
</FN>
</TABLE>
Page 10
Schedule of Investments
GLOBAL TARGET 30 QUALIFIED TRUST, 1998 SERIES
FT 254
At the Opening of Business on the
Initial Date of Deposit-____________, 1998
<TABLE>
<CAPTION>
Percentage
Number of Aggregate Market Cost of Equity Current
of Offering Value per Securities to Dividend
Shares Name of Issuer of Equity Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________________ ___________ ________ ____________ ________
<C> <S> <C> <C> <C> <C>
DJIA COMPANIES:
_______________
% $ $ %
% %
% %
% %
% %
% %
% %
% %
% %
% %
FT INDEX COMPANIES:
___________________
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
HANG SENG INDEX COMPANIES:
__________________________
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
_______ ________
Total Investments 100% $
===== ========
______________
<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 March 31, 1998. The Trust has a mandatory termination date of
____________, 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 the applicable exchange (converted into U.S. dollars at
the offer side of the exchange rate at the Evaluation Time) at the close
of business on ____________, 1998, the business day prior to the Initial
Date of Deposit. The valuation of the Equity Securities has been
determined by the Evaluator, an affiliate of the Sponsor. Such aggregate
underlying value of the Equity Securities on the business day prior to
the Initial Date of Deposit was $ . Cost and loss to Sponsor relating
to the Equity Securities sold to the Trust were $ and $ ,
respectively.
(3) Current Dividend Yield for each Equity Security was calculated by
adding together the most recent interim and final ordinary dividends
declared in the case of the FT Index Companies and the Hang Seng Index
Companies, or annualizing the last quarterly or semi-annual ordinary
dividend declared in the case of the DJIA Companies, and dividing the
result by that Equity Security's closing sale price at the close of
business on the business day prior to the Initial Date of Deposit.
Generally, United Kingdom and Hong Kong companies pay one interim and
one final dividend per fiscal year while United States companies usually
pay dividends quarterly or semi-annually.
</FN>
</TABLE>
Page 11
FIRST TRUST (registered trademark)
The Dow (sm) 5 Qualified Target Trust, 1998 Series
The Dow (sm) 10 Qualified Target Trust, 1998 Series
Global Target 30 Qualified Trust, 1998 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
24-Hour Pricing Line:
1-800-446-0132
THIS PART ONE MUST BE
ACCOMPANIED BY PART TWO.
When Units of the Trusts are no longer available, or for investors who
will reinvest into subsequent series of the Trusts, this Prospectus may
be used as a preliminary prospectus for a future series; in which case
investors should note the following:
INFORMATION CONTAINED HEREIN IS SUBJECT TO AMENDMENT. A REGISTRATION
STATEMENT RELATING TO SECURITIES OF A FUTURE SERIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE.
THE PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN
ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
____________, 1998
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 12
Part II of II
First Trust (registered trademark)
QUALIFIED TARGET TRUST SERIES
FT Series
Prospectus Part II
Dated ____________, 1998
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 FT Series?
The FT 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. The FT Series
was formerly known as The First Trust Special Situations Trust Series.
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" and "Global
Target 30 Trust" and may sometimes be referred to individually as a
"Trust" and collectively as the "Trusts." The Target 5 Trust and Target
10 Trust may sometimes be referred to individually as a "Domestic Trust"
and collectively as the "Domestic Trusts" while the Global Target 30
Trust may sometimes be referred to as the "International Trust." Each
Trust has a Mandatory Termination Date of approximately six months from
the date of Part I of this Prospectus as set forth under "Summary of
Essential Information" in Part I of this Prospectus. 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 Trust acquired 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 NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
First Trust (registered trademark)
1-800-621-9533
Page 1
The deposit of the Equity Securities on the Initial Date of Deposit,
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, additional Equity Securities or cash (including
a letter of credit) with instructions to purchase additional Equity
Securities may be deposited 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 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 "Rights of Unit Holders-
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 cash is
deposited, 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.
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, 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 "Rights of Unit Holders-How May Units be Redeemed?"
What are the Expenses and Charges?
With the exception of brokerage fees discussed above and bookkeeping and
other administrative services provided to the Trusts, for which the
Sponsor may be reimbursed in amounts as set forth under "Summary of
Essential Information" in Part I, the Sponsor will not receive any fees
in connection with its activities relating to the Trusts.
First Trust Advisors L.P., an affiliate of the Sponsor, will receive an
annual supervisory fee, which is not to exceed the amount set forth
under "Summary of Essential Information" in Part I of this Prospectus,
for providing portfolio supervisory services for the Trusts. Such fee is
based on the number of Units outstanding in a Trust on January 1 of each
year, except for the year or years in which an initial offering period
occurs in which case the fee for a month is based on the number of Units
outstanding at the end of such month. In providing such supervisory
services, the Portfolio Supervisor may purchase research services from a
variety of sources which may include underwriters or dealers of the
Trusts.
Subsequent to the initial offering period, First Trust Advisors L.P., in
its capacity as the Evaluator for the Trusts, will receive a fee as
indicated in the "Summary of Essential Information" in Part I of this
Prospectus.
The Trustee pays certain expenses of a Trust for which it is reimbursed
by such Trust. The Trustee will receive for its ordinary recurring
services to a Trust an annual fee as indicated in the "Summary of
Essential Information" in Part I. The fee is computed per Unit in such
Trust, based upon the largest aggregate number of Units of such Trust
outstanding at any time during the calendar year. For a discussion of
the services performed by the Trustee pursuant to its obligations under
the Indenture, see "Rights of Unit Holders."
The fees described above are payable from the Income Account of a Trust
to the extent funds are available, and then from the Capital Account of
Page 2
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, 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: a
quarterly fee payable by the Dow 5 Qualified Target Trust and the Dow 10
Qualified Target Trust for a license from Dow Jones & Company, Inc. for
the use by the Trusts of certain trademarks and trade names; 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.
Compensation or other consideration received by the Sponsor and its
affiliates on Units held in Eligible Plans offered to employees of the
Sponsor and its affiliates will be remitted to such Eligible Plans to
the extent the receipt of such compensation or other consideration by
the Sponsor or its affiliates is not permitted by ERISA.
What is the Federal Tax Status of Unit Holders?
Each Trust is not an association taxable as a corporation for federal
income tax purposes. Because the Eligible Plans are exempt from tax
under Sections 401(a), 403(b) or 457 of the Internal Revenue Code of
1986, as amended, while Units are held by Eligible Plans, neither such
Eligible Plans nor any participating employee will be taxed on income
from a Trust.
Investors in the Global Target 30 Trust should note that dividends paid
on Equity Securities listed on the FT Index will be subject to
withholding taxes and that stamp or transfer taxes may be assessed on
the purchase or sale of the Foreign Equity Securities. Unit holders
should consult their tax advisers as to the tax consequences of
ownership of the Units of the Trusts applicable to their particular
circumstances.
Page 3
PORTFOLIO
What are the 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 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.
International Trusts
The Global Target 30 Trust consists of 30 common stocks of companies
which are components of the DJIA, the FT Index or the Hang Seng Index,
respectively. Specifically, 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 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 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
Domestic Stock Selection Date. 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 in
one convenient purchase. Investing in the stocks with high dividend
yields may be effective in achieving certain of the Trust's investment
objectives, because regular dividends are common for established
companies, and dividends have accounted for a substantial portion of the
total return on stocks of each 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.
"Dow (sm)," "Dow Jones Industrial Average (sm)" and "DJIA (sm)" are
service marks of Dow Jones & Company, Inc. ("Dow Jones") and have been
licensed for use for certain purposes by First Trust Advisors L.P., an
affiliate of the Sponsor. None of the Trusts, including, and in
particular, the Target 5 Trust and the Target 10 Trust, are endorsed,
sold, or promoted by Dow Jones, and Dow Jones makes no representation
regarding the advisability of investing in such products.
In addition, the publishers of the 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.
Any changes in the components of any of the respective indices made
after the respective Stock Selection Date 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 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 (sm)
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
Page 4
stocks are chosen by the editors of The Wall Street Journal as
representative of the broad market and of American industry. The
companies are major factors in their industries and their stocks are
widely held by individuals and institutional investors. Changes in the
components of the DJIA are made entirely by the editors of The Wall
Street Journal without consultation with the companies, the stock
exchange or any official agency. For the sake of continuity, changes are
made rarely. However, on March 17, 1997 four companies were added to the
DJIA replacing Bethlehem Steel Corporation, Texaco, Inc., Westinghouse
Electric Corporation and Woolworth Corporation. The companies added to
the DJIA were Hewlett-Packard Co., Johnson & Johnson, Travelers Group,
Inc. and Wal-Mart Stores Inc. Most substitutions have been the result of
mergers, but from time to time, changes may be made to achieve a better
representation. The components of the DJIA may be changed at any time
for any reason. The following is a list of the companies which currently
comprise the DJIA.
AT&T Corporation Hewlett-Packard Co.
Allied Signal International Business Machines
Corporation
Aluminum Company of America International Paper Company
American Express Company Johnson & Johnson
Boeing Company McDonald's Corporation
Caterpillar Inc. Merck & Company, Inc.
Chevron Corporation Minnesota Mining & Manufacturing
Company
Coca-Cola Company J.P. Morgan & Company, Inc.
Walt Disney Company Philip Morris Companies, Inc.
E.I. du Pont de Nemours & Procter & Gamble Company
Company
Eastman Kodak Company Sears, Roebuck & Company
Exxon Corporation Travelers Group, Inc.
General Electric Company Union Carbide Corporation
General Motors Corporation United Technologies Corporation
Goodyear Tire & Rubber Company Wal-Mart Stores, Inc.
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.
However, on December 16, 1997 Diageo PLC and Scottish Power PLC replaced
Guinness PLC and Grand Metropolitan PLC. 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 Glaxo Wellcome Plc
Allied Domecq Plc Granada Group Plc
BG Plc Guest Keen & Nettlefolds (GKN) Plc
BOC Group Imperial Chemical Industries Plc
BTR Plc Lloyds TSB Group Plc
Blue Circle Industries Plc Lucas Varity Plc
Boots Company Plc Marks & Spencer Plc
British Airways Plc National Westminster Bank
British Petroleum Plc Peninsular & Oriental Steam
Navigation Company
British Telecommunications Reuters Holdings
Plc
Cadbury Schweppes Plc Royal & Sun Alliance Insurance Group
Courtaulds Plc Scottish Power Plc
Diageo Plc SmithKline Beecham
EMI Group Plc Tate & Lyle Plc
General Electric Company Plc Vodafone Plc
Page 5
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. On
January 27, 1998, China Telecom Ltd. and Shanghai Industrial Holdings
Ltd. will be added to the Hang Seng Index replacing Shun Tak Holdings
Ltd. and South China Morning Post Holdings Ltd. Sun Tak Holdings Ltd. is
included in the portfolio of the International Trusts and will not be
removed from such Trusts upon its deletion from the Hang Seng Index. The
Hang Seng Index is currently comprised of the companies on the following
list:
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 Holdings Hutchison Whampoa
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 Ltd. 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 Ltd.
Henderson Land Development Co. Ltd. Wheelock & Co.
Hong Kong and China Gas
Except as previously described, neither the publishers of the 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 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.
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 FT Index, the Hang Seng Index, the DJIA, and a
combination of the FT Index, Hang Seng Index and the DJIA (the
"Cumulative Index Returns"). All of the figures set forth below have
been adjusted to take into account the effect of currency exchange rate
fluctuations of the U.S. dollar, where applicable (i.e., returns are
stated in U.S. dollar terms). The Cumulative Index Returns are
calculated by adding one-third of the total returns of each of the FT
Index, the Hang Seng Index and 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 its
respective index in certain years. Accordingly, there can be no
assurance that a Trust's Portfolio will outperform its respective index
(or combination thereof, where applicable) 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 are established at different times of the
Page 6
year; 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; Equity
Securities are often purchased or sold at prices different from the
closing prices used in buying and selling Units; and for Trusts
investing in foreign securities, currency exchange rates will be
different.
Annualized Performance Information
The following table compares the hypothetical performance of the Ten
Highest Dividend Yielding Stocks Strategy for the DJIA; a combination of
the Ten Highest Dividend Yielding Stocks Strategy in the FT Index, Hang
Seng Index and the DJIA (the "Combined 30 Strategy"); the Five Lowest
Priced Stocks of the Ten Highest Dividend Yielding Stocks Strategies for
the DJIA; and the performance of the FT Index, the Hang Seng Index, the
DJIA and the Cumulative Index Returns in each of the 20 years listed
below, as of December 31 in each of those years (and as of the most
recent quarter).
Page 7
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN(2)
Hypothetical Strategy Total Returns Index Total Returns
10 Highest Dividend Yielding 5 Lowest Priced of the 10
Stocks(1) Highest Stocks(1) Cumulative
Combined Hang Seng Index
Year DJIA 30 Strategy DJIA FT Index Index DJIA Returns(3)
____ _______ ___________ ____ ________ _________ ______ __________
<S> <C> <C> <C> <C> <C> <C> <C>
1978 0.03% 10.16% 1.23% 9.92% 23.10% 2.66% 11.89%
1979 13.01% 33.58% 9.84% 3.59% 77.99% 10.60% 30.73%
1980 27.90% 30.85% 41.69% 31.77% 65.48% 21.90% 39.72%
1981 7.46% -1.43% 3.19% -5.30% -12.34% -3.61% -7.08%
1982 27.12% -4.96% 43.37% 0.42% -48.01% 26.85% -6.91%
1983 39.07% 22.72% 36.38% 21.94% -2.04% 25.82% 15.24%
1984 6.22% 26.80% 11.12% 2.15% 42.61% 1.29% 15.35%
1985 29.54% 46.17% 38.34% 54.74% 50.95% 33.28% 46.32%
1986 35.63% 41.48% 30.89% 24.36% 51.16% 27.00% 34.18%
1987 5.59% 13.21% 10.69% 37.13% -6.84% 5.66% 11.99%
1988 24.57% 24.38% 21.47% 9.00% 21.04% 16.03% 15.36%
1989 26.97% 19.51% 10.55% 20.07% 10.59% 32.09% 20.92%
1990 -7.82% 2.29% -15.74% 11.03% 11.71% -0.73% 7.34%
1991 34.20% 30.34% 62.03% 8.77% 50.68% 24.19% 27.88%
1992 7.69% 17.25% 22.90% -3.13% 34.73% 7.39% 12.99%
1993 27.08% 66.08% 34.01% 19.22% 124.95% 16.87% 53.68%
1994 4.21% -5.12% 8.27% 1.97% -29.34% 5.03% -7.45%
1995 36.85% 19.11% 30.50% 16.21% 27.52% 36.67% 26.80%
1996 28.35% 22.63% 26.20% 18.35% 37.86% 28.71% 28.31%
1997 21.68% 5.10% 19.97% 14.78% -17.69% 24.82% 7.30%
1998 9.09% 7.46% 7.05% 17.23% 8.17% 11.74% 12.38%
thru 3/31
____________
<FN>
(1) The Ten Highest Dividend Yielding Stocks and the Five Lowest Priced
Stocks of the Ten Highest Dividend Yielding Stocks for any given period
were selected by ranking the dividend yields for each of the stocks as
of the beginning of the period and dividing by that stock's market value
on the first trading day on the exchange where that stock principally
trades in the given period. The Combined 30 Strategy merely averages the
Total Return of the stocks which comprise the Ten Highest Dividend
Yielding Stocks in the FT Index, Hang Seng Index and the DJIA,
respectively.
(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first trading day of a period
and the total dividends paid on each group of stocks during the period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return does not take into
consideration any sales charges, commissions, expenses or taxes. Total
Return assumes that all dividends are reinvested semi-annually (with the
exception of the FT Index and the Hang Seng Index from 12/31/77 through
12/31/86, during which time annual reinvestment was assumed), and all
returns are stated in terms of the United States dollar. Based on the
year-by-year returns contained in the table, over the 20 full years
listed above, the Ten Highest Dividend Yielding Stocks in the DJIA and
the Combined 30 Strategy achieved an average annual total return of
18.97% and 19.78%, respectively, and the Five Lowest Priced Stocks of
the Ten Highest Dividend Yielding Stocks in the DJIA achieved an average
annual total return of 21.06%. In addition, over this period, each
individual strategy achieved a greater average annual total return than
that of its corresponding index, the DJIA or a combination of the FT
Index, Hang Seng Index and DJIA, which were 16.47% and 18.09%,
respectively. For the five year period between January 1, 1973 and
December 31, 1977, the Ten Highest Dividend Yielding Stocks in the DJIA
achieved an annual total return of 4.01% in 1973, -1.02% in 1974, 56.10%
in 1975, 35.18% in 1976 and -1.95% in 1977; the Five Lowest Priced
Stocks of the Ten Highest Dividend Yielding Stocks in the DJIA achieved
an annual total return of 20.01% in 1973, -5.40% in 1974, 64.77% in
1975, 40.96% in 1976 and 5.49% in 1977; and the DJIA achieved an annual
total return of -13.20% in 1973, 23.64% in 1974, 44.46% in 1975, 22.80%
in 1976 and -12.91% in 1977. 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 six-
month life or over consecutive rollover periods, if available.
(3) Cumulative Index Returns represent the average of the annual returns
of the stocks contained in the FT Index, Hang Seng Index and DJIA.
Cumulative Index Returns do not represent an actual index.
</FN>
</TABLE>
Page 8
Please refer to the APPENDIX following the last page of this document
for details on the chart included at this point.
The chart above represents past performance of the DJIA, the Ten Highest
Dividend Yielding DJIA Stocks and the Five Lowest Priced Stocks of the
Ten Highest Dividend Yielding DJIA Stocks (but not the Target 10 Trust
or the Target 5 Trust) from January 1, 1973 through March 31, 1998 and
should not be considered indicative of future results. Further, these
results are hypothetical. The chart assumes that all dividends during a
year are reinvested semi-annually and does not reflect sales charges,
commissions, expenses or taxes. There can be no assurance that either
the Target 10 Trust or the Target 5 Trust will outperform the DJIA over
its six-month 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 Combined 30 Strategy
and the Cumulative Index Returns from January 1, 1978 through March 31,
1998, and should not be considered indicative of future results.
Further, these results are hypothetical. The chart assumes that all
dividends during a year are reinvested semi-annually beginning January
1, 1987 and annually prior thereto and does not reflect sales charges,
commissions, expenses or taxes. The annual figures in the chart have
been adjusted to take into account the effect of currency exchange rate
fluctuations of the U.S. dollar as described in the footnote below*.
There can be no assurance that the Global Target 30 Trust will
outperform either its Combined Strategy or the Cumulative Index Returns
over its six-month life or over consecutive rollover periods, if
available.
____________
* The $10,000 initial investment was converted into local currency,
where applicable, using the opening exchange rate at the beginning of
each period. The year-end total in either British pounds sterling or
Hong Kong dollars was converted into U.S. dollars using the ending
exchange rate. This amount was then converted back into the appropriate
local currency using the opening exchange rate at the beginning of the
next period.
Page 10
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. 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.
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 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 Exchanges.
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 "Rights of Unit Holders-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. Both U.S. and foreign markets have
experienced substantial volatility and significant declines recently as
a result of certain or all of these factors. From September 30, 1997
through October 30, 1997, amid record trading volume, the S&P 500 Index,
DJIA, FT Index and Hang Seng Index have declined 4.60%, 7.09%, 6.19% and
Page 11
31.14%, respectively. 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.
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 increases to 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 cash is deposited, 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 "Rights of Unit
Holders-How May Equity Securities be Removed from a Trust?"
Like other investment companies, financial and business organizations
and individuals around the world, the Trust could be adversely affected
if the computer systems used by the Sponsor, Evaluator, Portfolio
Supervisor or Trustee or other service providers to the Trust do not
properly process and calculate date-related information and data
involving dates of January 1, 2000 and thereafter. This is commonly
known as the "Year 2000 Problem." The Sponsor, Evaluator, Portfolio
Supervisor and Trustee are taking steps that they believe are reasonably
designed to address the Year 2000 Problem with respect to computer
systems that they use and to obtain reasonable assurances that
comparable steps are being taken by the Trust's other service providers.
At this time, however, there can be no assurance that these steps will
be sufficient to avoid any adverse impact to the Trust.
Page 12
The Year 2000 Problem is expected to impact corporations, which may
include issuers of the Equity Securities contained in the Trust, to
varying degrees based upon various factors, including, but not limited
to, their industry sector and degree of technological sophistication.
The Sponsor is unable to predict what impact, if any, the Year 2000
Problem will have on issuers of the Equity Securities contained in the
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 of the Equity Securities included in the
Global Target 30 Trust consist of common stocks of foreign issuers, an
investment in such Trust 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
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 Global Target 30
Trust are subject to exchange control restrictions under existing law
which would materially interfere with payment to such Trust 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 Trust to satisfy its 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 Global Target 30 Trust 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 the Global Target 30 Trust.
United Kingdom. The emphasis of the United Kingdom's economy is in the
private services sector, which includes the wholesale and retail sector,
Page 13
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 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
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 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 Trust and the value of the Units.
China currently enjoys a most favored nation status ("MFN Status") with
the United States. MFN Status is subject to annual review by the
President of the United States 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
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
Page 14
36.5% in 1993) has been associated with rising inflation and concerns
about the devaluation of the Chinese currency. The currency crisis which
has affected a majority of Asian markets since mid-1997 has forced Hong
Kong leaders to address whether to devalue the Hong Kong dollar or
maintain its peg to the U.S. dollar. Any downturn in economic growth or
increase in the rate of inflation in China or Hong Kong could have a
materially adverse effect on the value of the 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, the Hang Seng Index declined by approximately 31% in October,
1997 as a result of speculation that the Hong Kong dollar would become
the next victim of the Asian currency crisis, and 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
subsequent to the events at Tiananmen Square 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 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 Global Target 30 Trust is comprised 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 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:
Page 15
<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 0.671-0.864 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 0.498-0.667 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 0.583-0.670 7.732-7.742
1997 0.584-0.633 7.708-7.751
</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).
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 a maximum total sales charge (which is entirely
deferred) of $_____ per Unit, divided by the number of Units of such
Trust outstanding. The deferred sales charge of $_____ per Unit per
month will be assessed on such dates set forth under "Public Offering
Price" in Part I. Units purchased subsequent to the initial deferred
sales charge payment will be subject only to 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.
The minimum purchase of each Trust is $500, except for Rollover Unit
holders who are not subject to a minimum purchase amount.
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
Page 16
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.
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 "Rights of Unit Holders-
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.
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 and additional Units created on subsequent Date(s) of Deposit
will be sold to Eligible Plans at the current Public Offering Price.
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, Ibbotson
Small-Cap 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
Page 17
series. These returns will reflect all applicable sales charges and
expenses.
Trust performance may be compared to performance on a total return basis
of the DJIA, the S&P 500 Composite Stock Price Index, or performance
data from Lipper Analytical Services, Inc. and Morningstar Publications,
Inc. or from publications such as Money, The New York Times, U.S. News
and World Report, Business Week, Forbes or Fortune. As with other
performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
What are the Sponsor's Profits?
The Sponsor of the Trusts will receive a gross sales commission equal to
the maximum sales charge per Unit for each Trust as set forth in Part I
of this Prospectus. In addition, the Sponsor may be considered to have
realized a profit or to have sustained a loss, as the case may be, in
the amount of any difference between the cost of the Equity Securities
to a Trust (which is based on the Evaluator's determination of the
aggregate offering price of the underlying Equity Securities of such
Trust on the Initial Date of Deposit as well as on subsequent deposits)
and the cost of such Equity Securities to the Sponsor. See Note (2) of
"Schedule of Investments" appearing in Part I of this Prospectus. During
the initial offering period, the Sponsor may also realize profits or
sustain losses as a result of fluctuations after the Date of Deposit in
the Public Offering Price received by the Sponsor upon the sale of Units.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued?
The Eligible Plans are required to hold the Units in uncertificated form.
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 as part of the final liquidation
distribution in the case of "Rollover Unit holders" and others. 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. 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 as part of the final liquidation distribution. 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).
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.
Within a reasonable time after a Trust is terminated, each Unit holder
who is not a Rollover Unit holder will, upon surrender of the Units for
redemption, receive (i) the pro rata share of the amounts realized upon
the disposition of Equity Securities and (ii) a pro rata share of any
other assets of 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.
What Reports will Unit Holders Receive?
The Trustee shall furnish Eligible Plans 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
Page 18
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 Equity Securities in a Trust furnished to it by the Evaluator.
How May Units be Redeemed?
Units may be redeemed by an Eligible Plan by sending the Trustee a
redemption request. No redemption fee will be charged. On the third
business day following such tender, the Eligible Plan 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.
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 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 initial offering period is determined as set
forth under "Public Offering-How is the Public Offering Price
Determined?" The aggregate value of the Equity Securities for purposes
of the Redemption Price subsequent to the initial offering period 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, the evaluation
Page 19
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
If your Eligible Plan assets are invested in Units of a Trust on the
Rollover Notification Date set forth under "Summary of Essential
Information" in Part I (a "Rollover Unit holder"), the Plan
Administrator of your Eligible Plan will redeem such Units and reinvest
the proceeds into a separate series of trusts created in conjunction
with the termination of the Trusts (the "New Trusts"), provided such New
Trusts are offered and Units are available. If you no longer wish to
have your Eligible Plan assets invested in a Trust you can change your
Eligible Plan allocation instructions at any time as permitted by your
Eligible Plan.
All Units of Rollover Unit holders will be redeemed In-Kind during the
appropriate Special Redemption and Liquidation Period, or such latter
date as permitted by the Trustee, 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, subject to the Sponsor's sensitivity
that certain Equity Securities have different settlement dates and that
the concentrated sale of large volumes of Equity Securities may affect
market prices in a manner adverse to the interests of investors. The
Sponsor does not anticipate that the period will be longer than five
days, given that the Equity Securities are usually highly liquid. The
liquidity of any Equity Security depends on the daily trading volume of
the Equity Security and the amount that the Sponsor has available for
sale on any particular day.
Pursuant to an exemptive order from the Securities and Exchange
Commission, each terminating Trust (and the Distribution Agent on behalf
of 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 FT Series?" 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, if
then registered and being offered. The proceeds of redemption will be
used to buy New Trust units once all the proceeds become available;
accordingly, proceeds may be uninvested for up to several days. 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
Page 20
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 $.100 per unit for the New Series of a Trust,
all of which will be deferred as provided herein).
The Sponsor intends to create New Trust units as quickly as possible,
depending upon the availability and reasonably favorable prices of the
Equity Securities included in a New Trust portfolio, and it is intended
that Rollover Unit holders will be given first priority to purchase the
New Trust units. Rollover Unit holders may also elect to have their
proceeds invested in a trust with a similar investment strategy, if such
trust is then registered in the Unit holder's state of residence and
being offered. There can be no assurance, however, as to the exact
timing of the creation of the New Trust units or the aggregate number of
New Trust units which the Sponsor will create. The Sponsor may, in its
sole discretion, stop creating new units (whether permanently or
temporarily) at any time it chooses, regardless of whether all proceeds
of the Special Redemption and Liquidation have been invested on behalf
of Rollover Unit holders. Cash which has not been invested on behalf of
the Rollover Unit holders in New Trust units will be distributed within
a reasonable time after such occurrence. However, since the Sponsor can
create units, the Sponsor anticipates that sufficient units can be
created, although moneys in a New Trust may not be fully invested on the
next business day.
The process of redemption, liquidation, and investment in a New Trust is
intended to allow for the fact that the portfolios selected by the
Sponsor are chosen on the basis of growth and income potential only for
a 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.
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 whose Units will not be reinvested ("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 "Rights of
Unit Holders-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 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 Contract 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
Page 21
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, or when
acting as agent for the Trusts in acquiring or selling Equity Securities
on behalf of the Trusts.
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, FT Series (formerly known as The First Trust Special Situations
Trust), The First Trust Insured Corporate Trust, The First Trust of
Insured Municipal Bonds, The First Trust GNMA, Templeton Growth and
Treasury Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust
and The Advantage Growth and Treasury Securities Trust. First Trust
introduced the first insured unit investment trust in 1974 and to date
more than $9 billion in First Trust unit investment trusts have been
deposited. The Sponsor's employees include a team of professionals with
many years of experience in the unit investment trust industry. The
Sponsor is a member of the National Association of Securities Dealers,
Inc. and Securities Investor Protection Corporation and has its
principal offices at 1001 Warrenville Road, Lisle, Illinois 60532;
telephone number (630) 241-4141. As of December 31, 1997, the total
partners' capital of Nike Securities L.P. was $11,724,071 (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."
Page 22
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.
Who is the Evaluator?
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532. The
Evaluator may resign or may be removed by the Sponsor and the Trustee,
in which event the Sponsor and the Trustee are to use their best efforts
to appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has
accepted appointment within 30 days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Indenture
shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unit holders for errors in
judgment. This provision shall not protect the Evaluator in any case of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
Page 23
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 "Rights of Unit Holders-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 during the period beginning nine business days prior to, and
no later than, 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
Units 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. Unit holders who do not elect the Rollover
Option will receive a cash distribution from the sale of the remaining
Equity Securities within a reasonable time after 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. In addition, to
the extent that Equity Securities are sold prior to the Mandatory
Termination Date, Unit holders will not benefit from any stock
appreciation they would have received had the Equity Securities not been
sold at such time. The Trustee will then distribute to each Unit holder
his pro rata share of the balance of the Income and Capital Accounts.
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
Federal tax law have been passed upon by Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, as counsel for the Sponsor.
Carter, Ledyard & Milburn, will act as counsel for the Trustee and as
special New York tax counsel for the Trusts.
Experts
The statements of net assets, including the schedules of investments, of
the Trusts at the opening of business on the Initial Date of Deposit
appearing in Part I of this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing in Part I of this Prospectus and in the
Registration Statement, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and
auditing.
Page 24
Supplemental Information
Upon written or telephonic request to the Trustee, investors will
receive at no cost to the investor supplemental information about this
Series, which has been filed with the Securities and Exchange Commission
and is hereby incorporated by reference. The supplemental information
includes more specific risk information concerning the Trusts.
Page 25
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Page 26
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Page 27
CONTENTS:
FT 254:
What is the FT Series? 1
What are the Expenses and Charges? 2
What is the Federal Tax Status of Unit Holders? 3
Portfolio:
What are the Equity Securities? 4
Domestic Trusts 4
International Trusts 4
The Dow Jones Industrial Average 4
The Financial Times Industrial Ordinary Share
Index 5
The Hang Seng Index 6
Hypothetical Performance Information 6
Annualized Performance Information 7
What are Some Additional Considerations
for Investors? 11
Risk Factors 11
Legislation 13
Foreign Issuers 13
United Kingdom 13
Hong Kong 14
Exchange Rate 15
Public Offering:
How is the Public Offering Price Determined? 16
How are Units Distributed? 17
What are the Sponsor's Profits? 18
Rights of Unit Holders:
How is Evidence of Ownership Issued? 18
How are Income and Capital Distributed? 18
What Reports will Unit Holders Receive? 18
How May Units be Redeemed? 19
Special Redemption, Liquidation and
Investment in a New Trust 20
How May Equity Securities be Removed
from a Trust? 21
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 22
Who is the Trustee? 22
Limitations on Liabilities of Sponsor and Trustee 23
Who is the Evaluator? 23
Other Information:
How May the Indenture be Amended
or Terminated? 24
Legal Opinions 24
Experts 24
Supplemental Information 25
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)
QUALIFIED 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 28
First Trust (registered trademark)
QUALIFIED TARGET TRUST SERIES
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of unit investment trusts ("Trusts")
contained in The FT Series, Qualified 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 ____________, 1998. Capitalized
terms have been defined in the Prospectus.
Table of Contents
Dow Jones & Company, Inc. 1
Risk Factors
Equity Securities 2
Foreign Issuers 2
Exchange Rate 3
Concentrations
Banks and Thrifts 6
Petroleum Refining Companies 7
Real Estate Companies 8
Small-Cap Companies 10
Hong Kong 10
Portfolios
Equity Securities Selected for
The Dow (sm) 5 Qualified Target Trust 10
Equity Securities Selected for
The Dow (sm) 10 Qualified Target Trust 11
Equity Securities Selected for
Global Target 30 Qualified Trust 11
Dow Jones & Company, Inc.
The Trusts are not sponsored, endorsed, sold or promoted by Dow Jones &
Company, Inc. ("Dow Jones"). Dow Jones makes no representation or
warranty, express or implied, to the owners of the Trusts or any member
of the public regarding the advisability of investing in securities
generally or in the Trusts particularly. Dow Jones' only relationship to
the Sponsor is the licensing of certain trademarks, trade names and
service marks of Dow Jones and of the Dow Jones Industrial Average
(sm), which is determined, composed and calculated by Dow Jones
without regard to the Sponsor or the Trusts. Dow Jones has no obligation
to take the needs of the Sponsor or the owners of the Trusts into
consideration in determining, composing or calculating the Dow Jones
Industrial Average (sm). Dow Jones is not responsible for and has not
participated in the determination of the timing of, prices at, or
quantities of the Trusts to be issued or in the determination or
calculation of the equation by which the Trusts are to be converted into
cash. Dow Jones has no obligation or liability in connection with the
administration, marketing or trading of the Trusts.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGE (sm) OR ANY DATA INCLUDED THEREIN AND DOW
JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, OWNERS OF THE TRUSTS, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL
AVERAGE (sm) OR ANY DATA INCLUDED THEREIN. DOW JONES MAKES NO EXPRESS
OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF
Page 1
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT
TO THE DOW JONES INDUSTRIAL AVERAGE (sm) OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
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. Both U.S. and foreign markets have experienced substantial
volatility and significant declines recently as a result of certain or
all of these factors. From September 30, 1997 through October 30, 1997,
amid record trading volume, the S&P 500 Index, DJIA, FT Index and Hang
Seng Index declined 4.60%, 7.09%, 6.19% and 31.14%, respectively.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those
of creditors of, or holders of debt obligations or preferred stocks of,
such issuers. Shareholders of common stocks of the type held by the
Trusts have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and have a right to
participate in amounts available for distribution by the issuer only
after all other claims on the issuer have been paid or provided for.
Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy.
Cumulative preferred stock dividends must be paid before common stock
dividends, and any cumulative preferred stock dividend omitted is added
to future dividends payable to the holders of cumulative preferred
stock. Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
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.
Page 2
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
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
Page 3
companies). From time to time, central banks in a number of countries
also are major buyers and sellers of foreign currencies, mostly for the
purpose of preventing or reducing substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well-particularly with respect to
transfers of capital). Investor psychology may also be an important
determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.
The following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and
end of month equivalent U.S. dollar rates of exchange for the United
Kingdom pound sterling and the Hong Kong dollar:
<TABLE>
<CAPTION>
Foreign Exchange Rates
Range of Fluctuations in Foreign Currencies
United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar U.S. Dollar
______ ______________ ___________
<S> <C> <C>
1983 0.616-0.707 6.480-8.700
1984 0.671-0.864 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 0.498-0.667 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 0.583-0.670 7.732-7.742
1997 0.584-0.622 7.708-7.751
<FN>
Source: Bloomberg L.P.
</FN>
</TABLE>
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
August .622 7.750
September .619 7.738
October .598 7.730
November .592 7.730
December .607 7.749
1998:
January 29 .613 7.735
February .609 7.743
March .598 7.749
April 29 .598 7.748
<FN>
Source: Bloomberg L.P.
</FN>
</TABLE>
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
Page 5
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).
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 were
allowed to turn existing banks into branches. 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
Page 6
banks regulatory agencies which, if implemented, may adversely affect
certain of the Equity Securities in the Trust's portfolio. Additional
legislative and regulatory changes may be forthcoming. For example, the
bank regulatory authorities have proposed substantial changes to the
Community Reinvestment Act and fair lending laws, rules and regulations,
and there can be no certainty as to the 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
Page 7
capacity prevented during the Persian Gulf crisis, and continues to
prevent, severe market disruption. Although unused capacity contributed
to market stability in 1990 and 1991, it ordinarily creates pressure to
overproduce and contributes to market uncertainty. The likely
restoration of a large portion of Kuwait and Iraq's production and
export capacity over the next few years could lead to such a development
in the absence of substantial growth in world oil demand. Formerly, OPEC
members attempted to exercise control over production levels in each
country through a system of mandatory production quotas. Because of the
crisis in the Middle East, the mandatory system has since been replaced
with a voluntary system. Production under the new system has had to be
curtailed on at least one occasion as a result of weak prices, even in
the absence of supplies from Kuwait and Iraq. The pressure to deviate
from mandatory quotas, if they are reimposed, is likely to be
substantial and could lead to a weakening of prices. In the longer term,
additional capacity and production will be required to accommodate the
expected large increases in world oil demand and to compensate for
expected sharp drops in U.S. crude oil production and exports from the
Soviet Union. Only a few OPEC countries, particularly Saudi Arabia, have
the petroleum reserves that will allow the required increase in
production capacity to be attained. Given the large-scale financing that
is required, the prospect that such expansion will occur soon enough to
meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased
dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to
environmental concerns will also pose serious challenges to the industry
over the coming decade. Refiners are likely to be required to make heavy
capital investments and make major production adjustments in order to
comply with increasingly stringent environmental legislation, such as
the 1990 amendments to the Clean Air Act. If the cost of these changes
is substantial enough to cut deeply into profits, smaller refiners may
be forced out of the industry entirely. Moreover, lower consumer demand
due to increases in energy efficiency and conservation, gasoline
reformulations that call for less crude oil, warmer winters or a general
slowdown in economic growth in this country and abroad, could negatively
affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will
increase or that any increases will not be marked by great volatility.
Some oil companies may incur large cleanup and litigation costs relating
to oil spills and other environmental damage. Oil production and
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the
disposal of hazardous materials. Increasingly stringent environmental
laws and regulations are expected to require companies with oil
production and refining operations to devote significant financial and
managerial resources to pollution control. General problems of the oil
and petroleum products industry include the ability of a few influential
producers significantly to affect production, the concomitant volatility
of crude oil prices and increasing public and governmental concern over
air emissions, waste product disposal, fuel quality and the
environmental effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of
energy and fuels or legislative changes relating to the energy industry
or the environment could have a negative impact on the petroleum
products industry. While legislation has been enacted to deregulate
certain aspects of the oil industry, no assurances can be given that new
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
Page 8
inability to reduce expenditures associated with a property (such as
mortgage payments and property taxes) when rental revenue declines, and
possible loss upon foreclosure of mortgaged properties if mortgage
payments are not paid when due.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
REITs are differentiated by the types of real estate properties held and
the actual geographic location of properties and fall into two major
categories: equity REITs emphasize direct property investment, holding
their invested assets primarily in the ownership of real estate or other
equity interests, while mortgage REITs concentrate on real estate
financing, holding their assets primarily in mortgages secured by real
estate. As of the Initial Date of Deposit, the Trust contains only
equity REITs. REITs obtain capital funds for investment in underlying
real estate assets by selling debt or equity securities in the public or
institutional capital markets or by bank borrowing. Thus, the returns on
common equities of the REITs in which the Trust invests will be
significantly affected by changes in costs of capital and, particularly
in the case of highly "leveraged" REITs (i.e., those with large amounts
of borrowings outstanding), by changes in the level of interest rates.
The objective of an equity REIT is to purchase income-producing real
estate properties in order to generate high levels of cash flow from
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
Page 9
be adversely affected by increases or decreases in property tax rates
and assessments or reassessments of the properties underlying the REITs
by taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary. In an effort to reduce the impact of the
risks discussed above, the 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.
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.
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.
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 The Dow 5 Qualified Target Trust
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
Page 10
Equity Securities Selected for The Dow 10 Qualified Target Trust
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
Equity Securities Selected for Global Target 30 Qualified Trust
Dow Jones Industrial Average (sm)
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
Financial Times Industrial Ordinary Share Index
Hang Seng Index
The Sponsor has obtained the foregoing company descriptions from sources
it deems reliable. The Sponsor has not independently verified the
provided information either in terms of accuracy or completeness.
Page 11
-APPENDIX-
The graph which appears on page 9 of Part II of the Prospectus
represents a comparison between a $10,000 investment made on January 1,
1973 in those stocks which comprise the Dow Jones Industrial Average,
the S&P 500 Index, 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 December 31 of each respective
year. The chart indicates that $10,000 invested on January 1, 1973 in
the stocks which comprise the Dow Jones Industrial Average would on
March 31, 1998 be worth $241,417, as opposed to $749,945 had the $10,000
been invested in the ten common stocks in the Dow Jones Industrial
Average having the highest dividend yield and $1,361,851 had the $10,000
been invested in the five lowest priced stocks of the ten common stocks
in the Dow Jones Industrial Average having the highest dividend yield as
of December 31 of each respective year. Each figure assumes that
dividends received during each year will be reinvested at year end and
sales charges, commissions, expenses and taxes were not considered in
determining total returns.
The graph which appears on page 10 of Part II of the Prospectus
represents a comparison between a $10,000 investment made on January 1,
1978 in those stocks which comprise the Combined Strategy and the
Cumulative Index Returns as of December 31 of each respective year. The
chart indicates that $10,000 invested on January 1, 1978 and reinvested
as of each December 31 in the stocks which comprise the Combined 30
Strategy would be worth $396,908 on March 31, 1998. The same $10,000,
invested on January 1, 1978 and reinvested as of each December 31 in the
Cumulative Index Returns would be worth $311,888 on March 31, 1998. Each
figure assumes that dividends received during a year are reinvested semi-
annually beginning January 1, 1987 and annually prior thereto and sales
charges, commissions, expenses and taxes were not considered in
determining total returns. The figures have been adjusted to take into
account currency exchange rate fluctuations in the U.S. dollar.
MEMORANDUM
Re: FT 254
As indicated in our cover letter transmitting the
Registration Statement on Form S-6 and other related material
under the Securities Act of 1933 to the Commission, the only
difference of consequence (except as described below) between FT
241, which is the current fund, and FT 254, the filing of which
this memorandum accompanies, is the change in the series number.
The list of securities comprising the Fund, the evaluation,
record and distribution dates and other changes pertaining
specifically to the new series, such as size and number of Units
in the Fund and the statement of condition of the new Fund, will
be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the FT
241 Prospectus relate to the series number and size and the date
and various items of information which will be derived from and
apply specifically to the securities deposited in the Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $1,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
Exhibits
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 254 has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Village of Lisle and State of
Illinois on May 11, 1998.
FT 254
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE* DATE
Robert D. Van Kampen Director of
Nike Securities May 11, 1998
Corporation, the
General Partner of
Nike Securities L.P. Robert M. Porcellino
Attorney-in-Fact**
David J. Allen Director of Nike
Securities Corporation,
the General Partner
of Nike Securities L.P.
___________________________
* The title of the person named herein represents his capacity
in and relationship to Nike Securities L.P., the Depositor.
** An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with Amendment No. 1 to form S-6 of The First Trust Combined
Series 258 (File No. 33-63483) and the same is hereby
incorporated by this reference.
S-2
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF ERNST & YOUNG LLP
The consent of Ernst & Young LLP to the use of its name and
to the reference to such firm in the Prospectus included in this
Registration Statement will be filed by amendment.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-3
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-43693] filed on behalf of The First Trust
Special Situations Trust, Series 22).
1.1.1* Form of Trust Agreement for FT 254 among Nike Securities
L.P., as Depositor, The Chase Manhattan Bank, as Trustee
and First Trust Advisors L.P., as Evaluator and Portfolio
Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by
reference).
3.1* Opinion of counsel as to legality of Securities being
registered.
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
S-4
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Director listed on page
S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-63483] filed on behalf of The First Trust Combined
Series 258).
___________________________________
* To be filed by amendment.
S-5
