File No. 33-50593
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST, SHORT-INTERMEDIATE,
SERIES 2
(Exact Name of Trust)
NIKE SECURITIES L.P.
(Exact Name of Depositor)
1001 Warrenville Road
Lisle, Illinois 60532
(Complete address of Depositor's principal executive offices)
NIKE SECURITIES L.P. CHAPMAN AND CUTLER
Attn: James A. Bowen Attn: Eric F. Fess
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(Name and complete address of agents for service)
It is proposed that this filing will become effective (check
appropriate box)
: : immediately upon filing pursuant to paragraph (b)
: x : February 1, 1995
: : 60 days after filing pursuant to paragraph (a)
: : on (date) pursuant to paragraph (a) of rule (485 or 486)
Pursuant to Rule 24f-2 under the Investment Company Act of
1940, the issuer has registered an indefinite amount of
securities. A 24f-2 Notice for the offering was last filed on
November 9, 1994.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
6,011,829 UNITS
PROSPECTUS
Part One
Dated January 20, 1995
Note: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
The Trust
The First Trust U.S. Treasury Securities Trust, Short-Intermediate, Series 2
(the "Trust") is a fixed portfolio of taxable U.S. Treasury Securities that
are backed by the full faith and credit of the United States Government. All
of the U.S. Treasury Securities consist of maturities of approximately 2.5-6.5
years from the Initial Date of Deposit which are "laddered" to return a
portion of the Unit holders principal annually. At December 16, 1994, each
Unit represented a 1/6,011,829 undivided interest in the principal and net
income of the Trust (see "What is the First Trust Special Situations Trust?"
in Part Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
Public Offering Price per Unit
The Public Offering Price per 1,000 Units is equal to the aggregate value of
the Securities in the Portfolio of the Trust, plus Purchased Interest, divided
by the number of Units outstanding, multiplied by 1,000, plus a sales charge
of 1.95% of the Public Offering Price (1.989% of the amount invested). At
December 16, 1994, the Public Offering Price per 1,000 Units was $902.90 plus
net interest accrued to date of settlement (five business days after such
date) of $.11422 (see "Market for Units" in Part Two).
Please retain both parts of this Prospectus for future reference.
______________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
______________________________________________________________________________
NIKE SECURITIES L.P.
Sponsor
<PAGE>
Estimated Current Return and Estimated Long-Term Return
Estimated Current Return to Unit holders was 4.55% per annum on December 16,
1994. Estimated Long-Term Return to Unit holders was 7.39% per annum on
December 16, 1994. Estimated Current Return is calculated by dividing the
Estimated Net Annual Interest Income per 1,000 Units by the Public Offering
Price per 1,000 Units. Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration and determines and factors in the
relative weightings of the market values, yields (which take into account the
amortization of premiums and the accretion of discounts) and estimated average
life of all of the Securities in the Trust and (2) takes into account the
expenses and sales charge associated with each Unit of the Trust. Since the
market values and estimated average lives of the Securities and the expenses
of the Trust will change, there is no assurance that the present Estimated
Current Return and Estimated Long-Term Return indicated above will be realized
in the future. Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of the Estimated Long-Term Return
reflects the estimated date and amount of principal returned while the
Estimated Current Return calculations include only Net Annual Interest Income
and Public Offering Price. The above figures are based on estimated per Unit
cash flows. Estimated cash flows will vary with changes in fees and expenses,
with changes in current interest rates, and with the principal prepayment,
redemption, maturity, exchange or sale of the underlying Securities. See
"What are Estimated Current Return and Estimated Long-Term Return?" in Part
Two.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 16, 1994
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: United States Trust Company of New York
<TABLE>
<CAPTION>
GENERAL INFORMATION
<S> <C>
Principal Amount of Securities in the Trust $6,025,000
Number of Units 6,011,829
Fractional Undivided Interest in the Trust per Unit 1/6,011,829
Public Offering Price per 1,000 Units:
Aggregate Value of Securities in the Portfolio $5,279,201
Aggregate Value of Securities per 1,000 Units $878.14
Purchased Interest $42,993
Purchased Interest per Unit $7.15
Sales Charge 1.989% (1.95% of Public Offering Price) $17.61
Public Offering Price per 1,000 Units $902.90*
Redemption Price and Sponsor's Repurchase Price
per 1,000 Units ($17.61 less than the Public Offering
Price per 1,000 Units) $885.29*
Discretionary Liquidation Amount $617,500
</TABLE>
Date Trust Established October 21, 1993
Mandatory Termination Date December 31, 2000
[FN]
*Plus net interest accrued to date of settlement (five business days after
purchase) (see "Public Offering Price per 1,000 Units" herein and "Redemption
of Units" and "Purchase of Units by the Sponsor" in Part Two).
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 16, 1994
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: United States Trust Company of New York
<TABLE>
<CAPTION>
SPECIAL INFORMATION
<S> <C>
Calculation of Estimated Net Annual Interest Income
per 1,000 Units:
Estimated Annual Interest Income per 1,000 Units $42.83
Less: Estimated Annual Expense per 1,000 Units 1.71
_______
Estimated Net Annual Interest Income per 1,000 Units $41.12
=======
Divided by 12 $3.43
=======
Estimated Daily Rate of Net Interest Accrual per 1,000 Units $.11422
=======
Estimated Current Return Based on Public Offering Price 4.55%
=======
Estimated Long-Term Return Based on Public Offering Price 7.39%
=======
</TABLE>
Trustee's Annual Fee: $.96 per 1,000 Units outstanding, exclusive of expenses
of the Trust.
Evaluator's Annual Fee: $.25 per $1,000 Units outstanding annually.
Supervisory Fee: Maximum of $.10 per 1,000 Units outstanding annually.
Distributions will generally be made on or shortly after the last day of each
month to Unit holders of record on the fifteenth day of such month.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Unit Holders of The First Trust
Special Situations Trust, Series 81, The
First Trust U.S. Treasury Securities Trust,
Short-Intermediate, Series 2
We have audited the accompanying statement of assets and liabilities,
including the portfolio, of The First Trust Special Situations Trust,
Series 81, The First Trust U.S. Treasury Securities Trust, Short-Intermediate,
Series 2 as of September 30, 1994, and the related statements of operations
and changes in net assets for the period from the Initial Date of Deposit,
October 21, 1993, to September 30, 1994. These financial statements are the
responsibility of the Trust's Trustee. Our responsibility is to express an
opinion on these financial statements 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of September 30, 1994,
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The First Trust Special
Situations Trust, Series 81, The First Trust U.S. Treasury Securities Trust,
Short-Intermediate, Series 2 at September 30, 1994, and the results of its
operations and changes in its net assets for the period from the Initial Date
of Deposit, October 21, 1993, to September 30, 1994, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
December 30, 1994
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1994
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Securities, at value (cost $5,764,948)
(Note 1) $5,391,983
Accrued interest 56,142
Cash 7,897
__________
5,456,022
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Purchased interest 43,207
Accrued liabilities 24
__________
43,231
__________
Net assets, applicable to 6,041,829
outstanding units of fractional
undivided interest:
Cost of Trust assets (Note 1) $5,764,948
Unrealized depreciation (372,965)
Distributable funds 20,808
__________
$5,412,791
==========
Net asset value per 1,000 units $895.89
==========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
PORTFOLIO - See notes to portfolio.
September 30, 1994
The portfolio consists of the following U.S. Treasury Securities:
<TABLE>
<CAPTION>
Coupon Principal
rate Maturity amount Value
<C> <C> <C> <C>
4.625% 2/15/1996 $830,000 810,204
6.250 1/31/1997 950,000 936,928
5.125 2/28/1998 950,000 893,855
6.375 1/15/1999 950,000 919,857
- (1) 2/15/2000 1,425,000 960,436
5.500 4/15/2000 950,000 870,703
____________________________
$6,055,000 5,391,983
============================
</TABLE>
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
NOTES TO PORTFOLIO
September 30, 1994
(1) This Treasury Security is being purchased at a discount from its par
value because there is no stated interest income thereon (such
securities are often referred to as zero coupon U.S. Treasury
Securities). Over the life of a zero coupon U.S. Treasury Security the
value increases, so that upon maturity the holders will receive 100% of
the principal amount thereof.
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
STATEMENT OF OPERATIONS
Period from the Initial Date of Deposit,
October 21, 1993, to September 30, 1994
<TABLE>
<S> <C>
Interest income $192,280
Expenses:
Trustee's fees and related expenses (5,712)
Evaluator's fees (1,160)
Supervisory fees (466)
_________
Investment income - net 184,942
Net gain (loss) on investments:
Net realized gain (loss) (3,662)
Change in unrealized appreciation/depreciation (372,965)
_________
(376,627)
_________
Net increase (decrease) in net assets
resulting from operations $(191,685)
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
STATEMENT OF CHANGES IN NET ASSETS
Period from the Initial Date of Deposit,
October 21, 1993, to September 30, 1994
<TABLE>
<S> <C>
Net increase in net assets resulting from operations:
Investment income - net $184,942
Net realized gain (loss) on investments (3,662)
Change in unrealized appreciation/depreciation
on investments (372,965)
__________
(191,685)
Units issued (4,222,829) 3,988,688
Unit redemptions (130,000):
Principal portion (117,422)
Net interest accrued (354)
__________
(117,776)
Distributions to unit holders:
Investment income - net (163,501)
Principal -
__________
(163,501)
__________
Total increase (decrease) in net assets 3,515,726
Net assets:
At the beginning of the period, representing
1,949,000 units at October 21, 1993 1,897,065
__________
At the end of the period (including
distributable funds applicable to Trust
units of $20,808 at September 30, 1994) $5,412,791
==========
Trust units outstanding at the end of the period 6,041,829
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation -
Securities are stated at values as determined by Securities Evaluation
Service, Inc., certain shareholders of which are officers of the Sponsor. The
values of the securities are based on (1) current bid prices for the
securities obtained from dealers or brokers who customarily deal in securities
comparable to those held by the Trust, (2) current bid prices for comparable
securities, (3) appraisal or (4) any combination of the above.
Security cost -
The Trust's cost of its portfolio is based on the offering prices of the
securities on the Initial Date of Deposit, October 21, 1993 and the offering
prices of the securities on each supplemental Date of Deposit. The premium or
discount is not being amortized. Realized gain (loss) from security
transactions is reported on an identified cost basis. Sales of securities are
recorded on the trade date.
Federal income taxes -
The Trust is not taxable for Federal income tax purposes. Each unit holder is
considered to be the owner of a pro rata portion of the Trust and,
accordingly, no provision has been made for Federal income taxes.
Expenses of the Trust -
The Trustee is United States Trust Company of New York. The Trustee's fees
are $.96 per 1,000 units outstanding, exclusive of expenses of the Trust. An
annual fee of $.25 per 1,000 units outstanding is payable to the Evaluator.
Additionally, the Trust pays all related expenses of the Trustee, recurring
financial reporting costs and an annual supervisory fee payable to an
affiliate of the Sponsor.
Distributions to unit holders -
Distributions to unit holders of investment income - net and principal are
presented on the accrual basis.
2. Unrealized appreciation and depreciation
An analysis of net unrealized depreciation at September 30, 1994 follows:
<TABLE>
<S> <C>
Unrealized depreciation $(372,965)
Unrealized appreciation -
_________
$(372,965)
=========
</TABLE>
<PAGE>
3. Other information
Cost to investors -
The cost to initial investors of units of the Trust was based on the aggregate
offering price of the securities on the date of an investor's purchase, plus
Purchased Interest as described below, plus a sales charge of 1.95% of the
public offering price which is equivalent to approximately 1.989% of the net
amount invested.
Purchased Interest -
Purchased Interest represents a portion of the accrued interest on the
underlying bonds as of the Initial Date of Deposit and as of the date of each
supplemental deposit; plus a portion of the interest accrued to the first
settlement date and to the settlement dates of each supplemental deposit, less
distributions paid to the Sponsor. Purchased Interest on the 6,171,829 units
deposited in the Trust totaled $44,137. Purchased Interest was included in
the public offering price paid by unit holders and will not be distributed to
unit holders until the termination of the Trust or until units are redeemed.
Purchased Interest on 6,041,829 units at September 30, 1994, totaling $43,207,
represents a liability of the Trust.
<PAGE>
Selected data per 1,000 units of the Trust
outstanding throughout the period -
<TABLE>
<CAPTION>
Period from
the Initial Date
of Deposit,
Oct. 21, 1993 to
Sept. 30, 1994
<S> <C>
Interest income $20.82
Expenses (.79)
_______
Investment income - net 20.03
Distributions to unit holders:
Investment income - net (36.24)
Principal -
Net gain (loss) on investments (61.25)
_______
Total increase (decrease) in net assets (77.46)
Net assets:
Beginning of the period 973.35
_______
End of the period $895.89
=======
</TABLE>
The net gain (loss) on investments per 1,000 units during the period includes
the effects of changes arising from issuance of 4,222,829 additional units
during the period at net asset values which differed from the net asset value
per 1,000 units of the original 1,949,000 units (973.35 per 1,000 units) on
October 21, 1993.
<PAGE>
THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
PART ONE
Must be Accompanied by Part Two
____________________
P R O S P E C T U S
____________________
SPONSOR: Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
(800) 621-1675
TRUSTEE: United States Trust Company of New York
770 Broadway
New York, New York 10003
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR: 111 West Monroe Street
Chicago, Illinois 60603
LEGAL COUNSEL Carter Ledyard & Milburn
TO TRUSTEE: 2 Wall Street
New York, New York 10005
INDEPENDENT Ernst & Young LLP
AUDITORS: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
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 statement and exhibits relating thereto, which the Trust 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 U.S. Treasury Securities Trust
Short-Intermediate Series
PROSPECTUS NOTE: THIS PART TWO PROSPECTUS MAY
Part Two ONLY BE USED WITH PART ONE
Dated March 31, 1994
The Trusts. The First Trust Special Situations Trusts (the "Trusts"
and each a "Trust") are unit investment trusts consisting of portfolios
of taxable U.S. Treasury Securities that are backed by the full
faith and credit of the United States Government (the "Securities").
The maturities of the U.S. Treasury Securities were "laddered"
at the Initial Date of Deposit to return to Unit holders a certain
percentage of principal annually. See Part One for each Trust.
The objective of each Trust is to obtain safety of capital and
current monthly distributions of interest through an investment
in a fixed portfolio of Securities. Each Series of the Trust was
a "laddered" portfolio at the Initial Date of Deposit providing
flexibility of principal investment with maturities ranging as
specified in Part One for each Trust.
The guaranteed payment of interest and principal afforded by the
Securities may make an investment in the Trusts particularly well
suited for purchase by Individual Retirement Accounts, Keogh Plans,
pension funds and other tax-deferred retirement plans. Investors
should consult with their tax advisers before investing. See "Why
are Investments in the Trusts Suitable for Retirement Plans?"
STANDARD & POOR'S CORPORATION HAS RATED UNITS OF EACH SERIES OF
THE TRUST "AAA." THIS IS THE HIGHEST RATING ASSIGNED BY STANDARD
& POOR'S CORPORATION. SEE "WHAT IS THE RATING OF THE UNITS?" AND
"DESCRIPTION OF STANDARD & POOR'S CORPORATION RATING."
Attention Foreign Investors: Your interest income from the Trust
may be exempt from federal withholding taxes if you are not a
United States citizen or resident and certain conditions are met.
See "What is the Federal Tax Status of Unit Holders?"
For Information on Estimated Current Return and Estimated Long-Term
Return for each Trust, see Part One for each Trust.
The Public Offering Price per 1,000 Units is equal to the aggregate
bid price of the Securities in the portfolio of a Series of the
Trust and the amount of Purchased Interest for each Trust (if
any) divided by the number of Units outstanding multiplied by
1,000, plus a sales charge as indicated in Part One for each Trust.
See "How is the Public Offering Price Determined?", particularly
for the method of evaluation.
Each Unit represents an undivided interest in the principal, Purchased
Interest (if any) and net income of a Series of the Trust in the
ratio of one Unit for each $1.00 principal amount of Securities.
Distributions of interest received by a Series of the Trust will
be paid in cash monthly unless the Unit holder elects to have
them automatically reinvested as described herein. See "How Can
Distributions to Unit Holders be Reinvested?" Monthly distributions
will be made as indicated in Part One for each Trust.
The Sponsor, although not obligated to do so, intends to maintain
a market for the Units at prices based upon the aggregate bid
price of the Securities in the portfolio of each Trust. In the
absence of such a market, a Unit holder will nonetheless be able
to dispose of the Units through redemption at prices based upon
the bid prices of the underlying Securities. See "How May Units
be Redeemed?"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Page 1
First Trust U.S. Treasury Securities Trust,
Short-Intermediate Series
The First Trust Special Situations Trust
What is the First Trust Special Situations Trust?
The First Trust Special Situations Trust is a series of investment
companies created by the Sponsor under the name of The First Trust
Special Situations Trust, all of which are generally similar but
each of which is separate and is designated by a different series
number (the "Trusts" and each a "Trust"). Each Series consists
of an underlying separate unit investment trust designated as:
First Trust U.S. Treasury Securities Trust, Short-Intermediate
Series and 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, United
States Trust Company of New York, as Trustee, Securities Evaluation
Service, Inc., as Evaluator and First Trust Advisors L.P., as
Portfolio Supervisor.
The objective of each Series of the Trust is to obtain safety
of capital and current monthly distributions of interest through
an investment in a fixed portfolio of taxable U.S. Treasury Securities.
Each Series of the Trust was a "laddered" portfolio at the Initial
Date of Deposit to provide flexibility of principal investment
with maturities ranging as indicated in Part One for each Trust.
The Trust may be an appropriate medium for investors who desire
to participate in a portfolio of taxable fixed income securities
offering the safety of capital provided by securities backed by
the full faith and credit of the United States but who do not
wish to invest the minimum amount which is required for a direct
investment in the Securities. Because regular payments of principal
are to be received in accordance with the "laddered" maturities
of the Securities and certain Securities may be sold under circumstances
described herein, the Trust is not expected to retain its present
size and composition. Units will remain outstanding until redeemed
upon tender to the Trustee by any Unit holder (which may include
the Sponsor) or until the termination of a Series of the Trust
pursuant to the Indenture.
Many investors in the First Trust U.S. Treasury Securities Trust,
Short-Intermediate Series may benefit from the exemption from
state and local personal income taxes that will pass through the
Trusts to Unit holders in all states. Each Trust has the additional
purpose of providing income which is exempt from withholding for
U.S. Federal income taxes for non-resident alien investors. A
foreign investor must provide a completed W-8 Form to his financial
representative or the Trustee to avoid withholding on his account.
In selecting the Securities for deposit in a Trust on the Initial
Date of Deposit, the following factors, among others, were considered
by the Sponsor: (i) the types of such securities available; (ii)
the prices and yields of such securities relative to other comparable
securities, including the extent to which such securities are
trading at a premium or at a discount from par; (iii) whether
the Securities were issued after July 18, 1984; and (iv) the maturities
of such securities. See "Portfolio" in Part One for each Trust
for information with respect to the Securities in the Trust.
The Portfolio of a Trust may contain Securities which were acquired
at a market discount. Such Securities trade at less than par value
because the interest coupons thereon are lower than interest coupons
on comparable debt securities being issued at currently prevailing
interest rates. If such interest rates for newly issued and otherwise
comparable securities increase, the market discount of previously
issued securities will become greater, and if such interest rates
for newly issued comparable securities decline, the market discount
of previously issued securities will be reduced, other things
being equal. Investors should also note that the value of Securities
purchased at a market discount will increase in value faster than
Securities purchased at a market premium if interest rates decrease.
Conversely, if interest rates increase the value of Securities
purchased at a market discount will decrease faster than Securities
purchased at a premium. Market discount attributable to interest
changes does not indicate a lack of market confidence in the issue.
Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any of the Securities.
Page 2
The Portfolio of a Trust may contain U.S. Treasury Obligations
which have been stripped of their unmatured interest coupons.
The zero coupon Securities evidence the right to receive a fixed
payment at a future date from the U.S. Government, and are backed
by the full faith and credit of the U.S. Government. Zero coupon
Securities are purchased at a deep discount because the buyer
obtains only the right to a fixed payment at a fixed date in the
future and does not receive any periodic interest payments. The
effect of owning deep discount bonds which do not make current
interest payments (such as the zero coupon Securities) is that
a fixed yield is earned not only on the original investment, but
also, in effect, on all earnings during the life of the discount
obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income
on such obligations at a rate as high as the implicit yield on
the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason,
the zero coupon Securities are subject to substantially greater
price fluctuations during periods of changing interest rates than
are securities of comparable quality which make regular interest
payments.
The Portfolio of a Trust may contain Securities which were acquired
at a market premium. Such Securities trade at more than par value
because the interest coupons thereon are higher than interest
coupons on comparable debt securities being issued at currently
prevailing interest rates. If such interest rates for newly issued
and otherwise comparable securities decrease, the market premium
of previously issued securities will be increased, and if such
interest rates for newly issued comparable securities increase,
the market premium of previously issued securities will be reduced,
other things being equal. The current returns of securities trading
at a market premium are initially higher than the current returns
of comparably rated debt securities of a similar type issued at
currently prevailing interest rates because premium securities
tend to decrease in market value as they approach maturity when
the face amount becomes payable. Market premium attributable to
interest changes does not indicate market confidence in the issue.
The Trustee will have no power to vary the investment of a Series
of the Trust, i.e., the Trustee will have no managerial power
to take advantage of market variations to improve a Unit holder's
investment. Each Unit represents the fractional undivided interest
in a Series of the Trust set forth in the "Summary of Essential
Information" appearing in Part One for each Trust. To the extent
that any Units are redeemed by the Trustee, the fractional undivided
interest in a Series of the Trust represented by each unredeemed
Unit will increase, although the actual interest in such Series
represented by such fraction will remain substantially unchanged.
Units will remain outstanding until redeemed upon tender to the
Trustee by any Unit holder, which may include the Sponsor, or
until the termination of the Indenture.
Special Considerations. The Securities are direct obligations
of the United States and are backed by its full faith and credit
although the Units of the Trust are not so backed. The Securities
are not rated but in the opinion of the Sponsor have credit characteristics
comparable to those of securities rated "AAA" by nationally recognized
rating agencies.
An investment in Units of a Trust should be made with an understanding
of the risks which an investment in fixed rate debt obligations
may entail, including the risk that the value of the Securities
and hence the Units will decline with increases in interest rates.
The high inflation of prior years, together with the fiscal measures
adopted to attempt to deal with it, have resulted in wide fluctuations
in interest rates and, thus, in the value of fixed rate debt obligations
generally. The Sponsor cannot predict whether such fluctuations
will continue in the future.
What is the Rating of the Units?
Standard & Poor's Corporation has rated Units of each Series of
the Trust "AAA." This is the highest rating assigned by Standard
& Poor's Corporation. See "Description of Standard & Poor's Corporation
Rating." The obtaining of this rating by a Trust should not be
construed as an approval of the offering of the Units by Standard
& Poor's Corporation or as a guarantee of the market value of
a Series of a Trust or the Units. Standard & Poor's Corporation
has indicated that this rating is not a recommendation to buy,
hold or sell Units nor does it take into account the extent to
which expenses of a Series of the Trust or sales by the Trust
of Securities for less than the purchase price paid by a Series
of the Trust will reduce payment to Unit holders
Page 3
of the interest and principal required to be paid on such Securities.
There is no guarantee that the "AAA" investment rating with respect
to the Units will be maintained. Standard & Poor's Corporation
will be compensated by the Sponsor for its services in rating
Units of a Series of the Trust.
What are Estimated Current Return and Estimated Long-Term Return?
Debt securities are customarily offered to investors on a "yield
price" basis (as contrasted to a "dollar price" basis) at the
lesser of the price as computed to maturity of such debt security
or to an earlier redemption date. Since Units of each Series of
the Trust are offered on a dollar price basis, the estimated rate
of return on an investment in Units of a Series of the Trust is
stated in terms of "Estimated Current Return and Estimated Long-Term
Return."
At the date of this Prospectus, the Estimated Current Return and
the Estimated Long-Term Return for each Series are as set forth
in Part One attached hereto for each Trust. Estimated Current
Return is computed by multiplying the Estimated Net Annual Interest
Rate per 1,000 Units by $1,000 and dividing the result by the
Public Offering Price per 1,000 Units. The Estimated Net Annual
Interest Rate per Unit will vary with changes in fees and expenses
of the Trustee and the Evaluator and with the principal prepayment,
redemption, maturity, exchange or sale of Securities while the
Public Offering Price will vary with changes in the offering price
of the underlying Securities; therefore, there is no assurance
that the Estimated Current Return indicated in Part One for each
Trust will be realized in the future. Estimated Current Return
does not take into account timing of distributions of income and
other amounts (including delays in distribution to Unit Holders),
and it only partially reflects the effects of premiums paid and
discounts realized in the purchase price of Units.
Unlike Estimated Current Return, Estimated Long-Term Return is
a measure of the estimated return to the investor earned over
the estimated life of a Series of the Trust. The Estimated Long-Term
Return represents an average of the yields to estimated retirements
of the Securities in a Series of the Trust and adjusted to reflect
expenses and sales charges.
Both Estimated Current Return and Estimated Long-Term Return are
subject to fluctuation with changes in the composition of the
Portfolio of a Series of the Trust and changes in market value
of the underlying Securities and changes in fees and expenses,
including sales charges, and therefore can be materially different
than the figures set forth in Part One for each Trust. In addition,
return figures may not be directly comparable to yield figures
used to measure other investments, and since return figures are
based on certain assumptions and variables, the actual returns
received by a Unit holder may be higher or lower.
Record Dates for distributions of interest are the fifteenth day
of each month. The Distribution Dates for distributions of interest
are the first day of the month following that in which the related
Record Date occurs (except for the distribution which would be
made on January 1, which instead will be made on or before December
31).
How are Purchased Interest and Accrued Interest Treated?
Purchased Interest. Series 2 of the Trust contains an element
of Purchased Interest. Purchased Interest is a portion of the
unpaid interest that has accrued on the Securities from the later
of the last payment date on the Securities or the date of issuance
thereof through the First Settlement Date of a Trust and, for
certain Trusts, is included in the calculation of the Public Offering
Price. Purchased Interest (if any) will be distributed to Unit
holders as Units are redeemed or Securities are sold, mature or
are called. See "Summary of Essential Information" in Part One
for the amount of Purchased Interest per 1,000 Units for each
Trust (if any). For certain Trusts, Purchased Interest is an element
of the determination of the price Unit holders will receive in
connection with the sale or redemption of Units prior to the termination
of the Trust.
Accrued Interest. Accrued interest is the accumulation of unpaid
interest on a security from the last day on which interest thereon
was paid. Interest on Securities in a Trust generally is paid
semi-annually, although the Trust accrues such interest daily.
Because of this, a Series of the Trust always has an amount of
interest earned but not yet collected by the Trustee. For this
reason, with respect to sales settling subsequent to the First
Settlement Date of a Trust, the Public Offering Price of Units
will have added to it the proportionate
Page 4
share of accrued interest to the date of settlement. Unit holders
will receive on the next distribution date of the Trust the amount,
if any, of accrued interest paid on their Units.
For Series 1 of the Trust, in an effort to reduce the amount of
accrued interest which would otherwise have to be paid by Unit
holders, the Trustee will advance the amount of the accrued interest
to the Sponsor as the Unit holder of record as of the First Settlement
Date. Consequently, the amount of accrued interest to be added
to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement
less any distributions from the Interest Account subsequent to
the First Settlement Date. See "Rights of Unit Holders - How are
Interest and Principal Distributed?"
For Series 2 of the Trust, in an effort to reduce the amount of
Purchased Interest which would otherwise have to be paid by Unit
holders, the Trustee may advance a portion of the accrued interest
to the Sponsor as the Unit holder of record as of the First Settlement
Date. Consequently, the amount of accrued interest to be added
to the Public Offering Price of Units will include only accrued
interest from the First Settlement Date to the date of settlement
(other than Purchased Interest already included therein) less
any distributions from the Interest Account subsequent to the
First Settlement Date. See "Rights of Unit Holders - How are Interest
and Principal Distributed?"
Because of the varying interest payment dates of the Securities,
accrued interest at any point in time will be greater than the
amount of interest actually received by the Trust and distributed
to Unit holders. If a Unit holder sells or redeems all or a portion
of his Units, he will be entitled to receive his proportionate
share of Purchased Interest, if any and accrued interest from
the purchaser of his Units. Since the Trustee has the use of the
funds (including Purchased Interest) held in the Interest Account
for distributions to Unit holders and since such Account is non-interest
bearing to Unit holders, the Trustee benefits thereby.
What are the Expenses and Charges?
At no cost to the Trusts, the Sponsor has borne all the expenses
of creating and establishing the Trusts, including the cost of
the initial preparation, printing and execution of the Indenture
and the certificates for the Units, legal and accounting expenses
of the Trustee. The Sponsor will not receive any fees in connection
with its activities relating to the Trusts. However, 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 in
Part One for each Trust for providing portfolio supervisory services
for such Trust. The fee may exceed the actual costs of providing
such supervisory services for such Trust, but at no time will
the total amount received for portfolio supervisory services rendered
to unit investment trusts of which Nike Securities L.P. is the
Sponsor in any calendar year exceed the aggregate cost to First
Trust Advisors L.P. of supplying such services in such year.
For purposes of evaluation of the Securities in a Series of the
Trust, the Evaluator will receive a fee as indicated in Part One
for each Trust. The Trustee pays certain expenses of a Series
of the Trust for which it is reimbursed by such Series of the
Trust. The Trustee will receive for its ordinary recurring services
to each Series of the Trust an annual fee as indicated in Part
One for each Trust. For a discussion of the services performed
by the Trustee pursuant to its obligations under the Indentures,
reference is made to the material set forth under "Rights of Unit
Holders." The Trustee's and Evaluator's fees are payable monthly
on or before each Distribution Date from the Interest Account
to the extent funds are available and then from the Principal
Account. Since the Trustee has the use of the funds being held
in the Principal and Interest Accounts for future distributions,
payment of expenses and redemptions and since such Accounts are
non-interest 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. Both fees may
be increased without approval of the Unit holders by amounts not
exceeding proportionate increases under the category "All Services
Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor.
The following additional charges with respect to a Series of the
Trust are or may be incurred by a Series of the Trust: all expenses
(including legal and annual auditing expenses) of the Trustee
incurred in connection with its responsibilities under the Indentures,
except in the event of negligence, bad faith or willful misconduct
on its part; the expenses and costs of any action undertaken by
the Trustee to protect a Series of the
Page 5
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 Series of the 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 the Trust; all taxes and other government charges
imposed upon the Securities or any part of a Series of the Trust
(no such taxes or charges are being levied or made upon termination
of a Series of the Trust). The above expenses and the Trustee's
annual fee, when paid or owing to the Trustee, are secured by
a lien on each Series of the Trust. In addition, the Trustee is
empowered to sell Securities in order to make funds available
to pay all these amounts if funds are not otherwise available
in the Interest and Principal Accounts. Due to the minimum principal
amount in which Securities may be required to be sold, the proceeds
of such sales may exceed the amount necessary for the payment
of such fees and expenses.
Unless the Sponsor determines that such an audit is not required,
the Indenture requires the accounts of a Series of the Trust shall
be audited on an annual basis at the expense of such Series by
independent auditors selected by the Sponsor. So long as the Sponsor
is making a secondary market for Units, the Sponsor shall bear
the cost of such annual audits to the extent such cost exceeds
$.50 per 1,000 Units. Unit holders of a Series of the Trust covered
by an audit may obtain a copy of the audited financial statements
from the Trustee upon request.
What is the Tax Status of Unit Holders?
In the opinion of Chapman and Cutler, counsel for the Sponsor,
under existing law:
1. Each Trust is not an association taxable as a corporation
for Federal income tax purposes; each Unit holder will be treated
as the owner of a pro rata portion of a Trust under the Internal
Revenue Code (the "Code") and income of such Trust will be treated
as the income of the Unit holders under the Code.
2. Each Unit holder will have a taxable event when a Trust disposes
of a Security, or when the Unit holder redeems or sells his Units.
Unit holders must reduce the tax basis of their Units for their
share of accrued interest received by a Trust, if any, on Securities
delivered after the Unit holders pay for their Units to the extent
that such interest accrued on such Securities during the period
from the Unit holder's settlement date to the date such Securities
are delivered to a Trust and, consequently, such Unit holders
may have an increase in taxable gain or reduction in capital loss
upon the disposition of such Units. Gain or loss upon the sale
or redemption of Units is measured by comparing the proceeds of
such sale or redemption with the adjusted basis of the Units.
If the Trustee disposes of Securities (whether by sale, payment
on maturity, redemption or otherwise), gain or loss is recognized
to the Unit holder. The amount of such gain or loss is measured
by comparing the Unit holder's pro rata share of the total proceeds
from such disposition with the Unit holder's basis for his or
her fractional interest in the asset disposed of. In the case
of a Unit holder who purchases Units, such basis (before adjustment
for earned original issue discount, amortized bond premium and
accrued market discount (if the Unit holder has elected to include
such market discount in income as it accrues), if any) is determined
by apportioning the cost of the Units among each of the Trust
assets ratably according to value as of the date of acquisition
of the Units. The tax cost reduction requirements of the Code
relating to amortization of bond premium may, under some circumstances,
result in the Unit holder realizing a taxable gain when his Units
are sold or redeemed for an amount equal to or less than his original
cost.
3. A Trust may contain certain "zero coupon" Securities (the
"Stripped Treasury Securities") that are treated as bonds that
were originally issued at an original issue discount provided,
pursuant to a Treasury Regulation (the "Regulation") issued on
December 28, 1992, that the amount of original issue discount
determined under Section 1286 of the Code is not less than a "de
minimis" amount as determined thereunder. Because the Stripped
Treasury Securities represent interests in "stripped" U.S. Treasury
bonds, a Unit holder's initial cost for his pro rata portion of
each Stripped Treasury
Page 6
Security held by a Trust (determined at the time he acquires his
Units, in the manner described above) shall be treated as its
"purchase price" by the Unit holder. Original issue discount is
effectively treated as interest for Federal income tax purposes,
and the amount of original issue discount in this case is generally
the difference between the bond's purchase price and its stated
redemption price at maturity. A Unit holder will be required to
include in gross income for each taxable year the sum of his daily
portions of original issue discount attributable to the Stripped
Treasury Securities held by a Trust as such original issue discount
accrues and will, in general, be subject to Federal income tax
with respect to the total amount of such original issue discount
that accrues for such year even though the income is not distributed
to the Unit holders during such year to the extent it is not less
than a "de minimis" amount as determined under the Regulation.
In general, original issue discount accrues daily under a constant
interest rate method which takes into account the semi-annual
compounding of accrued interest. In the case of the Stripped Treasury
Securities, this method will generally result in an increasing
amount of income to the Unit holders each year. Unit holders should
consult their tax advisers regarding the Federal income tax consequences
and accretion of original issue discount.
4. The Unit holder's aliquot share of the total proceeds received
on the disposition of, or principal paid with respect to, a Security
held by a Trust will constitute ordinary income (which will be
treated as interest income for most purposes) to the extent it
does not exceed the accrued market discount on such Security issued
after July 18, 1984 that has not previously been included in taxable
income by such Unit holder. A Unit holder may generally elect
to include market discount in income as such discount accrues.
In general, market discount is the excess, if any, of the Unit
holder's pro rata portion of the outstanding principal balance
of a Security over the Unit holder's initial tax cost for such
pro rata portion, determined at the time such Unit holder acquires
his Units. However, market discount with respect to any Security
will generally be considered zero if it amounts to less than 0.25%
of the obligation's stated redemption price at maturity times
the number of years to maturity. The market discount rules do
not apply to Stripped Treasury Securities because they are stripped
debt instruments subject to special original issue discount rules
as discussed above. If a Unit holder sells his Units, gain, if
any, will constitute ordinary income to the extent of the aggregate
of the accrued market discount on the Unit holder's pro rata portion
of each Security issued after July 18, 1984 that is held by a
Trust that has not previously been included in taxable income
by such Unit holder. In general, market discount accrues on a
ratable basis unless the Unit holder elects to accrue such discount
on a constant interest rate basis. However, a Unit holder should
consult his own tax adviser regarding the accrual of market discount.
The deduction by a Unit holder for any interest expense incurred
to purchase or carry Units will be reduced by the amount of any
accrued market discount that has not yet been included in taxable
income by such Unit holder. In general, the portion of any interest
expense which is not currently deductible would be ultimately
deductible when the accrued market discount is included in income.
5. The Code provides that "miscellaneous itemized deductions"
are allowable only to the extent that they exceed two percent
of an individual taxpayer's adjusted gross income. Miscellaneous
itemized deductions subject to this limitation under present law
include a Unit holder's pro rata share of expenses paid by the
applicable series of the Trust, including fees of the Trustee
and the Evaluator but does not include amortizable bond premium
on Securities held by a Trust.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised
tax rates on ordinary income while capital gains remain subject
to a 28% maximum stated rate. Because some or all capital gains
are taxed at a comparatively lower rate under the Tax Act, the
Tax Act includes a provision that recharacterizes capital gains
as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions
entered into after April 30, 1993. Unit holders and prospective
investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in Units.
A Unit holder of a Trust who is not a citizen or resident of the
United States or a United States domestic corporation (a "Foreign
Investor") will generally not be subject to U.S. Federal income
taxes, including withholding
Page 7
taxes on amounts distributed from a Trust (including any original
issue discount) on, or any gain from the sale or other disposition
of, his Units or the sale or disposition of any Securities by
the Trustee, provided that (i) the interest income or gain is
not effectively connected with the conduct by the Foreign Investor
of a trade or business within the United States, (ii) with respect
to any gain, the Foreign Investor (if an individual) is not present
in the United States for 183 days or more during the taxable year,
and (iii) the Foreign Investor provides the required certification
of his status and of the matters contained in clauses (i) and
(ii) above, and further provided that the exemption from withholding
for U.S. Federal income taxes for interest on any U.S. Securities
shall only apply to the extent the Securities were issued after
July 18, 1984.
Amounts otherwise distributable by a Trust to a Foreign Investor
will generally be subject to withholding taxes under Section 1441
of the Code unless the Unit holder timely provides his financial
representative or the Trustee with a statement that (i) is signed
by the Unit holder under penalties of perjury, (ii) certifies
that such Unit holder is not a United States person, or in the
case of an individual, that he is neither a citizen nor a resident
of the United States, and (iii) provides the name and address
of the Unit holder. The statement may be made, at the option of
the person otherwise required to withhold, on Form W-8 or on a
substitute form that is substantially similar to Form W-8. If
the information provided on the statement changes, the beneficial
owner must so inform the person otherwise required to withhold
within 30 days of such change.
Each Unit holder (other than a foreign investor who has properly
provided the certifications described in the preceding paragraph)
will be requested to provide the Unit holder's taxpayer identification
number to the Trustee and to certify that the Unit holder has
not been notified that payments to the Unit holder are subject
to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by a Trust to such Unit holder will be subject to
back-up withholding.
Investment in a Series of the Trust may be particularly well suited
for purchase by funds and accounts of individual investors that
are exempt from Federal income taxes such as Individual Retirement
Accounts, Keogh Plans, pension funds and other tax-deferred retirement
plans (see "Why are Investments in a Series of the Trust Suitable
for Retirement Plans?").
The foregoing discussions relate only to Federal income taxes
on distributions by a Trust. Foreign holders should consult their
own tax advisers with respect to the foreign and United States
Federal income tax consequences of ownership of Units.
The Sponsor believes that Unit holders who are individuals will
not be subject to any state personal income taxes on the interest
received by a Trust and distributed to them. However, Unit holders
(including individuals) may be subject to state and local taxes
on any capital gains (or market discount treated as ordinary income)
derived from a Trust and to other state and local taxes (including
corporate income or franchise taxes, personal property or intangible
taxes, and estate or inheritance taxes) on their Units or the
income derived therefrom. In addition, individual Unit holders
(and any other Unit holders which are not subject to state and
local taxes on the interest income derived from a Trust) will
probably not be entitled to a deduction for state and local tax
purposes for their share of the fees and expenses paid by a Trust,
for any amortized bond premium or for any interest on indebtedness
incurred to purchase or carry their Units. Therefore, even though
the Sponsor believes that interest income from a Trust is exempt
from state personal income taxes in all states, Unit holders should
consult their own tax advisers with respect to state and local
taxation of the purchase, ownership and disposition of Units.
It should be remembered that even if distributions are reinvested
through the Distribution Reinvestment Option they are still treated
as distributions for income tax purposes (see "How Can Distributions
to Unit Holders be Reinvested?").
Why are Investments in a Series of the Trust Suitable for Retirement
Plans?
A Series of the Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, capital gains and income received
in each of the foregoing plans are exempt from Federal income
taxation. Distributions from such plans are generally treated
as ordinary income but may, in some cases, be eligible for special
averaging or tax-deferred
Page 8
rollover treatment. Investors considering participation in any
such plan should review specific tax laws related thereto and
should consult their attorneys or tax advisers with respect to
the establishment and maintenance of any such plan. Such plans
are offered by brokerage firms and other financial institutions.
The Trust will waive the $1,000 minimum investment requirement
for tax-deferred retirement plan accounts. The minimum investment
is $250 for tax-deferred retirement plans such as IRA accounts.
Fees and charges with respect to such plans may vary.
How Can Distributions to Unit Holders be Reinvested?
Universal Distribution Option. Unit holders may elect participation
in a Universal Distribution Option which permits a Unit holder
to direct the Trustee to distribute principal and interest payments
to any other investment vehicle of which the Unit holder has an
existing account. For example, at a Unit holder's direction, the
Trustee would distribute automatically on the applicable distribution
date interest income, capital gains or principal on the participant's
Units to, among other investment vehicles, a Unit holder's checking,
bank savings, money market, insurance, reinvestment or any other
account. All such distributions, of course, are subject to the
minimum investment and sales charges, if any, of the particular
investment vehicle to which distributions are directed. The Trustee
will notify the participant of each distribution pursuant to the
Universal Distribution Option. The Trustee will distribute directly
to the Unit holder any distributions which are not accepted by
the specified investment vehicle. A participant may at any time,
by so notifying the Trustee in writing, elect to terminate his
participation in the Universal Distribution Option and receive
directly future distributions on his Units.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price. The Public Offering
Price is based on the Evaluator's determination of the aggregate
bid price of the Securities in the Trust, including any money
in the Principal Account other than money required to redeem tendered
Units, plus the amount of Purchased Interest (if any) and also
includes a sales charge as indicated in Part One. Also added to
the Public Offering Price is a proportionate share of interest
accrued but unpaid on the Securities after the First Settlement
Date to the date of settlement of Units (see "The First Trust
U.S. Treasury Securities Trust, Short-Intermediate, Series-How
are Purchased Interest and Accrued Interest Treated?").
The aggregate price of the Securities in a Series of the Trust
is determined by Securities Evaluation Service, Inc. acting as
evaluator (the "Evaluator") on the basis of bid prices (1) on
the basis of current market prices for the Securities obtained
from dealers or brokers who customarily deal in Securities comparable
to those held by the Trust; (2) if such prices are not available
for any of the Securities, on the basis of current market prices
for comparable securities; (3) by determining the value of the
Securities by appraisal; or (4) by any combination of the above.
The secondary market Public Offering Price will be equal to the
bid price per Unit of the Securities in a Series of the Trust
and, if applicable, the amount of Purchased Interest (if any)
per 1,000 Units plus the applicable sales charge.
Although payment is normally made five business days following
the order for purchase, payment may be made prior thereto. 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 five business
days following such order or shortly thereafter. Initial transaction
statements for Units held in uncertificated form representing
Units so ordered will be issued to the registered owner of such
Units within two business days of the issuance of such Units.
See "Rights of Unit Holders - How May Units be Redeemed?" for
information regarding the ability to redeem Units ordered for
purchase.
Page 9
How are Units Distributed?
Units repurchased in the secondary market may be offered by this
Part Two Prospectus at the secondary market public offering price
determined in the manner described above.
The Sponsor reserves the right to change the amount of the concession
to dealers and others from time to time. Certain commercial banks
are making Units of the Trust available to their customers on
an agency basis. A portion of the sales charge paid by these customers
is retained by or remitted to the banks. Under the Glass-Steagall
Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular
agency transactions are not permitted under such Act.
What are the Profits of the Sponsor?
In maintaining a market for the Units, the Sponsor will realize
profits or sustain losses in the amount of any difference between
the price at which Units are purchased (based on the bid prices
of the Securities in a Series of the Trust) and the price at which
Units are resold (which price is also based on the bid prices
of the Securities in such Series and includes a sales charge as
indicated in Part One for each Trust) or redeemed. The secondary
market public offering price of Units may be greater or less than
the cost of such Units to the Sponsor.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the
Trustee. Ownership of Units may be evidenced by registered certificates
executed by the Trustee and the Sponsor. Delivery of certificates
representing Units ordered for purchase is normally made five
business days following such order or shortly thereafter. Certificates
are transferable by presentation and surrender to the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer. Certificates to be redeemed must be properly endorsed
or accompanied by a written instrument or instruments of transfer.
A Unit holder must sign exactly as his name appears on the face
of the certificate with the signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates
of corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
The Trustee will maintain an account for each such Unit holder
and will credit each such account with the number of Units purchased
by that Unit holder. Within two business days of the issuance
or transfer of Units held in uncertificated form, the Trustee
will send to the registered owner of Units a written initial transaction
statement containing a description of a Series of the Trust; the
number of Units issued or transferred; the name, address and taxpayer
identification number, if any, of the new registered owner; a
notation of any liens and restrictions of the issues and any adverse
claims to which such Units are or may be subject or a statement
that there are no such liens, restrictions or adverse claims;
and the date the transfer was registered. Uncertificated Units
are transferable through the same procedures applicable to Units
evidenced by certificates (described above), except that no certificate
need be presented to the Trustee and no certificate will be issued
upon transfer unless requested by the Unit holder. A Unit holder
may at any time request the Trustee to issue certificates for
Units.
Although no such charge is now made or contemplated, a Unit holder
may be required to pay $2.00 to the Trustee per certificate reissued
or transferred, and to pay any governmental charge that may be
imposed in connection with each such transfer or exchange. For
new certificates issued to replace destroyed, stolen or lost certificates,
the Unit holder may be required to furnish indemnity satisfactory
to the Trustee
Page 10
and pay such expenses as the Trustee may incur. Mutilated certificates
must be surrendered to the Trustee for replacement.
How are Interest and Principal Distributed?
The pro rata share of cash in the Principal Account will be computed
as of the fifteenth day of each month and distributions to the
Unit holders as of such Record Date will be made as indicated
in Part One for each Trust. Proceeds from the disposition of any
of the Securities or amounts representing principal on the Securities
received after such Record Date and prior to the following Distribution
Date will be held in the Principal Account and not distributed
until the next Distribution Date. The Trustee is not required
to pay interest on funds held in the Principal or Interest Account
(but may itself earn interest thereon and therefore benefits from
the use of such funds) nor to make a distribution from the Principal
Account unless the amount available for distribution shall equal
at least $1.00 per 1,000 Units.
The Trustee will credit to the Interest Account all interest received
by a Series of the Trust, including moneys representing penalties
for the failure to make timely payments on Securities or liquidated
damages for default or breach of any condition or term of the
Securities and that part of the proceeds of any disposition of
Securities which represents accrued interest. Other receipts will
be credited to the Principal Account. Persons who purchase Units
between a Record Date and a Distribution Date will receive their
first distribution on the second Distribution Date after the purchase.
As of the fifteenth day of each month, the Trustee will deduct
from the Interest Account and, to the extent funds are not sufficient
therein, from the Principal Account, amounts necessary to pay
the expenses of a Series of the Trust. The Trustee also may withdraw
from said accounts such amounts, if any, as it deems necessary
to establish a reserve for any governmental charges payable out
of a Series of the Trust. Amounts so withdrawn shall not be considered
a part of the assets of such Series of the Trust until such time
as the Trustee shall return all or any part of such amounts to
the appropriate account. In addition, the Trustee may withdraw
from the Interest Account and the Principal Account such amounts
as may be necessary to cover redemption of Units by the Trustee.
Record Dates for monthly distributions will be the fifteenth day
of each month. Distributions will be made as indicated in Part
One for each Trust. Distributions for an IRA, Keogh, pension fund
or other tax-deferred retirement plan will not be sent to the
individual Unit holder; these distributions will go directly to
the custodian of the plan to avoid the penalties associated with
premature withdrawals from such accounts.
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of interest, if any, and
the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per 1,000 Units. Within
a reasonable time after the end of each calendar year, the Trustee
will furnish to each person who at any time during the calendar
year was a Unit holder of record, a statement as to (1) the Interest
Account: interest received (including amounts representing interest
received upon any disposition of Securities, penalties for the
failure to make timely payments on Securities or liquidated damages
for default or breach of any condition or term of the Securities),
deductions for payment of applicable taxes and for fees and expenses
of a Series of the Trust, redemption of Units and the balance
remaining after such distributions and deductions, expressed both
as a total dollar amount and as a dollar amount representing the
pro rata share per 1,000 Units outstanding on the last business
day of such calendar year; (2) the Principal Account: payments
of principal on Securities, the dates of disposition of any Securities
and the net proceeds received therefrom (excluding any portion
representing interest), deduction for payment of applicable taxes
and for fees and expenses of a Series of the Trust, redemptions
of Units, and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar
amount per 1,000 Units; (3) the Securities held and the number
of Units outstanding on the last business day of such calendar
year; (4) the Redemption Price per 1,000 Units based upon the
last computation thereof made during such calendar year; (5) the
dollar amounts actually distributed during such calendar year
from the Interest Account and from the Principal Account, separately
stated; and (6) such other information
Page 11
as the Trustee may deem appropriate. Unit holders of Units in
uncertificated form shall receive no less frequently than once
each year a dated written statement containing the name, address
and taxpayer identification number, if any, of the registered
owner, the number of Units registered in the name of the registered
owner on the date of the statement and certain other information,
that will be provided as required under applicable law.
In order to comply with Federal and state tax reporting requirements,
Unit holders will be furnished, upon request to the Trustee, evaluations
of the Securities furnished to it by the Evaluator.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender
to the Trustee at its corporate trust office in the City of New
York of the certificates representing the Units to be redeemed,
or, in the case of uncertificated Units, delivery of a request
for redemption, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed as explained above (or by
providing satisfactory indemnity, as in connection with lost,
stolen or destroyed certificates), and payment of applicable governmental
charges, if any. No redemption fee will be charged. On the seventh
calendar day following such tender, or if the seventh calendar
day is not a business day, on the first business day prior thereto,
the Unit holder will be entitled to receive in cash an amount
for each Unit equal to the Redemption Price per Unit next computed
after receipt by the Trustee of such tender of Units. The "date
of tender" is deemed to be the date on which Units are received
by the Trustee, except that as regards Units received after the
close of trading on the New York Stock Exchange (4:00 p.m. Eastern
time), the date of tender is the next day on which such 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 canceled.
Purchased Interest (if any) and any other accrued interest to
the settlement date paid on redemption shall be withdrawn from
the Interest Account or, if the balance therein is insufficient,
from the Principal Account. All other amounts paid on redemption
shall be withdrawn from the Principal Account.
The Redemption Price per Unit will be determined on the basis
of the bid price of the Securities in a Series of the Trust and
the amount of Purchased Interest (if any). The Redemption Price
per 1,000 Units is the pro rata share of each Unit determined
by the Trustee on the basis of (1) the cash on hand in the Trust
or moneys in the process of being collected, (2) the value of
the Securities in a Series of the Trust based on the bid prices
of the Securities and (3) Purchased Interest (if any) and any
other interest accrued thereon, less (a) amounts representing
taxes or other governmental charges payable out of a Series of
the Trust and (b) the accrued expenses of a Series of the Trust.
The Evaluator may determine the value of the Securities in a Series
of the Trust (1) on the basis of current bid prices of the Securities
obtained from dealers or brokers who customarily deal in securities
comparable to those held by a Series of the Trust, (2) on the
basis of bid prices for securities comparable to any securities
for which bid prices are not available, (3) by determining the
value of the Securities by appraisal, or (4) by any combination
of the above.
The difference between the bid and offering prices of such Securities
may be expected to average 1/16 to 1/8 of 1% of the principal
amount of such Securities. Therefore, the price at which Units
may be redeemed could be less than the price paid by the Unit
holder.
The Trustee is empowered to sell underlying Securities in order
to make funds available for redemption. To the extent that Securities
are sold, the size and diversity of the Trust will be reduced.
Such sales may be required at a time when Securities would not
otherwise be sold and might result in lower prices than might
otherwise be realized.
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 that Exchange is restricted or an 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.
Page 12
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, which includes
Purchased Interest (if any), it may purchase such Units by notifying
the Trustee before the close of business on the second succeeding
business day and by making payment therefor to the Unit holder
not later than the day on which the Units would otherwise have
been redeemed by the Trustee. Units held by the Sponsor may be
tendered to the Trustee for redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be
in accord with the Public Offering Price described in the then
currently effective prospectus describing such Units. Any profit
or loss resulting from the resale or redemption of such Units
will belong to the Sponsor.
How May Securities be Removed from the Trusts?
The Sponsor is empowered, but not obligated, to direct the Trustee
to dispose of Securities in the event certain events occur that
adversely affect the value of Securities including default in
payment of interest or principal, default in payment of interest
or principal of other obligations guaranteed or backed by the
full faith and credit of the United States of America, institution
of legal proceedings, default under other documents adversely
affecting debt service, decline in price or the occurrence of
other market or credit factors.
If any default in the payment of principal or interest on any
Security occurs and if the Sponsor fails to instruct the Trustee
to sell or to hold such Security within thirty days after notification
by the Trustee to the Sponsor of such default, the Trustee may,
in its discretion, sell the defaulted Security and not be liable
for any depreciation or loss thereby incurred.
The Trustee is also empowered to sell, for the purpose of redeeming
Units tendered by any Unit holder, and for the payment of expenses
for which funds may not be available, such of the Securities in
a list furnished by the Sponsor as the Trustee in its sole discretion
may deem necessary. The acquisition by the Trust of any securities
other than the Securities deposited during the primary offering
period is prohibited.
INFORMATION as to SPONSOR, TRUSTEE and EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds, The First Trust GNMA, Templeton Growth and Treasury
Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust
and The Advantage Growth and Treasury Securities Trust. First
Trust introduced the first insured unit investment trust in 1974
and to date more than $8 billion in First Trust unit investments
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 (708) 241-4141.
As of December 31, 1993, the total partners' capital of Nike Securities
L.P. was $12,743,032 (audited). (This paragraph relates only to
the Sponsor and not to the Trust or to any series thereof or to
any other Underwriter. The information is included herein only
for the purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual obligations.
More detailed financial information will be made available by
the Sponsor upon request.)
Who is the Trustee?
The Trustee is United States Trust Company of New York with its
principal place of business at 45 Wall Street, New York, New York
10005 and its unit investment trust offices at 770 Broadway, New
York, New York 10003. Unit holders who have questions regarding
the Fund may call the Customer Service Help Line at 1-800-682-7520.
The Trustee is a member of the New York Clearing House Association
and is subject to supervision
Page 13
and examination by the Comptroller of the Currency, 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 Securities. For information relating to
the responsibilities of the Trustee under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing
an instrument in writing and filing the same with the Sponsor
and mailing a copy of a notice of resignation to all Unit holders.
Upon receipt of such notice, the Sponsor is obligated to appoint
a successor trustee promptly. If the Trustee becomes incapable
of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If upon resignation
of a trustee no successor has accepted the appointment within
30 days after notification, the retiring trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only
when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and 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 Securities.
In the event of the failure of the Sponsor to act under the Indenture,
the Trustee may act thereunder and shall not be liable for any
action taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or
upon or in respect of a Series of the Trust which the Trustee
may be required to pay under any present or future law of the
United States of America or of any other taxing authority having
jurisdiction. In addition, the Indenture contains other customary
provisions limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become 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 Securities Evaluation Service, Inc., 531 East
Roosevelt Road, Suite 200, Wheaton, Illinois 60187. 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 14
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 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),
provided that the Indenture is not amended to increase the number
of Units issuable thereunder or to permit the deposit or acquisition
of securities either in addition to or in substitution for any
of the Securities initially deposited in a Series of the Trust.
In the event of any amendment, the Trustee is obligated to notify
promptly all Unit holders of the substance of such amendment.
A Series of the Trust may be liquidated at any time by consent
of 100% of the Unit holders or by the Trustee when the principal
amount of the Securities owned by such Series as shown by any
evaluation, is less than the lower of $1,000,000 or 10% of the
total principal amount of the Securities deposited in such Series
during the primary offering period, or in the event that Units
not yet sold aggregating more than 60% of the Units initially
deposited are tendered for redemption by the Underwriters, including
the Sponsor. If a Series of the Trust is liquidated because of
the redemption of unsold Units by the Underwriters, the Sponsor
will refund to each purchaser of Units the entire sales charge
paid by such purchaser. The Indenture will terminate upon the
redemption, sale or other disposition of the last Security held
thereunder, but in no event shall it continue beyond the Mandatory
Termination Date as set forth in Part One. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit
holders. Within a reasonable period after termination, the Trustee
will sell any Securities remaining in a Series of the Trust, and,
after paying all expenses and charges incurred by a Series of
the Trust, will distribute to each Unit holder (including the
Sponsor if it then holds any Units), upon surrender for cancellation
of his Units, his pro rata share of the balances remaining in
the Interest and Principal Accounts, all as provided in the Indenture.
Legal Opinions
The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois
60603, as counsel for the Sponsor. Carter, Ledyard & Milburn,
2 Wall Street, New York, New York 10005, acts as counsel for the
Trustee.
Experts
The statement of net assets, including the portfolio, of each
Trust contained in Part One of the Prospectus and Registration
Statement has been audited by Ernst & Young, independent auditors,
as set forth in their report thereon appearing elsewhere herein
and in the Registration Statement, and is included in reliance
upon such report given upon the authority of such firm as experts
in accounting and auditing.
DESCRIPTION of STANDARD & POOR'S CORPORATION RATING*
* As described by Standard & Poor's Corporation.
A Standard & Poor's Corporation's rating on the units of an investment
trust (hereinafter referred to collectively as "units" and "trust")
is a current assessment of creditworthiness with respect to the
investments held by such trust. This assessment takes into consideration
the financial capacity of the issuers and of any guarantors, insurers,
lessees or mortgagors with respect to such investments. The assessment,
however, does not take into account the extent to which trust
expenses or portfolio asset sales for less than the trust's purchase
price will reduce payment to the Unit holder of the interest and
principal required to be paid on the portfolio assets. In addition,
the rating is not a recommendation to purchase, sell, or hold
units, inasmuch as the rating does not comment as to market price
of the units or suitability for a particular investor.
Trusts rated "AAA" are composed exclusively of assets that are
rated "AAA" by Standard & Poor's or, have, in the opinion of Standard
& Poor's, credit characteristics comparable to assets rated "AAA,"
or certain short-term investments. Standard & Poor's defines its
"AAA" rating for such assets as the highest rating assigned by
Standard & Poor's to a debt obligation. Capacity to pay interest
and repay principal is very strong.
Page 15
<TABLE>
<CAPTION>
CONTENTS:
<S> <C>
First Trust U.S. Treasury Securities Trust,
Short-Intermediate Series
The First Trust Special Situations Trust:
What is the First Trust Special Situations Trust? 2
What is the Rating of the Units? 3
What are Estimated Current Return and
Estimated Long-Term Return? 4
How are Purchased Interest and Accrued
Interest Treated? 4
What are the Expenses and Charges? 5
What is the Tax Status of Unit Holders? 6
Why are Investments in a Series of the Trust
Suitable for Retirement Plans? 8
How Can Distributions to Unit Holders
be Reinvested? 9
Public Offering:
How is the Public Offering Price Determined? 9
How are Units Distributed? 10
What are the Profits of the Sponsor? 10
Rights of Unit Holders:
How is Evidence of Ownership Issued
and Transferred? 10
How are Interest and Principal Distributed? 11
What Reports Will Unit Holders Receive? 11
How May Units be Redeemed? 12
How May Units be Purchased by the Sponsor? 13
How May Securities be Removed from the Trusts? 13
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 13
Who is the Trustee? 13
Limitations on Liabilities of Sponsor and Trustee 14
Who is the Evaluator? 14
Other Information:
How May the Indenture be Amended or
Terminated? 15
Legal Opinions 15
Experts 15
Description of Standard & Poor's Corporation Rating 15
</TABLE>
__________
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
First Trust U.S. Treasury
Securities Trust,
Short-Intermediate
Series
The First Trust Special
Situations Trust
Prospectus
Part Two
March 31, 1994
First Trust registered trademark
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
United States Trust Company
of New York
770 Broadway
New York, New York 10003
1-800-682-7520
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
Page 16
CONTENTS OF POST-EFFECTIVE AMENDMENT
OF REGISTRATION STATEMENT
This Post-Effective Amendment of Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Auditors
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, THE FIRST TRUST SPECIAL SITUATIONS TRUST, SERIES
81 FIRST TRUST U.S. TREASURY SECURITIES TRUST, SHORT-
INTERMEDIATE, SERIES 2, certifies that it meets all of the
requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment of its Registration
Statement to be signed on its behalf by the undersigned thereunto
duly authorized in the Village of Lisle and State of Illinois on
February 1, 1995.
THE FIRST TRUST SPECIAL SITUATIONS TRUST,
SERIES 81
FIRST TRUST U.S. TREASURY SECURITIES TRUST,
SHORT-INTERMEDIATE, SERIES 2
(Registrant)
By NIKE SECURITIES L.P.
(Depositor)
By Carlos E. Nardo
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment of Registration Statement has been
signed below by the following person in the capacity and on the
date indicated:
Signature Title Date
Robert D. Van Kampen Sole Director of )
Nike Securities )
Corporation, ) February 1, 1995
the General Partner )
of Nike Securities L.P. )
)
) Carlos E. Nardo
) Attorney-in-Fact**
*The title of the person named herein represents his capacity in
and relationship to Nike Securities L.P., Depositor.
**An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with the Amendment No. 1 to Form S-6 of The First Trust
Special Situations Trust, Series 18 (File No. 33-42683) and
the same is hereby incorporated herein by this reference.
S-2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated December 30, 1994 in
this Post-Effective Amendment to the Registration Statement and
related Prospectus of The First Trust Special Situations Trust
dated January 20, 1995.
ERNST & YOUNG LLP
Chicago, Illinois
January 19, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Post
Effective Amendment to Form S-6 and is qualified in its entirety by
reference to such Post Effective Amendment to Form S-6.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> U.S. TREASURY SI TRUST
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1993
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 5,764,948
<INVESTMENTS-AT-VALUE> 5,391,983
<RECEIVABLES> 56,142
<ASSETS-OTHER> 7,897
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,456,022
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43,231
<TOTAL-LIABILITIES> 43,231
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,764,948
<SHARES-COMMON-STOCK> 6,041,829
<SHARES-COMMON-PRIOR> 1,949,000
<ACCUMULATED-NII-CURRENT> 20,808
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (372,965)
<NET-ASSETS> 5,412,791
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 192,280
<OTHER-INCOME> 0
<EXPENSES-NET> 7,338
<NET-INVESTMENT-INCOME> 184,942
<REALIZED-GAINS-CURRENT> (3,662)
<APPREC-INCREASE-CURRENT> (372,965)
<NET-CHANGE-FROM-OPS> (191,685)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 163,501
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,222,829
<NUMBER-OF-SHARES-REDEEMED> 130,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,515,726
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
